What action must a Sonesta Simply Suites franchisee take if their hotel is condemned?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN | SUMMARY |
|---|---|---|
| FRANCHISE AGREEMENT | ||
| d. Termination by franchisee | Sections 14.G and 16.B | You may terminate the Franchise Agreement without paying Lost Revenue Damages (described in Item 6) in the event your Hotel is damaged by fire or other casualty, the damage or destruction is substantial and material, affecting over fifty percent (50%) of the Guest Rooms of your Hotel, the reasonable estimated cost to repair the damage exceeds the fair market value of your Hotel, and you provide us written notice within 60 days of such casualty event of your election not to repair or rebuild your Hotel. If you terminate the Franchise Agreement without cause, you must pay us Lost |
| e. Termination by Franchisor without cause | Section 16.A | Revenue Damages (subject to state law). If your Hotel is condemned, you must give us notice at the earliest possible time. If, in our sole discretion, the taking is significant enough to render operation of your Hotel in accordance with the Brand Standards impractical, then we may terminate the Franchise Agreement on written notice, effective as of the day of the consummation of the actual taking. |
| f. Termination by Franchisor with cause | Sections 14.A and 14.B | We may terminate the Franchise Agreement if you or your owners, or any guarantor of your obligations under the Franchise Agreement, violate the Franchise Agreement (subject to state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 66–70)
What This Means (2025 FDD)
According to the 2025 Sonesta Simply Suites Franchise Disclosure Document, if a franchisee's hotel is condemned, the franchisee must notify Sonesta Simply Suites as soon as possible. Following this notification, Sonesta Simply Suites has the option to terminate the Franchise Agreement if they determine, at their sole discretion, that the condemnation is significant enough to make operating the hotel according to brand standards impractical. If Sonesta Simply Suites chooses to terminate the agreement, they will provide written notice, which will be effective on the date the property is officially taken.
This clause protects Sonesta Simply Suites by allowing them to end an agreement if the hotel is no longer viable due to condemnation. It also places the onus on the franchisee to promptly inform Sonesta Simply Suites of the condemnation, which allows Sonesta Simply Suites to assess the situation and make a decision about the future of the franchise agreement.
For a prospective franchisee, this means that the condemnation of the hotel property could lead to a termination of the franchise agreement, even if the franchisee wishes to continue operating. The franchisee's ability to continue operating under the Sonesta Simply Suites brand depends on Sonesta Simply Suites's assessment of the situation and their decision regarding the practicality of maintaining brand standards at the location. This highlights the importance of understanding the conditions under which the franchise agreement can be terminated and the potential financial implications of such termination.