Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—3d Cir.: Travelodge’s failure to timely integrate hotel into reservation system excused franchisee’s performance, (Nov 10, 2026)

By Martin A. Steinberg, J.D.

Franchisor’s unreasonable delay constituted a material breach of the franchise agreement, relieving franchisees of liability for unpaid fees and liquidated damages.

The Third Circuit affirmed judgment for Huber Hotels, LLC, and its owners, holding that the district court did not clearly err in finding that Travelodge materially breached the parties' franchise agreement by failing to integrate their Wisconsin hotel into its central reservation system within a reasonable time. Travelodge sought unpaid fees and liquidated damages after the Hubers sold the hotel, alleging that the sale breached the agreement. Following a bench trial, the district court found that Travelodge’s prolonged delay, inconsistent communications, and inaccurate online listings prevented the franchisees from opening promptly and operating profitably, excusing their further contractual performance. On appeal, Travelodge argued that the agreement imposed no specific integration deadline and that the franchisees had failed to satisfy pre-opening requirements. Applying New Jersey law, the Third Circuit held that a reasonable time for performance is implied when no deadline is specified and that sufficient evidence supported the finding of a material breach. The court also upheld findings that Travelodge may have waived certain pre-opening requirements and contributed to delays in satisfying others (Travelodge Hotels, Inc. v. Huber Hotels, LLC, No. 25-2808 (3d Cir. Nov. 9, 2026)).

Background. Travelodge Hotels, Inc., entered into a 15-year franchise agreement with Huber Hotels, LLC, on November 17, 2017, to operate a 99-room hotel in Hurley, Wisconsin. Owners Robert and Janette Huber personally guaranteed the company's obligations. The agreement required payment of recurring fees, monthly revenue reports, specified improvements, and written consent before transferring the property. Travelodge agreed to operate a central reservation system in which the hotel would participate exclusively.

Robert Huber testified that Travelodge missed a scheduled software installation, pushing the planned January 29, 2018, opening to March. He said a Travelodge representative subsequently communicated additional pre-opening requirements involving a telephone system, management training, and new artwork. Huber also testified that Travelodge’s website listed an incorrect address and telephone number even after Travelodge approved the hotel’s opening in May, and that a Travelodge representative apologized for giving larger hotels priority.

The Hubers contended that delayed access to the reservation system prevented enough bookings to cover approximately $30,000 in monthly operating expenses. Facing mounting losses, they sold the property back to its former owner in June 2018. Travelodge blamed the delays on the Hubers' incomplete renovations, missing information, and failure to install an appropriate telephone system. It also alleged unpaid franchise fees and an unauthorized property transfer. On July 16, Travelodge retroactively terminated the franchise effective June 18, demanding unpaid fees and liquidated damages.

Travelodge sued Huber Hotels and the Hubers individually in November 2019 for breach of contract and unjust enrichment, seeking approximately $198,000 in liquidated damages, more than $62,000 in unpaid fees, interest, attorneys' fees, costs, and an accounting. The Hubers maintained that Travelodge's failure to provide reservation-system access within a reasonable time materially breached the agreement and excused their performance.

Following a two-day bench trial in April 2025, the district court entered judgment for the Hubers. Travelodge appealed, challenging the material-breach finding and the court's allocation of responsibility.

District court findings. Following a two-day bench trial in April 2025, the district court entered judgment for the Hubers. It found that Travelodge materially breached the franchise agreement by failing to integrate the hotel into its central reservation system within a reasonable time. The court relied on Section 3.4.1, which addressed the Hubers’ participation in the system, and Section 4.2, which required Travelodge to operate and maintain a computerized reservation system in which the hotel would participate exclusively.

The court found that the Hubers made sincere and substantial efforts for about six months to meet Travelodge’s evolving requirements but lacked a meaningful opportunity to earn revenue as a Travelodge franchise without access to the reservation system. The court found that the delay, together with inconsistent communications from Wyndham or Travelodge representatives and errors in the hotel’s online listing, prevented a prompt and profitable opening as a Travelodge hotel. The material breach relieved the Hubers of their obligations under the agreement.

The Third Circuit rejected Travelodge’s argument that the district court clearly erred in finding a material breach. Under New Jersey law, conduct that tends to defeat the purpose of a long-term agreement may constitute a material breach. Courts assess materiality case by case, considering the agreement’s terms, the parties’ conduct, and the significance of the breach to the contract as a whole.

The appellate court emphasized Robert Huber’s testimony that Travelodge missed a scheduled software installation, delaying the hotel's anticipated January 2018 opening until March. Travelodge later imposed additional requirements, including installing a telephone system, management training, and new artwork. Even after Travelodge approved the hotel's opening in May, its website displayed an incorrect address and telephone number. Huber also testified that a Travelodge representative acknowledged prioritizing larger hotels over his property.

The hotel incurred approximately $30,000 in monthly operating expenses, which the Hubers could not sustain because of insufficient bookings. The district court credited Huber’s testimony, and the Third Circuit found no basis to disturb its credibility determinations. Considering the cumulative effect of Travelodge’s conduct, the appellate court concluded that sufficient evidence supported the finding that Travelodge had undermined the agreement’s fundamental purpose.

Implied reasonable time for performance. Travelodge argued that Section 4.2 required it to maintain a reservation system but imposed no specific deadline for integrating the hotel. The Third Circuit rejected that argument, explaining that New Jersey law generally implies a reasonable time for performance when a contract specifies no deadline.

Determining what constitutes a reasonable time is ordinarily a factual question reviewed for clear error. The appellate court concluded that the record amply supported the district court’s determination that Travelodge’s delay of several months was unreasonable, particularly given its effect on the Hubers’ ability to operate the hotel.

Pre-opening requirements did not excuse Travelodge’s breach. Travelodge also maintained that it had no obligation to integrate the hotel until the Hubers completed the renovation checklist required by Section 1.2 of Schedule D to the agreement. The Third Circuit rejected this argument, finding that the district court reasonably inferred from trial testimony that Travelodge representatives may have deemphasized or waived certain checklist requirements. Consequently, some improvements might not have been mandatory before opening. Moreover, the district court found that Travelodge’s own conduct contributed to the Hubers’ delays in completing the checklist.

Although the district court may have incorrectly interpreted Section 3.4.1 as imposing obligations on Travelodge rather than the franchisees, the appellate court concluded that any error was harmless because Section 4.2 independently established Travelodge’s obligation to provide the reservation system.

No clear error. Finally, the court declined to second-guess the trial court’s reasonable interpretation of the evidence. Finding no clear error in its determination that Travelodge materially breached the agreement, the appellate court affirmed the judgment in favor of the Hubers.

The Case is No. 25-2808.

Judge: Krause, C.

Attorneys: Bryan P. Couch (Connell Foley LLP) for Travelodge Hotels. Brett M. Buterick (Hill Wallack LLP) for Huber Hotels LLC.

Companies: Huber Hotels LLC

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