Is Sonesta Simply Suites required to use all of the Brand Promotion Fees for specific purposes?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
We and our affiliates will account for Brand Promotion Fees separately from our other funds, though we are not obligated to maintain them in a separate account. We and our affiliates may use Brand Promotion Fees to reimburse us or our affiliates or designees for the salaries and benefits of personnel who directly or indirectly manage and administer the brand promotion programs, associated administrative costs, travel expenses of personnel while they are on corresponding business, meeting costs, overhead relating to the brand promotion programs, and other expenses that we incur in activities related to administering or directing brand promotion programs, including conducting market research, public relations, preparing advertising, promotion, and marketing materials, and collecting and accounting for Brand Promotion Fees. Brand Promotion Fees will not be used principally to solicit new franchise sales.
The brand promotion programs are not a trust and the Brand Promotion Fees do not bear interest. We do not owe any fiduciary obligation to you for administering the brand promotion program or any other reason. Our spending of the Brand Promotion Fees in any fiscal year may be more or less than the total Brand Promotion Fees collected by us in such year, and the brand promotion programs may borrow from us or others (paying reasonable interest) to cover deficits, or invest surplus for future use. We may prepare an annual, unaudited statement of Brand Promotion Fee payments and expenses, and give you a copy of the most recently prepared statement upon your written request to us. We may (but are not obligated to) have the accounts related to Brand Promotion Fees audited annually, which audit may be paid for using Brand Promotion Fees, by an independent certified public accountant. We may incorporate a brand promotion fund whenever we deem appropriate.
We need not ensure that brand promotion program expenditures in or affecting any geographic area are proportionate or equivalent to Brand Promotion Fees paid by Network Hotels operating in that geographic area or that any Network Hotel benefits directly or in proportion to its Brand Promotion Fee payments from the development of advertising and marketing materials or the placement of advertising and marketing. We and our affiliates may forgive, waive, settle, and compromise all claims by or against the brand promotion programs. We assume no direct or indirect liability or obligation to you for collecting amounts due to, maintaining, directing, or administering programs related to the Brand Promotion Fees.
Franchisees of each brand may pay Brand Promotion Fees at a different rate. We and our affiliates also may at any time defer or reduce a franchisee's payment of Brand Promotion Fees and, upon 30 days' prior notice to you, reduce or suspend Brand Promotion Fee payments and
programs for which we use such payments for one or more periods of any length and terminate (and, if terminated, reinstate) such programs.
In the year ended December 31, 2024, the Brand Promotion Fees were used as follows: 42% was used for media placement; 38% was used for production; 7% was used for administrative expenses; and 13% was used for other purposes, such as to support our global sales program.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 48–60)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, Sonesta Simply Suites and its affiliates are not obligated to maintain Brand Promotion Fees in a separate account, but they will account for them separately from other funds. These fees can be used to cover various expenses, including salaries and benefits of personnel managing brand promotion programs, administrative costs, travel expenses, meeting costs, and overhead related to these programs. Sonesta Simply Suites can also use the fees for market research, public relations, advertising, and collecting Brand Promotion Fees.
The document specifies that Brand Promotion Fees will not be used primarily to solicit new franchise sales. The brand promotion programs are not considered a trust, and the fees do not accrue interest. Sonesta Simply Suites does not have a fiduciary obligation regarding the administration of the brand promotion program. The amount spent on brand promotion in a fiscal year may be more or less than the total fees collected, and the programs may borrow funds or invest surplus for future use.
Sonesta Simply Suites may provide an annual, unaudited statement of Brand Promotion Fee payments and expenses upon written request and may choose to have the accounts audited annually by an independent certified public accountant, with the audit costs potentially covered by the Brand Promotion Fees. The brand promotion program expenditures do not need to be proportionate to the fees paid by Network Hotels in any specific geographic area, nor does Sonesta Simply Suites need to ensure that any Network Hotel benefits directly or in proportion to its Brand Promotion Fee payments. Sonesta Simply Suites has the right to forgive, waive, settle, and compromise claims related to the brand promotion programs and assumes no direct liability for administering these programs.
In 2024, the Brand Promotion Fees were allocated as follows: 42% for media placement, 38% for production, 7% for administrative expenses, and 13% for other purposes, including support for the global sales program. Sonesta Simply Suites also reserves the right to modify or terminate brand promotion programs, and franchisees of each brand may pay Brand Promotion Fees at different rates. Sonesta Simply Suites may defer or reduce a franchisee's payment of Brand Promotion Fees with 30 days' notice.