What is the effect of the covenant not to sue included in the Sonesta Select Sonesta Essential release agreement?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
You, on behalf of yourself and the other Releasing Parties, further covenant not to sue any of the Sonesta RL Parties on any of the Claims released by this paragraph, and warrant and represent that the Releasing Parties have not assigned or otherwise transferred any Claims released by this paragraph.
We also are entitled to a release and covenant not to sue from your owners. By his, her or their separate signatures below, your owners likewise grant to us the release and covenant not to sue provided above.
Source: Item 23 — RECEIPTS (FDD pages 84–261)
What This Means (2025 FDD)
According to the 2025 FDD, Sonesta Select Sonesta Essential includes a covenant not to sue in its release agreement. This covenant means that the franchisee, along with their related parties, agrees not to initiate any legal action against Sonesta Select Sonesta Essential or its related entities regarding any claims covered by the release. This includes all claims, demands, and causes of action, whether known or unknown, that the franchisee or related parties may have against Sonesta Select Sonesta Essential. The release covers issues arising from any relationship or transaction with Sonesta Select Sonesta Essential, including those related to the Franchise Agreement or the operation of the franchisee's hotel.
The covenant not to sue is a significant commitment, as it prevents franchisees from pursuing legal remedies for past, present, or future issues related to their franchise. Sonesta Select Sonesta Essential also requires a release and covenant not to sue from the franchisee's owners, indicating the importance Sonesta Select Sonesta Essential places on preventing future litigation. This requirement is part of the consideration for Sonesta Select Sonesta Essential taking certain actions or agreeing to certain requests from the franchisee.
However, there are some limitations and exceptions to this covenant. For franchisees in California or residents of California, they are required to acknowledge that they are waiving their rights under Section 1542 of the California Civil Code, which protects against releasing unknown claims. This means that California franchisees are agreeing to release claims they may not even be aware of. Conversely, for franchisees in Maryland or residents of Maryland, any general release will not apply to liabilities under the Maryland Franchise Registration and Disclosure Law. Similarly, Minnesota law includes provisions that may limit the enforcement of certain terms outside of Minnesota, such as those related to litigation and punitive damages. These state-specific provisions highlight the importance of franchisees understanding the specific legal implications of the release agreement in their jurisdiction.