What is the meaning of 'termination with cause' in the context of the Sonesta Simply Suites Franchise Agreement?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Arbitration Act and other federal laws, Massachusetts law applies (subject to state law). |
| PROVISION | SECTION IN | SUMMARY |
|---|---|---|
| FRANCHISE AGREEMENT | ||
| d. Termination by franchisee | Sections 14.G and 16.B | You may terminate the Franchise Agreement without paying Lost Revenue Damages (described in Item 6) in the event your Hotel is damaged by fire or other casualty, the damage or destruction is substantial and material, affecting over fifty percent (50%) of the Guest Rooms of your Hotel, the reasonable estimated cost to repair the damage exceeds the fair market value of your Hotel, and you provide us written notice within 60 days of such casualty event of your election not to repair or rebuild your Hotel. If you terminate the Franchise Agreement without cause, you must pay us Lost |
| 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. |
| f. Termination by Franchisor with cause | Sections 14.A and 14.B | We may terminate the Franchise Agreement if you or your owners, or any guarantor of your obligations under the Franchise Agreement, violate the Franchise Agreement (subject to state law). |
| g. "Cause" | Section 14.A | Under the Franchise Agreement, you have 30 days to cure operational defaults and |
| defined-curable | other defaults of the Franchise Agreement or Brand Standards not listed in subsection | |
| defaults | h. below, or other agreements with us relating to your Hotel (subject to state law). | |
| h. "Cause" defined-non curable defaults | Sections 14.B and 16.B; Ex. D-1 and Ex. D-2 | Non-curable defaults under the Franchise Agreement include you or any guarantor: failing to pay us (or our affiliates) any amounts due and failing to correct such failure within ten days after our written notice of the same; failing to pay debts as they become due; filing bankruptcy, becoming insolvent, or being placed in a receivership; allowing an attachment to remain on all or a substantial part of your Hotel or of your or its assets for 30 days; failing within 60 days of the entry of a final judgment of any amount exceeding $100,000 to discharge, vacate or reverse the judgment, or to stay execution of it, or if appealed, to discharge the judgment within 30 days after a final adverse decision in the appeal; failing to obtain possession (or to timely provide us evidence of such possession), or losing possession or the right to possession of all or a significant part of your Hotel; failing to timely commence or complete construction work by your required commencement or completion date, or failing to complete the renovation work by your required completion date, as applicable; failing to open your Hotel by the Opening Date; failing to continue to identify your Hotel to the public as a Brand Hotel, or failing to operate your Hotel for five consecutive days, or any shorter period after which it is not unreasonable under the facts and circumstances for us to conclude that you do not intend to continue to operate your Hotel; contesting in any court or proceeding our ownership of the Marks or any part of the Franchise System, or the validity of any of the Marks; taking any action toward dissolving or liquidating yourself or itself; any of the owners of a controlling equity interest in you are or have been convicted by a trial court of, or plead or have pleaded no contest to, a felony (or any other offense or conduct that we reasonably determine |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 66–70)
What This Means (2025 FDD)
According to the 2025 Sonesta Simply Suites Franchise Disclosure Document, 'termination with cause' refers to situations where Sonesta Simply Suites can terminate the Franchise Agreement if the franchisee or their owners, or any guarantor, violates the Franchise Agreement.
The FDD outlines two categories of defaults that can lead to termination with cause: curable defaults and non-curable defaults. For curable defaults, the franchisee typically has 30 days to correct the issue. These defaults generally pertain to operational matters and other breaches of the Franchise Agreement or Brand Standards.
Non-curable defaults, on the other hand, are more severe and do not offer a cure period. These include failing to make payments to Sonesta Simply Suites (or its affiliates) within ten days of written notice, becoming insolvent, filing for bankruptcy, allowing an attachment on the hotel for 30 days, failing to discharge a judgment exceeding $100,000, losing possession of the hotel, failing to complete construction or renovation work by the required dates, failing to open the hotel by the opening date, ceasing to operate the hotel as a Sonesta Simply Suites, contesting the ownership of the brand's marks, taking action to dissolve the business, or if any owner with a controlling equity interest is convicted of a felony. These non-curable defaults allow Sonesta Simply Suites to terminate the agreement immediately, protecting the brand and its reputation.