Does Sonesta Select Sonesta Essential maintain a separate account for Brand Promotion Fees?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
We and our affiliates will account for Brand Promotion Fees separately from our other funds, though we are not obligated to maintain them in a separate account. We and our affiliates may use Brand Promotion
Fees to reimburse us or our affiliates or designees for the salaries and benefits of personnel who directly or indirectly manage and administer the brand promotion programs, associated administrative costs, travel expenses of personnel while they are on corresponding business, meeting costs, overhead relating to the brand promotion programs, and other expenses that we incur in activities related to administering or directing such programs, including conducting market research, public relations, preparing advertising, promotion, and marketing materials, and collecting and accounting for Brand Promotion Fees.
The brand promotion programs are not a trust and the Brand Promotion Fees do not bear interest. We do not owe any fiduciary obligation to you for administering the brand promotion program or any other reason. We or our affiliates will use Brand Promotion Fees for the purposes described in this Section 9.A. Our spending of the Brand Promotion Fees in any fiscal year may be more or less than the total Brand Promotion Fee payments in that year, and the brand promotion programs may borrow from us or others (paying reasonable interest) to cover deficits, or invest any surplus for future use. We may prepare an annual, unaudited statement of Brand Promotion Fee payments and expenses, and give you a copy of the most recently prepared statement upon your written request to us. We may (but are not obligated to) have our accounts related to Brand Promotion Fees audited annually, which audit may be paid for using Brand Promotion Fees collected, by an independent certified public accountant. We may incorporate a brand promotion fund or operate the same through a separate entity whenever we deem appropriate. The successor entity will have all the rights and duties specified in this Section 9.A.
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to the 2025 FDD, Sonesta Select Sonesta Essential will account for Brand Promotion Fees separately from their other funds. However, Sonesta Select Sonesta Essential is not obligated to maintain these fees in a separate account. This means that while the Brand Promotion Fees are tracked independently for accounting purposes, they may be commingled with other funds within the company's financial structure.
Sonesta Select Sonesta Essential and its affiliates can use the Brand Promotion Fees to cover various expenses. These include salaries and benefits for personnel managing brand promotion programs, administrative costs, travel expenses, meeting costs, overhead, and other expenses related to administering these programs. These programs include market research, public relations, advertising, and the creation of marketing materials.
The Brand Promotion Fees are not held in a trust, and they do not accrue interest. Sonesta Select Sonesta Essential does not owe any fiduciary obligation to franchisees regarding the administration of the brand promotion program. The FDD states that Sonesta Select Sonesta Essential's spending of Brand Promotion Fees in any fiscal year may be more or less than the total payments received that year. The brand promotion programs can borrow funds or invest any surplus for future use.
Sonesta Select Sonesta Essential may prepare an annual, unaudited statement of Brand Promotion Fee payments and expenses, and will provide a copy to franchisees upon written request. Sonesta Select Sonesta Essential may also choose to have their accounts related to Brand Promotion Fees audited annually by an independent certified public accountant, with the audit costs potentially covered by the collected Brand Promotion Fees. Sonesta Select Sonesta Essential has the option to incorporate a brand promotion fund or operate it through a separate entity if deemed appropriate.