What constitutes a non-curable default for a Sonesta Simply Suites franchisee?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
d in subsection | | defaults | | h. below, or other agreements with us relating to your Hotel (subject to state law). | | h. "Cause" defined-non curable defaults | Sections 14.B and 16.B; Ex. D-1 and Ex. D-2 | Non-curable defaults under the Franchise Agreement include you or any guarantor: failing to pay us (or our affiliates) any amounts due and failing to correct such failure within ten days after our written notice of the same; failing to pay debts as they become due; filing bankruptcy, becoming insolvent, or being placed in a receivership; allowing an attachment to remain on all or a substantial part of your Hotel or of your or its assets for 30 days; failing within 60 days of the entry of a final judgment of any amount exceeding $100,000 to discharge, vacate or reverse the judgment, or to stay execution of it, or if appealed, to discharge the judgment within 30 days after a final adverse decision in the appeal; failing to obtain possession (or to timely provide us evidence of such possession), or losing possession or the right to possession of all or a significant part of your Hotel; failing to timely commence or complete construction work by your required commencement or completion date, or failing to complete the renovation work by your required completion date, as applicable; failing to open your Hotel by the Opening Date; failing to continue to identify your Hotel to the public as a Brand Hotel, or failing to operate your Hotel for five consecutive days, or any shorter period after which it is not unreasonable under the facts and circumstances for us to conclude that you do not intend to continue to operate your Hotel; contesting in any court or proceeding our ownership of the Marks or any part of the Franchise System, or the validity of any of the Marks; taking any action toward dissolving or liquidating yourself or itself; any of the owners of a controlling equity interest in you are or have been convicted by a trial court of, or plead or have pleaded no contest to, a felony (or any other offense or conduct that we reasonably determine is likely to adversely reflect upon your Hotel, the Marks, the Network Hotels, us or our subsidiaries or affiliates); concealing revenue, maintaining false books and records of accounts, submitting false reports or information to us or otherwise attempt to defraud us or any third-party in connection with the operation of your Hotel; engaging in any dishonest or unethical behavior; knowingly making unauthorized use or disclosure of any part of the Brand Manual or any other Confidential Information; failing to pay when due any taxes due on your Hotel's operation; becoming a Competitive Business; engaging in an unauthorized transfer; not purchasing or maintaining required insurance, or not |
| PROVISION | SECTION IN | SUMMARY |
|---|---|---|
| FRANCHISE AGREEMENT | reimbursing us for our purchase of insurance on your behalf; failing to obtain or maintain licenses required to operate your Hotel; we learn of any information involving you or your affiliates that we determine is likely to adversely reflect upon any gaming licenses or permits held by us or our affiliates, or our or their reputation; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 66–70)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, there are specific actions or failures that constitute non-curable defaults, which can lead to the termination of the franchise agreement. These defaults, as detailed in Sections 14.B and 16.B of the Franchise Agreement, include failing to pay amounts owed to Sonesta Simply Suites or its affiliates within ten days of written notice, failing to pay debts as they become due, or facing bankruptcy or receivership. Allowing an attachment to remain on the hotel or its assets for 30 days, failing to discharge a judgment exceeding $100,000 within specified timeframes, or failing to maintain possession of the hotel are also considered non-curable defaults.
Further non-curable defaults include failing to meet construction or renovation deadlines, failing to open the hotel by the agreed-upon date, ceasing to operate the hotel as a Sonesta Simply Suites-branded property, or contesting Sonesta Simply Suites's ownership of the trademarks. Actions such as dissolving the franchisee entity, felony convictions of owners, concealing revenue, submitting false reports, engaging in dishonest behavior, or unauthorized use of confidential information also constitute non-curable defaults. Failing to pay taxes, becoming a competitive business, engaging in unauthorized transfers, or failing to maintain required insurance are additional grounds for non-curable default.
Moreover, failing to obtain necessary licenses, actions that adversely affect Sonesta Simply Suites's gaming licenses or reputation, posing an imminent danger to public health or safety, or violating laws and failing to correct such violations within 72 hours after notice are also non-curable defaults. A guarantor's breach of their guaranty also falls under this category. Committing the same noncompliance within a 24-month period or breaching the Franchise Agreement on three or more occasions within a 12-month period, regardless of whether the defaults are cured, are also considered non-curable. Additionally, failing to complete restoration after damage by fire or other casualty within 180 days can lead to termination.
These stipulations are important for prospective franchisees to understand, as they outline the circumstances under which Sonesta Simply Suites can terminate the franchise agreement without the possibility of the franchisee rectifying the situation. Franchisees should be aware of these potential pitfalls and ensure they maintain compliance to avoid such defaults.