How are System Services Charges determined for The Standardx?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
"System Services Charges" means the amounts that the Hyatt Group charges the Hotel, and Franchisee hereby agrees to pay, for the Hotel's equitably allocable share of the System Services Costs attributable to the System Services in which the Hotel participates (or is obligated to participate), as periodically determined by the Hyatt Group.
"System Services Costs" means, with respect to any of the System Services in which the Hotel participates (or is required to participate), all costs actually incurred or properly accrued by any member of Hyatt Group during the period of determination in respect of the provision of such System Services, including out-of-pocket expenses, costs for employees, occupancy costs, capital costs, administrative expenses, carrying costs and other costs incurred directly or indirectly in providing System Services.
On or before the tenth (10th) day of each month or such later day of the month that Hyatt periodically specifies, Franchisee shall pay Hyatt:
- (b) the System Services Charges for the previous month.
Franchisee acknowledges that System Services Charges will include an allocable proportion of certain System Services Costs incurred during the period before the Hotel opens in accordance with this Agreement.
System Services Charges shall be determined on the same basis as such amounts are determined for other Participating Hotels.
Any allocation of shared costs that the Hyatt Group makes in good faith and with the intention of fairly allocating such costs to System Services shall be binding on the parties hereto.
System Services Costs shall include the actual costs incurred by the Hyatt Group and shall not be subject to any mark-up, premium or profit on any Mandatory Services, but may include a profit or markup component on Non-Mandatory Services as described above or as determined by the Hyatt Group.
The Hyatt Group may in its reasonable judgment periodically change its method of allocation of the System Services Costs among Participating Hotels, and the categories of Brand Hotels and/or other Hyatt Network Hotels that are classified as Participating Hotels, provided that such method of allocation and categories of Participating Hotels shall at all times be determined on a reasonable, equitable and nondiscriminatory basis; and
If any Provider assesses a single or group fee or other charge that covers all or a group of Brand Hotels or other Hyatt Network Hotels to which that Provider provides products or services, Franchisee agrees that Hyatt's allocation of that fee or other charge among the Hotel and other participating hotels is final.
Source: Item 18 — OTHER INCOME (LOSS), NET (FDD pages 187–399)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, System Services Charges are the amounts that the Hyatt Group charges the Hotel for its share of System Services Costs related to the System Services in which the Hotel participates. These charges are determined periodically by the Hyatt Group. Franchisees must pay these charges monthly, specifically on or before the tenth day of each month, or another date specified by Hyatt. System Services Charges will include an allocable proportion of certain System Services Costs incurred during the period before the Hotel opens.
System Services Costs include all costs actually incurred or properly accrued by any member of Hyatt Group during the determination period for providing System Services. These costs encompass out-of-pocket expenses, employee costs, occupancy costs, capital costs, administrative expenses, carrying costs, and other costs incurred directly or indirectly in providing System Services. The System Services Costs will include the actual costs incurred by the Hyatt Group and will not be subject to any mark-up, premium or profit on any Mandatory Services, but may include a profit or markup component on Non-Mandatory Services as determined by the Hyatt Group.
The Hyatt Group has the right to periodically change its method of allocating System Services Costs among Participating Hotels, and the categories of Brand Hotels that are classified as Participating Hotels. However, the method of allocation and categories of Participating Hotels must be determined on a reasonable, equitable, and nondiscriminatory basis. If a Provider assesses a single or group fee that covers all or a group of Brand Hotels, Hyatt's allocation of that fee among the Hotel and other participating hotels is final.
In simpler terms, The Standardx franchisees will pay a monthly fee for the services that Hyatt provides to support the hotel system. This fee covers Hyatt's actual costs, without markups for mandatory services, but may include a profit component for non-mandatory services. The exact amount can fluctuate based on Hyatt's allocation methods and the services the hotel uses. Franchisees should be aware that these charges can start accruing even before the hotel opens and that Hyatt can change how these costs are allocated over time, as long as it's done fairly.