Under what conditions does Best Western limit damages for failure to grant membership?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
MEMBER AGREES THAT THE MEMBER, THE VOTING MEMBER, AND ANY LEGAL ENTITY ASSOCIATED WITH THE PROPERTY BY WAY OF OWNERSHIP OR LEASE INTEREST, SHALL HAVE NO RECOURSE OF ANY KIND AGAINST BEST WESTERN OR ITS SUBSIDIARIES OR AFFILIATES AND ITS AND THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, REPRESENTATIVES, INSURERS, OR OTHER MEMBERS FOR FAILURE TO GRANT MEMBERSHIP UNLESS MEMBER HAS STRICTLY, ABSOLUTELY, AND TIMELY COMPLIED WITH EACH AND EVERY REQUIREMENT IMPOSED UPON MEMBER BY BEST WESTERN, INCLUDING BUT NOT LIMITED TO THOSE CONTAINED IN THIS AGREEMENT, THE APPROVAL LETTER, THE APPLICATION, AND THE REGULATORY DOCUMENTS TO THE SATISFACTION OF BEST WESTERN. IN THE EVENT THAT BEST WESTERN WRONGFULLY FAILS TO GRANT MEMBERSHIP AFTER MAKING AN ALLEGED COMMITMENT FOR MEMBERSHIP UNDER THIS AGREEMENT AND THE APPROVAL LETTER, OR IF BEST WESTERN IS FOUND TO HAVE WRONGFULLY FAILED TO GRANT MEMBERSHIP IN ANY OTHER SITUATION, MEMBER SHALL HAVE NO RIGHT TO COMPEL BEST WESTERN TO GRANT A MEMBERSHIP TO MEMBER. MEMBER AGREES THAT MEMBER'S SOLE REMEDY SHALL BE LIMITED TO ACTUAL DAMAGES, WHICH IN NO EVENT SHALL EXCEED THE ENTRANCE FEES PAID BY MEMBER TO BEST WESTERN IN CONNECTION WITH THE SUBMISSION OF ITS APPLICATION, THE APPROVAL LETTER, AND THIS AGREEMENT.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, Best Western limits damages for failure to grant membership under specific conditions. A member, voting member, or any legal entity associated with the property is not entitled to any recourse against Best Western if Best Western fails to grant membership, unless the member has strictly and absolutely complied with every requirement imposed by Best Western. These requirements include those in the agreement, the approval letter, the application, and the regulatory documents.
In the event that Best Western wrongfully fails to grant membership after making a commitment or in any other situation, the member cannot force Best Western to grant a membership. The member's sole remedy is limited to actual damages, which cannot exceed the entrance fees paid by the member to Best Western in connection with the application, the approval letter, and the agreement.
This limitation of damages is a significant consideration for prospective franchisees. It means that even if Best Western makes a commitment for membership and then fails to grant it, the franchisee's potential recovery is capped at the amount of the entrance fees paid. This could be substantially less than the actual losses incurred by the franchisee in preparing to open the Best Western location. Therefore, it is crucial for potential franchisees to ensure they fully understand and comply with all requirements for membership to avoid any issues with the membership being granted.