For Sonesta Select Sonesta Essential, what minimum ownership interest must the Principal have?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
C. Subject to our rights and your obligations under Section 12, you and your owners agree to sign and deliver to us revised Exhibit A to reflect any changes in the information that Exhibit A now contains;
- (5) If you are an Entity, you must identify on Exhibit A one of your owners who is a natural person with at least 25% ownership interest and voting power in you, and who will have the authority of a chief executive officer (the "Principal")
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, if the franchisee is a corporation, limited liability company, or partnership (referred to as an "Entity"), they must designate one owner as the Principal. This Principal must be a natural person holding at least 25% ownership interest and voting power in the franchisee Entity.
This requirement ensures that Sonesta Select Sonesta Essential has a clearly identified individual with significant authority to act as the primary contact and decision-maker for the franchise. The Principal is expected to have the powers of a chief executive officer.
Furthermore, Sonesta Select Sonesta Essential requires the franchisee to keep Exhibit A of the Franchise Agreement updated to accurately reflect the Principal's identity. If the Principal changes during the term of the agreement, the franchisee must provide a revised Exhibit A to the franchisor. This allows Sonesta Select Sonesta Essential to maintain current records of the responsible party for each franchise location.
This requirement is fairly standard in franchising, as franchisors typically want to ensure that there is a responsible individual with a vested interest in the business who is accountable for the franchise's performance and compliance with the franchise agreement.