Is Sonesta Select Sonesta Essential permitted to sell its ownership interests to a third party?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) this Agreement;
- (2) you;
- (3) your Hotel or substantially all its assets; or
- (4) your owners (if such owners are legal entities).
An assignment, sale, gift, or other disposition includes the following events:
- (a) transfer of ownership of capital stock, a partnership or membership interest, or another form of ownership interest, including by way of a public offering or pursuant to a private placement;
- (b) merger or consolidation or issuance of additional securities or other forms of ownership interest;
- (c) any sale of a security convertible to an ownership interest;
- (d) transfer of an interest in you, this Agreement, your Hotel or substantially all its assets, or your owners in a divorce, insolvency, or entity dissolution proceeding or otherwise by operation of law;
- (e) if you, one of your owners, or an owner of one of your owners dies, a transfer of an interest in you, this Agreement, your Hotel or substantially all its assets, or your owner by will, declaration of or transfer in trust, or under the laws of intestate succession; and
- (f) pledge of this Agreement (to someone other than us) or of an ownership interest in you or your owners as security, foreclosure upon your Hotel, or your transfer, surrender, or loss of the possession, control, or management of your Hotel.
If you intend to list your Hotel for sale with any broker or agent, you shall do so only after providing us ten days' prior written notice. You may not use, or authorize any broker or agent or other third party to use, any Mark in advertising the transfer or other disposition of your Hotel or of any ownership in you without our prior written consent. You shall not use or authorize the use of, and no third party shall on your behalf use, any written materials to advertise or promote the transfer of your Hotel or of any ownership interest in you without our prior written approval of such materials.
Source: Item 12 — TERRITORY (FDD pages 64–65)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, franchisees are able to transfer ownership. However, any transfer of the franchise agreement, the hotel, or ownership interests in the franchise is considered an assignment, sale, gift, or disposition that requires adherence to specific conditions.
These conditions include various scenarios such as the transfer of stock, partnership, or membership interests, including through public offerings or private placements. It also encompasses mergers, consolidations, the issuance of additional securities, or any sale of securities convertible to an ownership interest. Transfers due to divorce, insolvency, entity dissolution, or by operation of law, as well as transfers by will, trust, or intestate succession following the death of an owner, are also included.
Furthermore, pledging the Franchise Agreement or ownership interests as security, foreclosure upon the hotel, or the transfer, surrender, or loss of possession, control, or management of the hotel are considered transfers. If a franchisee intends to list their hotel for sale, they must provide Sonesta Select Sonesta Essential with ten days' prior written notice. The franchisee is restricted from using any of Sonesta Select Sonesta Essential's marks in advertising the transfer without prior written consent, and all advertising materials must be approved by Sonesta Select Sonesta Essential before use.