When does the Existing Franchise Agreement terminate for a Sonesta Select Sonesta Essential franchise transfer?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Termination of Existing Franchise Agreement.
Franchisee Parties agree that the Existing Franchise Agreement is terminated as of the Closing Date and shall thereafter be of no further force or effect except as provided in this Agreement.
Notwithstanding the foregoing, Assignor Parties acknowledge that (a) the termination does not affect any obligations under the Existing Franchise Agreement that arose or accrued prior to the Closing Date, and (b) the termination does not affect or release Assignor Parties from, and Assignor Parties hereby agree to comply with, any obligations under the Existing Franchise Agreement that, either expressly or by their nature are intended to survive termination of the Existing Franchise Agreement, including, for example, the post-termination obligations (except those obligations pertaining to the de-imagin
Source: Item 23 — RECEIPTS (FDD pages 84–261)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, the Existing Franchise Agreement terminates as of the Closing Date of the transfer. After the Closing Date, the Existing Franchise Agreement will no longer be in effect, except as provided in the agreement.
However, the termination of the Existing Franchise Agreement does not release the Assignor Parties from any obligations that arose or accrued prior to the Closing Date. Additionally, the termination does not affect or release Assignor Parties from any obligations under the Existing Franchise Agreement that, either expressly or by their nature, are intended to survive termination. These surviving obligations include post-termination obligations, except those pertaining to de-imaging.
In conjunction with the transfer, the Assignee (the party acquiring the franchise) must execute Sonesta Select Sonesta Essential's current form of franchise agreement, known as the New Franchise Agreement, along with related agreements and a Guaranty and Assumption of Obligations. This New Franchise Agreement governs the Assignee's ownership and operation of the hotel after the Closing Date. If the transfer is not completed by the Outside Date and Sonesta Select Sonesta Essential terminates the agreement, the New Franchise Agreement becomes null and void.