Are the brand promotion programs for Sonesta Select Sonesta Essential considered a trust?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
The brand promotion programs are not a trust and the Brand Promotion Fees do not bear interest. We do not owe any fiduciary obligation to you for administering the brand promotion program or any other reason. We or our affiliates will use Brand Promotion Fees for the purposes described in this Section 9.A. Our spending of the Brand Promotion Fees in any fiscal year may be more or less than the total Brand Promotion Fee payments in that year, and the brand promotion programs may borrow from us or others (paying reasonable interest) to cover deficits, or invest any surplus for future use. We may prepare an annual, unaudited statement of Brand Promotion Fee payments and expenses, and give you a copy of the most recently prepared statement upon your written request to us. We may (but are not obligated to) have our accounts related to Brand Promotion Fees audited annually, which audit may be paid for using Brand Promotion Fees collected, by an independent certified public accountant. We may incorporate a brand promotion fund or operate the same through a separate entity whenever we deem appropriate. The successor entity will have all the rights and duties specified in this Section 9.A.
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, the brand promotion programs are not considered a trust. The document explicitly states that the brand promotion programs are not a trust and that the Brand Promotion Fees do not bear interest. This means that Sonesta Select Sonesta Essential does not owe any fiduciary obligation to franchisees for administering the brand promotion program.
Sonesta Select Sonesta Essential and its affiliates will account for Brand Promotion Fees separately from their other funds, although they are not obligated to maintain them in a separate account. These fees may be used to cover various expenses, including salaries and benefits of personnel managing the programs, administrative costs, travel expenses, meeting costs, overhead, market research, public relations, and the creation of advertising and marketing materials.
Sonesta Select Sonesta Essential clarifies that spending on brand promotion in any fiscal year may be more or less than the total Brand Promotion Fee payments received that year. To cover deficits, the brand promotion programs may borrow funds (paying reasonable interest), or any surplus may be invested for future use. While Sonesta Select Sonesta Essential may prepare an annual, unaudited statement of Brand Promotion Fee payments and expenses, they are not obligated to do so unless a franchisee makes a written request. Additionally, Sonesta Select Sonesta Essential may choose to have these accounts audited annually by an independent certified public accountant, with the audit expenses potentially covered by the Brand Promotion Fees collected.
Sonesta Select Sonesta Essential retains the right to incorporate a brand promotion fund or operate it through a separate entity, which would then assume all specified rights and duties. This structure provides Sonesta Select Sonesta Essential with flexibility in managing and utilizing the Brand Promotion Fees for the benefit of the Network Hotels.