CHOICE HOTELS: Franchisees Sue for “Unfair & Deceptive Acts”
UnhappyFranchisee.com – Franchisees of Choice Hotels International are suing their franchisor, and alleging that the Silver Springs, MD company cost them millions as a result of its “unfair and deceptive acts.”
The class action complaint that Choice Hotels International is charging its franchisees a fee, of up to 5 percent, on room stays by guests who are members of the Choice Privileges rewards program. Choice Hotels franchisees allege that the fee was neither disclosed nor agreed to in their original franchise contracts.
The Choice Privileges rewards program provides member benefits to guests of multiple Choice Hotels brands, including Comfort Inn, Comfort Suites, Quality, Sleep Inn, Econo Lodge, MainStay Suites, Clarion, Cambria Suites, Suburban, and Rodeway Inn
The plaintiff group, which includes Choice Hotel franchise owners in Florida, Louisiana, Missouri and Texas, are seeking $225 million in damages, plus attorneys’ fees and costs.
The lawsuit alleges that:
In essence, Choice has created a group of reward members, the majority of whom are not even aware of that status, and siphoned 5 percent of the gross room sales revenue from the Plaintiff franchisees in relation to the stays by these reward members and without any contractual or other basis to do so… Plaintiffs’ action against Choice also arises from violation of law based on unfair and deceptive conduct by Choice
Choice Hotels International has more than 6,000 hotel franchises worldwide.
Source: Gazette.net
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Cheating
We urge today to focus on some outline to be addressed and make free choice of living rather than tie up for unfair franchise agreement.
1) Hotel brands must drive at least 50% of the revenues from the brand websites or sales and marketing teams. Hotel brands can offer revenue management or sales services to maximize revenue. If this requirement is not met, the franchisee is entitled to either monetary recoupment of additional OTA fees paid, in excess of a 50% brand contribution, or an option to provide a 6 month notice of termination without any liquidated damages assessed.
2) Any affiliations fees other than royalties must be approved by 2/3 property owners consent survey conducted through a 3rd party agency.
3) If a franchisee is cut off from the reservation system as a stipulation of a violation of brand standards or any other reason, the franchisee should not be charged to reconnect if the issue is rectified within a set 30 days. However, if a decision to cut off reservation system or terminate has been made, there should be no liquidation damages charged to exit out.
4) Any revenue generated from 3rd party Online Travel Agents should be exempted from royalties, pass through fees or any marketing fees, as brand has no control on driving business to their brand locations.
5) The right to transfer a franchise should be no more than $2,500 if the existing property has met a certain inspection score in the last inspection.
6) Hotel brands should not mandate any particular vendor. Franchisees should satisfy brand standards to maintain the product quality.
7) Hotel brands to limit in the economy and mid-scale segments to ONLY coffee to offer as a complimentary.
8) Brand cannot introduce new flag to compromise with existing brand flag within minimum of 2 mile radius.
9) No liquidated damages for franchisor initiated terminations, if franchisees does not satisfy with brand support as presented should match performance if not there should be no demand for any damages.