What is the impact of a hotel condemnation on the Sonesta Simply Suites Franchise Agreement?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN | SUMMARY |
|---|---|---|
| e. Termination by Franchisor without cause | Section 16.A | Revenue Damages (subject to state law). If your Hotel is condemned, you must give us notice at the earliest possible time. If, in our sole discretion, the taking is significant enough to render operation of your Hotel in accordance with the Brand Standards impractical, then we may terminate the Franchise Agreement on written notice, effective as of the day of the consummation of the actual taking. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 66–70)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, if the franchisee's hotel is condemned, the franchisee must notify Sonesta Simply Suites as soon as possible. Sonesta Simply Suites has the option to terminate the Franchise Agreement if, in its sole judgment, the condemnation is significant enough to make operating the hotel according to brand standards impractical. If Sonesta Simply Suites chooses to terminate the agreement, it will provide written notice, which will be effective on the day the actual taking occurs.
This clause gives Sonesta Simply Suites significant discretion in deciding whether to terminate the agreement following a condemnation. A franchisee should carefully consider this provision, as a condemnation could lead to the termination of their franchise agreement, even if they wish to continue operating the hotel. The franchisee's ability to continue operating the Sonesta Simply Suites hotel depends on Sonesta Simply Suites's assessment of the situation.
It is important for a prospective Sonesta Simply Suites franchisee to understand the circumstances under which Sonesta Simply Suites might choose to terminate the agreement. The franchisee should seek clarification from Sonesta Simply Suites regarding the criteria it uses to determine whether a condemnation is significant enough to render operation of the hotel impractical. Understanding these factors can help a franchisee assess the risks associated with potential condemnation and make informed decisions about investing in a Sonesta Simply Suites franchise.