Does the Sonesta Simply Suites Franchise Agreement mention a non-compliance charge for a Sonesta Simply Suites franchise?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
If we determine in good faith that the effect of any law enacted hereafter will be materially detrimental to our interests, we may terminate this Agreement by delivering written notice thereof to you.
- N. Non-Compliance Charge. In addition to our other rights and remedies, we may charge you a non-compliance charge in an amount equal to one percent (1%) of Gross Rooms Revenue per month for each month you are in non-compliance of any term of this Agreement, including failure to pay (or to have adequate amounts available for electronic transfer of) amounts you or your Affiliates owe us or our
Source: Item 22 — CONTRACTS (FDD pages 79–80)
What This Means (2025 FDD)
According to Sonesta Simply Suites' 2025 Franchise Disclosure Document, the Franchise Agreement does address non-compliance charges. Specifically, Sonesta Simply Suites has the right to charge a non-compliance fee if a franchisee fails to adhere to any term within the Franchise Agreement. This includes, but isn't limited to, not paying amounts owed to Sonesta Simply Suites or its affiliates, not having enough funds available for electronic transfers, or failing to submit required reports and financial statements on time.
The non-compliance charge is set at 1% of the Gross Rooms Revenue for each month the franchisee remains non-compliant. This charge is in addition to any other legal rights or remedies Sonesta Simply Suites may pursue. It's important to note that Sonesta Simply Suites retains the sole discretion to modify or eliminate this charge.
This clause means that franchisees must diligently adhere to all aspects of the Franchise Agreement to avoid incurring additional costs. The potential financial impact of 1% of Gross Rooms Revenue per month could be significant, especially for larger properties. Franchisees should ensure they have systems in place to meet all payment and reporting obligations promptly. The fact that Sonesta Simply Suites can change or eliminate this charge at their discretion introduces an element of uncertainty, highlighting the importance of maintaining a strong relationship with the franchisor and staying informed of any policy changes.