What claims did Holiday Hospitality Franchising, LLC assert in its counterclaims against the plaintiffs in the 'Atlanta Hospitality Investment, LLC v. Holiday Hospitality Franchising, LLC' case, potentially impacting Even Hotels?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 3 — LITIGATION (FDD pages 15–26)
What This Means (2025 FDD)
According to the 2025 FDD, the case 'Atlanta Hospitality Investment, LLC v. Holiday Hospitality Franchising, LLC' involves a dispute over a former Holiday Inn® & Suites branded hotel. The plaintiffs, who were the licensee and guarantor, ceased operating the hotel under the Holiday Inn® & Suites brand and de-identified it without Holiday's permission before the license agreement's expiration date in October 15, 2041. The plaintiffs' amended petition alleges that Holiday made misrepresentations before the license agreement was signed and seeks a declaratory judgment that the license agreement is unconscionable and unenforceable, and that the liquidated damages clause is an unenforceable penalty. They also claim they are not liable to Holiday for ceasing operations as a Holiday Inn® & Suites and de-identifying the hotel.
In response, Holiday Hospitality Franchising, LLC filed counterclaims against the plaintiffs for breach of the license agreement and associated guaranty. These claims are based on the licensee's actions of ceasing to operate the hotel under the Holiday Inn® & Suites brand and de-identifying the hotel well before the scheduled expiration date of the agreement.
While this litigation does not directly involve Even Hotels, it is disclosed in the FDD because Holiday Hospitality Franchising, LLC, which is the franchisor in this case, is affiliated with InterContinental Hotels Group (IHG), the parent company of Even Hotels. This type of litigation is common in franchising, as franchisors often pursue legal action against franchisees who violate the terms of their franchise agreements. For a prospective Even Hotels franchisee, this highlights the importance of adhering to the terms and conditions of the franchise agreement to avoid potential legal disputes with the franchisor.