Mar 10, 2016 - Blog by |

RIDING THE CIRCUITS FOR HOTEL FRANCHISEE CASES:

Good news and bad news for THI franchisee defaulted for failure to appear in Court: [Judge: “I will enter a default judgment. THI is awarded $327,213.03, comprising: (i) $207,414.71 in outstanding fees; (ii) liquidated damages of $76,500; (iii) $34,711.60 in interest on the LDs.” However, the Judge in his discretion denied THI’s request for $164,768.40 in trebled damages for post-termination Lanham Act violations. Travelodge Hotels v. S.S.B. Assoc. 7/27/15]; Court cuts Super 8 Franchisor slack for its failure to prosecute: [Judge: “The Court finds that reinstatement of  (Super 8’s) Complaint would result in little, if any, prejudice to the defendants. The defendants do not appear to have incurred any expense or inconvenience in defending this litigation. In any event, the delay between dismissal and the motion for reinstatement—less than 5 months—is too slight to detrimentally affect the proceedings.” Super 8 v. Kusum 7/29/15]; Appeals Court reverses trial court’s refusal to allow Red Lion Franchisee to use Washington State Franchisee Bill of Rights: [Judge: “We conclude the best interpretation of FIPA's bill of rights is the same as our interpretation of California's analogous Equipment Dealers Act. In the case now before us, the franchisor is incorporated in Washington and has its headquarters in Washington, and the franchise agreement provides for the application of Washington law. We hold that FIPA's bill of rights applies to this dispute even though the franchise is located outside Washington.” Red Lion Hotels v. MAK 2012]; Although Franchisor shows infringement from Franchisee’s failure to remove old signage, Court refuses to enter injunction or award attorney’s fees: [Judge: “Goldmark has adduced evidence that would permit a reasonable trier of fact to find that Goldmark was slow to remove the signs in question only because it considered the cost of doing so to be prohibitive, not because it intended to trade on Choice Hotels' trademarks. Goldmark was not the former franchisee; it was a beneficiary of a deed of trust under which the Goldmark Hotel Property was foreclosed on. So this is not, for example, a case in which a former franchisee intentionally traded on the franchisor's trademarks after their franchise agreement was terminated.” Choice Hotels v. Goldmark Hospitality (2014)]; Franchisee’s personal injury case dismissed for inability to link Franchisor to the housekeeping staff of franchisee: [Judge: “Funderburk offers as evidence screen shots of an "Undercover Boss" episode, a reality television show that aired two years before her stay at the Clarion Inn Hotel. In this episode of "Undercover Boss," Choice Hotel's Chief Executive Officer Stephen P. Joyce referred to a few franchisee employees (not at the Pocatello, Idaho location) as "employees" and offered them positions with Choice Hotels.” Funderburk v. Choice Hotels (November 2014)]; Hilton’s QAI process survives bad-faith attack of Franchisee: [Judge: upholding award of $702,355, “To be sure, some aspects of the scoring system are opaque; there may have been some inconsistencies between evaluations; and there is subjectivity to the evaluations, as one might expect where matters such as cleanliness are at issue. But an evaluation system need not be perfect to be consistent with the covenant of good faith and fair dealing. It need only be rational and non-arbitrary—and WHG 's complaints and excuses do not raise an issue of material fact as to whether Hilton's widely-used, detailed, and thorough system is so irrational and arbitrary as to violate its duty of good faith and fair dealing.” HLT v. Worcester Hospitality (2014)]

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