What is the deadline for a Sonesta Select Sonesta Essential franchisee to provide a Casualty Termination Notice?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
B. Casualty. You must immediately inform us if your Hotel, or any part thereof, is damaged by fire or other casualty.
If such damage or destruction is substantial and material, affecting over fifty percent (50%) of the Guest Rooms of your Hotel, and the reasonable estimated cost to repair the damage exceeds the fair market value of your Hotel, you shall immediately notify us and elect, by written notice to us within sixty (60) days following the date of the casualty, to repair or rebuild your Hotel in accordance with the Brand Standards or to terminate this Agreement ("Casualty Termination Notice").
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 must immediately inform the franchisor if the hotel is damaged by fire or other casualty. If the damage is substantial, affecting over 50% of the guest rooms, and the estimated repair cost exceeds the hotel's fair market value, the franchisee has a limited time to decide whether to rebuild or terminate the agreement.
The franchisee must notify Sonesta Select Sonesta Essential in writing within 60 days following the date of the casualty if they elect to repair/rebuild the hotel or terminate the agreement. This written notice is referred to as the "Casualty Termination Notice." If the franchisee fails to send this notice within the 60-day timeframe, they are considered to have elected to repair or rebuild the hotel according to Sonesta Select Sonesta Essential's brand standards.
If the franchisee chooses to repair the damage, they must complete the restoration within 180 days after the casualty. Failure to rebuild to brand standards within the specified time periods can result in Sonesta Select Sonesta Essential terminating the agreement. However, if the franchisee terminates the agreement due to the casualty, they will not be obligated to pay Lost Revenue Damages.
This clause is important for prospective franchisees as it outlines the procedures and deadlines that must be followed in the event of significant property damage. Failing to adhere to these timelines could result in unwanted outcomes, such as being forced to rebuild when termination was preferred, or facing termination by the franchisor for failing to rebuild in time.