What are the conditions under which Sonesta Select Sonesta Essential may approve a transfer of the franchise agreement?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
C. Conditions for Approval of Transfer. If you (and your owners) are in full compliance with this Agreement, then you may request our consent to a proposed transfer. We will give your request reasonable consideration but may condition our consent on compliance with certain requirements, including the following:
- (1) you have paid all Royalty and Brand Promotion Fee payments, and other amounts owed to us, our affiliates, and third-party vendors and have submitted all required reports and statements;
- (2) you have not violated any provision of this Agreement, the Lease, or any other agreement with us during both the 60-day period before you requested our consent to the transfer
and the period between your request and the effective date of the transfer, nor have you received a notice of termination from us;
(3) neither the transferee nor its owners (if the transferee is an Entity) or affiliates have an ownership interest (direct or indirect) in or perform services for a Competitive Business;
(4) you provide us all information or documents we request about the proposed transfer, the transferee, and its owners;
(5) the transferee completes to our satisfaction any training, brand introduction and/or orientation program that we require at the time of the transfer;
(6) your landlord, if applicable, allows you to transfer the Lease or sublease the Premises to the transferee;
(7) the transferee agrees (if the transfer is of this Agreement) to meet with us at our request, either virtually or in person, to conduct an inspection of the Premises and develop a PIP for necessary upgrades, remodeling, and refurbishment of your Hotel and your Hotel's FF&E in accordance with our then-current requirements and specifications for Brand Hotels, and complete the Renovation Work therein within 120 days after the effective date of the transfer;
(8) the transferee, at our request, signs our then current form of franchise agreement and related documents, any and all of the provisions of which may differ materially from any and all of those contained in this Agreement;
(9) The transferee shall demonstrate to our satisfaction that the transferee meets our then-current standards for a new franchisee, including educational, managerial, and business standards; possesses a good moral character, business reputation, and credit rating; has the aptitude and ability to operate your Hotel; and has sufficient equity capital to operate your Hotel;
(10) you or the transferee pays us a transfer fee equal to the Initial Fee as provided in Section 3.A of this Agreement.
However, no transfer fee is due if, upon a spouse's death, that spouse's interest in this Agreement and your Hotel, or ownership in you, is transferred to the surviving spouse, provided that such transfer is subject to the terms and conditions of this Section 12;
(11) you (and your transferring owners) sign a general release, in a form satisfactory to us, of any and all claims against us and our affiliates and our and their owners, officers, directors, employees, and agents;
(12) you and your owners agree that all the transferee's obligations under promissory notes, agreements, or security interests reserved in your Hotel are subordinate to the transferee's obligation to pay Royalty, Brand Promotion Fees, and other amounts due to us, our affiliates, and third-party vendors and otherwise to comply with this Agreement; and
(13) you and your transferring owners will not directly or indirectly at any time or in any manner (except with respect to other Network Hotels you own and operate) identify yourself or themselves or any business as a current or former Hotel or as one of our franchisees; use any Mark, any colorable imitation of a Mark, or other indicia of a Brand Hotel in any manner or for any purpose; or utilize for any purpose any trade name, trade or service mark, or other commercial symbol that suggests or indicates a connection or association with us.
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, a franchisee who is in full compliance with the franchise agreement may request consent to a proposed transfer. However, Sonesta Select Sonesta Essential may condition its consent on compliance with certain requirements.
These conditions include ensuring all Royalty and Brand Promotion Fee payments, and other amounts owed to Sonesta Select Sonesta Essential, its affiliates, and third-party vendors, have been paid, and all required reports and statements have been submitted. The franchisee must not have violated any provision of the Agreement, the Lease, or any other agreement with Sonesta Select Sonesta Essential during the 60-day period before requesting consent and the period between the request and the transfer's effective date, and must not have received a notice of termination. The transferee and its owners or affiliates must not have an ownership interest in or perform services for a Competitive Business.
Additional conditions include providing all requested information about the proposed transfer and the transferee, ensuring the transferee completes any required training or orientation programs, and securing the landlord's approval for the lease transfer or sublease. The transferee may also be required to meet with Sonesta Select Sonesta Essential to inspect the premises and develop a Property Improvement Plan (PIP) for necessary upgrades, with the renovation work to be completed within 120 days after the transfer. Furthermore, the transferee may need to sign Sonesta Select Sonesta Essential's current form of franchise agreement, which may differ materially from the original agreement, meet the standards for a new franchisee, and pay a transfer fee equal to the Initial Fee as outlined in the agreement.
Finally, the franchisee and transferring owners must sign a general release of claims against Sonesta Select Sonesta Essential and its affiliates, agree that the transferee's obligations are subordinate to those owed to Sonesta Select Sonesta Essential, and agree not to identify themselves with the brand after the transfer, except with respect to other Network Hotels they own and operate.