The Franchise Memorandum

A federal court in Georgia recently dismissed the claims of an alleged human trafficking victim against hotel franchisor G6 Hospitality, while allowing some claims to proceed against the hotel franchisee. Doe (K.B.) v. G6 Hosp., LLC, 2023 WL 8650785 (N.D. Ga. Dec. 14, 2023). Plaintiff alleged that she was the victim of human trafficking at the hotel owned by a G6 franchisee and asserted claims under the federal Trafficking Victims Protection Reauthorization Act (TVPRA) and an analogous Georgia statute, O.G.C. § 51-1-56. Both statutes authorize victims of human trafficking to bring claims against traffickers and those who “knowingly benefitted” from the trafficking if they were a participant in the trafficking through a joint venture and had constructive or actual knowledge that the plaintiff was being trafficked. Plaintiff argued that the franchisor was in a joint venture with either the traffickers or the franchisee or, alternatively, the franchisor controlled the franchisee and was vicariously liable for its actions.

The district court dismissed the claims against the franchisor, concluding plaintiff failed to allege any contact between the franchisor and the traffickers, that the franchisor had any knowledge of the alleged trafficking, or that the franchisor exercised sufficient control over the franchisee to be vicariously liable for its actions. Concerning the franchisee, the district court concluded that plaintiff plausibly alleged the franchisee had constructive knowledge of the alleged trafficking and denied its motion to dismiss the TVPRA claim. However, the court did dismiss the claims against the franchisee under the Georgia state statute because the penalty provided for under the statute could not be applied retroactively.