Does Sonesta Select Sonesta Essential need to provide notice before procuring insurance for the franchisee?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (Note 1) |
|---|---|---|---|
| Non Compliance Fee | 1% of Gross Rooms Revenue per month of non-compliance | Upon demand | If we deliver you notice of your breach under the Franchise Agreement, you may be assessed a non-compliance fee until such default has been remediated or cured. |
| Late Payment Charge | Lesser of 1.5% per month or the maximum rate permitted by applicable law | Upon demand | You may be assessed a late payment charge if you do not make any payment when due. Our acceptance of your payment of any deficiency will not waive our right to terminate the Franchise Agreement under its terms. |
| Reactivation Fee | The lesser of 25% of past due balances or $2,000 | Prior to reactivation | If we have suspended your Hotel from the Reservation System because of a default under your Franchise Agreement, and you have cured the default, we may require you to pay this fee as a condition of reactivation. |
| Insurance | $500 per month, plus reimbursement for all premiums, costs, and expenses we incur | As billed | If you do not procure or maintain the required insurance or policy limits described in the Brand Manual, in addition to paying us a monthly fee, we may (but are not obligated to) procure and maintain insurance for you without first giving you notice, and you will be required to reimburse us. The m |
Source: Item 6 — OTHER FEES (FDD pages 24–36)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, Sonesta Select Sonesta Essential does not need to provide notice before procuring insurance for the franchisee under certain conditions. Specifically, if a franchisee fails to procure or maintain the required insurance or policy limits as described in the Brand Manual, Sonesta Select Sonesta Essential has the option, but not the obligation, to procure and maintain insurance on behalf of the franchisee without prior notice.
In such instances, the franchisee is required to reimburse Sonesta Select Sonesta Essential for all premiums, costs, and expenses incurred. Additionally, the franchisee must pay a monthly fee of $500, which is subject to change. This fee is in addition to the reimbursement for premiums, costs, and expenses.
This arrangement means that franchisees must ensure they meet all insurance requirements outlined in the Brand Manual to avoid Sonesta Select Sonesta Essential stepping in to secure insurance on their behalf and incurring the associated costs and fees. Franchisees should refer to Item 8 and Note 9 of the FDD for further details regarding insurance requirements and related information.