What is the maximum the Brand Promotion Fee can be increased to for a Sonesta Select Sonesta Essential hotel?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
E. Brand Promotion Fee. You agree to pay, in the same manner as the Royalty, a brand promotion fee (the "Brand Promotion Fee").
Currently, the Brand Promotion Fee is 3.5% of your Hotel's Gross Rooms Revenue.
However, we have the right, at any time and on notice to you, to increase the Brand Promotion Fee, provided that the Brand Promotion Fee shall not exceed 4.5% of your Hotel's Gross Rooms Revenue.
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, Sonesta Select Sonesta Essential franchisees must pay a Brand Promotion Fee. Currently, this fee is 3.5% of the hotel's Gross Rooms Revenue. However, Sonesta Select Sonesta Essential retains the right to increase this fee at any time, provided they give notice to the franchisee. The maximum the Brand Promotion Fee can be increased to is 4.5% of the hotel's Gross Rooms Revenue.
This means that a prospective Sonesta Select Sonesta Essential franchisee should be aware that the Brand Promotion Fee, which is a percentage of their revenue, could increase by 1% over the initial rate. While 1% may seem small, it can add up to a significant amount over time, especially for a high-revenue hotel. Franchisees should factor this potential increase into their financial projections and business plans.
It is common for franchisors to have the ability to adjust fees to adapt to changing market conditions or to invest in the brand's growth. However, franchisees should carefully consider the potential impact of such increases on their profitability and cash flow. It would be prudent for a prospective franchisee to discuss with existing franchisees how these fees are used and whether they perceive a tangible benefit from them.