Is a transfer without Sonesta Simply Suites' approval considered a breach of the Franchise Agreement?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
You acknowledge and agree that the rights and duties this Agreement creates are personal to you (or to your owners if you are an Entity) and that we have granted you the Franchise in reliance upon our perceptions of your (or your owners') individual or collective character, skill, aptitude, attitude, business ability, and financial capacity. Accordingly, neither this Agreement (or any interest in this Agreement), your Hotel or substantially all its assets, any direct or indirect ownership interest in you (regardless of its size), nor any ownership interest in any of your owners (if such owners are legal entities) may be transferred without our prior written approval, which consent will not be unreasonably withheld or delayed. You further agree that you will not enter into any proposed mortgage, pledge, hypothecation, encumbrance or giving of a security interest in or which affects your Hotel, this Agreement, or your rights under this Agreement without our prior written consent. A transfer of your Hotel ownership, possession, or control, or substantially all its assets, may be made only with a transfer of this Agreement. Any transfer, or attempt to transfer, without our approval is a breach of this Agreement and has no effect. In this Agreement, the term "transfer" includes a voluntary, involuntary, direct, or indirect assignment, sale, gift, or other disposition of any interest in:
- (1) this Agreement;
- (2) you;
- (3) your Hotel or substantially all its assets; or
- (4) your owners (if such owners are legal entities).
An assignment, sale, gift, or other disposition includes the following events:
Source: Item 22 — CONTRACTS (FDD pages 79–80)
What This Means (2025 FDD)
According to Sonesta Simply Suites' 2025 Franchise Disclosure Document, any transfer or attempted transfer of the franchise without prior written approval from Sonesta Simply Suites constitutes a breach of the Franchise Agreement and has no effect. This includes not only the agreement itself but also the hotel, its assets, or any ownership interest in the franchisee or its owners.
This provision is in place because Sonesta Simply Suites grants the franchise based on their assessment of the franchisee's character, skills, business ability, and financial capacity. The brand wants to ensure that any new owner meets their standards. The FDD specifies that the term "transfer" encompasses a wide range of transactions, including voluntary, involuntary, direct, or indirect assignments, sales, gifts, or other dispositions of interest.
For a prospective franchisee, this means that selling the Sonesta Simply Suites franchise or transferring ownership requires obtaining Sonesta Simply Suites's approval. While the franchisor agrees to not unreasonably withhold or delay consent, failure to obtain this consent before transferring the franchise can result in a breach of contract, potentially leading to termination of the franchise agreement and other legal consequences. This is a standard clause in most franchise agreements, designed to protect the integrity of the brand and the franchise system.