Under what conditions can Hyatt require The Standardx franchisee to upgrade or renovate the Hotel?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
Without limiting Hyatt's rights and Franchisee's obligations under Section 4.3, Hyatt may require Franchisee at any time and from time to time during the Term to upgrade or renovate the Hotel, including by altering the Hotel's appearance and/or replacing a material portion of improvements and/or FF&E, to comply with then current building décor, appearance, trade dress standards and other aspects of the Hotel System that Hyatt has established and then requires for new similarly situated Brand Hotels (subject to Reasonable Deviations).
This upgrading or renovation may obligate Franchisee to invest additional capital in the Hotel and/or incur higher operating costs.
Franchisee agrees to implement such upgrading and renovation within the time period Hyatt requests, provided that all such upgrades and renovations apply to similarly situated Brand Hotels (subject to Reasonable Deviations).
In order to assist Franchisee in having funds available to make any necessary capital expenditures at the Hotel and comply with its obligations under this Section 4.7 (but without limiting those obligations), each month Franchisee shall deposit into a separate account that Franchisee controls (the "CapEx Account") the amount set forth in Exhibit B-1. Upon Hyatt's reasonable request, Franchisee will periodically provide Hyatt information concerning the funds in and expenditures from the CapEx Account. Franchisee shall use the funds in the CapEx Account only for the purpose of making approved capital expenditures and complying with its upgrade and
other obligations under this Section 4.7, although such obligations may require Franchisee to spend more than the amount then in the CapEx Account.
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 can mandate upgrades or renovations to the hotel at any time during the franchise term. These upgrades may involve altering the hotel's appearance, replacing improvements, or updating FF&E (furniture, fixtures, and equipment). The primary reason for these mandates is to ensure compliance with the current building décor, appearance, trade dress standards, and other aspects of The Standardx Hotel System that Hyatt requires for new, similarly situated hotels. However, these upgrades are subject to 'Reasonable Deviations,' which suggests some flexibility based on specific circumstances.
These required upgrades or renovations may necessitate that The Standardx franchisee invest additional capital in the hotel and potentially incur higher operating costs. The franchisee is obligated to implement these changes within the timeframe specified by Hyatt, provided that such upgrades and renovations are also applied to similarly situated The Standardx hotels, again with consideration for 'Reasonable Deviations.'
To assist franchisees in managing these capital expenditures, The Standardx requires franchisees to deposit a specified amount each month into a separate CapEx Account, as detailed in Exhibit B-1. While the franchisee controls this account, the funds are earmarked specifically for approved capital expenditures and upgrade obligations. Hyatt retains the right to request information about the funds in and expenditures from this account. It's important to note that the franchisee's obligations may require spending more than the amount available in the CapEx Account, meaning the franchisee may need to source additional funds to meet Hyatt's upgrade requirements.