For Sonesta Simply Suites, what is management responsible for in relation to internal control?

According to the 2025 Franchise Disclosure Document, Sonesta Simply Suites's management is responsible for several key aspects of financial statement preparation and internal control. Specifically, management is tasked with designing, implementing, and maintaining internal controls that are relevant to the preparation and fair presentation of financial statements. These controls are intended to ensure the financial statements are free from material misstatement, whether due to fraud or error.

This responsibility means that Sonesta Simply Suites's management must establish and oversee a system of policies and procedures designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (GAAP). This includes controls over things like the accuracy and completeness of financial data, the safeguarding of assets, and the prevention and detection of fraud.

For a prospective franchisee, understanding management's role in internal control is crucial. It provides insight into the overall financial governance and risk management practices of Sonesta Simply Suites. While franchisees are not directly involved in the company-level internal controls, the effectiveness of these controls can impact the financial health and stability of the entire franchise system. Therefore, a well-managed internal control environment at the franchisor level can give franchisees confidence in the accuracy and reliability of the financial information provided by the franchisor.

It is important to note that the auditor's role is to obtain an understanding of internal control relevant to the audit but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. Therefore, prospective franchisees may want to inquire further about the specific internal control procedures in place and any assessments or certifications of their effectiveness beyond the scope of the financial statement audit.