What constitutes a default under both the Agreement and the Note for Sonesta Simply Suites?

According to the 2025 FDD, a default under the terms of the Franchise Agreement or the Note for Sonesta Simply Suites will be considered a default of both agreements. This means that if a franchisee fails to meet their obligations under either the Franchise Agreement or the Note, Sonesta Simply Suites can pursue remedies available under both agreements.

Specifically, the Note outlines several events that would trigger acceleration, meaning the outstanding principal balance becomes immediately due. These Acceleration Events include: any false or misleading representation made in connection with the Note, the franchise application, the Franchise Agreement, or any submitted report; termination of the Franchise Agreement for any reason; any breach of the Franchise Agreement or the Note, regardless of whether the franchisee is notified or cures the breach; transfer of any interest in the Franchise Agreement without the transferee assuming the franchisee's obligations under the Note; loss of ownership or possession of the premises or the right to conduct the franchised business; transfer of any ownership interest in the franchisee entity; the commencement of proceedings for the appointment of a receiver or custodian for the franchisee's business or assets that are not dismissed within 45 days; or the occurrence of any of these events with respect to an affiliate of the franchisee that is party to an agreement with the Holder.

This provision gives Sonesta Simply Suites broad latitude to declare a default and pursue remedies. Prospective franchisees should carefully review the terms of both the Franchise Agreement and the Note with legal counsel to fully understand their obligations and the potential consequences of failing to meet them. Understanding these triggers is crucial for managing the franchise and avoiding potential defaults that could jeopardize their investment.