Under what circumstances will Hyatt indemnify Franchisee Indemnified Parties for losses related to the operation of The Standardx hotel, according to Section 8.4(a)(i)?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Indemnification. Hyatt agrees to indemnify and hold harmless the Franchisee Indemnified Parties against, and to reimburse any one or more of the Franchisee Indemnified Parties for, any and all Losses (including defense costs and other Losses incurred in defending any Proceeding described in Section 8.3(b), if applicable) directly or indirectly arising out of, resulting from, or in connection with (i) a final decision by a court of competent jurisdiction not subject to further appeal that Hyatt, its Affiliate, or any of their respective employees directly engaged in willful misconduct or gross negligence or intentionally caused the property damage or bodily injury that is the subject of the claim with respect to the operation of the Hotel, so long as the claim is not asserted on the basis of (A) theories of vicarious liability (including agency, apparent agency, or joint employer), (B) Hyatt's failure to compel Franchisee to comply with this Agreement, or (C) negligence or misconduct in connection with the development or construction of the Hotel, all of which are claims for which the Franchisee Indemnified Parties are not entitled to indemnification under this Section 8.4; or (ii) any trademark infringement Proceeding disputing Franchisee's authorized use of any Proprietary Mark under this Agreement,
provided that Franchisee has timely notified Hyatt of, and complies with Hyatt's directions in responding to, the Proceeding.
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, Hyatt will indemnify Franchisee Indemnified Parties for losses related to the operation of The Standardx hotel under specific conditions outlined in Section 8.4(a)(i). Hyatt's indemnification obligation is triggered by a final court decision, not subject to further appeal, determining that Hyatt, its affiliate, or their employees directly engaged in willful misconduct or gross negligence, or intentionally caused property damage or bodily injury. This misconduct, negligence, or intentional action must be directly related to the operation of the hotel.
However, there are limitations to this indemnification. Hyatt will not indemnify Franchisee Indemnified Parties if the claim is based on theories of vicarious liability, such as agency, apparent agency, or joint employer. Additionally, indemnification is not provided if the claim arises from Hyatt's failure to compel the franchisee to comply with the franchise agreement or from negligence or misconduct related to the development or construction of the hotel. These exceptions are significant, as they shift certain risks and liabilities back to the franchisee.
For a prospective The Standardx franchisee, this means that while Hyatt provides some protection against its own direct actions of willful misconduct or gross negligence, the franchisee bears the responsibility for many other potential liabilities. This includes liabilities arising from the franchisee's own actions, the actions of their employees, or from the development and construction of the hotel. It is crucial for potential franchisees to understand these limitations and to ensure they have adequate insurance coverage and risk management strategies in place to protect themselves from these uncovered liabilities. Franchisees should consult with legal and insurance professionals to fully assess their risks and obligations under the franchise agreement.