Can a Sonesta Simply Suites franchisee perform services as an agent for a Competitive Business?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Covenants Against Competition.
(1) You agree that, during the Term, neither you, any of your owners, nor any of your or your owners' immediate family members will, without our prior written consent:
b. perform services as a director, officer, manager, employee, consultant, representative, lessor, or agent for a Competitive Business, wherever located or operating;
(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 the 2025 Sonesta Simply Suites Franchise Disclosure Document, franchisees are restricted from engaging in activities that compete with the franchise during the term of the agreement. Specifically, a franchisee, their owners, and their immediate family members are prohibited from performing services as an agent for a Competitive Business without prior written consent from Sonesta Simply Suites. This restriction applies regardless of where the Competitive Business is located or operating.
A "Competitive Business" is defined as any entity that owns a hotel brand or trade name that competes with Sonesta Simply Suites or its Network Hotels, grants franchises or licenses for competitive hotel brands, or provides services to such entities. However, 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 business decisions.
This non-compete clause ensures that franchisees remain dedicated to the success of their Sonesta Simply Suites location and do not divert resources or knowledge to competing businesses. It also protects Sonesta Simply Suites's brand and market position by preventing franchisees from promoting or supporting rival hotel chains. Franchisees must also secure similar non-compete agreements from specified personnel, such as officers, directors, managers, and employees who attend training or have access to confidential information, further safeguarding the franchise system.