Under what circumstances might Sonesta Simply Suites procure insurance on behalf of a franchisee?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (Note 1) |
|---|---|---|---|
| Insurance | $500 per month, plus reimbursement for all premiums, costs, and expenses we incur | As billed | If you do not procure or maintain the required insurance or policy limits described in the Brand Manual, in addition to paying us a monthly fee, we may (but are not obligated to) procure and maintain insurance for you without first giving you notice, and you will be required to reimburse us. The monthly fee is subject to change. See Item 8 and Note 9. |
Source: Item 6 — OTHER FEES (FDD pages 25–36)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, if a franchisee fails to procure or maintain the required insurance or policy limits as described in the Brand Manual, Sonesta Simply Suites has the option, but not the obligation, to procure and maintain insurance on behalf of the franchisee. This can occur without prior notice to the franchisee. In such instances, the franchisee is responsible for reimbursing Sonesta Simply Suites for all premiums, costs, and expenses incurred.
In addition to reimbursing Sonesta Simply Suites for the insurance premiums, costs, and expenses, the franchisee must also pay a monthly fee of $500. This monthly fee is subject to change. This arrangement ensures that the hotel maintains the necessary insurance coverage to protect the brand and comply with legal requirements, even if the franchisee fails to do so independently.
This provision in the franchise agreement serves as a safeguard for Sonesta Simply Suites, ensuring that all franchised locations meet the brand's insurance standards. While it offers a safety net, it also places the financial burden on the franchisee for both the cost of the insurance and an additional monthly fee if they fail to maintain their own insurance coverage. Prospective franchisees should carefully review the insurance requirements outlined in Item 8 and the Brand Manual to avoid incurring these additional costs.