Are misrepresentations to Sonesta Select Sonesta Essential considered an Event of Default?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) An "Event of Default" will occur if you fail to satisfy or comply with any of the obligations, requirements, conditions, or terms set forth in (i) this Agreement, the Brand Standards (including the minimum performance scores required by the Brand Manual), or any attachment to this Agreement; or (ii) any other agreement you have with us, or an Entity, relating to your Hotel, including, any computer system agreement, or any agreement to manage your Hotel.
An "Event of Default" will also occur if you make any misrepresentations to us, whether in entering into this Agreement, or in the performance of your obligations to us.
(2) Our notice of termination will not relieve you of your obligations under this Agreement or any of its attachments.
(3) Upon notice of an Event of Default, we also may at any time, at our sole discretion, suspend our obligations under this Agreement (including Central Reservation Services as more fully described below) and may remove the listing of your Hotel from any directories we publish, and from any advertising we publish, or to remove or suspend you from the Central Reservation System immediately without notice to you, and/or rescind any terms to this Agreement that were negotiated between the parties.
We will have the right to divert reservations previously made for your Hotel to other Network Hotels after giving you notice of an Event of Default.
If you fully cure the Event of Default within the time provided in our notice, including payment of any amounts accruing to us under this Agreement after the date of our notice, and further including payment of our then applicable administrative fee for resumption of services, we will restore you to the Central Reservation System, and add you to all future directories we publish and to all advertising we subsequently disseminate (except advertising that was ordered before your reinstatement), but we will not be required to redirect to you any reservations previously made for your Hotel and diverted to other Network Hotels during the period of suspension or removal, and you will be entitled to no compensation in connection with our election to suspend or remove your Hotel from our directories, advertising or the Central Reservation System.
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, making misrepresentations to the company constitutes an Event of Default. This applies whether the misrepresentation occurs when entering into the Franchise Agreement or during the fulfillment of obligations to Sonesta Select Sonesta Essential.
An Event of Default has significant consequences for a franchisee. Sonesta Select Sonesta Essential may suspend its obligations under the agreement, including Central Reservation Services. The company can also remove the hotel's listing from directories and advertising, and even remove or suspend the hotel from the Central Reservation System without prior notice. Furthermore, Sonesta Select Sonesta Essential has the right to redirect reservations made for the franchisee's hotel to other Network Hotels after providing notice of the Event of Default.
However, the franchisee has an opportunity to cure the Event of Default. If the franchisee fully rectifies the default within the timeframe specified in the notice, including paying all outstanding amounts and an administrative fee for the resumption of services, Sonesta Select Sonesta Essential will reinstate the hotel to the Central Reservation System and include it in future directories and advertising. However, Sonesta Select Sonesta Essential is not obligated to redirect previously diverted reservations back to the franchisee's hotel, and the franchisee will not receive compensation for the period of suspension or removal from the directories, advertising, or Central Reservation System.
This clause highlights the importance of honesty and compliance with the terms of the Franchise Agreement. Misrepresentations, whether intentional or unintentional, can lead to serious repercussions, including suspension of services and potential loss of revenue. Prospective franchisees should ensure they fully understand their obligations and provide accurate information to Sonesta Select Sonesta Essential to avoid triggering an Event of Default.