What constitutes a failure to pay debts for a Sonesta Simply Suites franchisee?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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;
- c.
Commence any case, proceeding or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of you or it or your or its debts under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for you or it or for all or any substantial part of your or its property;
Source: Item 22 — CONTRACTS (FDD pages 79–80)
What This Means (2025 FDD)
According to Sonesta Simply Suites' 2025 Franchise Disclosure Document, a franchisee's failure to pay debts can lead to immediate termination of the franchise agreement. Specifically, this includes several scenarios related to the franchisee's or any guarantor's financial stability.
The first scenario is failing to pay amounts due to Sonesta Simply Suites or its affiliates and not correcting this failure within ten days after receiving written notice. The second is a general failure to pay debts as they become due, including debts to the lessor of the premises (if leased) and any other amounts owed in connection with the hotel. This also includes admitting in writing to insolvency or the inability to pay debts, or if the franchisee's liabilities exceed their assets.
Finally, commencing any legal case or action seeking reorganization, liquidation, or dissolution, or seeking the appointment of a receiver or trustee for the franchisee or their property, also constitutes a failure to pay debts. These conditions are significant because they provide Sonesta Simply Suites with the right to terminate the franchise agreement immediately, protecting the brand from association with financially unstable operations.