What happens to the Existing Franchise Agreement upon the Closing Date for Sonesta Simply Suites?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee Parties agree that the Existing Franchise Agreement is terminated as of the Closing Date and shall thereafter be of no further force or effect except as provided in this Agreement.
Notwithstanding the foregoing, Assignor Parties acknowledge that (a) the termination does not affect any obligations under the Existing Franchise Agreement that arose or accrued prior to the Closing Date, and (b) the termination does not affect or release Assignor Parties from, and Assignor Parties hereby agree to comply with, any obligations under the Existing Franchise Agreement that, either expressly or by their nature are intended to survive termination of the Existing Franchise Agreement, including, for example, the post-termination obligations (except those obligations pertaining to the de-imaging of the Hotel) and indemnification obligations with respect to claims arising from or based on events which occurred prior to termination.
-
- New Franchise Agreement.
Assignee shall, concurrently with the execution of this Agreement, execute our current form of franchise agreement and related agreements (to reflect that the agreement is executed in connection with a transfer of the rights under the Existing Franchise Agreement) (the "New Franchise Agreement"), and Assignee Owner[s] shall execute the Guaranty and Assumption of Obligations attached thereto.
The New Franchise Agreement will govern Assignee's ownership and operation of the Hotel from and after the Closing Date.
If the Transfer is not consummated on or prior to the Outside Date, and we terminate this Agreement and withdraw our consent to the Transfer, then Assignee acknowledges and agrees that the New Franchise Agreement becomes null and void.
Source: Item 23 — RECEIPTS (FDD pages 80–246)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, the Existing Franchise Agreement with Sonesta Simply Suites is terminated as of the Closing Date. After the Closing Date, the Existing Franchise Agreement will no longer be in effect, except as provided in the agreement.
However, the termination of the Existing Franchise Agreement does not release the Assignor Parties from obligations that arose or accrued prior to the Closing Date. Additionally, any obligations that are intended to survive termination, either expressly or by their nature, remain in effect. These surviving obligations include post-termination obligations (excluding those related to de-imaging the hotel) and indemnification obligations for claims based on events that occurred before the termination.
In conjunction with the termination of the Existing Franchise Agreement, the Assignee is required to execute Sonesta Simply Suites' current form of franchise agreement, referred to as the New Franchise Agreement, along with related agreements. This New Franchise Agreement governs the Assignee's ownership and operation of the hotel from the Closing Date forward. If the transfer is not completed by the Outside Date and Sonesta Simply Suites terminates the agreement, the New Franchise Agreement becomes void.