What is an 'Acceleration Event' according to the Sonesta Simply Suites agreement?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
This Note shall be accelerated on the occurrence of any of the following events (each, an "Acceleration Event"): (i) any representation or warranty made in connection with this Note, your application, the Agreement, or in any report or other information later submitted to the Holder that is, in the Holder's opinion, false, misleading or incorrect in any material respect; (ii) termination of the Agreement for any reason; (iii) any breach of the Agreement or this Note, whether Maker is notified of or cures such breach; (iv) transfer of any interest in the Agreement whereby the transferee does not assume Maker's obligation under this Note in a form acceptable to Holder upon transfer; (v) Maker loses ownership or possession of the Premises, or otherwise loses the right to conduct the franchised business at the Hotel; (vi) any ownership interest of the Maker is transferred or conveyed, whether directly or indirectly, or an owner of the Maker enters into an agreement or understanding for such a transfer or conveyance; (vii) if any proceedings for the appointment of a receiver or other custodian or seeking marshaling or composition of or for Maker's business or assets is filed in any court, or otherwise commenced in accordance with applicable law, and is not dismissed within forty-five (45) days; or (viii) any of the events described in this Section 3 occur with respect to any affiliate of the Maker that is a party to an agreement with the Holder.
Should an Acceleration Event occur, the unamortized Principal shall become immediately due and payable without further notice and, if applicable, Maker will have no obligation to make any additional Disbursement.
Source: Item 23 — RECEIPTS (FDD pages 80–246)
What This Means (2025 FDD)
According to the 2025 Sonesta Simply Suites FDD, an Acceleration Event refers to specific occurrences that trigger the immediate due and payable status of any unamortized principal on a note. These events provide Sonesta Simply Suites with the ability to demand immediate payment under certain adverse conditions.
These Acceleration Events include instances such as (i) any false, misleading, or incorrect representation or warranty made in connection with the Note, application, the Agreement, or any report submitted to the Holder; (ii) termination of the Agreement for any reason; (iii) any breach of the Agreement or the Note; (iv) transfer of any interest in the Agreement without the transferee assuming the Maker's obligations; (v) loss of ownership or possession of the premises or the right to conduct the franchised business; (vi) transfer of any ownership interest of the Maker; (vii) the filing of proceedings for the appointment of a receiver or custodian for the Maker's business or assets that are not dismissed within 45 days; or (viii) the occurrence of any of these events with respect to an affiliate of the Maker that is a party to an agreement with the Holder.
If an Acceleration Event occurs, the unpaid principal becomes immediately due without notice, and Sonesta Simply Suites is not obligated to make any further disbursements. Furthermore, if the accelerated Note is not paid within ten days of becoming due, the outstanding principal balance will accrue simple interest at a rate of either 18% per annum or the highest rate allowed by law, whichever is lower. This provision protects Sonesta Simply Suites' financial interests by allowing them to promptly recover outstanding amounts if the franchisee defaults or encounters significant issues.