Who benefits from the Indemnification coverage paid by a Sonesta Select Sonesta Essential franchisee?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
penses if training is conducted virtually. See Note 9. |
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (Note 1) |
|---|---|---|---|
| Non Compliance Fee | 1% of Gross Rooms Revenue per month of non-compliance | Upon demand | If we deliver you notice of your breach under the Franchise Agreement, you may be assessed a non-compliance fee until such default has been remediated or cured. |
| 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. |
| 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. |
| Insurance | $500 per month, plus reimbursement for all premiums, costs, and expenses we incur | As billed | If you do not procure or maintain the required insurance or policy limits described in the Brand Manual, in addition to paying us a monthly fee, we may (but are not obligated to) procure and maintain insurance for you without first giving you notice, and you will be required to reimburse us. The monthly fee is subject to change. See Item 8 and Note 9. |
| Taxes | Varies | Upon demand | If any sales, use, gross receipts, or similar tax is imposed on us for the receipt of any payments you are required to make to us under the Franchise Agreement, then you also must pay this tax to us. |
| Indemnification | Varies | Case by case basis as incurred | You must reimburse us if we are held liable for claims arising from the development or operation of your Hotel, the business you conduct under the Franchise Agreement, any default under your Franchise Agreement, and/or your employment practices or that are instituted by your employees, including attorneys' fees and court costs we reasonably incur to protect us, our parent, subsidiaries, or affiliate |
Source: Item 6 — OTHER FEES (FDD pages 24–36)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, the indemnification coverage primarily benefits Sonesta Select Sonesta Essential, its parent company, subsidiaries, and affiliates. Franchisees are required to reimburse Sonesta Select Sonesta Essential if they are held liable for claims arising from the development or operation of the franchisee's hotel. This includes any business conducted under the Franchise Agreement, any default under the Franchise Agreement, and/or the franchisee's employment practices or those instituted by their employees.
The indemnification extends to covering attorneys' fees and court costs that Sonesta Select Sonesta Essential reasonably incurs to protect itself and its related entities. This means that if a franchisee's actions or inactions lead to legal claims against Sonesta Select Sonesta Essential, the franchisee is responsible for covering the associated legal expenses.
For a prospective Sonesta Select Sonesta Essential franchisee, this highlights the importance of operating the hotel in compliance with all applicable laws and the terms of the Franchise Agreement. It also underscores the need for sound employment practices to minimize the risk of employment-related claims. The costs associated with indemnification can vary significantly depending on the nature and extent of the claim, so franchisees should be aware of this potential financial obligation.