How and when must the royalty fee be paid by a Sonesta Simply Suites franchisee?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- for onboarding services we provide to you in connection with the opening of your Hotel as a Brand Hotel. This fee is non-refundable and is due during or immediately after the onboarding process.
- C. Royalty Fee. Beginning on the earlier of (a) the Opening Date, or (b) the date you begin operating your Hotel under the Marks, you will pay to us via ACH in U.S.
Source: Item 22 — CONTRACTS (FDD pages 79–80)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, the franchisee must pay a monthly royalty fee. This fee is 5% of Gross Rooms Revenue accruing during the preceding calendar month. The franchisee must pay the royalty fee via ACH in U.S. dollars on or before the twentieth (20th) day of each month, including the final month of the Term.
This means that a Sonesta Simply Suites franchisee needs to ensure they have a system in place to accurately track and report Gross Rooms Revenue on a monthly basis. They also need to set up an ACH payment method to ensure timely payment of the royalty fees to avoid any penalties or breach of the franchise agreement.
It is typical in the franchise industry for royalty fees to be a percentage of gross sales, payable monthly. The ACH payment method is also a common practice for ensuring timely and accurate payments. Franchisees should be aware of these requirements and factor them into their financial planning.