Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Hotel franchisor alleges franchise assignee failed to comply with post-termination obligations, (Jun 29, 2016)

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

A company that purchased a hotel from a Park Inn franchisee breached its license agreement and interim assignment agreement by failing to pay recurring fees and to comply with post-termination obligations, according to a complaint filed by the franchisor in the federal district court in Minneapolis (Park Hospitality LLC v. GP Hotel Dallas, LLC, June 28, 2016).

According to the complaint, Garrison Love Field LLC (GLF) entered into a license agreement with Park Hospitality, LLC to operate a Park Inn by Radisson hotel. In addition to the payment of recurring fees and other fees, the license agreement provided that Park was entitled to injunctive relief to enforce GLF’s obligations upon termination or expiration of the license agreement.

GP Hotel Dallas later purchased the hotel from GLF. At the time of purchase, the defendant expressed an interest in operating the hotel as a Radisson System Hotel and had begun negotiating a license agreement with Radisson Hotels International (RHI). Because RHI was an affiliate of Park, Park agreed to permit the temporary assignment of the license agreement from GLF to the defendant.

The complaint states that the temporary assignment was effectuated by a consent to interim assignment, and interim assignment and assumption of license agreement (interim assignment agreement). When the defendant failed to renovate the hotel and open it as a Radisson System Hotel within the time permitted, the interim assignment agreement terminated. Despite being obligated to comply with the agreements’ post-termination obligations, the defendant failed to pay fees due and continued to display Park’s marks in its operation of the hotel.

Park asserts claims for breach of the interim assignment agreement, false designation of origin/federal unfair competition, and federal trademark infringement and trade dress infringement, in violation of the Lanham Act.

The action seeks: (1) an order ratifying and enforcing the termination of the license agreement and interim assignment agreement; (2) the payment of past due fees; (3) injunctive relief to enjoin the defendant’s continued use of Park’s marks and to enjoin the defendant’s compliance with the post-termination provisions in the license agreement and the interim assignment agreement; (4) an order requiring the defendant to submit a written report detailing its compliance with the injunctions; (5) an award of attorneys’ fees and costs incurred in enforcing the interim assignment agreement and as allowed by the Lanham Act; and (6) prejudgment interest.

The case is No: 0-16-cv-02192-PJS-HB.

Attorneys: Craig P. Miller, Kirk W. Reilly and Richard Landon (Gray, Plant, Mooty, Mooty & Bennett, P.A.) for Park Hospitality LLC.

Companies: GP Hotel Dallas, LLC; Park Hospitality LLC

News: FranchisingDistribution MinnesotaNews