Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D. Md.: Choice Hotels wins $310,000 default judgment confirming franchise arbitration award, (Aug 27, 2026)

By Martin A. Steinberg, J.D.

The court confirmed the $309,883.83 arbitration award against the franchisee and its guarantors after they failed to participate in either the arbitration or the federal-court proceeding.

The federal district court in Greenbelt, Maryland, granted Choice Hotels International, Inc.’s motion for default judgment and confirmed a $309,883.83 arbitration award against franchisee JRC Investments, Inc. and guarantors Chirag Patel and Popat Patel. The dispute arose from a franchise agreement allowing JRC to operate a Quality Inn & Suites hotel in Willow Park, Texas. Choice Hotels alleged that the defendants fell behind on required payments, leading it to terminate the agreement and pursue arbitration. After the defendants failed to participate in the arbitration, the arbitrator found that they had breached the franchise agreement and held them jointly and severally liable. The court concluded that the arbitration agreement was valid and enforceable, the award fell within its scope, Choice Hotels timely sought confirmation under the Federal Arbitration Act, and no basis existed to vacate the award. Because the defendants also failed to respond after being served in the federal action, the court entered default judgment for $309,883.83, plus post-judgment interest and $405 in costs (Choice Hotels International, Inc. v. JRC Investments, Inc., No. 8:25-cv-01731-LKG (D. Md. Aug. 26, 2026)).

Background. In December 2017, Choice Hotels entered into a franchise agreement with JRC Investments, Inc. permitting JRC to operate a Quality Inn & Suites hotel in Willow Park, Texas. Chirag Patel and Popat Patel separately guaranteed JRC’s obligations under the agreement. The franchise agreement required arbitration of disputes arising from the agreement, provided for application of Maryland law, and permitted entry of judgment on any arbitration award by a court with jurisdiction.

Choice Hotels alleged that JRC fell behind on required monthly payments. It terminated the franchise agreement in December 2021 and demanded payment of outstanding fees, interest, and liquidated damages. Choice Hotels then initiated arbitration in March 2024. The defendants did not appear or participate, and the arbitrator proceeded with an ex parte hearing in October 2024. The arbitrator found that the defendants had breached the franchise agreement by failing to make required payments and awarded Choice Hotels $309,883.83, holding the defendants jointly and severally liable.

Choice Hotels filed its application to confirm the award in May 2025. After the defendants failed to appear or respond in the federal action, Choice Hotels sought entry of default and moved for default judgment. The clerk entered default in January 2026, and the defendants still did not participate, leaving the court to resolve Choice Hotels’ motion for default judgment.

Default judgment. The court concluded that Choice Hotels was entitled to default judgment confirming the arbitration award. Choice Hotels argued that an arbitrator had awarded it $309,883.83, that the defendants had been served with the summons and application to confirm the award, that the amount owed was certain, and that the defendants had failed to respond or otherwise defend the action. The court agreed and granted default judgment, confirmed the arbitration award, and entered judgment for $309,883.83, plus post-judgment interest and $405 in costs.

Subject-matter jurisdiction. The court first determined that it had subject-matter jurisdiction based on diversity of citizenship. Choice Hotels was a citizen of Maryland, while JRC Investments and the individual defendants were citizens of Texas, and the amount in controversy exceeded $75,000.

Turning to confirmation of the award, the court explained that a party seeking default judgment based on an arbitration award must demonstrate that it is entitled to confirmation as a matter of law. Under Section 9 of the Federal Arbitration Act, a court generally must confirm an arbitration award when the parties have agreed that judgment may be entered on the award, unless the award is vacated, modified, or corrected under the FAA. Judicial review of arbitration awards is “severely circumscribed,” and an award may be vacated only on the limited statutory grounds in Section 10 or where the arbitrator acted in manifest disregard of the law.

Choice Hotels satisfied those requirements. The parties had entered into a valid franchise agreement permitting JRC to operate a hotel using Choice Hotels’ Quality Inn & Suites trade names, marks, and system. That agreement contained a valid arbitration clause requiring claims arising from or relating to the agreement or its breach to be submitted to final and binding arbitration in Maryland. The agreement also expressly authorized any court with jurisdiction to enter judgment on an arbitration award.

Choice Hotels initiated arbitration pursuant to that provision on March 7, 2024. The proceeding was conducted under the agreement, the AAA Commercial Arbitration Rules, and Maryland law. Although the defendants did not participate, the arbitrator proceeded and determined that they had breached the franchise agreement by failing to make required payments. The arbitrator therefore entered an ex parte award of $309,883.83 in Choice Hotels’ favor, with JRC, Chirag Patel, and Popat Patel jointly and severally liable.

The court also found that Choice Hotels timely sought confirmation. The arbitration award was issued on October 26, 2024, and Choice Hotels filed its application on May 31, 2025, within the FAA’s one-year period. The arbitrator rendered the award in Maryland, further supporting the Maryland federal court’s authority to confirm it. No defendant appeared to assert, and the record otherwise did not establish, any statutory basis for vacating the award, such as fraud, arbitrator partiality or misconduct, or an excess of arbitral authority. Accordingly, the court concluded that the award should be confirmed under the FAA.

Default judgment warranted. The court separately concluded that the defendants’ conduct justified entry of default judgment under Rule 55. Choice Hotels commenced the confirmation proceeding on May 31, 2025, and the docket demonstrated that the defendants were properly served with the application and summons. Nevertheless, none of the defendants responded to the application or otherwise defended the action. Choice Hotels therefore requested entry of default on November 21, 2025, and the clerk entered default on January 30, 2026.

Choice Hotels then moved for default judgment, and the defendants again failed to respond. By the time the court ruled, more than a year had passed since the application was filed, with no participation by the defendants. The court therefore determined that the defendants' failure to respond had effectively halted the adversarial process and that default judgment was appropriate. It granted Choice Hotels’ motion and entered judgment in the amount awarded by the arbitrator, together with post-judgment interest and costs.

The Case is No. 8:25-cv-01731-LKG.

Judge: Griggsby, L.

Attorneys: Janna Alysse Sakla (Choice Hotels International, Inc.) for Choice Hotels International, Inc.

Companies: Choice Hotels International, Inc.; JRC Investments, Inc.

Cases: FranchisingDistribution MarylandNews