Under what conditions are fees paid to Hyatt or its affiliates by The Standardx franchisee refundable?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
Unless otherwise specified, all fees that Franchisee paid to Hyatt or its Affiliates before or simultaneously with the execution of this Agreement, or pays to Hyatt or its Affiliates during the Term, are non-refundable.
Applicant hereby expressly acknowledges that acceptance and deposit of the application fee by Franchisor does not, in any respect, bind or obligate Franchisor to enter into a Franchise Agreement granting Applicant a franchise. This Application is neither an offer of a franchise by Franchisor nor a contract for the acquisition of a franchise or any other rights to operate a Hyatt-affiliated Hotel. Applicant further acknowledges that the research, investigation, review and approval process and similar administrative functions of Franchisor constitute the sole and only consideration for the application fee submitted herewith. If Applicant withdraws this Application before Franchisor approves it, or if Franchisor does not approve this Application for any reason, Franchisor will refund Applicant's application fee less a $5,000 fee to cover Franchisor's costs associated with evaluating this Application; however, after Franchisor approves this Application, Applicant's application fee is not refundable, even if Franchisor and Applicant do not sign a Franchise Agreement.
(a) The initial Application Fee was fully earned by Hyatt and non-refundable upon Hyatt's approval of Franchisee's franchise application before Hyatt and Franchisee signed this Agreement. If Hyatt and Franchisee agree to add guest rooms to the Hotel above the number of rooms stated in Exhibit B-3 before the Hotel opens, then Franchisee must pay Hyatt, when Hyatt approves the additional guest rooms, an additional Application Fee in an amount equal to the amount set forth in Exhibit B-1. After the Hotel opens, if Franchisee wants to add any guest rooms to the Hotel, Franchisee must pay Hyatt's then current PIP fee (currently the amount set forth in Exhibit B-1 when Franchisee requests Hyatt's approval of Franchisee's plans. This PIP fee is non-refundable. Hyatt will apply this PIP fee toward the additional Application Fee of the amount set forth in Exhibit B-1 if Hyatt approves Franchisee's plans. If the PIP fee exceeds the additional Application Fee, Hyatt may keep the excess. The remaining portion of the additional Application Fee is due, fully earned by Hyatt, and non-refundable on the date Hyatt approves Franchisee's plans to develop the additional guest rooms.
(b) Franchisee shall pay Hyatt the "IT Project Management Services Fee" set forth in Exhibit B-1, plus any applicable taxes thereon. The IT Project Management Services Fee is non-refundable. Franchisee shall reimburse Hyatt's or its Affiliate's reasonable expenses in connection with rendering the IT Project Management Services, including any necessary transportation, lodging and meals, plus applicable taxes thereon. The IT Project Management Services Fee (including expenses) will be invoiced by Hyatt no earlier than: (i) Hyatt's completion of the IT Project Management Services or (ii) upon Franchisee's termination of the Hotel development project or the IT Project Management
(c) If Franchisee is constructing a new Hotel, adapting a non-hotel space for use as a Hotel, or conducting a significant renovation of an existing hotel in connection with conversion to a Brand Hotel, Franchisee shall pay Hyatt a design services review fee (the "Design Services Review Fee") as set forth in Exhibit B-1.
In addition, if Franchisee requests Hyatt's review of alternative plans, design or products other than those prescribed by Hyatt's prototype plans, Franchisee must pay Hyatt an alternative design review fee (the "Alternative Design Review Fee") as set forth in Exhibit B-1.
The Design Services Review Fee and the Alternative Design Review Fee are non-refundable.
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, most fees paid to Hyatt or its affiliates are non-refundable, but there is an exception regarding the initial application fee. Specifically, if an applicant withdraws their application before Hyatt approves it, or if Hyatt does not approve the application for any reason, the application fee will be refunded, less a $5,000 fee to cover Hyatt's costs associated with evaluating the application. However, once Hyatt approves the application, the application fee becomes non-refundable, even if a Franchise Agreement is not ultimately signed.
Several fees paid to Hyatt are explicitly stated to be non-refundable. These include the initial Application Fee after Hyatt approves the franchise application, the IT Project Management Services Fee, the Design Services Review Fee, and the Alternative Design Review Fee. Additionally, all fees paid to Hyatt or its Affiliates before, simultaneously with, or during the term of the agreement are generally non-refundable unless otherwise specified in the agreement.
This non-refundability policy has significant implications for prospective The Standardx franchisees. It means that franchisees bear the risk of losing these fees if the project is terminated or if they change their minds after Hyatt has incurred costs or approved plans. The $5,000 deduction from the application fee if the application is withdrawn before approval is also noteworthy, as it covers Hyatt's evaluation costs. Franchisees should carefully consider these financial risks before submitting applications or paying any fees to Hyatt.