How is the repayable amount of the Incentive reduced each year for a Sonesta Simply Suites franchise?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
For each year that your Hotel is open, the repayable amount is reduced by an equal annual percentage based on the term of the Franchise Agreement. For example, if the Franchise Agreement has a twentyyear term, the repayable amount is reduced by 1/20th of the original amount annually. If your franchise terminates before the expiration of the Franchise Agreement, you must pay us the thencurrent repayable amount of the Incentive. If you transfer your Hotel you also must pay us the then-current repayable amount of the Incentive.
Source: Item 10 — FINANCING (FDD pages 47–48)
What This Means (2025 FDD)
According to Sonesta Simply Suites' 2025 Franchise Disclosure Document, the repayable amount of the incentive is reduced each year by an equal annual percentage based on the term of the Franchise Agreement. For instance, if the Franchise Agreement has a twenty-year term, the repayable amount is reduced by 1/20th of the original amount annually.
This means that a Sonesta Simply Suites franchisee who receives an incentive will have a portion of it forgiven each year that the hotel remains open and operating under the franchise agreement. The amount forgiven annually is simply the original incentive amount divided by the number of years in the franchise term.
However, if the franchise agreement is terminated before its expiration date, the franchisee must pay Sonesta Simply Suites the then-current repayable amount of the incentive. Similarly, if the franchisee transfers the hotel to a new owner, the then-current repayable amount of the incentive must be paid to Sonesta Simply Suites. This provides a strong incentive for franchisees to maintain the franchise agreement for its full term.