What constitutes a 'substantial and material' damage for Sonesta Simply Suites franchise termination purposes?
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 |
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, a franchisee can terminate the Franchise Agreement without incurring Lost Revenue Damages if the hotel suffers substantial and material damage from fire or other casualty. This is defined as damage or destruction affecting over 50% of the hotel's guest rooms, where the reasonable estimated cost to repair the damage exceeds the hotel's fair market value.
To exercise this termination right, the franchisee must provide Sonesta Simply Suites with written notice within 60 days of the casualty event, indicating their decision not to repair or rebuild the hotel. This provision offers a degree of protection to franchisees facing severe property damage, allowing them to exit the agreement without penalty under specific circumstances.
It is important for prospective Sonesta Simply Suites franchisees to understand these conditions, as failing to meet them could result in financial penalties if they choose to terminate the agreement. Franchisees should also be aware of their obligations upon termination, such as ceasing use of the brand's marks and settling outstanding debts.