Does the Sonesta Select Sonesta Essential franchise agreement grant exclusivity to the franchisee?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
1. GRANT OF FRANCHISE; NO EXCLUSIVITY; RESERVATION OF RIGHTS.
A. Grant of Franchise. Subject to this Agreement's terms, we grant you a limited and nonexclusive franchise (the "Franchise") to establish and operate your Hotel under the Franchise System at the Premises, and to use the Franchise System and the Brand Standards (as defined in Section 2.A) for the applicable Designated Brand Concept in its operation, for a term beginning on the Opening Date (as defined in Section 2.E) and expiring 20 years from the Opening Date, unless sooner terminated under Section 14 of this Agreement (the "Term").
You agree to, at all times, faithfully, honestly, and diligently perform your obligations under this Agreement and to use your best efforts to promote your Hotel. You agree to use the Premises only for your Hotel, and, once it opens for business, to continuously operate your Hotel in accordance with this Agreement for the duration of the Term. You agree not to conduct the business of your Hotel at any location other than the Premises. You may not promote or sell any products or services, whether directly or indirectly, through or on the Internet, the World Wide Web, or any other similar proprietary or common carrier electronic delivery system, except as expressly set forth herein or as set forth in the Brand Manual, as hereinafter defined.
- B. No Exclusivity and Reservation of Rights. We do not grant any, and you have no, exclusive rights or territorial protection around your Hotel.
We (and our affiliates) retain the right at all times during and after the Term to engage in any and all activities that we (and they) deem appropriate and that have not been expressly granted to you in this Agreement, wherever and whenever we (and they) desire, and whether or not such activities compete with your Hotel, including the right, anywhere in the world, to do any of the following:
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, the franchise agreement does not grant any exclusive rights or territorial protection to the franchisee around their hotel. Sonesta Select Sonesta Essential retains the right to engage in any activities they deem appropriate, whether or not these activities compete with the franchisee's hotel. These rights are retained during and after the term of the agreement.
Sonesta Select Sonesta Essential and its affiliates reserve the right to operate or license others to operate hotels under various service marks, trademarks, and trade names, including Sonesta Select Hotels and Sonesta Essential Hotels. This means that other Sonesta branded hotels, or hotels under different brands owned or licensed by Sonesta, could be established in the same area as a franchisee's location.
This lack of exclusivity is a significant factor for potential franchisees to consider. It means that Sonesta Select Sonesta Essential could establish another franchise or corporate-owned location nearby, potentially drawing customers away from the franchisee's hotel. This could impact the franchisee's revenue and profitability. It is essential for prospective franchisees to carefully evaluate the market and potential competition before investing in a Sonesta Select Sonesta Essential franchise.