What document must a Sonesta Simply Suites franchisee and their principals sign to receive an Incentive?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
To receive an Incentive, you and your principals must sign a development incentive promissory note in the form attached as Exhibit E (the "Incentive Note"), when you sign the Franchise Agreement. An Incentive does not have to be repaid unless the Franchise Agreement is terminated before its expiration date, or a transfer occurs as described below. The Incentive will be disbursed to you, unless otherwise agreed to by you and us, within 45 days after your Hotel opens as a Brand Hotel with our approval, as long as you have completed any PIP, there have been no material adverse changes to your Hotel since approval (for example, a decrease in the number of Guest Rooms or a significant delay in opening as a Brand Hotel), and subject to your and any guarantor's financial condition being satisfactory to us. For each year that your Hotel is open, the repayable amount is reduced by an equal annual percentage based on the term of the Franchise Agreement. For example, if the Franchise Agreement has a twentyyear term, the repayable amount is reduced by 1/20th of the original amount annually. If your franchise terminates before the expiration of the Franchise Agreement, you must pay us the thencurrent repayable amount of the Incentive. If you transfer your Hotel you also must pay us the then-current repayable amount of the Incentive. An Incentive bears no interest. However, if an Incentive becomes repayable and payment is not made in full when due, the outstanding amount is subject to interest at 18% per annum or the highest rate allowed by law, and we may collect court costs and attorneys' fees incurred to collect the repayable amount of the Incentive.
Source: Item 10 — FINANCING (FDD pages 47–48)
What This Means (2025 FDD)
According to the 2025 Sonesta Simply Suites Franchise Disclosure Document, to receive an incentive from Sonesta Simply Suites, both the franchisee and their principals are required to sign a development incentive promissory note. This note is in the form attached as Exhibit E to the FDD and is referred to as the "Incentive Note." This signing typically occurs when the franchisee signs the Franchise Agreement.
The incentive, which Sonesta Simply Suites may offer at its discretion for hotels new to the brand, is a financial contribution to assist with the development or conversion of the hotel. The amount of the incentive typically ranges from $2,000 to $7,600 per guest room, though the exact amount is determined by Sonesta Simply Suites.
The Incentive Note outlines the terms under which the incentive must be repaid. Specifically, the incentive does not have to be repaid unless the Franchise Agreement is terminated before its expiration date, or a transfer of the hotel occurs. The repayable amount decreases annually over the term of the Franchise Agreement. If repayment is required and not made when due, the outstanding amount is subject to interest at 18% per annum or the highest rate allowed by law, and Sonesta Simply Suites may collect court costs and attorneys' fees incurred to collect the repayable amount of the Incentive.