Can a Sonesta Simply Suites franchisee perform services as a representative 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 are restricted from performing services for a Competitive Business during the term of the franchise agreement. Specifically, the franchisee, their owners, and their immediate family members are prohibited from acting as a director, officer, manager, employee, consultant, representative, lessor, or 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 operates.
A "Competitive Business" is defined as any entity that owns a hotel brand or trade name that competes with Sonesta Simply Suites or Network Hotels, grants franchises or licenses for a competitive hotel brand, 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 with no control over the brand's business decisions.
This non-compete clause ensures that franchisees remain dedicated to the Sonesta Simply Suites system and do not use their knowledge or resources to benefit competing businesses. It also requires franchisees to obtain similar non-compete agreements from specified personnel, such as officers, directors, managers, and employees who attend training or have access to confidential information. Sonesta Simply Suites retains the right to regulate the form of these agreements and act as a third-party beneficiary with independent enforcement rights.