What is the definition of 'Competitive Businesses' in relation to Sonesta Simply Suites?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) The term "Competitive Business" means any entity that (i) owns in whole or in part, whether directly or indirectly, a hotel brand or trade name (whether or not licensed) that, in our judgment, competes with the Brand Hotels or Network Hotels, irrespective of the number of hotels comprising the competitive hotel brand, (ii) grants franchises or licenses for the operation of any competitive hotel brand, or (iii) provides services to any entity that falls under subsection (i) or (ii).
Notwithstanding the foregoing, no entity will be considered a Competitive Business if such entity has an interest merely as (a) a franchisee of a competitive hotel brand; (b) a management company operating hotels on behalf of multiple brands; or (c) a passive investor that has no control over business decisions of such brand.
You agree to obtain similar covenants from the personnel we specify, including officers, directors, managers, and other employees attending our training program or having access to Confidential Information.
Source: Item 22 — CONTRACTS (FDD pages 79–80)
What This Means (2025 FDD)
According to Sonesta Simply Suites' 2025 Franchise Disclosure Document, a 'Competitive Business' is defined in the franchise agreement regarding covenants against competition. During the term of the agreement, franchisees, their owners, and their immediate family members are restricted from having certain interests or performing specific services for Competitive Businesses without prior written consent from Sonesta Simply Suites. This includes direct or indirect ownership, roles as a director, officer, manager, employee, consultant, representative, lessor, or agent.
The term 'Competitive Business' encompasses any entity that owns a hotel brand or trade name that Sonesta Simply Suites considers competitive with its Brand Hotels or Network Hotels, irrespective of the number of hotels in the competitive brand. It also includes entities that grant franchises or licenses for competitive hotel brands or provide services to such entities.
However, there are exceptions. An entity is not considered a Competitive Business if it is merely a franchisee of a competitive hotel brand, a management company operating hotels for multiple brands, or a passive investor without control over the brand's business decisions. Equity ownership of less than 5% in a publicly traded Competitive Business on a recognized U.S. stock exchange is also exempt. Franchisees must also secure similar non-compete covenants from specified personnel, such as officers, directors, managers, and employees who attend Sonesta Simply Suites' training program or have access to confidential information.