Menu
Blog Banner Image

The Franchise Memorandum

Federal Court in North Carolina Enforces Forum Selection Clause in Hotel Franchise Agreement and Transfers Case

The United States District Court for the Eastern District of North Carolina has granted a hotel franchisor's motion to transfer venue based on the forum selection clause in the parties' franchise agreement. Generation Companies, LLC v. Holiday Hospitality Franchising, LLC, 2015 WL 7306448 (E.D.N.C. Nov. 19, 2015). Generation, a franchisee of the Staybridge Suites brand, brought suit alleging that Holiday Hospitality (the franchisor of the Staybridge Suites system) was liable for tortious interference with contract, slander, and unfair trade practices as a result of its having incorrectly informed a competitor, Hilton Hotels, that Generation was not permitted to terminate its Staybridge Suites franchise agreement. At the time of the alleged communication, Generation was working to switch to the Hilton Hotels brand, but Hilton Hotels allegedly backed out of signing a franchise agreement with Generation following the statements by Holiday Hospitality.

Generation initially filed suit in North Carolina state court, but Holiday Hospitality removed the case to federal court and then brought a motion to transfer the case to a federal court in Georgia. The forum selection clause in the franchise agreement stated that claims "concerning" the agreement were not required to be filed in Georgia but that the franchisor could elect to litigate "all matters of construction, validity, enforceability and performance" in DeKalb County, Georgia. Additionally, the guaranty accompanying the franchise agreement required the franchisee to "consent and submit, at Licensor's election" to venue in Georgia. The franchisee argued that its claims were based in tort and therefore fell outside the scope of the forum selection clauses found in the franchise agreement and guaranty. The court disagreed, holding that the tort claims required construction of the franchise agreement and were therefore encompassed by the forum selection clause. On that basis, the court granted Holiday Hospitality's motion to transfer the case to the United States District Court for the Northern District of Georgia.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

About this Publication

The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

To subscribe to monthly emails for The Franchise Memorandum, please click here

Topics

Archives

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Blog Authors