What constitutes a non-curable default under the Sonesta Select Sonesta Essential Franchise Agreement?

Question

Accepted Answer

| PROVISION | SECTION IN | SUMMARY | |---|---|---| | | FRANCHISE AGREEMENT | | | s. Modification of | Section 17.K | No modifications of the Franchise Agreement except by written agreement, | | the agreement | | except that we may modify the Brand Manual and Brand Standards. | | t. Integration / merger clause | Section 17.N | Only the terms of Franchise Agreement, including its attachments and the Brand Standards, are binding (subject to state law). Any representations or promises outside of this Disclosure Document and the Franchise Agreement may not be enforceable. | | u. Dispute | Section 17.F | We and you must arbitrate all disputes (except for claims to collect amounts | | resolution by | | owed) at a location within 50 miles of our or, as applicable, our successor’s | | arbitration or | | or assign’s then-current principal place of business (currently, Newton, | | mediation | | Massachusetts) (subject to state law). | | v. Choice of forum | Sections 17.H and 17.J | Subject to the arbitration requirement, litigation must be brought in the court nearest to our or, as applicable, our successor’s or assign’s then current principal place of business (currently, Newton, Massachusetts) (subject to state law). However, we may seek injunctive relief in any court of competent jurisdiction. | | w. Choice of law | Section 17.G | Except for the U.S. Trademark Act, the Federal Arbitration Act and other federal laws, Massachusetts law applies (subject to state law). | | THE FRANCHISE RELATIONSHIP | | | | PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY | | h. "Cause" defined-non curable defaults | Sections 14.B and 16.B; Ex. D 1 and Ex. D-2 | Non-curable defaults under the Franchise Agreement include you or any guarantor: failing to pay us (or our affiliates) any amounts due and failing to correct such failure within ten days after our written notice of the same; failing to pay debts as they become due; filing bankruptcy, becoming insolvent, or being placed in a receivership; allowing an attachment to remain on all or a substantial part of your Hotel or of your or its assets for 30 days; failing within 60 days of the entry of a final judgment of any amount exceeding \$100,000 to discharge, vacate or reverse the judgment, or to stay execution of it, or if appealed, to discharge the judgment within 30 days after a final adverse decision in the appeal; failing to obtain possession (or to timely provide us evidence of such possession), or losing possession or the right to possession of all or a significant part of your Hotel; failing to timely commence or complete construction work by your required commencement or completion date, or failing to complete the renovation work by your required completion date, as applicable; failing to open your Hotel by the Opening Date; failing to continue to identify your Hotel to the public as a Brand Hotel, or failing to operate your Hotel for five consecutive days, or any shorter period after which it is not unreasonable under the facts and circumstances for us to conclude that you do not intend to continue to operate your Hotel; contesting in any court or proceeding our ownership of the Marks or any part of the Franchise System, or the validity of any of the Marks; taking any action toward dissolving or liquidating yourself or itself; any of the owners of a controlling equity interest in you are or have been convicted by a trial court of, or plead or have pleaded no contest to, a felony (or any other offense or conduct that we reasonably determine is likely to adversely reflect upon your Hotel, the Marks, the Network Hotels, us or our subsidiaries or affiliates); concealing revenue, maintaining false books and records of accounts, submitting false reports or information to us or otherwise attempt to defraud us or any third-party in connection with the operation of your Hotel; engaging in any dishonest or unethical behavior; knowingly making unauthorized use or disclosure of any part of the Brand Manual or any other Confidential Information; failing to pay when due any taxes due on your Hotel's operation; becoming a Competitive Business; engaging in an unauthorized transfer; not purchasing or maintaining required insurance, or not reimbursing us for our purchase of insurance on your behalf; failing to obtain or maintain licenses required to operate your Hotel; we learn of any information involving you or your affiliates that we determine is likely to adversely reflect upon any gaming licenses or permits held by us or our affiliates, or our or their reputation; we reasonably determine that continued operation of your Hotel will result in imminent danger to public health or safety; you violate any law, ordinance, rule or regulation and fail to correct such violation within 72 hours after receiving notice from us or another party; or any guarantor breaches his or her guaranty or fails to provide adequate assurances to us (subject to state law). Non-curable defaults also include engaging in the same noncompliance within any consecutive 24-month period, or breach of the Franchise Agreement on 3 or more separate occasions within any consecutive 12- month period, regardless of whether the defaults are cured. If your Hotel is damaged by fire or other casualty and you elect to repair or rebuild your Hotel, we may terminate the Franchise Agreement if you fail to complete the restoration in accordance with Brand Standards and recommence operations within 180 days after the casualty event occurs. Source: Item 17 — **RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 70–75)

What constitutes a non-curable default under the Sonesta Select Sonesta Essential Franchise Agreement?

Answer from 2025 FDD Document

What This Means (2025 FDD)

PROVISION	SECTION IN	SUMMARY
	FRANCHISE AGREEMENT
s. Modification of	Section 17.K	No modifications of the Franchise Agreement except by written agreement,
the agreement		except that we may modify the Brand Manual and Brand Standards.
t. Integration / merger clause	Section 17.N	Only the terms of Franchise Agreement, including its attachments and the Brand Standards, are binding (subject to state law). Any representations or promises outside of this Disclosure Document and the Franchise Agreement may not be enforceable.
u. Dispute	Section 17.F	We and you must arbitrate all disputes (except for claims to collect amounts
resolution by		owed) at a location within 50 miles of our or, as applicable, our successor’s
arbitration or		or assign’s then-current principal place of business (currently, Newton,
mediation		Massachusetts) (subject to state law).
v. Choice of forum	Sections 17.H and 17.J	Subject to the arbitration requirement, litigation must be brought in the court nearest to our or, as applicable, our successor’s or assign’s then current principal place of business (currently, Newton, Massachusetts) (subject to state law). However, we may seek injunctive relief in any court of competent jurisdiction.
w. Choice of law	Section 17.G	Except for the U.S. Trademark Act, the Federal Arbitration Act and other federal laws, Massachusetts law applies (subject to state law).
THE FRANCHISE RELATIONSHIP
PROVISION	SECTION IN FRANCHISE AGREEMENT	SUMMARY
h. "Cause" defined-non curable defaults	Sections 14.B and 16.B; Ex. D 1 and Ex. D-2	Non-curable defaults under the Franchise Agreement include you or any guarantor: failing to pay us (or our affiliates) any amounts due and failing to correct such failure within ten days after our written notice of the same; failing to pay debts as they become due; filing bankruptcy, becoming insolvent, or being placed in a receivership; allowing an attachment to remain on all or a substantial part of your Hotel or of your or its assets for 30 days; failing within 60 days of the entry of a final judgment of any amount exceeding $100,000 to discharge, vacate or reverse the judgment, or to stay execution of it, or if appealed, to discharge the judgment within 30 days after a final adverse decision in the appeal; failing to obtain possession (or to timely provide us evidence of such possession), or losing possession or the right to possession of all or a significant part of your Hotel; failing to timely commence or complete construction work by your required commencement or completion date, or failing to complete the renovation work by your required completion date, as applicable; failing to open your Hotel by the Opening Date; failing to continue to identify your Hotel to the public as a Brand Hotel, or failing to operate your Hotel for five consecutive days, or any shorter period after which it is not unreasonable under the facts and circumstances for us to conclude that you do not intend to continue to operate your Hotel; contesting in any court or proceeding our ownership of the Marks or any part of the Franchise System, or the validity of any of the Marks; taking any action toward dissolving or liquidating yourself or itself; any of the owners of a controlling equity interest in you are or have been convicted by a trial court of, or plead or have pleaded no contest to, a felony (or any other offense or conduct that we reasonably determine is likely to adversely reflect upon your Hotel, the Marks, the Network Hotels, us or our subsidiaries or affiliates); concealing revenue, maintaining false books and records of accounts, submitting false reports or information to us or otherwise attempt to defraud us or any third-party in connection with the operation of your Hotel; engaging in any dishonest or unethical behavior; knowingly making unauthorized use or disclosure of any part of the Brand Manual or any other Confidential Information; failing to pay when due any taxes due on your Hotel's operation; becoming a Competitive Business; engaging in an unauthorized transfer; not purchasing or maintaining required insurance, or not reimbursing us for our purchase of insurance on your behalf; failing to obtain or maintain licenses required to operate your Hotel; we learn of any information involving you or your affiliates that we determine is likely to adversely reflect upon any gaming licenses or permits held by us or our affiliates, or our or their reputation; we reasonably determine that continued operation of your Hotel will result in imminent danger to public health or safety; you violate any law, ordinance, rule or regulation and fail to correct such violation within 72 hours after receiving notice from us or another party; or any guarantor breaches his or her guaranty or fails to provide adequate assurances to us (subject to state law). Non-curable defaults also include engaging in the same noncompliance within any consecutive 24-month period, or breach of the Franchise Agreement on 3 or more separate occasions within any consecutive 12- month period, regardless of whether the defaults are cured. If your Hotel is damaged by fire or other casualty and you elect to repair or rebuild your Hotel, we may terminate the Franchise Agreement if you fail to complete the restoration in accordance with Brand Standards and recommence operations within 180 days after the casualty event occurs.