Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Former Knights Inn franchisee allegedly owed past due fees, liquidated damages, (Jul 12, 2016)

By Michael Menzhuber, J.D., LL.M.

A former Knights Inn franchisee and its guarantor breached their franchise agreement by failing to pay recurring fees and to comply with a post-termination requirement to pay liquidated damages, according to a complaint filed by Knights Franchise Systems, Inc. (KFS) in the federal district court in Newark, New Jersey (Knights Franchise Systems, Inc. v. R & D, Inc., July 11, 2016).

According to the complaint, R & D, Inc. entered into a franchise agreement with KFS to operate a Knights Inn guest lodging facility. Pursuant to the franchise agreement, R & D was required to pay various recurring fees and, in the event the agreement was terminated, liquidated damages. The franchise agreement also provided that the non-prevailing party would pay all costs incurred by the prevailing party to enforce the agreement or to collect amounts owed. R & D’s obligations under the franchise agreement were personally guaranteed by Dilip Rama.

The complaint further states that, after R & D repeatedly failed to meet its financial obligations, KFS terminated the franchise agreement and advised R & D it was required to pay liquidated damages for premature termination and all outstanding recurring fees.

KFS asserts claims for breach of the franchise agreement and unjust enrichment. The action seeks liquidated damages, together with interest, attorney fees and costs; or, in the alternative, actual damages for premature termination of the franchise agreement. The action also seeks payment of recurring fees due and owing under the franchise agreement.

The case is No: 2:16-cv-04163.

Attorneys: Bryan P. Couch (LeClairRyan) for Knights Franchise Systems, Inc.

Companies: Knights Franchise Systems, Inc.

News: FranchisingDistribution NewJerseyNews