Can a Sonesta Simply Suites franchisee perform services as an officer 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 Sonesta Simply Suites's 2025 Franchise Disclosure Document, franchisees face restrictions regarding involvement with competitive businesses during the term of their franchise agreement. Specifically, without prior written consent from Sonesta Simply Suites, a franchisee, their owners, or their immediate family members are prohibited from performing services as an officer for a Competitive Business, regardless of its location.
A "Competitive Business" is defined as any entity that owns a competing hotel brand, grants franchises for a competitive hotel brand, or provides services to such entities. This definition extends to entities owning a hotel brand or trade name that competes with Sonesta Simply Suites or Network Hotels. However, an exception exists for equity ownership of less than 5% in a publicly-traded Competitive Business on a recognized United States stock exchange.
These restrictions are designed to protect Sonesta Simply Suites's market position and prevent franchisees from using the franchised business's knowledge and resources to benefit a competitor. Franchisees must also secure similar non-compete covenants from specified personnel, including officers and managers, who attend training or have access to confidential information. This ensures a consistent level of protection for Sonesta Simply Suites's proprietary information and business model.
It is important for prospective franchisees to fully understand these restrictions and how they might impact their other business interests or family members. Seeking clarification from Sonesta Simply Suites regarding the scope of "Competitive Business" and the process for obtaining written consent is advisable before entering into a franchise agreement.