When are pre-opening damages due for a Sonesta Simply Suites franchise?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
uch termination. |
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (Note 1) |
|---|---|---|---|
| Pre-Opening Damages | $3,600 per Guest Room | Upon demand | You must pay us these damages if we terminate the Franchise Agreement for your breac |
Source: Item 6 — OTHER FEES (FDD pages 25–36)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, pre-opening damages are due upon demand. These damages, amounting to $3,600 per guest room, are levied if Sonesta Simply Suites terminates the Franchise Agreement due to the franchisee's breach before the hotel's authorized opening.
This means that if a franchisee fails to meet their obligations under the Franchise Agreement during the pre-opening phase, leading to termination by Sonesta Simply Suites, the franchisee will be required to pay a specified amount for each guest room as compensation. This fee is intended to cover the damages incurred by Sonesta Simply Suites as a result of the franchisee's failure to open the hotel as agreed.
The "upon demand" clause indicates that Sonesta Simply Suites can request immediate payment of these damages once the termination is effective. This could create a significant financial burden for the franchisee, especially considering the amount is calculated per guest room, potentially resulting in a substantial sum for larger hotels. Prospective franchisees should carefully review the terms of the Franchise Agreement to understand what constitutes a breach and what steps they can take to avoid such a situation.
It is important for potential Sonesta Simply Suites franchisees to have sufficient capital and a solid business plan to minimize the risk of pre-opening breaches. Understanding the conditions that could lead to termination and the resulting financial implications is crucial for making an informed investment decision.