What document must franchisees sign to receive an Incentive from Sonesta Select Sonesta Essential?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
solution | Section 17.F | Item 17 |
FINANCING
We may, in our sole discretion, offer incentives for hotels that are new to the Sonesta brand. An "Incentive" is a financial contribution that we make to assist with the development or conversion of your Hotel and will be in an amount that we determine. If an Incentive is granted to you, the amount of the Incentive typically shall comprise, at our discretion, between $4,000 and $7,000 per Guest Room of your Hotel if you operate a Sonesta Select-branded hotel, or between $3,000 and $8,000 per Guest Room of your Hotel if you operate a Sonesta Essential-branded hotel. To receive an Incentive, you and your principals must sign a development incentive promissory note in the form attached as Exhibit F (the "Incentive Note"), when you sign the Franchise Agreement. An Incentive does not have to be repaid unless the Franchise Agreement is terminated before its expiration date or a transfer occurs as described below. The Incentive will be disbursed to you, unless otherwise agreed to by you and us, within 45 days after your Hotel opens as a Brand Hotel with our approval, as long as you have completed any PIP, there have been no material adverse changes to your Hotel since approval (for example, a decrease in the number of Guest Rooms or a significant delay in opening as a Brand Hotel), and subject to your and any guarantor's financial condition being satisfactory to us. For each year that your Hotel is open, the repayable amount is reduced by an equal annual percentage based on the term of the Franchise Agreement. For example, if the Franchise Agreement has a twenty-year term, the repayable amount is reduced by 1/20th of the original amount annually. If your franchise terminates before the expiration of the Franchise Agreement, you must pay us the then-current repayable amount of the Incentive. If you transfer your Hotel you also must pay us the then-current repayable amount o
Source: Item 10 — FINANCING (FDD pages 51–52)
What This Means (2025 FDD)
According to the 2025 FDD, to receive an incentive from Sonesta Select Sonesta Essential, franchisees and their principals must sign a development incentive promissory note. This note is in the form attached as Exhibit F, referred to as the "Incentive Note," and must be signed when the Franchise Agreement is signed.
The incentive is a financial contribution from Sonesta Select Sonesta Essential to assist with the development or conversion of the hotel. The amount of the incentive is determined by Sonesta Select Sonesta Essential at their sole discretion. For a Sonesta Select-branded hotel, the incentive typically ranges from $4,000 to $7,000 per guest room. For a Sonesta Essential-branded hotel, the incentive typically ranges from $3,000 to $8,000 per guest room.
The incentive does not have to be repaid unless the Franchise Agreement is terminated before its expiration date or a transfer occurs. The incentive will be disbursed within 45 days after the hotel opens as a Brand Hotel with Sonesta Select Sonesta Essential's approval, provided that any Property Improvement Plan (PIP) has been completed, there have been no material adverse changes to the hotel since approval, and the franchisee's and any guarantor's financial condition is satisfactory to Sonesta Select Sonesta Essential. The repayable amount of the incentive is reduced annually based on the term of the Franchise Agreement. The incentive does not bear interest.