Explanation

Based on the FDD's Item 20 data for the past three years (2022-2024), the JdV by Hyatt franchised system has experienced very low turnover. Only one franchisee termination was reported in 2024, with no non-renewals or franchisor reacquisitions. This low turnover rate generally suggests a stable franchise system and franchisee satisfaction, which is a positive indicator for a prospective franchisee. However, the system is small and growing, so historical data is limited.

Potential Mitigations

• Your business advisor should help you contact a representative sample of current franchisees listed in Item 20 to discuss their experience and satisfaction with the system.
• It is wise to ask the franchisor for more context regarding the single termination to understand the circumstances surrounding it.
• An attorney can help you formulate questions for current franchisees to gauge their view of the system's health and support.

Explanation

The JdV by Hyatt franchised system is small but has been growing steadily, doubling from three to six outlets from 2022 to 2024, with five more agreements signed. While growth itself is positive, you should verify the franchisor has the infrastructure to support this expansion. The parent company, Hyatt Hotels Corporation, appears to have substantial resources, which helps mitigate the risk of support quality degrading due to growth.

Potential Mitigations

• Your business advisor can help you question the franchisor about their plans to scale support, training, and operational staff to match unit growth.
• Interviewing both new and established franchisees can provide insight into whether the quality of franchisor support is keeping pace with expansion.
• An accountant's review of the parent company's financial statements can help assess if sufficient resources are being allocated to support brand growth.

Explanation

This risk was not identified in the FDD Package. The business model, a 'collection' of unique lifestyle resort hotels affiliated with the globally recognized Hyatt brand, appears to be based on a durable consumer demand for distinct travel experiences rather than a temporary trend. The backing of a major hospitality corporation like Hyatt further suggests a focus on long-term viability. However, you must still assess if this specific hotel type fits your local market's long-term needs.

Potential Mitigations

• Engaging a business advisor to independently assess the long-term market demand for this specific 'collection brand' hotel concept in your target location is recommended.
• Review the franchisor's plans for system innovation and adaptation with your business advisor to gauge their commitment to long-term market relevance.
• An accountant can help you model the financial sustainability of the business, considering potential shifts in travel trends.

Explanation

This risk was not identified in the FDD Package. Item 2 shows that the executive team of Hyatt Franchising, L.L.C. and its parent, Hyatt Hotels Corporation, consists of individuals with extensive and long-term experience in the hotel and hospitality industry, including in franchising, development, and operations. This level of experience is a positive factor, suggesting the franchisor has the knowledge to manage the franchise system effectively and provide credible support.

Potential Mitigations

• It is still worthwhile to research the recent performance and reputation of the specific executives listed in Item 2 with the help of a business advisor.
• When speaking with current franchisees, asking about their direct experiences and the quality of support received from the management team is a good practice.
• An attorney can help you verify that the experience listed is relevant to the support you will need.

Explanation

This risk was not identified in the FDD Package. The franchisor, Hyatt Franchising, L.L.C., is a subsidiary of Hyatt Hotels Corporation, a publicly traded company, not a private equity firm. This structure often implies a focus on long-term brand health and operational performance over short-term financial engineering. However, as with any large corporation, strategic shifts or sales of brands can occur. The Franchise Agreement gives Hyatt a broad right to assign the agreement.

Potential Mitigations

• Your attorney should review the assignment clause in the Franchise Agreement to fully understand the implications if the franchise system is sold.
• A business advisor can help you research Hyatt Hotels Corporation's history regarding its management and support of its various brands.
• In discussions with the franchisor, you might inquire about the long-term strategic plan for the JdV by Hyatt brand.

Explanation

This risk was not identified in the FDD Package. The franchisor is a subsidiary of Hyatt Hotels Corporation, which is clearly disclosed in Item 1. The FDD properly includes the audited consolidated financial statements of the parent company in Item 21 and Exhibit A-1. Furthermore, Exhibit A-1 contains an explicit and unconditional Guarantee of Performance from the parent company for the franchisor's obligations, which is a strong positive factor providing you with significant financial backing.

Potential Mitigations

• An accountant should review the parent company's financials to confirm its ability to support the franchisor and the guarantee.
• Your attorney should review the specific terms of the Guarantee of Performance to ensure it is unconditional and covers all of the franchisor's obligations.
• It is still wise to ask the franchisor how it is capitalized and funded by its parent, with assistance from your business advisor.

Explanation

This risk was not identified in the FDD Package. Item 1 states that the franchisor has no predecessors. The JdV by Hyatt brand was developed within the Hyatt system following the acquisition of Two Roads Hospitality in 2018, but the franchisor entity itself does not have a predecessor from which it acquired the system in a way that would require disclosure under franchise law. This provides a clean corporate history for the franchisor entity.

Potential Mitigations

• Asking long-tenured franchisees about the brand's history since the 2018 acquisition can still provide valuable context; your business advisor can help.
• Your attorney can confirm that the 'no predecessor' disclosure is accurate based on the information presented in Item 1.
• A business advisor can help you research the history of the original 'Joie de Vivre' brand before its acquisition by Hyatt for additional background.

Explanation

This risk was not identified in the FDD Package. Item 3 discloses only one litigation case in the last fiscal year, which was initiated by the franchisor against a franchisee for unpaid royalty fees. There are no disclosures of franchisees suing the franchisor for fraud, misrepresentation, or similar claims. For a system of Hyatt's overall size, this low level of disclosed litigation is a positive indicator and does not suggest a pattern of franchisee disputes or franchisor misconduct.

Potential Mitigations

• An attorney should still review the details of the single disclosed case to understand the context.
• A business advisor can help you conduct independent online searches for any other legal disputes involving the franchisor or the JdV by Hyatt brand.
• It is wise to ask current franchisees about the nature of their relationship with the franchisor and whether disputes are handled fairly.