Sonesta_Select_Sonesta_Essential 2025 Franchise FAQ - FDD Ninja

Question 1

As of December 31, 2024, how many Americas Best Value Inn-branded hotels were open in the United States under the Sonesta Select Sonesta Essential franchise, and how many additional franchises were under contract?

Accepted Answer

In October 2016, we began offering franchises for the operation of hotels in the limitedservice segment under the service mark Americas Best Value Inn® ("ABVI") and certain other proprietary marks, collectively referred to as the "ABVI Marks." As of December 31, 2024, there were 464 Americas Best Value Inn-branded hotels open in the United States, 283 of which are franchised, and there were 6 additional Americas Best Value Inn franchises under contract in the United States. The remaining became affiliated with the ABVI brand through VHGI's membership model, and we provide services for those ABVI hotels as well. Source: Item 1 — **THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES (FDD pages 9–16)

Question 2

As of December 31, 2024, how many franchised hotels were open or under contract in the United States under the Sonesta Hotels and Resorts Marks for Sonesta Select Sonesta Essential?

Accepted Answer

We have offered franchises for hotels that provide full service, upscale accommodations with modern furnishings under the Sonesta® Hotels and Resorts Marks since September 2021, and that provide full service, upper upscale accommodations with authentic and local touches under the Royal Sonesta® Marks since October 2022. "Sonesta Hotels and Resorts Marks" refers to the Sonesta® Hotels and Resorts service mark and related trademarks, service marks and trade names. "Royal Sonesta Marks" refers to the Royal Sonesta® service mark and related trademarks, service marks and trade names. As of December 31, 2024, there were 7 franchised hotels open or under contract and 25 affiliate-owned or affiliate-managed hotels open in the United States under the Sonesta Hotels and Resorts Marks. Source: Item 1 — **THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES (FDD pages 9–16)

Question 3

As of December 31, 2024, how many franchised hotels were under contract in the United States under the Royal Sonesta Marks for Sonesta Select Sonesta Essential?

Accepted Answer

As of December 31, 2024, there were two franchised hotel under contract and 18 affiliate-owned or affiliate-managed hotels open in the United States under the Royal Sonesta Marks. Source: Item 1 — **THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES (FDD pages 9–16)

Question 4

As of December 31, 2024, how many franchised and licensed hotels were included in the Sonesta Select Sonesta Essential system, along with all other brands under RLH Corporation?

Accepted Answer

Red Lion Hotels Corporation ("RLH Corporation," "RLHC," "RLH", "we," "our," "us," or "company") is engaged, through its subsidiaries, in the franchising and ownership of hotels of its proprietary brands, including the following brands that are being actively sold in the United States and Canada: The Royal Sonesta Hotels, The James Hotels, Classico Collection by Sonesta, MOD A Sonesta Collection, Sonesta Hotels and Resorts, Sonesta Select Hotels, Sonesta Essential Hotels, Sonesta ES Suites, Sonesta Simply Suites, Red Lion Hotels, Inns & Suites by Sonesta, Signature Inn by Sonesta, Americas Best Value Inn by Sonesta, Canadas Best Value Inn by Sonesta and Knights Inn. As of December 31, 2024, our system for all our brands included 834 franchised and licensed hotels and 1 company owned and operated hotel. RLH Corporation is wholly owned by Sonesta International Hotels Corporation ("Sonesta").

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 84)

Question 5

What is the general subject matter of the concluded litigation described in this section of the FDD for Sonesta Select Sonesta Essential?

Accepted Answer

nticipated to be scheduled in April 2025. ## **Concluded Litigation Relating to the Merger:** Eight lawsuits were filed by purported RLHC stockholders in United States District Courts in connection with the merger (the "Merger") of RLHC with and into a wholly owned subsidiary of Sonesta: Van Cleave v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-00177, Filed February 9, 2021 (U.S. District Court for the District of Delaware) Raul v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-01208, Filed February 10, 2021 (U.S. District Court for the Southern District of New York) Romero v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-01307, Filed February 12, 2021 (U.S. District Court for the Southern District of New York) Babiker v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-00440, Filed February 15, 2021 (U.S. District Court for the District of Colorado) Finger v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-00513, Filed February 22, 2021 (U.S. District Court for the District of Colorado) Franchi v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-00558, Filed February 24, 2021 (U.S. District Court for the District of Colorado) Waterman v. Red Lion Hotels Corporation, et al., Case No. 21-cv-00916, Filed February 26, 2021 (U.S. District Court for the Eastern District of Pennsylvania) Anderson v. Red Lion Hotels Corporation, et al., Case No. 21-cv-00617, Filed March 2, 2021 (U.S. District Court for the District of Colorado) In each of these eight lawsuits, the purported RLHC stockholder filed a complaint against RLHC and the members of the RLHC board of directors alleging that the preliminary proxy statement filed by RLHC on January 26, 2021, or the definitive proxy statement filed by RLHC on February 9, 2021, in connection with the Merger failed to provide certain information allegedly material to RLHC stockholders in violation of Sections 14(a) and 20(a) of the Securities and Exchange Act of 1934 (as amended, the "Exchange Act") and Rule 14a-9 promulgated thereunder. The requests for relief under each of the complaints were generally the same, and included a request: for an injunction enjoining the proposed Merger and any vote on the proposed Merger until defendants disclosed and disseminated the allegedly omitted material information; for rescission of the Merger in the event the defendants consummated the Merger (or an award of rescissory damages); for dissemination of a proxy statement that did not contain allegedly untrue statements of material fact and that did not omit allegedly material information; a declaratory judgment that the defendants violated Sections 14(a) and/or 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder; and an award of plaintiff's attorneys' and experts' fees; and other relief. In response to those lawsuits, RLHC filed a Form 8-K (Current Report) on March 9, 2021, which included certain supplemental disclosures in order to moot plaintiffs' disclosure claims and avoid further nuisance and business delays. As of March 31, 2021, the plaintiffs in each of these eight lawsuits voluntarily dismissed their respective claims, and on September 8, 2021, the parties entered into an agreement that provided for a mutual release of claims and for RLHC to pay the plaintiffs' attorneys an aggregate amount of \$240,000 in fees. ## **Concluded Litigation Unrelating to the Merger:** Radisson Hotels International, Inc. v. Red Lion Hotels Corporation d/b/a RLH Corporation, and Red Lion Hotels Franchising, Inc., Case No. 2:18-cv-00303 (U.S. District Court for the Eastern District of Washington). On September 26, 2018, plaintiff, which is a competitor of RLHC and SRLHF, filed a lawsuit against RLHC and SRLHF for tortious interference with franchise license agreements and a global settlement agreement as a result of SRLHF entering into franchise agreements with nine properties that were previously licensees of plaintiff, which properties allegedly exited plaintiff's franchise system prior to the expiration of their franchise license agreements. On August 25, 2021, plaintiff, RLHC and SRLHF entered into a Settlement Agreement and Release in which plaintiff, on the one hand, and RLHC and SRLHF, on the other hand, agreed to mutually release one another from all claims, and, without admitting any liability, RLHC and SRLHF agreed to pay plaintiff \$500,000. On September 2, 2021, the court granted the parties' Stipulated Motion for Dismissal, dismissing all of the parties' claims with prejudice. Red Lion Hotels Franchising, Inc. v. Remo Polselli, Case No. 2:19-cv-00082 (U.S. District Court for the Eastern District of Washington). On March 14, 2019, SRLHF filed a lawsuit against defendant, the guarantor of a former franchisee, for breach of its guarantee as a result of defendant's failure to ensure the former franchisee's performance under the franchise license agreement, including payment of amounts due. SRLHF requested monetary damages. On August 9, 2019, defendant filed a motion to quash personal service and dismiss the lawsuit for lack of personal jurisdiction; defendant filed an amended motion on August 16, 2019. On October 24, 2019, the court denied defendant's motion. On November 18, 2019, defendant filed an answer and an affirmative defense of lack of authorization or forgery, claiming the guarantee was signed by an unauthorized party and is therefore voidable at the option of defendant, or was forged and is void *ab initio*. On February 24, 2020, defendant filed an amended answer, additional affirmative defenses and a counterclaim for attorneys' fees and costs incurred in defending against the lawsuit. Source: Item 3 — **LITIGATION (FDD pages 18–22)

Question 6

What was the net change in the number of Sonesta Select Sonesta Essential outlets in Florida between the start of 2022 and the end of 2024?

Accepted Answer

franchised Brand Hotels were terminated or otherwise ceased operations. ## TABLE NO. 4 STATUS OF COMPANY-OWNED OUTLETS FOR YEARS 2022 to 2024 | State | Year | Outlets at Start of Year | Outlets Opened | Outlets Reacquired From Franchisee | Outlets Closed | Outlets Sold to Franchisee | Outlets at End of the Year | |------------|------|--------------------------------|-------------------|---------------------------------------------|-------------------|----------------------------------|-------------------------------------| | | 2022 | 1 | 0 | 0 | 0 | 1 | 0 | | Alabama | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | | | 2024 | 0 | 0 | 0 | 0 | 0 Source: Item 20 — **OUTLETS AND FRANCHISEE INFORMATION (FDD pages 75–84)

Question 7

In which states did Sonesta Select Sonesta Essential have zero outlets at the end of 2024?

Accepted Answer

franchised Brand Hotels were terminated or otherwise ceased operations. ## TABLE NO. 4 STATUS OF COMPANY-OWNED OUTLETS FOR YEARS 2022 to 2024 | State | Year | Outlets at Start of Year | Outlets Opened | Outlets Reacquired From Franchisee | Outlets Closed | Outlets Sold to Franchisee | Outlets at End of the Year | |------------|------|--------------------------------|-------------------|---------------------------------------------|-------------------|----------------------------------|-------------------------------------| | | 2022 | 1 | 0 | 0 | 0 | 1 | 0 | | Alabama | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | | | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | | | 2022 | 5 | 1 | 0 | 1 | 1 | 4 | | Arizona | 2023 | 4 | 0 | 0 | 0 | 0 | 4 | | | 2024 | 4 | 0 | 0 | 0 | 0 | 4 | | | 2022 | 9 | 0 | 0 | 0 | 0 | 9 | | California | 2023 | 9 | 0 | 0 | 0 | 0 | 9 | | | 2024 | 9 | 0 | 0 | 0 | 0 | 9 | | | 2022 | 1 | 0 | 0 Source: Item 20 — **OUTLETS AND FRANCHISEE INFORMATION (FDD pages 75–84)

Question 8

What was the total number of Sonesta Select Sonesta Essential outlets at the end of 2024 across all listed states?

Accepted Answer

| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | |---|---|---|---| | Franchised | 2022 2023 2024 | 0 0 5 | 0 5 24 | Source: Item 20 — **OUTLETS AND FRANCHISEE INFORMATION (FDD pages 75–84)

Question 9

What is the total projected dollar amount associated with agreements with franchisees for Sonesta Select Sonesta Essential, as indicated in the financial statement?

Accepted Answer

tion impact of sold assets was \$0.4 million.

#### 5. Intangible Assets, net

At December 31, 2024 and 2023, our intangible assets were as follows (in thousands):

| Asset Description | Cost |  | umulated | Net |
|--------------------------------------------------|-----------|-------|------------------------|--------------|
|  |  |  | ortization |  |
| Amortizable intangible assets: |  |  |  |  |
| Agreements with franchisees | \$ 5,184 | \$ | (902) | \$ 4,282 |
| Carrying value of brand names (finite lives) | 200 |  | (128) | 72 |
| Total amortizable intangible assets | 5,384 |  | (1,030) | 4,354 |
| Carrying value of brand names (indefinite lives) | 16,530 |  |  | 16,530 |
| Intangible assets, net | \$ 21,914 | \$ | (1,030) | \$ 20,884 |
| Asset Description | Cost |  | ımulated | Net |
|--------------------------------------------------|-----------|-------|-----------------------|--------------|
|  |  |  | rtization |  |
| Amortizable intangible assets: |  |  |  |   |
| Agreements with franchisees | \$ 5,184 | \$ | (666) | \$ 4,518 |
| Carrying value of brand names (finite lives) | 200 |  | (94) | 106 |
| Total amortizable intangible assets | 5,384 |  | (760) | 4,624 |
| Carryin

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 84)

Question 10

What is the total projected number of new franchisee-owned Sonesta Select Sonesta Essential outlets expected to open in the next fiscal year?

Accepted Answer

| State | Franchise Agreements Signed But Outlets Not Opened | Projected New Franchisee Outlets In The Next Fiscal Year | Projected New Company Owned Outlets In The Next Fiscal Year | |----------------|-------------------------------------------------------------|----------------------------------------------------------------|-------------------------------------------------------------------| | California | 0 | 1 | 0 | | Florida | 0 | 1 | 0 | | Missouri | 1 | 1 | 0 | | North Carolina | 1 | 2 | 0 | | Texas | 0 | 1 | 0 | | Total | 2 | 6 | 0 | Source: Item 20 — **OUTLETS AND FRANCHISEE INFORMATION (FDD pages 75–84)

Question 11

Are Sonesta Select Sonesta Essential Brand Hotels owned or managed by the franchisor or its affiliates required to pay the Brand Promotion Fee on the same percentage basis as franchisees?

Accepted Answer

We and our affiliates have established a brand promotion program for all Network Hotels. We and our affiliates reserve the right to separate the brand promotion program into separate brand promotion programs for each brand or any combination of brands we and they determine, or to consolidate the brand promotion program with the brand promotion program of other brands we or our affiliates maintain so that we maintain and administer one brand promotion program for all brands or any combination of brands as we determine. Currently we require franchisees to pay a Brand Promotion Fee equal to 3.5% of Gross Rooms Revenue. However, we may increase the Brand Promotion Fee, but the Brand Promotion Fee will not exceed 4.5% of Gross Rooms Revenue. Brand Hotels that we or our affiliates own or manage may not pay us the Brand Promotion Fee on the same percentage basis as franchisees. Source: Item 11 — **FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 52–64)

Question 12

What other companies besides Sonesta Select Sonesta Essential is Jennifer B. Clark the Secretary of as of the date of this FDD?

Accepted Answer

Ms. Clark has served as our, SRLHCF's and RLHC's Director and Secretary since March 2021. Ms. Clark also holds or has held the following positions, each located in Newton, Massachusetts: Director and Secretary of Sonesta and its subsidiaries since January 2012; Executive Vice President, General Counsel and Secretary of The RMR Group Inc. and The RMR Group LLC and its subsidiaries, and director of the subsidiaries, since July 1999; Managing Director of The RMR Group Inc. since March 2018; Secretary of Diversified Healthcare Trust and its subsidiaries since 2008, and Managing Trustee and director of the subsidiaries from March 2018 to June 2021; Secretary of Industrial Logistics Properties Trust and its subsidiaries since January 2018; Secretary of Service Properties Trust and its subsidiaries since 2008; Secretary of AlerisLife Inc. and its subsidiaries since September 2001; Managing Trustee of Office Properties Income Trust and director of its subsidiaries since June 2021, and Secretary since February 2009; Secretary of Seven Hills Realty Trust since 2006; and Secretary of ABP Trust and its subsidiaries since 2016; and Secretary of MPC Partnership Holdings LLC (now doing business as RMR Residential) since December 2023, and of its direct wholly owned subsidiaries. Ms. Clark is based in Newton, Massachusetts. Ms. Clark intends to retire in December 2025.

Source: Item 2 — BUSINESS EXPERIENCE (FDD pages 16–18)

Question 13

How does the franchisor's discretion in offering incentives (Item 10) affect the overall attractiveness of a Sonesta Select Sonesta Essential franchise compared to other hotel franchises?

Accepted Answer

solution | Section 17.F | Item 17 | #### **FINANCING** We may, in our sole discretion, offer incentives for hotels that are new to the Sonesta brand. An "Incentive" is a financial contribution that we make to assist with the development or conversion of your Hotel and will be in an amount that we determine. If an Incentive is granted to you, the amount of the Incentive typically shall comprise, at our discretion, between \$4,000 and \$7,000 per Guest Room of your Hotel if you operate a Sonesta Select-branded hotel, or between \$3,000 and \$8,000 per Guest Room of your Hotel if you operate a Sonesta Essential-branded hotel. To receive an Incentive, you and your principals must sign a development incentive promissory note in the form attached as Exhibit F (the "Incentive Note"), when you sign the Franchise Agreement. An Incentive does not have to be repaid unless the Franchise Agreement is terminated before its expiration date or a transfer occurs as described below. The Incentive will be disbursed to you, unless otherwise agreed to by you and us, within 45 days after your Hotel opens as a Brand Hotel with our approval, as long as you have completed any PIP, there have been no material adverse changes to your Hotel since approval (for example, a decrease in the number of Guest Rooms or a significant delay in opening as a Brand Hotel), and subject to your and any guarantor's financial condition being satisfactory to us. For each year that your Hotel is open, the repayable amount is reduced by an equal annual percentage based on the term of the Franchise Agreement. For example, if the Franchise Agreement has a twenty-year term, the repayable amount is reduced by 1/20th of the original amount annually. If your franchise terminates before the expiration of the Franchise Agreement, you must pay us the then-current repayable amount of the Incentive. If you transfer your Hotel you also must pay us the then-current repayable amount o

Question 14

How does the initial fee for a Sonesta Select Sonesta Essential franchise (Item 5) compare to the ongoing royalty fees (Item 6)?

Accepted Answer

EES** #### **Initial Fee** You must pay us an initial fee equal to: the greater of \$65,000 or \$500 per Guest Room (as defined below) for a Sonesta Select-branded hotel, or equal to the greater of \$45,000 or \$500 per Guest Room for a Sonesta Essential-branded hotel (the "Initial Fee"), when you sign the Franchise Agreement. The Initial Fee is fully earned and non-refundable and must be paid before we will countersign the Franchise Agreement. "Guest Room" means each rentable unit in your Hotel generally used for overnight guest accommodations, the entrance to which is controlled by the same key. Adjacent Guest Rooms with connecting doors that can be rented as separate units are considered separate Guest Rooms. The initial number of approved Guest Rooms will be identified on Exhibit A to the Franchise Agreement. During the 2024 fiscal year, we charged discounted Initial Fees for Sonesta Select-branded hotels ranging from \$40,000 (with 148 Guest Rooms) to \$65,000 (with 134 Guest Rooms), and for Sonesta Essential-branded hotels ranging from \$5,000 (wit

Question 15

How does the initial fee for Sonesta Select Sonesta Essential in Item 5 differ based on whether it's a Sonesta Select or Sonesta Essential-branded hotel?

Accepted Answer

EES** #### **Initial Fee** You must pay us an initial fee equal to: the greater of \$65,000 or \$500 per Guest Room (as defined below) for a Sonesta Select-branded hotel, or equal to the greater of \$45,000 or \$500 per Guest Room for a Sonesta Essential-branded hotel (the "Initial Fee"), when you sign the Franchise Agreement. The Initial Fee is fully earned and non-refundable and must be paid before we will countersign the Franchise Agreement. "Guest Room" means each rentable unit in your Hotel generally used for overnight guest accommodations, the entrance to which is controlled by the same key. Adjacent Guest Rooms with connecting doors that can be rented as separate units are considered separate Guest Rooms. The initial number of approved Guest Rooms will be identified on Exhibit A to the Franchise Agreement. During the 2024 fiscal year, we charged discounted Initial Fees for Sonesta Select-branded hotels ranging from \$40,000 (with 148 Guest Rooms) to \$65,000 (with 134 Guest Rooms), and for Sonesta Essential-branded hotels ranging from \$5,000 (with 172 Guest Rooms) to \$45,000 (with 131 Guest Rooms). #### **Other Initial Fees** If you are entering into the Franchise Agreement for a newly constructed Brand Hotel, or if you are converting an existing hotel into a Brand Hotel, you will pay us an onboarding administration fee of \$5,000 for Sonesta Select-branded hotels and \$2,500 for Sonesta Essentialbranded hotels for the onboarding services we provide to you in connection with the opening of your Hotel. If you are acquiring an existing Brand Hotel, you will pay us a reduced onboarding administration fee of \$2,500 for a Sonesta Select-branded hotel and \$2,000 for a Sonesta Essential-branded hotel This fee is non-refundable and is due during or immediately after the onboarding process. During the 2024 fiscal year, we waived the onboarding administration fee for certain Sonesta Essential-branded hotels.

Question 16

What pre-opening assistance does Sonesta Select Sonesta Essential provide (Item 11) and how does this assistance differ for franchisees converting an existing hotel versus building a new one?

Accepted Answer

we are not required to provide you with any assistance.**

## **Pre-Opening Assistance**

Before you open your Hotel, we will provide you the following assistance:

- If you are converting an existing hotel into a Brand Hotel, conduct an initial inspection of your Hotel and develop a PIP of improvements required for your Hotel to meet Brand Standards. You must complete renovation work on your Hotel in accordance with the PIP. (Franchise Agreement, Section 2.B; and Conversion Rider, attached as Exhibit D-1 to the Franchise Agreement)
- Review and approve your plans, layouts, specifications, and drawings for your Hotel (the "Plans") and your plans, layouts, specifications and drawings for the proposed furnishings, fixtures, equipment, and décor of your Hotel (the "Designs"), at our election. You are responsible for ensuring your Plans and Designs comply with all applicable laws, rules, permits, licenses, and other governmental requirements. (Franchise Agreement, Sections 2.B and Section 2.C; Conversion Rider and New Construction Rider, attached as Exhibit D-1 and Exhibit D-2 to the Franchise Agreement, respectively)
- Inspect your Hotel, at our election, during or following renovation or construction, as applicable, to determine compliance with the Brand Standards. (Conversion Rider and New Construction Rider, attached as Exhibit D-1 and Exhibit D-2 to the Franchise Agreement, respectively)
- Provide you with onboarding services. (Franchise Agreement, Section 3.B)

- Provide your Hotel Representative with initial brand training in areas such as brand programs, marketing, sales, loyalty, and brand culture. You will then be responsible for training your own employees. (Franchise Agreement, Section 4.A)
- Provide you with a copy of the Brand Manuals (currently, 190 pages for Sonesta Select and 182 pages for Sonesta Essential), which includes standards for the equipment, supplies, advertising materials and other products and services used to furnish and to provide services at your Hotel. If we make the Brand Manuals available electronically, you must monitor the intranet portal for updates. (Franchise Agreement, Section 4.H) The table of contents for each Brand Manual is attached as Exhibit I.
- If you elect to obtain a Management Company (defined in Item 15), or at any time during the term of the Franchise Agreement change the Management Company, provide our consent to the Management Company and your agreement with the Management Company, which consent we may withhold for any reason. (Franchise Agreement, Section 8.D)
- Provide you with a list of and specifications for equipment, supplies, advertising materials, inventory and other products and services we require you to use to operate your Hotel and a list of approved or recommended suppliers of these items. We do not deliver or install these items, except as provided below under the heading Computer Systems. (Franchise Agreement, Section 8.E)
- Assign a project manager or onboarding specialist to you.

Question 17

What is the relationship between the initial fee for a Sonesta Select Sonesta Essential hotel described in Item 5 and the estimated initial investment for a 125-room Sonesta Select hotel in Item 7?

Accepted Answer

| Type Of Expenditure | Amount Conversion | New Construction | Method of Payment | When Due | To Whom Payment Is To Be Made |
|---|---|---|---|---|---|
| Initial Fee (Note 2) | $65,000 | $65,000 | Lump sum | Upon your signing of the Franchise Agreement | Us |

Note 2 – The Initial Fee of $65,000 for a Sonesta Select-branded hotel is based on the assumption that your Hotel has 125 Guest Rooms and therefore must pay the minimum Initial Fee. The Initial Fee of $45,000 for a Sonesta Essential-branded hotel is based on the assumption that your Hotel has 80 Guest Rooms and therefore must pay the minimum Initial Fee.

TOTAL | $1,883,363 to $5,845,134 | $13,021,957 to $19,652,424 |  |  |  |

Note 1 – We have estimated costs based on a 125-room Sonesta Select-branded hotel. None of the fees payable to us are refundable. Amounts payable to third parties are nonrefundable unless the supplier agrees otherwise.

Question 18

What is the relationship between the initial fee for Sonesta Select Sonesta Essential in Item 5 and the Onboarding fee in Item 7?

Accepted Answer

[Item 5: INITIAL FEES] ## **INITIAL FEES** #### **Initial Fee** You must pay us an initial fee equal to: the greater of $65,000 or $500 per Guest Room (as defined below) for a Sonesta Select-branded hotel, or equal to the greater of $45,000 or $500 per Guest Room for a Sonesta Essential-branded hotel (the "Initial Fee"), when you sign the Franchise Agreement. The Initial Fee is fully earned and non-refundable and must be paid before we will countersign the Franchise Agreement. "Guest Room" means each rentable unit in your Hotel generally used for overnight guest accommodations, the entrance to which is controlled by the same key. Adjacent Guest Rooms with connecting doors that can be rented as separate units are considered separate Guest Rooms. The initial number of approved Guest Rooms will be identified on Exhibit A to the Franchise Agreement. During the 2024 fiscal year, we charged discounted Initial Fees for Sonesta Select-branded hotels ranging from $40,000 (with 148 Guest Rooms) to $65,000 (with 134 Guest Rooms), and for Sonesta Essential-branded hotels ranging from $5,000 (with 172 Guest Rooms) to $45,000 (with 131 Guest Rooms). #### **Other Initial Fees** If you are entering into the Franchise Agreement for a newly constructed Brand Hotel, or if you are converting an existing hotel into a Brand Hotel, you will pay us an onboarding administration fee of $5,000 for Sonesta Select-branded hotels and $2,500 for Sonesta Essentialbranded hotels for the onboarding services we provide to you in connection with the opening of your Hotel. If you are acquiring an existing Brand Hotel, you will pay us a reduced onboarding administration fee of $2,500 for a Sonesta Select-branded hotel and $2,000 for a Sonesta Essential-branded hotel This fee is non-refundable and is due during or immediately after the onboarding process. During the 2024 fiscal year, we waived the onboarding administration fee for certain Sonesta Essential-branded hotels. --- [Item 7: ESTIMATED INITIAL INVESTMENT SONESTA SELECT (Note 1) – 125 ROOMS] | Type Of Expenditure | Amount Conversion | New Construction | Method of Payment | When Due | To Whom Payment Is To Be Made | |---|---|---|---|---|---| | Initial Fee (Note 2) | $65,000 | $65,000 | Lump sum | Upon your signing of the Franchise Agreement | Us | | Onboarding | $5,000 | $5,000 | Lump sum | As arranged | Us | | Administration Fee | | | | | | | (Note 3) | | | | | |

Question 19

According to the Sonesta Select Sonesta Essential agreement, what happens if a franchisee fails to provide training programs for Food and Beverage Operations?

Accepted Answer

uire that your Hotel Representative, complete our required training within a designated time period, prior to or after your Opening Date. All training must be completed to our satisfaction and verification of successful completion must be presented upon our request. Additionally, you must ensure at all times that your personnel is adequately trained, and you agree to provide such evidence and verification of your personnels' training as we may request from time to time.

Source: Item 22 — CONTRACTS (FDD page 84)

Question 20

According to the Sonesta Select Sonesta Essential Franchise Agreement, to what extent will Section 14.G regarding damages be enforced in North Dakota, considering the North Dakota Franchise Investment Law?

Accepted Answer

*Unauthorized Opening Damages** will not be enforced to the extent prohibited by applicable law.
- 2. The following is added to the "Remarks" section of the Item 6 line item entitled **Default Remedies**:

Sections of the Franchise Disclosure Document requiring you to pay all costs and expenses incurred by us in enforcing the Franchise Agreement may not be enforceable

under Section 51-19-09 of the North Dakota Franchise Investment Law, and are amended accordingly to the extent required by law.

3.

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 21

According to Michigan law, how many business days before the execution of any binding franchise agreement or payment of consideration, whichever occurs first, must Sonesta RL Hotels Franchising Inc. provide the disclosure document for a Sonesta Select Sonesta Essential franchise?

Accepted Answer

If Sonesta RL Hotels Franchising Inc. offers you a franchise, it must provide this disclosure document to you 14 calendar days before you sign a binding agreement with, or make a payment to, Sonesta RL Hotels Franchising Inc. or an affiliate in connection with the proposed franchise sale, or sooner if required by applicable state law. Under Iowa law, we must give you this disclosure document at the earlier of our first personal meeting or 14 calendar days before you sign an agreement with, or make a payment to, us or an affiliate in connection with the proposed franchise sale. Under Michigan law, we must give you this disclosure document at least 10 business days before the execution of any binding franchise or other agreement or the payment of any consideration, whichever occurs first.

Source: Item 22 — CONTRACTS (FDD page 84)

Question 22

According to the New Construction Rider, what action does Sonesta RL Hotels Franchising Inc. have the right to take if a Sonesta Select Sonesta Essential franchisee fails to provide the Deed or Lease on time?

Accepted Answer

- 2. **Interest in Premises**. You must deliver to us, before you commence construction, and in any event no later than thirty (30) days after the Effective Date, either a deed reflecting your ownership of the Premises (the "**Deed**") or a copy of your lease for the Premises that allows you the right to enter into the Franchise Agreement (the "**Lease**"). If you fail to timely provide us the Deed or Lease, we may immediately terminate the Franchise Agreement. You represent and warrant that, throughout the Term of the Franchise Agreement, you will be entitled to possession of the Premises and your Hotel without restrictions that would interfere with your performance under the Franchise Agreement, subject to the reasonable requirements of any financing secured by your Hotel. You will provide us copies of all documentation reflecting your right to possession of the Premises at any time upon our request. Further, if you do not own the Premises, you must provide us with copies of any amendment, addendum, extension, or other modification to the Lease within five days following execution.

Source: Item 22 — CONTRACTS (FDD page 84)

Question 23

According to the Rider, what legal restriction does the Virginia Retail Franchising Act place on Sonesta Select Sonesta Essential regarding franchise termination?

Accepted Answer

| 2.
| TERMINATION BY EITHER PARTY. The following language is added to Section 14.A of
| the Franchise Agreement:
| Under Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor |
| to cancel a franchise without reasonable cause. If any grounds for default or termination |
| stated in the Franchise Agreement does not constitute "reasonable cause," as that term |
| may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision |
| may not be enforceable. |

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 24

According to the Rider, under what circumstances is it being signed in relation to a Sonesta Select Sonesta Essential franchise?

Accepted Answer

anchise agreement or related agreements that prohibits the franchisee from communicating with or complaining to regulators is inconsistent with the express instructions in the Franchise Disclosure Document and is unlawful under RCW 19.100.180(2)(h).

Under the Washington Franchise Investment Protection Act, a "franchise broker" is defined as a person that engages in the business of the offer or sale of franchises. A franchise broker represents the franchisor and is paid a fee for referring prospects to the franchisor and/or selling the franchise. If a franchisee is working with a franchise broker, franchisees are advised to carefully evaluate any information provided by the franchise broker about a franchise.

**THE FOLLOWING PAGES IN THIS EXHIBIT ARE STATE-SPECIFIC RIDERS TO THE FRANCHISE AGREEMENT**

### **RIDER TO THE SONESTA RL HOTELS FRANCHISING INC. FRANCHISE AGREEMENT FOR USE IN ILLINOIS**

| THIS RIDER is by and between SONESTA RL HOTELS FRANCHISING INC. a Washington corporation with its principal business address at 400 Centre Street, Newton, Massachusetts 02458 ("we," |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| "us," or "our"), and                                                                                                                                                                     |
| , whose principal business address is                                                                                                                                                    |
| ("you" or "your").                                                                                                                                                                       |
| 1. |
| BACKGROUND. We and you are parties to that certain Franchise Agreement dated |
| (the "Franchise Agreement") that has been signed concurrently with the |
| signing of this Rider. This Rider is annexed to and forms part of the Franchise Agreement. This Rider is                                                                                 |
| being signed because (a) any of the offering or sales activity relating to the Franchise Agreement occurred                                                                              |
| in Illinois and the Hotel that you will operate under the Franchise Agreement will be located in Illinois, and/or                                                                        |

- 2. **GOVERNING LAW**. The first sentence of Section 17.G of the Franchise Agreement is deleted and replaced with the following:
  - G. **Governing Law.** Except to the extent governed by the Federal Arbitration Act, the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sections 1051 et seq.), or other United States federal law, this Agreement or any related agreements, the Franchise, and all claims arising from the relationship between us (or any of our affiliates, and our and their respective owners, officers, directors, agents, representatives, and employees) and you (and your owners, guarantors, affiliates, and employees), whether couched in tort or contract, will be governed by the laws of the State of Illinois.
- 3. **CONSENT TO JURISDICTION**. Section 17.H of the Franchise Agreement is deleted in its entirety.
- 4. **WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL, AND CLASS ACTION**. The following language is added to the end of Section 17.I of the Franchise Agreement:

**HOWEVER, THIS SECTION SHALL NOT ACT AS A CONDITION, STIPULATION OR PROVISION PURPORTING TO BIND ANY PERSON ACQUIRING ANY FRANCHISE TO WAIVE COMPLIANCE WITH ANY PROVISION OF THE ILLINOIS FRANCHISE DISCLOSURE ACT AT SECTION 705/41 OR ILLINOIS REGULATIONS AT SECTION 200.609, OR ANY OTHER LAW OF THE STATE OF ILLINOIS, TO THE EXTENT APPLICABLE.**

5. **LIMITATIONS OF CLAIMS**. The following language is added to the end of Section 17.L of the Franchise Agreement:

However, this Section shall not act as a condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of the Illinois Franchise Disclosure Act or any other law of the State of Illinois, to the extent applicable.

- 6. **ILLINOIS FRANCHISE DISCLOSURE ACT**. The following language is added as Section 17.P of the Franchise Agreement:
  - P. **Illinois Franchise Disclosure Act**. Section 41 of the Illinois Franchise Disclosure Act provides that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.

Your rights upon termination and non-renewal of a franchise agreement are subject to sections 19 and 20 of the Illinois Franchise Disclosure Act.

(*Remainder of page intentionally blank*)

(b) you are domiciled in Illinois.

**IN WITNESS WHEREOF**, the parties have executed and delivered this Rider to be effective as of the effective date of the Franchise Agreement.

SONESTA RL HOTELS FRANCHISING INC. [Franchisee Name]
#### **RIDER TO THE SONESTA RL HOTELS FRANCHISING INC. FRANCHISE AGREEMENT FOR USE IN MARYLAND**

**THIS RIDER** is by and between **SONESTA RL HOTELS FRANCHISING INC.** a Washington

| corporation with its principal business address at 400 Centre Street, Newton, Massachusetts 02458 ("we,"                                                     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| "us," or "our"), and                                                                                                                                         |
| , whose principal business address is                                                                                                                        |
| ("you" or "your").                                                                                                                                           |
| 1. |
| BACKGROUND. We and you are parties to that certain Franchise Agreement dated |
| (the "Franchise Agreement") that has been signed concurrently with the |
| signing of this Rider. This Rider is annexed to and forms part of the Franchise Agreement. This Rider is                                                     |
| being signed because (a) you are domiciled in Maryland, and/or (b) the Hotel that you will operate under                                                     |
| the Franchise Agreement will be located in Maryland.                                                                                                         |

2. **REPRESENTATIONS AND WARRANTIES: FURTHER ASSURANCES**. The following is added to the end of Section 1.D of the Franchise Agreement:

The acknowledgements or representations of the franchisee made in this Agreement which disclaim the occurrence and/or acknowledge the non-occurrence of acts that could constitute a violation of the Franchise Law are not intended to nor shall they act as a release, estoppel or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law.

3. **RELEASES.** The following is added to the end of Sections 12.C(11) and 13.C of the Franchise Agreement:

Pursuant to COMAR 02.02.08.16L, any release required as a condition of renewal and/or assignment/transfer will not apply to claims arising under the Maryland Franchise Registration and Disclosure Law.

- 4. **INSOLVENCY**. The following is added to the end of Sections 14.B.(2).c and 14.B.(2).e of the Franchise Agreement:
  - ;

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 25

What acknowledgement is made regarding the enforceability of the damages provision in the Sonesta Select Sonesta Essential Franchise Agreement under Minnesota law?

Accepted Answer

5. **DAMAGES**. The following language is added to the end of Section 14.G of the Franchise Agreement:

We and you acknowledge that certain parts of this provision might not be enforceable under Minn. Rule Part 2860.4400J. However, we and you agree to enforce the provision to the extent the law allows.

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 26

What additional costs are associated with the re-inspection fee for a Sonesta Select Sonesta Essential franchise?

Accepted Answer

Quality Assurance Annual Inspection | Up to $2,500 once per year, plus appropriate and customary travel, lodging, and meals. If your Hotel fails the quality inspection, a re-inspection will be required at an additional fee of up to $4,000 plus appropriate and customary travel, lodging, and meals. | As incurred | Inspection and travel fees shall be paid to SRLHF, its affiliate or a third party, as applicable, for the inspection process. See Notes 8 and 9.

If we require additional inspections of your Hotel, we may charge up to $4,000 for the first re-inspection, and up to $5,000 for any subsequent re-inspection. You must pay the costs of all inspections, including the reimbursement of our personnel's travel and meal expenses.

Note 9 – These fees are subject to, no more than once per year, the Fee Adjustment. "Fee Adjustment" means an increase at our discretion by up to the greater of (i) 5% annually (or 10% for TMC and Consortia Fees and Operations Insight Fees) on a compounding basis regardless of whether we exercise such adjustment in any calendar year, or (ii) the difference, expressed as a percentage, in CPI as determined by comparing the CPI in effect as of the Effective Date to the CPI in effect as of the date of the Fee Adjustment, without reference to any prior Fee Adjustment, if any. "CPI" means the National Consumer Price Index-All Urban Consumers-All Items (1982- 1984 = 100) published by the U.S. Department of Labor (or if the CPI is no longer published, another substitute reference reasonably designated by us).

Source: Item 6 — OTHER FEES (FDD pages 24–36)

Question 27

What is the Assignee required to do regarding the New Franchise Agreement if the transfer of a Sonesta Select Sonesta Essential franchise is not completed?

Accepted Answer

If the Transfer is not consummated on or prior to the Outside Date, and we terminate this Agreement and withdraw our consent to the Transfer, then Assignee acknowledges and agrees that the New Franchise Agreement becomes null and void.

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 28

Is Sonesta Select Sonesta Essential authorized to supplement the information provided in Item 19 with information about possible performance at a particular location?

Accepted Answer

The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.

We do not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor's management by contacting Bradford Maxwell, 400 Centre Street, Newton, Massachusetts 02458, (617) 421-5400, franchiselegal@sonesta.com, the Federal Trade Commission, and the appropriate state regulatory agencies.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD page 75)

Question 29

What is the base monthly fee for the Local Sales Solution program for a Sonesta Select Sonesta Essential franchise, and is it mandatory?

Accepted Answer

hout proration for partial calendar years | | ¹ If you fail to report the number of room nights actually consumed by a group within 15 days of the group's departure, this fee will be charged based on the contracted for room nights. ² These booking fees are subject to change as third-party fees change, and such reservation and booking fees will be charged for cancelled reservations unless they are cancelled through the same channel in which they were made. | Local Sales Solution 3 | Base fee starts at \$1,900 per month (applies only if you opt into this program). Additional features are available for additional fees. | |------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Sales Technology Platform (Annual Fee) 4 | \$5,000 per year, payable on a quarterly installment basis without proration for partial calendar quarters | | Sales Technology Platform (Monthly Fee) 4 | \$150 per month | | Guest Relations Fee 4 | \$25 to \$125 per issue | | Operations Insights 4 | Up to \$150 per month | | Online Review Response Fee 4 | \$39 to \$150 per response (if not responded to within 72 hours) | | Quality Assurance Inspections 4 | Up to \$2,500 for the first inspection each year; up to \$4,000 for the first re-inspection upon your failed inspection; up to \$5,000 for any additional re inspections due to your persistent failed inspections, or for inspections resulting from guest satisfaction deficiencies. | | Revenue Management for Hire 4 | \$995 to \$2,500 per month, depending on number of Guest Rooms and market (required for the first year following the Opening Date, and thereafter if you do not have a dedicated revenue manager). | | Revenue Management System 4 | \$6.44 per Guest Room pe Source: Item 22 — CONTRACTS (FDD page 84)

Question 30

What is the base monthly fee for the Local Sales Solution 3 program for a Sonesta Select Sonesta Essential franchise, and under what condition does it apply?

Accepted Answer

| Brand Programs | Current Applicable Fees (Subject to Change) | | |----------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--| | Technology Fee 4 | \$9 per Guest Room per month | | | Market Intelligence 4 | \$275 per month | | | Custom Architecture & Design Review | Up to \$15,000 (for conversions) and \$25,000 (for new construction) in connection with any Guest Room design review, public area review, or exterior review requiring custom architecture and design review by us | | | Corporate Transient and Consortia Account Support Subscription and Services 4 | \$1,355 to \$2,200 per year, payable on a calendar year basis in equal monthly installments without proration for partial calendar years | | ¹ If you fail to report the number of room nights actually consumed by a group within 15 days of the group's departure, this fee will be charged based on the contracted for room nights. ² These booking fees are subject to change as third-party fees change, and such reservation and booking fees will be charged for cancelled reservations unless they are cancelled through the same channel in which they were made. | Local Sales Solution 3 | Base fee starts at Source: Item 22 — CONTRACTS (FDD page 84)

Question 31

Besides virtual or on-site, can Sonesta Select Sonesta Essential conduct training at another location?

Accepted Answer

ty vendors are subject to change as third-party fees change. ### **Training** ## **Initial Training** We do not assist in the hiring of your employees, but we will provide initial brand training to one of your Hotel Representative(s) virtually, at your Hotel, or at another location we designate, at our election. The initial brand training program covers the areas of brand programs, marketing, sales, loyalty, and brand culture. We offer the training program on an as-needed basis throughout the year depending on our trainers' and attendees' availability. Prior to opening your Hotel, or within 90 days of activating your Hotel in our system, one of your Hotel Representative(s) must complete the initial brand training program to our satisfaction. If at any time during the term of your Franchise Agreement your trained Hotel Representative is no longer employed by you, a new Hotel Representative will be required to attend and complete our training program to our satisfaction. If we determine that your Hotel Representative cannot complete initial training to our satisfaction, we may terminate the Franchise Agreement. If space permits, we may allow you to send additional attendee(s) to the initial brand training. Any individual attending our training program who has not signed the Franchise Agreement or Guaranty may be required to sign a confidentiality agreement. You will pay us a fee in the amount of \$1,500 for the initial brand training. In the event the initial brand training is conducted in-person rather than virtually, you must also reimburse us for our personnel's travel, meals, and lodging expenses, which we estimate to be up to \$2,500. You (or your Principal) may request additional training at the end of the initial training program, to be provided at our then current fees as outlined, if your Hotel Representative does not feel sufficiently trained in the operation of a Brand Hotel. We and you will jointly determine the duration of this additional training. Source: Item 11 — **FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 52–64)

Question 32

Is boiler & machinery insurance required for a Sonesta Select Sonesta Essential hotel?

Accepted Answer

nual, which we may revise from time to time, or otherwise in writing.

You must procure and maintain, at your expense, insurance coverage in the types and amounts we periodically require, in addition to any other insurance that may be required by applicable law, your landlord, your mortgagee, or otherwise. At a minimum, such policies include the following (primary and excess/umbrella policies may be used in any combination as long as the total minimum limit requirements are met):

• commercial general liability (CGL) insurance for any claims or losses arising or resulting from the operations/premises of the hotel with limits of not less than \$1,000,000 per occurrence and a general aggregate limit not less than \$3,000,000; limits shall apply on a per location aggregate basis if the hotel is insured under a blanket policy;

- liquor liability (applicable only when or if you distribute, sell, serve, or furnish alcoholic beverages) with limits of not less than \$1,000,000 per occurrence; limits shall apply on a per location aggregate basis if the hotel is insured under a blanket policy;
- automobile liability insurance including owned, non-owned, and hired vehicles for combined single limits of bodily injury and property damage of not less than \$1,000,000 per occurrence and a general aggregate limit not less than \$3,000,000;
- garage-keeper's liability to the extent that hotel operations include parking operations, with a limit adequate to cover the full actual value of all automobiles that are in your care, custody, and control at any one time;
- umbrella or excess liability insurance policies as follows: (i) if your Hotel is three stories or less, then you must carry coverage of at least \$14,000,000, or (ii) if your Hotel is more than three stories, then you must acquire a policy with coverage of at least \$24,000,000. All policies providing excess/umbrella coverage shall follow the form of the primary CGL, worker's compensation, automobile liability, and liquor liability policies;
- property/all risk and contents insurance (or builder's risk insurance during any period of construction) on all building(s) and contents against loss or damage by fire, lightning and all other risks associated and covered by the "all risks" policy form all in an amount not less than 90% of the replacement cost. Terrorism risk insurance (TRIA) coverage is required;
- boiler & machinery insurance against loss or damage from explosion of boilers or pressure vessels to the extent applicable;
- business interruption insurance covering at least 12 months loss of profits and necessary continuing expenses for interruptions caused by a covered occurrence;
- workers' compensation insurance in statutory amounts for all your employees and employers' liability insurance in amounts not less than \$1,000,000 per accident or disease;
- crime insurance covering employee dishonesty, such as theft of money, securities, or property, with a limit of not less than \$1,000,000 per occurrence;
- employment practices liability insurance covering wrongful acts arising from the employment process; and
- cyber liabili

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 46–50)

Question 33

For Sonesta Select Sonesta Essential, are booking fees charged for cancelled reservations, and if so, under what conditions are they waived?

Accepted Answer

ntribution up to 4.5% of your Hotel's Qualified Revenue.

Note 4 – You must participate in reservation systems that we make available. Each reservation is subject to the following fees, as applicable: \$1.75 per transaction through Direct Connect interfaces to associated onward distribution channels; \$1.75 per transaction through the Brand-dedicated website; \$4.00 per transaction through the Internet Distribution System to onward distribution switch or channel manager providers; \$4.00 per call for Voice Reservation Service with Auto Attendant Fee; and \$10.50 per transaction sourced from the Global Distribution Systems. Separately, you must pay all other costs, including third party costs and fees incurred through the Central Reservation System. Fees are subject to change. Booking fees will be charged for cancelled reservations unless they are ca

Source: Item 6 — OTHER FEES (FDD pages 24–36)

Question 34

In California, what happens if a provision in the Sonesta Select Sonesta Essential Franchise Agreement is inconsistent with the California Business and Professions Code Sections 20000 through 20043?

Accepted Answer

The California Business and Professions Code Sections 20000 through 20043 provide rights to the franchisee concerning termination, transfer or nonrenewal of a franchise. If the Franchise Agreement contains a provision that is inconsistent with the law, and the law applies, the law will control.

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 35

How do the concluded litigation cases described potentially impact the ongoing operations or reputation of Sonesta Select Sonesta Essential?

Accepted Answer

Red Lion Hotels Franchising, Inc. v. JS Three Star Investment Inc., Case No. 96777-422 (District Court of the 422nd Judicial District, Kaufman County, Texas). In December 2016, SRLHF filed a lawsuit against a former franchisee for failure to pay its account, unjust enrichment and breach of contract as a result of its failure to pay amounts due under the membership agreement. On March 8, 2017, defendant filed an answer and counterclaim alleging that SRLHF failed to provide services under the membership agreement, which defendant alleges was a violation of the Texas Deceptive Trade Practices Act, requesting damages in the amount of $81,000. On December 11, 2017, the parties entered into a confidential settlement agreement in which the parties agreed to mutually release each other from all claims. On January 18, 2018, the court dismissed the case with prejudice. ## **Suits Against Former Franchisees/Guarantors to Collect Unpaid Amounts and Liquidated Damages**: Sonesta RL Hotels Franchising Inc. v. Ganapati LLC and Mayuri Patel, Civil Action No. 1:24-cv-11518-DJC, Filed June 10, 2024 (United States District Court for the District of Massachusetts) Sonesta RL Hotels Franchising Inc. v. Sai Genesh LLC, Kunal Patel, and Parth Patel, Civil Action No. 1:24-cv-11534-RGS, Filed June 11, 2024 (United States District Court for the District of Massachusetts) Sonesta RL Hotels Franchising Inc. v. TGP ACO II TIC, LLC and Ternion Growth Partners, LLC, Civil Action No. 1:24-cv-11539-MJJ, Filed June 12, 2024 (United States District Court for the District of Massachusetts) Other than the above, no litigation is required to be disclosed in this Item. ## **Concluded Litigation Unrelating to the Merger:** Radisson Hotels International, Inc. v. Red Lion Hotels Corporation d/b/a RLH Corporation, and Red Lion Hotels Franchising, Inc., Case No. 2:18-cv-00303 (U.S. District Court for the Eastern District of Washington). On September 26, 2018, plaintiff, which is a competitor of RLHC and SRLHF, filed a lawsuit against RLHC and SRLHF for tortious interference with franchise license agreements and a global settlement agreement as a result of SRLHF entering into franchise agreements with nine properties that were previously licensees of plaintiff, which properties allegedly exited plaintiff's franchise system prior to the expiration of their franchise license agreements. On August 25, 2021, plaintiff, RLHC and SRLHF entered into a Settlement Agreement and Release in which plaintiff, on the one hand, and RLHC and SRLHF, on the other hand, agreed to mutually release one another from all claims, and, without admitting any liability, RLHC and SRLHF agreed to pay plaintiff $500,000. On September 2, 2021, the court granted the parties' Stipulated Motion for Dismissal, dismissing all of the parties' claims with prejudice. Red Lion Hotels Franchising, Inc. v. Kumar and Sadikila Vemulapalli, Case No. 16-2- 01814-3 (Superior Court of Washington, County of Spokane). On May 12, 2016, SRLHF filed a complaint against guarantors of a former franchisee seeking to enforce their personal guaranty of a franchise agreement. On December 15, 2017, defendants filed an answer, affirmative defenses and counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel/reliance damages, and fraud in the inducement/fraud alleging that SRLHF: (1) failed to provide services and support under the franchise agreement, (2) demanded payment of fees other than what defendants allege was agreed upon, (3) countersigned a copy of the franchise agreement that did not contain defendants handwritten changes and therefore was not what defendants believed to be the contract, and (4) interfered with hotel operations following termination. On December 18, 2018, the parties entered into a Settlement and Release Agreement in which the parties agreed to mutually release each other from all claims and defendants agreed to pay SRLHF $80,000. On June 13, 2019, the court dismissed all claims with prejudice. Van Cleave v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-00177, Filed February 9, 2021 (U.S. District Court for the District of Delaware) Raul v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-01208, Filed February 10, 2021 (U.S. District Court for the Southern District of New York) Romero v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-01307, Filed February 12, 2021 (U.S. District Court for the Southern District of New York) Babiker v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-00440, Filed February 15, 2021 (U.S. District Court for the District of Colorado) Finger v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-00513, Filed February 22, 2021 (U.S. District Court for the District of Colorado) Franchi v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-00558, Filed February 24, 2021 (U.S. District Court for the District of Colorado) Waterman v. Red Lion Hotels Corporation, et al., Case No. 21-cv-00916, Filed February 26, 2021 (U.S. District Court for the Eastern District of Pennsylvania) Anderson v. Red Lion Hotels Corporation, et al., Case No. 21-cv-00617, Filed March 2, 2021 (U.S. District Court for the District of Colorado) In each of these eight lawsuits, the purported RLHC stockholder filed a complaint against RLHC and the members of the RLHC board of directors alleging that the preliminary proxy statement filed by RLHC on January 26, 2021, or the definitive proxy statement filed by RLHC on February 9, 2021, in connection with the Merger failed to provide certain information allegedly material to RLHC stockholders in violation of Sections 14(a) and 20(a) of the Securities and Source: Item 3 — **LITIGATION (FDD pages 18–22)

Question 36

What is the condition regarding the execution of the New Franchise Agreement for Assignee of Sonesta Select Sonesta Essential?

Accepted Answer

- 4. **New Franchise Agreement**.

Assignee shall, concurrently with the execution of this Agreement, execute our current form of franchise agreement and related agreements (to reflect that the agreement is executed in connection with a transfer of the rights under the Existing Franchise Agreement) (the "**New Franchise Agreement**"), and Assignee Owner[s] shall execute the Guaranty and Assumption of Obligations attached thereto.

The New Franchise Agreement will govern Assignee's ownership and operation of the Hotel from and after the Closing Date.

If the Transfer is not consummated on or prior to the Outside Date, and we terminate this Agreement and withdraw our consent to the Transfer, then Assignee acknowledges and agrees that the New Franchise Agreement becomes null and void.

- 5. **Conditions to Consent**.

Our consent to the Transfer is conditioned on all of the following terms and conditions being met on or prior to the Closing Date:

- (a) All of the representations and warranties made in this Agreement by the Franchisee Parties must be true and correct as of the Closing Date, and the Franchisee Parties further represent and warrant that, upon the consummation of the Transfer: (i) the Hotel's assets and the [Real Estate / Lease] will be held solely in the name of the Assignee, [and] (ii) neither Assignor nor Assignor Owner[s] provides Assignee or Assignee Owner[s] with any financing in connection with the Transfer[, and (iii) under the Lease, Assignee will have the right to occupy the Hotel's premises during the entire term of the New Franchise Agreement];

- (b) Assignee Parties deliver to us a fully executed New Franchise Agreement and Guaranty and Assumption of Obligations;

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 37

What is the condition regarding meeting all terms and conditions on or prior to the Closing Date for Sonesta Select Sonesta Essential?

Accepted Answer

Our consent to the Transfer is conditioned on all of the following terms and conditions being met on or prior to the Closing Date:

- (a) All of the representations and warranties made in this Agreement by the Franchisee Parties must be true and correct as of the Closing Date, and the Franchisee Parties further represent and warrant that, upon the consummation of the Transfer: (i) the Hotel's assets and the [Real Estate / Lease] will be held solely in the name of the Assignee, [and] (ii) neither Assignor nor Assignor Owner[s] provides Assignee or Assignee Owner[s] with any financing in connection with the Transfer[, and (iii) under the Lease, Assignee will have the right to occupy the Hotel's premises during the entire term of the New Franchise Agreement];

- (b) Assignee Parties deliver to us a fully executed New Franchise Agreement and Guaranty and Assumption of Obligations;

- (c) Franchisee Parties must provide us with executed versions of any other documents executed by Franchisee Parties to effect the Transfer, and all other information we request about the proposed Transfer, and such Transfer meets all of our requirements and will not adversely affect Assignee's operation of the Hotel;

- (d) If the proposed Transfer requires notice to or approval from any landlord, vendor, lender or governmental authority, the Franchisee Parties have taken such appropriate action and provided us with evidence of the same;

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 38

What conditions must be met for Sonesta Select Sonesta Essential to disburse the Incentive?

Accepted Answer

solution | Section 17.F | Item 17 | #### **FINANCING** We may, in our sole discretion, offer incentives for hotels that are new to the Sonesta brand. An "Incentive" is a financial contribution that we make to assist with the development or conversion of your Hotel and will be in an amount that we determine. If an Incentive is granted to you, the amount of the Incentive typically shall comprise, at our discretion, between \$4,000 and \$7,000 per Guest Room of your Hotel if you operate a Sonesta Select-branded hotel, or between \$3,000 and \$8,000 per Guest Room of your Hotel if you operate a Sonesta Essential-branded hotel. To receive an Incentive, you and your principals must sign a development incentive promissory note in the form attached as Exhibit F (the "Incentive Note"), when you sign the Franchise Agreement. An Incentive does not have to be repaid unless the Franchise Agreement is terminated before its expiration date or a transfer occurs as described below. The Incentive will be disbursed to you, unless otherwise agreed to by you and us, within 45 days after your Hotel opens as a Brand Hotel with our approval, as long as you have completed any PIP, there have been no material adverse changes to your Hotel since approval (for example, a decrease in the number of Guest Rooms or a significant delay in opening as a Brand Hotel), and subject to your and any guarantor's financial condition being satisfactory to us. For each year that your Hotel is open, the repayable amount is reduced by an equal annual percentage based on the term of the Franchise Agreement. For example, if the Franchise Agreement has a twenty-year term, the repayable amount is reduced by 1/20th of the original amount annually. If your franchise terminates before the expiration of the Franchise Agreement, you must pay us the then-current repayable amount of the Incentive. If you transfer your Hotel you also must pay us the then-current repayable amount o Source: Item 10 — FINANCING (FDD pages 51–52)

Question 39

What conditions must be met for a release or waiver of rights to be valid for a Sonesta Select Sonesta Essential franchise in Washington?

Accepted Answer

A release or waiver of rights in the franchise agreement or related agreements purporting to bind the franchisee to waive compliance with any provision under the Washington Franchise Investment Protection Act or any rules or orders thereunder is void except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel, in accordance with RCW 19.100.220(2). In addition, any such release or waiver executed in connection with a renewal or transfer of a franchise is likewise void except as provided for in RCW 19.100.220(2).

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 40

What are the conditions under which a Sonesta Select Sonesta Essential franchisee must comply with Section 12.C after transferring their hotel?

Accepted Answer

You may sell, lease, or transfer your Hotel, your Hotel site, or any portion thereof if, in our reasonable judgment, after the sale, you retain possession and control of your Hotel site and the management control of your Hotel operations and continue to comply with the requirements of Section 7.A, provided you give us at least 60 days' prior notice of the proposed transfer, and any information related to the Transfer that we may reasonably require.

If, in our reasonable judgment, the Transfer will result either in (a) your loss of possession or control of your Hotel or Hotel site or management of your Hotel, or (b) a material change in your financial condition, the sale will then be considered a change of ownership and you must comply with the provisions of Section 12.C.

Source: Item 22 — CONTRACTS (FDD page 84)

Question 41

What are the consequences if a Sonesta Select Sonesta Essential franchisee fails to comply with the online presence guidelines?

Accepted Answer

Your use of all Online Presence shall be subject to the Brand Standards as we may implement during the term of your Franchise Agreement. You must adhere to our Online Presence guidelines and procedures, which include but are not limited to: appropriate content, relevance, behavior related to communications, frequency and responsiveness to communications, etiquette, naming conventions and use of the Network Marks and posting messages or commentary on third party websites. We must approve your social media pages and they shall be linked to any Network Brand social media pages we designate. We have the right to require you to remove your social media page(s) if you fail to comply with our guidelines and procedures. Source: Item 11 — **FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 52–64)

Question 42

What are the consequences of paying a deficiency late for a Sonesta Select Sonesta Essential franchise?

Accepted Answer

| TYPE OF FEE              | AMOUNT                                                                                      | DUE DATE                          | REMARKS (Note 1)                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------------------------|---------------------------------------------------------------------------------------------|-----------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Late Payment Charge | Lesser of 1.5% per month or the maximum rate permitted by applicable law | Upon demand | You may be assessed a late payment charge if you do not make any payment when due. Our acceptance of your payment of any deficiency will not waive our right to terminate the Franchise Agreement under its terms. |

Source: Item 6 — OTHER FEES (FDD pages 24–36)

Question 43

What constitutes 'reasonable cause' for termination of a Sonesta Select Sonesta Essential franchise agreement in Virginia, according to the Virginia Retail Franchising Act?

Accepted Answer

The following language is added to the end of the "Summary" section of Item 17(e), entitled **Termination by franchisor without cause**:

Under Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the Franchise Agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 44

What is the dependency between curing a default and paying the Reactivation Fee for Sonesta Select Sonesta Essential?

Accepted Answer

| TYPE OF FEE              | AMOUNT                                                                                      | DUE DATE                          | REMARKS (Note 1)                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------------------------|---------------------------------------------------------------------------------------------|-----------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Reactivation Fee | The lesser of 25% of past due balances or $2,000 | Prior to reactivation | If we have suspended your Hotel from the Reservation System because of a default under your Franchise Agreement, and you have cured the default, we may require you to pay this fee as a condition of reactivation. |

Source: Item 6 — OTHER FEES (FDD pages 24–36)

Question 45

What is the dependency between curing an Event of Default and being added to all advertising subsequently disseminated by Sonesta Select Sonesta Essential?

Accepted Answer

If you fully cure the Event of Default within the time provided in our notice, including payment of any amounts accruing to us under this Agreement after the date of our notice, and further including payment of our then applicable administrative fee for resumption of services, we will restore you to the Central Reservation System, and add you to all future directories we publish and to all advertising we subsequently disseminate (except advertising that was ordered before your reinstatement), but we will not be required to redirect to you any reservations previously made for your Hotel and diverted to other Network Hotels during the period of suspension or removal, and you will be entitled to no compensation in connection with our election to suspend or remove your Hotel from our directories, advertising or the Central Reservation System.

Source: Item 22 — CONTRACTS (FDD page 84)

Question 46

What is the dependency between curing an Event of Default and being added to future directories published by Sonesta Select Sonesta Essential?

Accepted Answer

If you fully cure the Event of Default within the time provided in our notice, including payment of any amounts accruing to us under this Agreement after the date of our notice, and further including payment of our then applicable administrative fee for resumption of services, we will restore you to the Central Reservation System, and add you to all future directories we publish and to all advertising we subsequently disseminate (except advertising that was ordered before your reinstatement), but we will not be required to redirect to you any reservations previously made for your Hotel and diverted to other Network Hotels during the period of suspension or removal, and you will be entitled to no compensation in connection with our election to suspend or remove your Hotel from our directories, advertising or the Central Reservation System.

Source: Item 22 — CONTRACTS (FDD page 84)

Question 47

What is the dependency between curing an Event of Default and the resumption of Central Reservation Services for a Sonesta Select Sonesta Essential franchise?

Accepted Answer

If you fully cure the Event of Default within the time provided in our notice, including payment of any amounts accruing to us under this Agreement after the date of our notice, and further including payment of our then applicable administrative fee for resumption of services, we will restore you to the Central Reservation System, and add you to all future directories we publish and to all advertising we subsequently disseminate (except advertising that was ordered before your reinstatement), but we will not be required to redirect to you any reservations previously made for your Hotel and diverted to other Network Hotels during the period of suspension or removal, and you will be entitled to no compensation in connection with our election to suspend or remove your Hotel from our directories, advertising or the Central Reservation System.

Source: Item 22 — CONTRACTS (FDD page 84)

Question 48

What is the dependency between a lender comfort letter and operating a Sonesta Select Sonesta Essential hotel after foreclosure?

Accepted Answer

As a condition to our giving our consent to a pledge or mortgage of this Agreement or any Equity Interest we may require the lender to sign a lender comfort letter that describes our requirements on foreclosure.

If the lender desires to continue to operate a Brand Hotel, the lender will be required to conform to the lender comfort letter approved by us at our reasonable discretion or, if no lender comfort letter was signed, then it must meet the terms and conditions of Section 12.C.

Source: Item 22 — CONTRACTS (FDD page 84)

Question 49

What is the dependency between 'Our Notice' and the franchisee's right to acquire a Sonesta Select Sonesta Essential successor franchise?

Accepted Answer

tween you and the transferee, a guarantee of your Hotel or transferee's prospects of success, or a waiver of any claims we have against you (or your owners) or of our right to demand full compliance by you and the transferee with this Agreement. #### 13. **EXPIRATION OF THIS AGREEMENT.** #### A. **Your Right to Acquire a Successor Franchise.** When this Agreement expires: - (1) if you (and each of your owners) have substantially complied with this Agreement during its term; and - (2) if you (and each of your owners) are, both on the date you give us written notice of your election to acquire a successor franchise (as provided in Section 13.B. below) and on the date on which the term of the successor franchise would commence, in full compliance with this Agreement and all Brand Standards; and - (3) provided that, and in conjunction with Section 13.A(4) below, (a) you maintain possession of and agree (regardless of cost) to remodel or expand your Hotel, add, or replace improvements and FF&E, and otherwise modify your Hotel as we require to comply with Brand Standards then applicable for new Brand Hotels, or (b) at your option, you secure a substitute premises that we approve, and you develop those premises according to Brand Standards then applicable for Brand Hotels; and (4) provided that if we so require, you transition your Hotel into a different brand concept that we (or an affiliate) offer, including remodeling your Hotel as necessary, adding or replacing improvements and FF&E, replacing the Marks wherever they appear (including without limitation signage, advertising materials and stationery), and complying with all the then-current brand standards applicable to the new brand concept, then you may acquire a successor franchise to operate your Hotel as a Brand Hotel for one additional 20 year term, subject to the terms and conditions in Sections 13.B and 13.C, below. - B. **Grant of a Successor Franchise.** You agree to give us written notice of your election to acquire a successor franchise no more than one year and no less than nine months before this Agreement expires. We agree to give you written notice ("**Our Notice**"), not more than 90 days after we receive your notice, of our decision: - (1) to grant you a successor franchise; - (2) to grant you a successor franchise on the condition that you correct existing deficiencies of your Hotel or in your operation of your Hotel; - (3) to grant you a successor franchise on the condition that you transition your Hotel into a different brand concept, in accordance with Section 13.A(4) of this Agreement; - (4) not to grant you a successor franchise based on our determination that you and your owners have not substantially complied with this Agreement during its term, were not in full compliance with this Agreement and all Brand Standards on the date you gave us written notice of your election to acquire a successor franchise, or you have received four or more default notices during the Term; or - (5) not to grant you a successor franchise because we no longer grant franchises for Brand Hotels. If applicable, Our Notice will: - (a) describe the remodeling, expansion, improvements, or modifications required to bring your Hotel into compliance with then applicable Brand Standards for Brand Hotels (or the different brand concept, if applicable); and - (b) state the actions you must take to correct operating deficiencies and the time period in which you must correct these deficiencies. If we elect not to grant you a successor franchise, Our Notice will describe the reasons for our decision. Source: Item 22 — CONTRACTS (FDD page 84)

Question 50

What is the dependency between retaining possession/control and transferring a Sonesta Select Sonesta Essential hotel?

Accepted Answer

You may sell, lease, or transfer your Hotel, your Hotel site, or any portion thereof if, in our reasonable judgment, after the sale, you retain possession and control of your Hotel site and the management control of your Hotel operations and continue to comply with the requirements of Section 7.A, provided you give us at least 60 days' prior notice of the proposed transfer, and any information related to the Transfer that we may reasonably require.

If, in our reasonable judgment, the Transfer will result either in (a) your loss of possession or control of your Hotel or Hotel site or management of your Hotel, or (b) a material change in your financial condition, the sale will then be considered a change of ownership and you must comply with the provisions of Section 12.C.

Source: Item 22 — CONTRACTS (FDD page 84)

Question 51

What is the effect of the Rider on Section 14.A of the Sonesta Select Sonesta Essential Franchise Agreement?

Accepted Answer

| THIS RIDER is by and between SONESTA RL HOTELS FRANCHISING INC. a Washington corporation with its principal business address at 400 Centre Street, Newton, Massachusetts 02458 ("we," "us," or "our"), and , whose                                                                                                                                                                                       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| principal business address is                                                                                                                                                                                                                                                                                                                                                                                     |
| ("you" or "your").                                                                                                                                                                                                                                                                                                                                                                                                |
| 1. |
| BACKGROUND. We and you are parties to that certain Franchise Agreement dated |
| (the "Franchise Agreement") that has been signed concurrently |
| with the signing of this Rider. This Rider is annexed to and forms part of the Franchise Agreement. This |
| Rider is being signed because the Hotel that you will operate under the Franchise Agreement will be |
| established or maintained in Virginia. |
| 2. |
| TERMINATION BY EITHER PARTY. The following language is added to Section 14.A of |
| the Franchise Agreement:                                                                                                                                                                                                                                                                                                                                                                                          |
| Under Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor |
| to cancel a franchise without reasonable cause. If any grounds for default or termination |
| stated in the Franchise Agreement does not constitute "reasonable cause," as that term |
| may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision |
| may not be enforceable. |

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 52

For Sonesta Select Sonesta Essential, can email be used for providing official notices under Section 18 of the agreement?

Accepted Answer

This consent given in this Section 19 shall not apply to the provision of notice by either party under this Agreement pursuant to Section 18 unless we and you otherwise agree in a written document manually signed by both parties. 20. **COUNTERPARTS.** This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Scanned or electronic signatures shall have the same effect and validity, and may be relied upon in the same manner, as original signatures. Source: Item 22 — CONTRACTS (FDD page 84)

Question 53

In the event of termination by Sonesta Select Sonesta Essential, does the franchisee have to pay liquidated damages?

Accepted Answer

m that your lodging facility is no longer part of the Franchise System. We further have the right to inform those guests of other facilities within the Franchise System that are near your Hotel if the guests prefer to change their reservations. You agree that the exercise of our rights under this Section will not constitute interference with your contractual or business relationship. #### G. **Damages.** (1) Lost Revenue Damages. To preserve the Franchise System in the interest of all franchisees, it is necessary to protect the relevant trade secrets and know-how and prevent its disclosure to Competitive Businesses. If we terminate this Agreement because of your breach or if you terminate this Agreement without cause, you and we agree that it would be difficult, if not impossible, to determine the amount of damages that we would suffer due to the loss or interruption of the revenue stream we otherwise would have derived from your continued payment of Royalties and Brand Promotion Fees through the remainder of the Term. Therefore, you and we agree that a reasonable estimate of such damages, which are damages for the future profits lost to us due to the premature termination of this Agreement, and not as a penalty or as damages for breaching this Agreement, or in lieu of any other payment, less any cost savings we might have experienced (the "**Lost Revenue Damages**"), is an amount equal to the net present value of the Royalties and Brand Promotion Fees that would have become due had this Agreement not been terminated, from the date of termination to the scheduled expiration of the Term. For the purposes of this Section, Lost Revenue Damages shall be calculated as follows: (1) the lesser of 36 or the number of full and partial calendar months remaining in the Term, multiplied by (2) the aggregate of the Royalty fee and Brand Promotion Fee percentages, multiplied by (3) the average monthly Gross Rooms Revenue of your Hotel during the 36 full calendar months immediately preceding the last date of regular operations of your Hotel; provided, that if, as of such date, your Hotel has not been operating for at least 36 months, the average monthly Gross Rooms Revenue shall be based on the average Gross Rooms Revenue of your Hotel for all full calendar months during the period commencing on the Opening Date and ending as of the last full calendar month immediately preceding the last date of regular operations of your Hotel. Source: Item 22 — CONTRACTS (FDD page 84)

Question 54

To what extent does the Rider to the Sonesta Select Sonesta Essential Franchise Agreement for use in North Dakota modify the original Franchise Agreement?

Accepted Answer

AAA**"). The arbitration proceedings will be conducted by one arbitrator and, except as this Section otherwise provides, according to the AAA's thencurrent Commercial Arbitration Rules. All proceedings will be conducted at a suitable location chosen by the arbitrator that is within 50 miles of our or, as applicable, our

successor's or assign's then-current principal place of business (currently, Newton, Massachusetts); provided, however, that to the extent otherwise required by the North Dakota Franchise Investment Law (unless such a requirement is preempted by the Federal Arbitration Act), arbitration shall be held at a site to which we and you mutually agree. All matters relating to arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.). The interim and final awards of the arbitrator shall be final and binding upon each party, and judgment upon the arbitrator's awards may be entered in any court of competent jurisdiction.

5. **GOVERNING LAW**. Section 17.G of the Franchise Agreement is deleted and replaced with the following:

Except to the extent governed by the Federal Arbitration Act, the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sections 1051 et seq.), or other United States federal law, or as otherwise required by North Dakota law, this or any related agreements, the Franchise, and all claims arising from the relationship between us (or any of our affiliates, and our and their respective owners, officers, directors, agents, representatives, and employees) and you (and your owners, guarantors, affiliates, and employees), whether couched in tort or contract, will be governed by the laws of the Commonwealth of Massachusetts, without regard to its conflict of laws rules, except that any state law regulating the offer or sale of franchises or governing the relationship of a franchisor and its franchisee will not apply unless its jurisdictional requirements are met independently without reference to this Section. If any of the provisions of this Agreement which relate to restrictions on you and your owners' competitive activities are found unenforceable under Massachusetts law, the enforceability of those provisions will be governed by the laws of the state in which your Hotel is located.

6. **CONSENT TO JURISDICTION**. The following language is added to the end of Section 17.H of the Franchise Agreement:

Notwithstanding the foregoing, to the extent required by the North Dakota Franchise Investment Law, you may bring an action in North Dakota for claims arising under the North Dakota Franchise Investment Law.

- 7. **WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL, AND CLASS ACTION**. To the extent required by the North Dakota Franchise Investment Law, Section 17.I of the Franchise Agreement is deleted.
- 8. **LIMITATIONS OF CLAIMS**. The following is added to the end of Section 17.L of the Franchise Agreement:

The statutes of limitations under North Dakota law applies with respect to claims arising under the North Dakota Franchise Investment Law.

(*Remainder of page intentionally blank*)

**IN WITNESS WHEREOF**, the parties have executed and delivered this Rider to be effective as of the effective date of the Franchise Agreement.

SONESTA RL HOTELS FRANCHISING INC. [Franchisee Name]
#### **RIDER TO THE SONESTA RL HOTELS FRANCHISING INC. FRANCHISE AGREEMENT FOR USE IN RHODE ISLAND**

| THIS RIDER is by and between SONESTA RL HOTELS FRANCHISING INC. a Washington corporation with its principal business address at 400 Centre Street, Newton, Massachusetts 02458 ("we," "us," or "our"), and , whose                                                                                                                                                                             |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| principal business address is                                                                                                                                                                                                                                                                                                                                                                           |
| ("you" or "your").

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 55

What factors might cause the hours devoted to each subject in the Sonesta Select Sonesta Essential training program to vary?

Accepted Answer

Note 1: The hours devoted to each subject are estimates and may vary based on class size, participation, the attendee's experience with the subjects taught, and schedule. Source: Item 11 — **FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 52–64)

Question 56

Does the Sonesta Select Sonesta Essential franchise agreement specify any exceptions to the brand's right to take or withhold an action?

Accepted Answer

span>C. **The Exercise of Our Judgment.** We have the right to further develop and change the Brand Standards in any manner at any time either on a temporary or a permanent basis, in our sole discretion. Whenever we have reserved in this Agreement a right to take or to withhold an action, to grant or decline to grant you a right to take or withhold an action, or to provide or withhold approval or consent, we may, except as otherwise specifically provided in this Agreement, make our decision or exercise our rights based on information readily available to us and on our judgment of what is in our or the Brand Hotels' best interests at the time our decision is made. #### D. Source: Item 22 — CONTRACTS (FDD page 84)

Question 57

Does the Sonesta Select Sonesta Essential Franchise Agreement's integration clause supersede state law?

Accepted Answer

| PROVISION | SECTION IN | SUMMARY | |---|---|---| | t. Integration / merger clause | Section 17.N | Only the terms of Franchise Agreement, including its attachments and the Brand Standards, are binding (subject to state law). Any representations or promises outside of this Disclosure Document and the Franchise Agreement may not be enforceable. | Source: Item 17 — **RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 70–75)

Question 58

For a Sonesta Select Sonesta Essential franchise in Maryland, what condition triggers the signing of the Rider to the Franchise Agreement?

Accepted Answer

| THIS RIDER is by and between SONESTA RL HOTELS FRANCHISING INC. a Washington
|------------------------------------------------------------------------------------------------------------|
| corporation with its principal business address at 400 Centre Street, Newton, Massachusetts 02458 ("we,"
| "us," or "our"), and |
| , whose |
| principal business address is                                                                              |
| ("you" or "your").                                                                                         |
|                                                                                                            |
| 1.
| BACKGROUND. We and you are parties to that certain Franchise Agreement dated |
| (the "Franchise Agreement") that has been signed concurrently
| with the signing of this Rider. This Rider is annexed to and forms part of the Franchise Agreement. This
| Rider is being signed because (a) Franchisee is domiciled in the State of Washington; and/or (b) the Hotel |
| that Franchisee will operate under the Franchise Agreement will be located in Washington; and/or (c) any   |
| of the offering or sales activity relating to the Franchise Agreement occurred in Washington.

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 59

For a Sonesta Select Sonesta Essential franchise, when are you responsible for booking and transaction fees, regardless of the Opening Date of your Hotel?

Accepted Answer

Note 2 – Your obligation to make monthly payments of Royalty and Brand Promotion Fees will begin on the earlier of (a) the Opening Date, or (b) the date you begin operating your Hotel under the Marks. "Opening Date" means the designated date you are required to open your Hotel, as provided on Exhibit A to the Franchise Agreement, unless we otherwise agree in writing. If you sign a Franchise Agreement in connection with the acquisition of an existing Brand Hotel, your Opening Date will be the day you close on the acquisition of your Hotel. You will be responsible for all booking and transaction fees incurred in connection with reservations made or consumed for your Hotel, and you must make payments for all other fees and commissions from the time those fees are incurred, regardless of the Opening Date of your Hotel.

Source: Item 6 — OTHER FEES (FDD pages 24–36)

Question 60

What must a Sonesta Select Sonesta Essential franchisee do to be eligible for reimbursement in a trademark infringement proceeding?

Accepted Answer

- G. **Indemnification for Use of Marks.** We agree to reimburse you for all damages and reasonable expenses that you incur in any trademark infringement proceeding disputing your authorized use of any Mark under this Agreement if you have timely notified us of, and comply with our directions in responding to, the proceeding. At our option, we and our affiliates may defend and control the defense of any proceeding arising from your use of any Mark under this Agreement. Source: Item 22 — CONTRACTS (FDD page 84)

Question 61

For Sonesta Select Sonesta Essential franchises governed by Minnesota law, what minimum notice period will the franchisor provide for termination of the Franchise Agreement, and how long does the franchisee have to cure the issue?

Accepted Answer

With respect to franchises governed by Minnesota law, we will comply with Minnesota Statutes, Section 80C.14, Subs. 3, 4, and 5, which require, except in certain specified cases, that you be given 90 days' notice of termination (with 60 days to cure) of the Franchise Agreement and 180 days' notice for non-renewal of the Franchise Agreement.

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 62

For Sonesta Select Sonesta Essential franchises governed by Minnesota law, what minimum notice period will the franchisor provide for non-renewal of the Franchise Agreement?

Accepted Answer

With respect to franchises governed by Minnesota law, we will comply with Minnesota Statutes, Section 80C.14, Subs. 3, 4, and 5, which require, except in certain specified cases, that you be given 90 days' notice of termination (with 60 days to cure) of the Franchise Agreement and 180 days' notice for non-renewal of the Franchise Agreement.

Source: Item 23 — RECEIPTS (FDD pages 84–261)

Question 63

What is the Sonesta Select Sonesta Essential franchisor's right regarding the approval of ancillary product and service operations?

Accepted Answer

- B. **Products and Services Your Hotel Offers.** You agree that you (1) will offer and sell from your Hotel all of the products and services that we periodically specify in the Brand Manual, including all products and services ancillary to the operation of your Hotel that we may periodically specify, such as food and beverage operations, restaurants, dining, bar, lounge, retail food and beverage services, banquets, meetings, events and catering services ("**Food and Beverage Operations**"), and such other products or services as we periodically specify; (2) will not offer or sell at your Hotel, the Premises or any other location any products or services we have not authorized; and (3) will discontinue selling and offering for sale any products or services that we at any time disapprove. - C. **Other Operations.** You must ensure that all applicable Food and Beverage Operations, and any other approved ancillary products and services, as provided in the Brand Manual, operate in full compliance with all applicable laws, rules and regulations and all applicable Brand Standards. You or the Management Company, if applicable, must provide training programs to such providers in the manner we may periodically specify. We may revoke our approval of your Food and Beverage Operations, if applicable, and other ancillary product and service operations, in the event you fail to provide such products and services in full compliance with all applicable laws, rules and regulations and all applicable Brand Standards. Source: Item 22 — CONTRACTS (FDD page 84)

Question 64

When is garage-keeper's liability insurance required for a Sonesta Select Sonesta Essential hotel?

Accepted Answer

- garage-keeper's liability to the extent that hotel operations include parking operations, with a limit adequate to cover the full actual value of all automobiles that are in your care, custody, and control at any one time;

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 46–50)

Sonesta_Select_Sonesta_Essential 2025 FDD FAQ