What constitutes a default under the Note for Sonesta Select Sonesta Essential?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
This Note shall be accelerated on the occurrence of any of the following events (each, an "Acceleration Event"): (i) any representation or warranty made in connection with this Note, your application, the Agreement, or in any report or other information later submitted to the Holder that is, in the Holder's opinion, false, misleading or incorrect in any material respect; (ii) termination of the Agreement for any reason; (iii) any breach of the Agreement or this Note, whether Maker is notified of or cures such breach; (iv) transfer of any interest in the Agreement whereby the transferee does not assume Maker's obligation under this Note in a form acceptable to Holder upon transfer; (v) Maker loses ownership or possession of the Premises, or otherwise loses the right to conduct the franchised business at the Hotel; (vi) any ownership interest of the Maker
Source: Item 23 — RECEIPTS (FDD pages 84–261)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, an Acceleration Event, which leads to the acceleration of the Note for Sonesta Select Sonesta Essential, occurs under the following conditions: if any representation or warranty made in connection with the Note, the application, the Agreement, or any report submitted to the Holder is, in the Holder's opinion, false, misleading, or incorrect in any material respect. It also occurs if the Agreement is terminated for any reason, or if there is any breach of the Agreement or the Note, regardless of whether the Maker is notified or cures the breach.
Furthermore, an Acceleration Event happens if any interest in the Agreement is transferred to a transferee who does not assume the Maker's obligations under the Note in a form acceptable to the Holder upon transfer. It also occurs if the Maker loses ownership or possession of the premises or the right to conduct the franchised business at the hotel, or if any ownership interest of the Maker is transferred or conveyed such that the Maker no longer retains control.
In practical terms, these conditions mean that a Sonesta Select Sonesta Essential franchisee must ensure all information provided is accurate and truthful, comply with all terms of the franchise agreement and the Note, and maintain control and ownership of the hotel. Failure to do so could result in the acceleration of the Note, requiring immediate payment of the outstanding principal balance. The Holder also reserves the right to specify additional defaults, so the franchisee should maintain open communication with the Holder to avoid any misunderstandings or unexpected defaults.