Can the Holder of the Note for Sonesta Simply Suites specify additional defaults?

According to the 2025 Sonesta Simply Suites Franchise Disclosure Document, the Holder of the Note retains certain rights that are not fully detailed within the note itself. Specifically, the Holder reserves the right to specify additional defaults beyond those initially outlined. This provision ensures that the Holder maintains flexibility and control over the loan agreement, allowing them to address unforeseen circumstances or potential risks that may arise during the term of the note.

For a prospective Sonesta Simply Suites franchisee, this means that the terms of the Note are not necessarily exhaustive. The Holder has the power to add further conditions that could trigger a default. This introduces an element of uncertainty, as the franchisee must be aware that the goalposts could shift. It is crucial to maintain open communication with the Holder to understand their expectations and any potential concerns they may have.

This clause does not modify or replace any other rights, default, or termination notices under the Franchise Agreement or any other agreement with the Holder regarding the franchisee's hotel. This means that the Holder's right to specify additional defaults is separate from, and in addition to, any other rights or remedies they may have. The FDD states that the Holder does not waive any of its legal or equitable rights or remedies. Therefore, a franchisee should seek legal counsel to fully understand the implications of this provision and to assess the potential risks it poses to their investment.

In summary, while the Note provides a framework for the loan agreement, prospective Sonesta Simply Suites franchisees must recognize that the Holder has the latitude to introduce additional default conditions. This underscores the importance of thorough due diligence, careful negotiation, and ongoing communication to mitigate potential risks and ensure a clear understanding of all obligations.