A recent federal court decision in T&T Management, Inc. v. Choice Hotels, Inc. underscores key contractual and operational considerations for franchisors. T&T filed suit in U.S. District Court for the District of Minnesota against Choice Hotels alleging that Choice Hotels breached a geographic exclusivity agreement and misappropriated trade secrets. However, on February 27, 2025, the court granted a motion to dismiss, emphasizing the importance of clear contractual terms.

Background

T&T Management entered a franchise agreement with Country Inn & Suites by Carlson in 2011, which granted them exclusivity within a defined area for that brand. Over the years, Country Inn & Suites changed ownership twice—first acquired by Radisson and later by Choice Hotels. Choice subsequently issued a franchise license to Sunshine Fund Port Orange, LLC to operate a WoodSpring Suites hotel near T&T’s location. T&T argued that this action violated its exclusive territorial rights and also alleged that Choice misused proprietary guest data.

Holding

The court dismissed all claims against Choice Hotels and its co-defendants, holding:

Key Takeaways

This case serves as a reminder that well-drafted franchise agreements can protect franchisors while limiting liability in the face of legal challenges.

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