Does the Sonesta Simply Suites FDD mention any adjustments to the PIP fee?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
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- F. Third-Party Fees. We periodically may require you to pay us fees due from you to third parties, which we will collect on behalf of such third parties and remit to such third parties.
- G. Property Improvement Plans Fees. In connection with our inspections of your Hotel and issuance of any PIP, and if applicable, reinspection following a failed PIP inspection, you will pay us our then current PIP fee (currently, up to $5,000, subject to Fee Adjustments (as defined in Schedule 3.H)).
- H. Booking Fees and Commissions; Other Fees. You are responsible for the payment of all booking fees, reservation fees, and commissions incurred in connection with the operation of your Hotel, whether payable directly to a third-party or advanced by us to such third-party and billed to you. In addition, beginning on the Opening Date, you will pay to us for each month, or as otherwise billed, other fees resulting from the operation of your Hotel and the programs in which you are or will be required to participate as further described in the Brand Manual (such as technology fees and brand conference fees), which may change from time to time. A summary of the currently applicable booking fees, commissions, and other fees is set forth in Schedule 3.H. Such fees are subject to change.
You will pay to us such other fees designated in this Agreement, in the Brand Manual, or otherwise provided to you in writing, which may be made available to you electronically through the Franchise System's online franchisee portal. We have the right to rename certain programs, add or remove programs, and modify fees for various elements of the Franchise System and other services as described in the Brand Manual, this Agreement or otherwise provided to you in writing, and upon 30 days' notice to you. If you request that we provide extraordinary services, such as amendments you request, amendments necessitated by your action or inaction, a lender comfort letter, or other documentation outside the ordinary course of business, you must pay us an administrative fee for each such letter or document (currently $2,000 per lender comfort
Source: Item 22 — CONTRACTS (FDD pages 79–80)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, the Property Improvement Plan (PIP) fee is subject to adjustments. In connection with inspections of the hotel and issuance of any PIP, the franchisee will pay Sonesta Simply Suites their then-current PIP fee, which is currently up to $5,000. This fee is subject to "Fee Adjustments," as defined in Schedule 3.H of the agreement.
The "Fee Adjustment" is defined as an increase at Sonesta Simply Suites's discretion, up to the greater of (i) 5% annually (or 10% for TMC and Consortia Fees and Operations Insights fees), on a compounding basis regardless of whether they exercise such adjustment in any calendar year, or (ii) the difference, expressed as a percentage, in CPI as determined by comparing the CPI in effect as of the Effective Date to the CPI in effect as of the Fee Adjustment, without reference to any prior Fee Adjustment. CPI refers to the National Consumer Price Index-All Urban Consumers-All Items (1982-1984 = 100) published by the U.S. Department of Labor (or if the CPI is no longer published, another substitute reference reasonably designated by Sonesta Simply Suites).
This means that the initial PIP fee of up to $5,000 could increase over time, based on either a fixed percentage or changes in the Consumer Price Index (CPI), potentially raising the cost of compliance with PIP requirements for franchisees. The compounding nature of the annual increase means that even if Sonesta Simply Suites doesn't raise the fee every year, the potential for increases accumulates, which could lead to significant adjustments over the term of the franchise agreement. Franchisees should factor in these potential increases when budgeting for property improvements and ongoing operational costs.