Can a Sonesta Simply Suites franchisee perform services as a consultant for a Competitive Business?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
tion 6 with the same legal force and effect as if executed by you. The obligations of this Section 6 shall survive any expiration or termination of this Agreement.
7. EXCLUSIVE RELATIONSHIP DURING TERM.
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:
- a. have any direct or indirect interest as an owner whether of record or beneficially in a Competitive Business (defined below), wherever located or operating (except that equity ownership of less than five percent (5%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
- b. perform services as a director, officer, manager, employee, consultant, representative, lessor, or agent for a Competitive Business, wherever located or operating; or
- c. directly or indirectly, appropriate, use or duplicate the Franchise System or Brand Standards, or any portion thereof, for use in any other business or endeavor.
Source: Item 22 — CONTRACTS (FDD pages 79–80)
What This Means (2025 FDD)
According to the 2025 Sonesta Simply Suites Franchise Disclosure Document, franchisees face restrictions on their involvement with competitive businesses during the term of their franchise agreement. Specifically, without prior written consent from Sonesta Simply Suites, a franchisee (including their owners and immediate family members) is prohibited from performing services as a consultant for a Competitive Business, regardless of its location or operation. This restriction is in place to protect the Sonesta Simply Suites brand and its standards.
A "Competitive Business" is defined broadly as any entity that owns a hotel brand or trade name that competes with Sonesta Simply Suites or Network Hotels, grants franchises for competitive hotel brands, or provides services to such entities. However, the definition excludes entities with interests merely as 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 has significant implications for prospective Sonesta Simply Suites franchisees. It restricts their ability to engage in other business ventures within the hospitality sector, even in a consulting capacity, without first obtaining written permission from Sonesta Simply Suites. This could limit a franchisee's income opportunities and business activities during the term of the franchise agreement. Franchisees must also ensure that key personnel, such as officers and managers, agree to similar covenants to protect confidential information and the franchise system.