What constitutes a 'Disbursement Condition' for the financial contribution to a Sonesta Select Sonesta Essential hotel?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
The Principal will be distributed to Maker ([each, a] "Disbursement") [within forty-five (45) days after the Opening Date] [in installments as of the dates set forth on Schedule A hereto] subject to the Disbursement Conditions. "Disbursement Conditions" shall mean, with respect to and as of the date of each Disbursement, if applicable, Maker has opened and is operating the Hotel in accordance with the Agreement; Maker and each of its guarantor's creditworthiness and financial condition is satisfactory to Holder in Holder's sole discretion; from the Opening Date through such Disbursement, there has been no material adverse change to the Hotel (including, but not limited to a decrease in Guest Rooms); Maker is in compliance with the terms and conditions of the Agreement, this Note, and any other agreement between Maker and Holder or its affiliates; and all required parties have executed a guaranty in a form acceptable to Holder.
Source: Item 23 — RECEIPTS (FDD pages 84–261)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, a 'Disbursement Condition' refers to the specific requirements that must be met for a franchisee to receive the financial contribution from the Holder (presumably Sonesta) intended to assist with the development or conversion of the hotel to a Sonesta brand.
Specifically, these conditions include the franchisee (Maker) having opened and operating the hotel in accordance with the franchise agreement. Additionally, the creditworthiness and overall financial condition of both the franchisee and any guarantors must be satisfactory to Sonesta Select Sonesta Essential, at their sole discretion. There should be no material adverse change to the hotel from the opening date through the disbursement date, including a decrease in guest rooms.
Furthermore, the franchisee must be in full compliance with all terms and conditions of the franchise agreement, the promissory note related to the financial contribution, and any other agreements between the franchisee and Sonesta Select Sonesta Essential or its affiliates. Finally, all required parties must have executed a guaranty in a form acceptable to Sonesta Select Sonesta Essential. Meeting all these Disbursement Conditions is essential for the franchisee to receive the financial assistance as outlined in the franchise agreement.