Under what circumstances can Sonesta Select Sonesta Essential immediately terminate the agreement?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
B. Immediate Termination by Us. We have the right to terminate this Agreement immediately upon notice to you (or terminate it at the earliest time permitted by applicable law) if one or more of the following breaches to this Agreement or any of its attachments occur:
(1) After curing any Event of Default of this Agreement or the Brand Standards you engage in the same noncompliance within any consecutive 24 month period, or you fail on three or more separate occasions within any 12 consecutive month period to comply with this Agreement, whether or not the noncompliance is corrected after notice; or after we have notified you of your noncompliance with any of the requirements imposed by this Agreement or the Brand Standards, regardless of materiality, you engage in a pattern of noncompliance with any of those requirements, whether or not the noncompliance is corrected after notice, which pattern of non-compliance in and of itself will be deemed material;
(2) You or any guarantor of your obligations under this Agreement:
a.
Fail to pay us (or our affiliates) any amounts due and do not correct the failure within ten days after we deliver written notice of that failure to you;
- b.
Generally fails to pay your or its debts as they become due, including to the lessor of Premises (if leased) and any other amounts owed in connection with your Hotel; admits in writing your or its insolvency or inability to pay its debts or obligations as they become due; your or its liabilities exceed its assets; or makes a general assignment for the benefit of your or its creditors;
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, Sonesta Select Sonesta Essential has the right to terminate the franchise agreement immediately upon notice to the franchisee under certain conditions.
Sonesta Select Sonesta Essential can immediately terminate the agreement if, after the franchisee cures an Event of Default, the same noncompliance occurs within a 24-month period. Immediate termination can also occur if the franchisee fails to comply with the agreement on three or more separate occasions within a 12-month period, regardless of whether the noncompliance is corrected after notice. Furthermore, Sonesta Select Sonesta Essential can terminate the agreement if the franchisee engages in a pattern of noncompliance with the requirements of the agreement or Brand Standards, whether or not the noncompliance is corrected after notice; this pattern of non-compliance will be deemed a material breach.
Sonesta Select Sonesta Essential can also immediately terminate the agreement if the franchisee or any guarantor fails to pay amounts due to Sonesta Select Sonesta Essential (or its affiliates) and does not correct the failure within ten days after written notice. Immediate termination is also permitted if the franchisee generally fails to pay debts as they become due, admits insolvency or inability to pay debts, has liabilities exceeding assets, or makes a general assignment for the benefit of creditors. These conditions provide Sonesta Select Sonesta Essential with strong recourse in cases of repeated noncompliance or financial instability on the part of the franchisee.