Under what conditions can Sonesta Simply Suites immediately terminate the agreement?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
B. Immediate Termination by Us. We have the right to terminate this Agreement immediately upon notice to you (or terminate it at the earliest time permitted by applicable law) if one or more of the following breaches to this Agreement or any of its attachments occur:
(1) After curing any Event of Default of this Agreement or the Brand Standards you engage in the same noncompliance within any consecutive 24 month period, or you fail on three or more separate occasions within any 12 consecutive month period to comply with this Agreement, whether or not the noncompliance is corrected after notice; or after we have notified you of your noncompliance with any of the requirements imposed by this Agreement or the Brand Standards, regardless of materiality, you engage in a pattern of noncompliance with any of those requirements, whether or not the noncompliance is corrected after notice, which pattern of non-compliance in and of itself will be deemed material:
(2) You or any guarantor of your obligations under this Agreement:
a.
Fail to pay us (or our affiliates) any amounts due and do not correct the failure within ten days after we deliver written notice of that failure to you;
- b.
Generally fails to pay your or its debts as they become due, including to the lessor of Premises (if leased) and any other amounts owed in connection with your Hotel; admits in writing your or its insolvency or inability to pay its debts or obligations as they become due; your or its liabilities exceed its assets; or makes a general assignment for the benefit of your or its creditors;
- c.
Commence any case, proceeding or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of you or it or your or its debts under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for you or it or for all or any substantial part of your or its property;
Source: Item 22 — CONTRACTS (FDD pages 79–80)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, the franchise agreement can be terminated immediately by Sonesta Simply Suites under specific circumstances. These include repeated noncompliance with the agreement or brand standards, even if corrected, within certain timeframes. Specifically, if a franchisee engages in the same noncompliance after curing an initial event of default within a 24-month period, or fails to comply with the agreement on three or more separate occasions within a 12-month period, Sonesta Simply Suites has grounds for immediate termination. Additionally, a pattern of noncompliance with the agreement or brand standards, regardless of whether each instance is corrected, can also lead to immediate termination.
Immediate termination can also occur if the franchisee or any guarantor fails to pay amounts due to Sonesta Simply Suites or its affiliates and does not correct this failure within ten days after receiving written notice. Further, if the franchisee generally fails to pay debts as they become due, admits insolvency, has liabilities exceeding assets, or makes a general assignment for the benefit of creditors, Sonesta Simply Suites can terminate the agreement immediately. The commencement of any legal case seeking reorganization, liquidation, or the appointment of a receiver for the franchisee or their property also constitutes grounds for immediate termination.
These termination rights are in place to protect the Sonesta Simply Suites brand and ensure that franchisees adhere to the standards and financial obligations outlined in the franchise agreement. Prospective franchisees should be aware of these conditions and understand the importance of maintaining compliance and financial stability to avoid the risk of immediate termination. It is also important to note that Sonesta Simply Suites's decision to exercise these rights does not waive any other breaches of the agreement by the franchisee.