Does the Sonesta Select Sonesta Essential indemnity obligation continue after the termination of the franchise agreement?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
This indemnity will continue in full force and effect subsequent to and notwithstanding this Agreement's expiration or termination.
An Indemnified Party need not seek recovery from any insurer or other third party, or otherwise mitigate its losses and expenses, to maintain and recover fully a claim against you under this subparagraph.
You agree that a failure to pursue a recovery or mitigate a loss will not reduce or alter the amounts that an Indemnified Party may recover from you under this subparagraph.
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, Sonesta Select Sonesta Essential's indemnity obligations do continue even after the franchise agreement expires or is terminated. This means that even after the agreement ends, the franchisee may still be responsible for covering certain losses, damages, or expenses that Sonesta Select Sonesta Essential incurs related to the franchisee's business operations.
This continued obligation is a significant point for prospective franchisees to consider. It implies that potential liabilities are not cut off at the termination date but can extend into the future. The franchisee remains responsible for any issues arising from their operation during the term of the agreement, even after the business is no longer operating under the Sonesta Select Sonesta Essential brand.
The FDD also specifies that Sonesta Select Sonesta Essential as the indemnitee does not need to seek recovery from any insurer or mitigate its losses to maintain a claim against the franchisee. Furthermore, the franchisee's failure to pursue recovery or mitigate a loss will not reduce the amounts that Sonesta Select Sonesta Essential may recover from the franchisee. This places a significant responsibility on the franchisee to manage risks effectively during the franchise term, as these responsibilities could extend beyond the agreement's end date.
Franchisees should carefully evaluate the scope of the indemnity clause and understand the potential long-term financial implications. It is advisable to seek legal counsel to fully understand the risks and obligations associated with this clause.