Can Sonesta Select Sonesta Essential change or eliminate the non-compliance charge?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
N. Non-Compliance Charge. In addition to our other rights and remedies, we may charge you a non-compliance charge in an amount equal to one percent (1%) of Gross Rooms Revenue per month for each month you are in non-compliance of any term of this Agreement, including failure to pay (or to have adequate amounts available for electronic transfer of) amounts you or your Affiliates owe us or our affiliates or failure to timely provide required reports and financial statements. We may change or eliminate this charge in our sole discretion.
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, Sonesta Select Sonesta Essential has the authority to modify or remove the non-compliance charge at their discretion. The non-compliance charge is applied if a franchisee fails to adhere to any term of the Franchise Agreement. This includes not paying amounts owed to Sonesta Select Sonesta Essential or its affiliates, or failing to provide required reports and financial statements on time.
The non-compliance charge is equal to 1% of Gross Rooms Revenue per month for each month the franchisee is non-compliant. Gross Rooms Revenue is the total amount of revenue generated from renting rooms at the hotel.
This clause in the Franchise Agreement gives Sonesta Select Sonesta Essential flexibility in how they address non-compliance. While the charge can act as a deterrent, Sonesta Select Sonesta Essential can choose to waive or adjust it depending on the circumstances. For a prospective franchisee, this means the non-compliance charge is not necessarily a fixed cost, but it is essential to maintain compliance with the Franchise Agreement to avoid it.