Representing Hotel Franchisees That are Being Sued Under a Hotel Franchise Agreement

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What are some of the unique aspects of representing a hotel franchisee in lawsuits involving a hotel franchise agreement?

Representing the Franchisee in Hotel Franchise Litigation

The Nissenbaum Law Group has handled a number of lawsuits relating to hotel franchises that have resulted in significant litigation. The most common scenario involves some sort of business downturn that results in the hotel franchisee being unable to meet the stringent requirements the franchise agreement imposes on them relating to quality control, compliance and/or payments that are required to be remitted to the franchisor.

This sort of litigation has many unique aspects. First, the hotel franchisee often will have consented to jurisdiction in a state other than the one in which the hotel is located. The rationale for this requirement is that the franchisor usually finds it advantageous to have all lawsuits nationwide take place in the same state and county. That way, they can use common counsel and utilize form-based pleadings, discovery requests and motions. This scalability of the legal efforts to enforce the costs franchise agreement can significantly lower the hotel franchisor’s costs.

On the other hand, the franchisee can often have a viable counterclaim against the franchisor based upon the fact that the reduction in profitability was occasioned by the franchise agreement’s requirement that the franchisee exclusively use the franchisor’s marketing team and vendors. Essentially, the legal basis for the counterclaim is that the franchisor precipitated its own breach of the agreement by starving the hotel of cashflow because the required marketing team performed in a manner that was grossly inadequate.

Another example of the unique nature of hotel franchise litigation is that these agreements often include extreme financial penalties for breach  that can exceed the actual damages suffered by the franchisor. This involves not just outright penalties that are added to the damages for breach of contract, but also attorney’s fees shifting, by which the franchisee is actually required to pay the attorney’s fees of the franchisor who is suing them if the latter prevails in the lawsuit.

Our firm represents its clients with respect to a wide variety of legal challenges confronting franchisees and franchisors.

The Nissenbaum Law Group welcomes inquiries from hotel franchisees who are the subject of a lawsuit or arbitration based upon a breach of their franchise agreement. Contact us.

 

PUBLICATIONS & PRESENTATIONS

Gary D. Nissenbaum, Esq.

  • “Pitfalls in Collecting a Judgment Against Individual Partners of a Partnership”, The Independent Eastern Association of Equipment Lessors, Fall, 1994
  •  “Stop Look and Listen: Selected Defenses to the New Jersey Frivolous Lawsuit Statute”, 20 Seton Hall Law Review 184, 1989
  • “Challenges Ahead for Frivolous Lawsuit Statute”, 124 N.J.L.J. 837, October 5, 1989

Laura J. Magedoff, Esq.

  • Panelist, Intellectual Property Protection & Enforcement, New Jersey Bar Association Annual Conference, Atlantic City, NJ, May 2017
  • Presented Seminar, Business Contracts A to Z, National Business Institute, Newark, NJ, December 2013
  • Presented Seminar, 2014 Trademark Primer: Prosecution & Enforcement Strategies Every Attorney Should Know, NJICLE, New Brunswick, NJ, November 2013

Looking for advice?

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Contact the Nissenbaum Law Group to schedule an appointment at 908-686-8000 or feel free to use the following form to e-mail us. Please include as much information as you can to ensure that we are able to handle your request as quickly as possible.

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Looking for advice?

We're here to help.

Contact the Nissenbaum Law Group to schedule an appointment at 908-686-8000 or feel free to use the following form to e-mail us. Please include as much information as you can to ensure that we are able to handle your request as quickly as possible.

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PLEASE NOTE Meetings by appointment only in Union, NJ; New York, NY; Philadelphia, PA & Dallas, TX offices. Legal services generally performed from the Union, NJ office. The firm has attorneys licensed in New Jersey, New York, Pennsylvania, Texas and/or the District of Columbia. In limited circumstances, the firm may practice in other states under the prevailing multi-jurisdiction rules or through pro hac vice admission.

 

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