Does Sonesta Select Sonesta Essential have an obligation to procure insurance for the franchisee if they fail to do so?
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 have an obligation to procure insurance for franchisees who fail to do so. However, Sonesta Select Sonesta Essential has the option to procure and maintain insurance without providing prior notice to the franchisee if the franchisee fails to obtain or maintain the required insurance or policy limits as described in the Brand Manual.
If Sonesta Select Sonesta Essential chooses to procure insurance on behalf of the franchisee, the franchisee is required to reimburse Sonesta Select Sonesta Essential for all premiums, costs, and expenses incurred. In addition to reimbursing Sonesta Select Sonesta Essential, the franchisee must also pay a monthly fee of $500. This monthly fee is subject to change.
It is important for prospective Sonesta Select Sonesta Essential franchisees to understand that while Sonesta Select Sonesta Essential is not obligated to obtain insurance on their behalf, they may do so at their discretion. Franchisees should ensure they meet all insurance requirements outlined in the Brand Manual to avoid the additional costs and fees associated with Sonesta Select Sonesta Essential potentially securing insurance for them.