Under what conditions might Sonesta Simply Suites negotiate the Incentive?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| x. Dispute resolution | Section 17.F | Item 17 |
FINANCING
We may, in our sole discretion, offer incentives for hotels that are new to the Sonesta brand. An "Incentive" is a financial contribution that we make to assist with the development or conversion of your Hotel and will be in an amount that we determine. If an Incentive is granted to
you, the amount of the Incentive typically shall comprise, at our discretion, between $2,000 and $7,600 per Guest Room of your Hotel. To receive an Incentive, you and your principals must sign a development incentive promissory note in the form attached as Exhibit E (the "Incentive Note"), when you sign the Franchise Agreement. An Incentive does not have to be repaid unless the Franchise Agreement is terminated before its expiration date, or a transfer occurs as described below. The Incentive will be disbursed to you, unless otherwise agreed to by you and us, within 45 days after your Hotel opens as a Brand Hotel with our approval, as long as you have completed any PIP, there have been no material adverse changes to your Hotel since approval (for example, a decrease in the number of Guest Rooms or a significant delay in opening as a Brand Hotel), and subject to your and any guarantor's financial condition being satisfactory to us. For each year that your Hotel is open, the repayable amount is reduced by an equal annual percentage based on the term of the Franchise Agreement. For example, if the Franchise Agreement has a twentyyear term, the repayable amount is reduced by 1/20th of the original amount annually. If your franchise terminates before the expiration of the Franchise Agreement, you must pay us the thencurrent repayable amount of the Incentive. If you transfer your Hotel you also must pay us the then-current repayable amount of the Incentive. An Incentive bears no interest. However, if an Incentive becomes repayable and payment is not made in full when due, the outstanding amount is subject to interest at 18% per annum or the highest rate allowed by law, and we may collect court costs and attorneys' fees incurred to collect the repayable amount of the Incentive. We may negotiate these Incentives when business circumstances warrant.
We do not require security interest under the Incentive Note.
Source: Item 10 — FINANCING (FDD pages 47–48)
What This Means (2025 FDD)
According to Sonesta Simply Suites' 2025 Franchise Disclosure Document, the brand may negotiate the incentive they offer to new franchisees when business circumstances warrant it. The incentive is a financial contribution Sonesta Simply Suites may make to assist with the development or conversion of a hotel to their brand.
The amount of the incentive typically ranges from $2,000 to $7,600 per guest room, at Sonesta Simply Suites' discretion. To receive the incentive, the franchisee must sign a development incentive promissory note when signing the Franchise Agreement. The incentive does not have to be repaid unless the Franchise Agreement is terminated before its expiration date, or a transfer occurs.
The incentive will be disbursed within 45 days after the hotel opens as a Sonesta Simply Suites branded hotel, provided the franchisee has completed any Property Improvement Plan (PIP), there have been no material adverse changes to the hotel since approval, and the franchisee's financial condition is satisfactory to Sonesta Simply Suites. The repayable amount of the incentive reduces annually based on the term of the Franchise Agreement. If the franchise terminates early or the hotel is transferred, the franchisee must repay the outstanding amount. The incentive does not bear interest unless it becomes repayable and is not paid when due, in which case it is subject to interest at 18% per annum or the highest rate allowed by law.