How does Sonesta Simply Suites develop Level 3 inputs for its financial statements?

According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, Level 3 inputs are unobservable inputs that reflect assumptions about what factors market participants would use in pricing an asset or liability. Sonesta Simply Suites develops these Level 3 inputs based on the best information available, including their own data.

In simpler terms, when Sonesta Simply Suites needs to estimate the value of something for their financial statements and there's no clear market price or comparable data, they use their own judgment and internal information to come up with a reasonable estimate. This could apply to things like the value of certain assets or liabilities where there isn't an active market to determine the price.

For a prospective franchisee, this means that some of the financial figures presented by Sonesta Simply Suites involve a degree of estimation and may not be based on hard market data. While this is a standard accounting practice when objective data is unavailable, it's important to recognize that these estimates could impact the overall financial picture of the company. It would be prudent for a potential franchisee to understand the specific items where Level 3 inputs are used and the potential impact those estimates could have on the financial health of Sonesta Simply Suites.