Sonesta Simply Suites Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$819,151 - $16,413,220
Franchise Fee
$25,000
Total US Locations
65
Business Summary
Sonesta Simply Suites grants franchises to operate mid-scale, extended-stay hotels under its service mark and related proprietary marks. These hotels provide a distinct business format, methods, procedures, and standards, and offer access to reservation services, advertising, marketing programs, and training. Franchisees must adhere to the high standards established for Sonesta Simply Suites hotels, which are known as Brand Hotels, at a specified location.
Corporate History
Sonesta RL Hotels Franchising Inc. was originally formed in Washington on December 24, 1986, as Vance Hotels, Inc. The company later changed its name to Red Lion Hotels Franchising, Inc. in 2005, and then to its current name in September 2021. Its parent corporation, Red Lion Hotels Corporation (RLHC), was incorporated in Washington in 1978 and re-domiciled as a Maryland corporation in March 2021. Sonesta RL Hotels Franchising Inc. and RLHC have actively owned and managed hotels since their incorporation. The company expanded significantly through acquisitions, including GuestHouse International in 2015, Vantage Hospitality Group in 2016 (adding brands like Lexington and Americas Best Value Inn), and the Knights Inn brand in 2018. In March 2021, RLHC merged with Sonesta International Hotels Corporation, becoming a wholly-owned subsidiary of Sonesta. In April 2022, an affiliate acquired The James hotel brand. Sonesta RL Hotels Franchising Inc. began offering franchises under the Sonesta® Simply Suites Marks in September 2021, and also offers franchises for numerous other hotel brands, including Classico Collection By Sonesta, MOD A Sonesta Collection, The James, Sonesta Hotels and Resorts, Royal Sonesta, Sonesta ES Suites, Sonesta Select Hotels, Sonesta Essential Hotels, Red Lion Hotel, Red Lion Inn & Suites, Signature Inn, and Knights Inn.
Financial Overview
Investment Range
$819,151 - $16,413,220
Franchise Fee (Low)
$25,000
Franchise Fee (High)
$50,000
Royalty %
5%
Marketing %
3.5%
Equipment Costs (Low)
$289,800
Equipment Costs (High)
$13,998,375
Working Capital
$377,095
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
The independent auditor has issued an unqualified opinion on Red Lion Hotels Corporation's consolidated financial statements for 2024, 2023, and 2022. The 2023 financial statements were restated to correct misstatements in cash flow presentation, specifically reclassifying key money disbursements and centralized cash management transfers, but this did not modify the auditor's opinion on the fair presentation of the financials. The auditor did not raise substantial doubt about Red Lion Hotels Corporation's ability to continue as a going concern. Red Lion Hotels Corporation's financial statements indicate that its parent company, Sonesta, handles certain cash transfers and vendor payments for working capital. The document states that Red Lion Hotels Franchising Inc. has sufficient funds to maintain its operations and can seek additional funds from Sonesta if needed.
Financing Details
Sonesta RL Hotels Franchising Inc. may offer incentives, which are financial contributions ranging from $2,000 to $7,600 per Guest Room, for hotels new to the Sonesta brand. Franchisees and their principals must sign a development incentive promissory note to receive this. The incentive is generally disbursed within 45 days after the hotel opens as a Brand Hotel, provided conditions like completing property improvement plans, no material adverse changes, and satisfactory financial condition of the franchisee and guarantor are met. The repayable amount of this incentive is reduced by an equal annual percentage over the term of the franchise agreement (e.g., 1/20th annually for a 20-year term). If the franchise agreement terminates early or the hotel is transferred, the outstanding repayable amount becomes immediately due, and if not paid, it will accrue interest at 18% per annum or the highest legal rate. Direct and indirect owners with a 20% or more ownership interest must personally guarantee the obligations under the incentive note. Apart from this specific incentive program, Sonesta RL Hotels Franchising Inc. and its affiliates do not offer or guarantee any other financing arrangements.
Performance Metrics
Total US Locations
65
Franchised Units
17
Corporate Units
48
Avg Square Footage
55,000
Franchising Since
2021
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
21
Litigation Summary
Sonesta RL Hotels Franchising Inc. currently faces one pending class-action lawsuit filed in August 2023 against its former board members and other entities. This lawsuit alleges breaches of fiduciary duties related to the BP Merger of TravelCenters of America Inc., claiming the board failed to maximize shareholder value and disclose necessary information. Sonesta RL Hotels Franchising Inc. is named as aiding and abetting. A motion to dismiss was granted but has been appealed, with oral argument expected in April 2025. In 2021, eight lawsuits were filed by purported Red Lion Hotels Corporation stockholders concerning a merger, alleging failure to provide material information. These were voluntarily dismissed after Red Lion Hotels Corporation made supplemental disclosures and paid plaintiffs' attorneys $240,000. In 2018, Red Lion Hotels Franchising Inc. was sued by Radisson Hotels International, Inc. for tortious interference, and this case was settled in 2021 with Red Lion Hotels Franchising Inc. paying $500,000. Between 2016 and 2019, Sonesta RL Hotels Franchising Inc. and its predecessors were involved in several lawsuits against former franchisees and guarantors for breach of contract and unpaid amounts. These cases included disputes with Remo Polselli (dismissed without prejudice), Linger Chu and His-Hsieh Chu (settled for $250,000), Ghazanfar Khan (two lawsuits, settled for $500,000), Kumar and Sadikila Vemulapalli (settled for $80,000), Minnesota Hospitality, Inc. (settled for $150,000), Tiya Hospitality, LLC (settled for $10,500), and JS Three Star Investment Inc. (settled confidentially). Additionally, Sonesta RL Hotels Franchising Inc. initiated three new lawsuits in June 2024 against former franchisees and guarantors to collect unpaid amounts.
Bankruptcy History
Sonesta RL Hotels Franchising Inc. has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Term
20 years
Renewal Conditions
To qualify for a successor franchise, Sonesta Simply Suites franchisees must: give timely notice of election to renew; have substantially complied with the Franchise Agreement during its term and not received four or more default notices; be in full compliance with the Franchise Agreement and all Brand Standards on the notice and commencement dates of the new agreement; maintain possession of their hotel premises and remodel the hotel to comply with then-current Brand Standards; if required, transition their hotel to a different brand concept offered by Sonesta RL Hotels Franchising Inc. or an affiliate; correct any notified deficiencies before renewal; sign Sonesta RL Hotels Franchising Inc.'s then-current form of franchise agreement and ancillary agreements; pay the renewal fee; and the franchisee and its owners must sign a general release.
Training & Support Program
Franchisor Assistance
Sonesta RL Hotels Franchising Inc. provides comprehensive assistance to its Sonesta Simply Suites franchisees. Pre-opening assistance includes conducting initial inspections and developing a Property Improvement Plan (PIP) for conversions, reviewing and approving hotel plans and designs, performing inspections during or after construction/renovation, providing onboarding services, and offering initial brand training to one Hotel Representative covering brand programs, marketing, sales, loyalty, and brand culture. Sonesta RL Hotels Franchising Inc. also provides a Brand Manual, approves Management Companies, provides lists of required equipment and approved suppliers, and assigns a project manager or onboarding specialist. Ongoing support includes providing required and optional training programs (virtually or in-person), convening a Brand Conference at least every 24 months for networking and educational seminars, periodically offering advisory guidance on hotel operations, administering the Sonesta Travel Pass loyalty program, and offering access to IT and franchise services help desks. Sonesta RL Hotels Franchising Inc. also facilitates participation in a Third-Party Distribution Program, updates the Brand Manual, indemnifies for authorized use of Marks in trademark proceedings, operates and maintains the Central Reservation System, offers participation in the Revenue Management for Hire program, administers brand promotion programs, and maintains a franchise system website for Brand Hotels.
Initial Training Hours
33
Training Location
Virtual or on-site
Ongoing Support
Sonesta RL Hotels Franchising Inc. provides ongoing support to Sonesta Simply Suites franchisees through various channels. This includes required and optional ongoing training programs, which can be in-person/on-site ($2,000 per day plus expenses) or virtual ad-hoc ($200 per hour). Franchisees and their general managers or Management Company representatives must attend a Brand Conference at least every 24 months, which may be held virtually or at a designated location. Sonesta RL Hotels Franchising Inc. also periodically advises franchisees on hotel operations, administers a loyalty program (Sonesta Travel Pass), and offers access to IT and franchise services help desks. Franchisees can participate in the Revenue Management for Hire program and are part of brand promotion programs. A franchise system website is maintained, and the Brand Manual is regularly updated.
Franchise Requirements
Ideal Candidate Profile
Sonesta Simply Suites seeks individuals or entities to operate its branded hotels who satisfactorily meet the franchisor's qualifications and are willing to undertake the necessary investment and effort. For transfers of existing franchises, a new franchisee must demonstrate educational, managerial, and business acumen, possess good moral character, business reputation, and credit rating, have the aptitude and ability to operate a Sonesta Simply Suites Hotel, and have sufficient equity capital. The franchisor also seeks individuals who will personally guarantee the franchise obligations.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
Supervisory
Territory Type
Non-Exclusive
Territory Size Requirements
Sonesta Simply Suites grants franchisees a non-exclusive license to operate hotels at a specified location. Franchisees will not receive an exclusive territory and may face competition from other Sonesta Simply Suites franchisees, company-owned outlets, or other distribution channels and competitive brands controlled by the franchisor. In special circumstances, Sonesta Simply Suites may grant an exclusive or protected area, but this is at its sole judgment and discretion.
Staffing Notes
Sonesta Simply Suites franchisees are solely responsible for all decisions related to the employees, agents, and independent contractors hired or engaged to operate their Hotel. This includes exclusive responsibility for terms of employment, such as recruiting, hiring, firing, training, compensation, work hours, work assignments, safety, security, discipline, and supervision. The franchisee must manage these employment functions in compliance with all applicable federal, state, and local employment laws and must notify all employees in writing that they are the franchisee's employees, not the franchisor's. One of the Hotel Representatives (the general manager or an owner with equivalent authority) must complete the initial brand training program to the franchisor's satisfaction prior to or within 90 days of activating the Hotel in the system. After the first year of operation, Sonesta Simply Suites requires participation in its Revenue Management For Hire program or the employment of a full-time certified revenue management professional who meets specified minimum qualifications, including training in the revenue management system.