Does Sonesta Simply Suites require a security interest under the Incentive Note?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
We do not require security interest under the Incentive Note. Each of your direct and indirect owners, with a 20% or more ownership interest in you, must sign the Guaranty and Assumption of Obligations attached as Exhibit C to the Franchise Agreement, personally guaranteeing your obligations under the Incentive Note.
The Incentive Note provides for a waiver of presentment, demand for payment, protest, notices of protest, dishonor, nonpayment of the Incentive Note and all notices of every kind are waived by you. We may grant renewals, extensions, modifications, compositions, compromises, releases or discharges of other parties without notice to any guarantor or co-maker.
It is not our practice or intent to sell, assign or discount to a third party all or part of the Incentive Note, nor do we receive any consideration for placing the Incentive Note with a lender.
Except for the development incentive program described above, neither we nor our affiliates offer, directly or indirectly, financing arrangements to franchisees nor do we guarantee any note, lease, or other obligations. This program may be modified, limited, extended or terminated at any time without advance notice.
Source: Item 10 — FINANCING (FDD pages 47–48)
What This Means (2025 FDD)
According to the 2025 Sonesta Simply Suites FDD, Sonesta Simply Suites does not require a security interest under the Incentive Note. However, each direct and indirect owner with a 20% or more ownership interest must sign a Guaranty and Assumption of Obligations, which is attached as Exhibit C to the Franchise Agreement. This means these owners must personally guarantee the franchisee's obligations under the Incentive Note.
The Incentive Note includes a waiver of presentment, demand for payment, protest, notices of protest, dishonor, and nonpayment. The franchisee also waives all notices of every kind. Sonesta Simply Suites has the right to grant renewals, extensions, modifications, compositions, compromises, releases, or discharges of other parties without notifying any guarantor or co-maker.
Sonesta Simply Suites does not typically sell, assign, or discount the Incentive Note to a third party, nor do they receive any compensation for placing the Incentive Note with a lender. Besides the development incentive program, Sonesta Simply Suites and its affiliates do not offer direct or indirect financing arrangements to franchisees, nor do they guarantee any note, lease, or other obligations. The development incentive program can be modified, limited, extended, or terminated at any time without prior notice.