What is the basis for Holiday's counterclaims against the plaintiffs in the 'Atlanta Hospitality Investment, LLC v. Holiday Hospitality Franchising, LLC' case concerning Crowne Plaza?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
gation that must be disclosed in this Item 3.*
Pending Litigation:
Atlanta Hospitality Investment, LLC, a Georgia limited liability company, and Mohammad Sarower Hossain, individually v. Holiday Hospitality Franchising, LLC, DeKalb County, Georgia Superior Court, Civ. Action No. 23-CV-9509 (October 31, 2023).
Plaintiffs are the licensee and guarantor with respect to a former Holiday Inn & Suites branded hotel. Plaintiffs filed their initial petition for declaratory judgment on October 31, 2023 and an amended petition on December 7, 2023. The plaintiffs ceased operating the hotel as a Holiday Inn & Suites branded hotel and de-identified the hotel without Holiday's permission long before the October 15, 2041 expiration date of the license agreement. The amended petition alleges that Holiday made certain misrepresentations to plaintiffs in advance of the execution of the license agreement but asserted no claim for damages. The amended petition seeks a declaratory judgment finding that Holiday's license agreement is unconscionable and unenforceable, that the liquidated damages clause is an unenforceable penalty, and that the defendants are not liable to Holiday for ceasing to operate the hotel as a Holiday Inn & Suites and de-identifying the hotel. On February 2, 2024, Holiday filed an answer and counterclaims against the plaintiffs, asserting claims for breach of the license agreement and associated guaranty related to licensee's ceasing operating the hotel as a Holiday Inn & Suites branded hotel and deidentifying the hotel long before its scheduled expiration date. Holiday's counterclaims seek liquidated damages, other unpaid amounts owed under the license, interest and attorneys' fees, exceeding $2.1 million total. Holiday believes plaintiffs are entitled to none of the relief sought in their petition for declaratory relief and that Holiday is entitled to judgment in the amounts sought in its counterclaims. On March 26, 2024, Plaintiffs filed a motion for summary judgment on their claims, and a "supplemental" motion for summary judgment on April 24, 2024. Holiday filed its own motion for summary judgment on all claims on August 29, 2024. Both motions are fully briefed, and the parties are awaiting the Court's ruling. Holiday believes the plain
Source: Item 3 — Litigation (FDD pages 16–27)
What This Means (2025 FDD)
According to the 2025 FDD, Holiday Hospitality Franchising, LLC's counterclaims in the case of Atlanta Hospitality Investment, LLC v. Holiday Hospitality Franchising, LLC are based on the licensee ceasing operation of their hotel as a Holiday Inn & Suites branded hotel and de-identifying the hotel before the license agreement's expiration date. The plaintiffs ceased operating the hotel as a Holiday Inn & Suites branded hotel and de-identified the hotel without Holiday's permission long before the October 15, 2041 expiration date of the license agreement.
Holiday's counterclaims against the plaintiffs seek damages for breach of the license agreement and associated guaranty. Specifically, Holiday is pursuing liquidated damages, other unpaid amounts owed under the license, interest, and attorneys' fees, which total an amount exceeding $2.1 million.
This lawsuit indicates the potential financial and legal risks Crowne Plaza franchisees face if they choose to terminate their franchise agreement early or operate outside the bounds of the agreement. Prospective franchisees should carefully consider the terms of the franchise agreement, especially those related to termination and adherence to brand standards, to avoid similar legal issues. Franchisees should seek legal counsel to fully understand their obligations and the potential consequences of non-compliance.