What specific declaratory judgments are the plaintiffs seeking in the 'Atlanta Hospitality Investment, LLC v. Holiday Hospitality Franchising, LLC' case, and how might they relate to Even Hotels?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
erior 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 plaintiff's summa
Source: Item 3 — LITIGATION (FDD pages 15–26)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, the lawsuit 'Atlanta Hospitality Investment, LLC v. Holiday Hospitality Franchising, LLC' involves a former Holiday Inn® & Suites licensee seeking several declaratory judgments. Specifically, the plaintiffs are seeking a judgment that Holiday's license agreement is unconscionable and unenforceable, that the liquidated damages clause is an unenforceable penalty, and that the plaintiffs are not liable to Holiday for ceasing operations as a Holiday Inn® & Suites and de-identifying the hotel. This case was initially filed on October 31, 2023, with an amended petition on December 7, 2023. Holiday filed counterclaims on February 2, 2024, seeking damages for breach of the license agreement. As of the FDD's publication, motions for summary judgment from both sides are fully briefed, and the parties are awaiting the Court's ruling. Holiday is seeking over $2.1 million in damages.
This type of litigation is relevant to prospective Even Hotels franchisees because it highlights potential areas of dispute that can arise between a franchisor and franchisee, particularly concerning the enforceability of the franchise agreement and the associated financial obligations upon termination or breach. While the case specifically involves Holiday Inn® & Suites, the underlying issues—such as the enforceability of liquidated damages clauses and the consequences of de-identifying a hotel before the license expiration—could potentially apply to any franchise system, including Even Hotels.
For a prospective Even Hotels franchisee, this underscores the importance of carefully reviewing the franchise agreement with legal counsel to understand the terms and conditions, especially those related to termination, liquidated damages, and compliance with brand standards. Understanding these terms can help a franchisee assess the potential risks and obligations associated with the franchise and make informed decisions about entering into the franchise agreement. It also highlights the importance of attempting to resolve disputes through negotiation or mediation before resorting to litigation, as litigation can be costly and time-consuming for both parties.