What did the plaintiffs in the 'Atlanta Hospitality Investment, LLC v. Holiday Hospitality Franchising, LLC' case do with the Holiday Inn® & Suites branded hotel before the license agreement's expiration, potentially affecting 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 Even Hotels' 2025 Franchise Disclosure Document, the case of Atlanta Hospitality Investment, LLC v. Holiday Hospitality Franchising, LLC involves a licensee who operated a Holiday Inn® & Suites branded hotel. The plaintiffs, Atlanta Hospitality Investment, LLC, and Mohammad Sarower Hossain, ceased operating the hotel as a Holiday Inn® & Suites and removed the Holiday Inn branding from the hotel. This action occurred without Holiday Hospitality Franchising, LLC's permission and before the license agreement's original expiration date of October 15, 2041.
The plaintiffs' amended petition in the case alleges that Holiday made misrepresentations before the license agreement was signed, though it does not claim damages. The plaintiffs are seeking a declaratory judgment that the Holiday license agreement is unconscionable and unenforceable, that the liquidated damages clause is an unenforceable penalty, and that they are not liable to Holiday for ceasing operations as a Holiday Inn® & Suites and de-identifying the hotel.
Holiday Hospitality Franchising, LLC, responded by filing counterclaims against the plaintiffs for breach of the license agreement and associated guaranty. These counterclaims are related to the licensee's decision to stop operating the hotel under the Holiday Inn® & Suites brand and removing its branding before the agreement's scheduled expiration. This type of litigation is relevant to prospective Even Hotels franchisees as it highlights potential disputes that can arise between a franchisor and franchisee regarding brand standards, adherence to the franchise agreement, and the consequences of early termination or de-identification of a property.