THX are a design and quality control system for the playback enviroment in a theatre

First the aspiring theatre must meet certain acoustic criteria: 

•  low background noise, (no loud air conditioners or projectors)

• good isolation (so the lucky patron doesn't get to hear the gunfight in the theatre next door)

• specific reverberant characteristics based on the volume of each individual theatre

• the theatre can't have any nasty slap echoes or reflections. 

• the dialogue will be more intelligible, 
• the high frequencies will reproduce clearly,
• the bass will not build up excessively within the room, etc. 

High-quality hardware in THX theatres 
Once a theatre is accepted for the aforementioned preliminary THX criteria, the owner must choose the equipment to be used from a list provided by THX.  This list includes amplifiers, processors, screen and surround speakers.  They can choose from a number of different products by various manufacturers, but they all the products have been objectively tested here to conform to very high standards.  These high-quality components assure a wider dynamic range and more faithfully reproduced sound, plus adequate for the room size.  

Incidentally, the only Cinema Processors which THX were accepted until quite recently  were made by Dolby, so any THX theatre was by default a "Dolby" theatre. 

THX are not in competition with Dolby, THX are a complementary technology to Dolby Processing.  Recently, Ultra-Stereo also had a processor approved for use in THX Theatres.  

THX not in the business of selling any equipment, just assuring high quality hardware in THX theatres.  The only piece of hardware that is specifically "THX" is an electronic crossover network, which is leased, not purchased by the theatre.  

  
The theatre is retrofitted to provide optimum sound 
THX design office takes the architectural plans for every theatre, and designs the placement of the screen speakers and surrounds.  The screen speakers are set in a special baffle structure behind the screen.  This structure has certain acoustic properties, and the speaker placement within the structure is coordinated to best match the projected film image.  

The surround speaker array is designed to provide optimum sound pressure and audience coverage.  (and to integrate with the interior design whenever possible).  

THX coordinate all this with the architects, owners, and equipment installers.  Once the theatre has been completed or successfully retrofitted, THX field technicians visit the theatre to align and "tune" the sound system, then they measure the acoustical characteristics to make sure that they meet THX requirements.  This test data is then evaluated, and if the theatre passes on all counts, it becomes a "certified" THX site.  

This, entitles the theatre to use the THX name and show the THX trailer.  (You know, "The Audience is Listening.")  The theatre is re-tested every 6 months to ensure that the quality of sound remains high.   

THX are not a method of recording, encoding, or processing movie soundtracks! THX are a design and quality control system for the Playback enviroment .  

This means that every film will sound better in a THX theatre, not just a select few.  The premium quality of a THX theatre is often well-demonstrated by "special-effects-extravaganza" films, because they are mixed with a very wide dynamic range and a lot of "loud" or "low" sounds that might distort when played back through a lesser system.  

THX theatres are especially well-equipped to handle the demands of the new digital theatre soundtracks (like "Cinema Digital" and "SR-D") because of their high performance and headroom.   

Home THX system 
The new Home THX system consists of a family of licensed products that various licensees have developed to meet specs. designated by THX engineers.  The pricing of the home system is dependent on the licensee.  These are sold through dealers like regular home A/V equipment, and THX do not design these systems.  

Links:

• How THX Works
  
  
• THX.com
  
  
• How Movie Sound Works
  - Digital Theater Systems (DTS)
  - Dolby Digital
  - Sony Dynamic Digital Sound (SDDS)
  
  
• Surround Sound Formats