What is management required to evaluate when preparing the financial statements for Sonesta Simply Suites?

According to the 2025 FDD, when preparing financial statements for Sonesta Simply Suites, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the company's ability to continue as a going concern for one year after the date that the financial statements are available to be issued. This evaluation is a critical component of ensuring the accuracy and reliability of the financial statements. This assessment is based on accounting principles generally accepted in the United States of America.

This requirement ensures that Sonesta Simply Suites' financial statements provide a transparent and realistic view of the company's financial health. By evaluating the company's ability to continue as a going concern, management provides stakeholders with important information about the company's long-term viability. This assessment considers all known conditions and events that could impact the company's financial stability over the next year.

For a prospective Sonesta Simply Suites franchisee, this information is valuable because it reflects the financial stability and management's foresight in addressing potential risks. Understanding that management is actively assessing the company's ability to operate as a going concern can provide reassurance about the franchisor's stability. Additionally, the financial statements are audited by external auditors, providing further assurance about their reliability.