What does the term 'transfer' include in the Sonesta Select Sonesta Essential Franchise Agreement?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
In this Agreement, the term "transfer" includes a voluntary, involuntary, direct, or indirect assignment, sale, gift, or other disposition of any interest in:
- (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:
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to the 2025 Sonesta Select Sonesta Essential Franchise Disclosure Document, the term "transfer" is broadly defined and encompasses various ways in which an interest in the franchise can change hands. This includes any voluntary, involuntary, direct, or indirect assignment, sale, gift, or other disposition of any interest in the franchise agreement itself, the franchisee entity, the hotel or its assets, or the owners of the franchisee if the franchisee is a legal entity.
This definition means that any change in ownership or control, whether through a direct sale or a more indirect method like gifting an interest, is considered a transfer under the agreement. This is a common provision in franchise agreements, designed to give the franchisor control over who operates their branded locations. Sonesta Select Sonesta Essential wants to ensure that any new operator meets their standards and is capable of maintaining the brand's reputation.
For a prospective franchisee, this means that they cannot sell their franchise, their hotel, or any part of their business without first obtaining approval from Sonesta Select Sonesta Essential. This approval is not guaranteed and may be subject to certain conditions. Failing to obtain this approval would constitute a breach of the franchise agreement, potentially leading to termination of the agreement. This also extends to the ownership of the franchisee entity itself, meaning that changes in the ownership of the company that holds the franchise also require franchisor approval.
It is important for potential franchisees to understand these restrictions on transfer, as they can significantly impact the franchisee's ability to exit the business or bring in new partners. Franchisees should carefully review the conditions for transfer outlined in the franchise agreement and be prepared to comply with these requirements if they ever wish to sell or transfer their interest in the franchise.