Does the Sonesta Select Sonesta Essential franchise agreement include a waiver of punitive damages?

Yes, according to the 2025 Franchise Disclosure Document, the Sonesta Select Sonesta Essential franchise agreement includes a waiver of punitive damages. Specifically, neither party (Sonesta Select Sonesta Essential or the franchisee) is liable to the other for punitive damages arising from or related to the service, even if advised of the possibility of such damages. This waiver extends to consequential, incidental, and indirect damages, including lost profits or lost revenue, which are collectively referred to as "indirect damages."

This means that if a dispute arises between Sonesta Select Sonesta Essential and a franchisee related to the services provided under the agreement, neither party can seek punitive damages from the other. Punitive damages are intended to punish a party for egregious behavior, and this waiver limits the potential financial exposure of both parties in the event of a dispute. However, the agreement also states that each party's direct damages (and any indirect damages not recognized or enforced by a court) are limited to the total fees paid by the franchisee to Sonesta Select Sonesta Essential during the current term of the franchise agreement.

This limitation on liability is a significant aspect of the agreement, potentially reducing the financial risks associated with the franchise. However, franchisees should be aware that this waiver could limit their ability to recover damages beyond their direct financial losses in certain situations. It is common in franchise agreements to include clauses that limit liability and waive certain types of damages to provide more predictable financial outcomes for both parties.