Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Wingate Inns seeks $615K for franchisee’s unilateral termination, (Aug 7, 2015)

By Greg Hammond, J.D.

Lodging franchisor Wingate Inns International, Inc. has filed a complaint in the federal district court in Chicago, Illinois, against franchisee R K Hospitality, LLC, seeking liquidated damages, fees owed under the agreement, and principal due under an assumption agreement, in the total amount of over $615,000. R K unilaterally terminated the franchise agreement, the complaint alleges, by ceasing to operate the facility as a Wingate guest lodging establishment (Wingate Inns International, Inc. v. R K Hospitality, LLC, August 6, 2015).

The complaint states that Wingate and R K entered into a franchise agreement in January 2008, for R K to operate a 108-room Wingate guest lodging facility in Prospect Heights, Illinois. Under the agreement, R K was required to make periodic royalty payments and agreed to maintain records relating to gross room revenue of the facility. R K also agreed to assume liability of a development incentive note owed to Wingate.

According to the complaint, R K unilaterally terminated the franchise agreement in March 2010 when it ceased to operate the facility as a Wingate guest lodging establishment. In April 2010, Wingate sent a letter to RK that acknowledged the unilateral termination and advised R K of its obligation to pay liquidated damages pursuant to the franchise agreement.

The franchisor seeks: (1) an order requiring R K to account for any and all revenue derived as a result of marketing, promoting, or selling guest lodging services as the facility; (2) liquidated damages in the amount of $216,000; (3) actual damages; (4) recurring fees due and owing under the franchise agreement, in the amount of $219,259; (5) principal due and owing under the assumption agreement, in the amount of $180,668.50; along with (6) interest, attorney fees, and costs.

The case number is 1:15-cv-6865.

Attorneys: Joseph M. Hanna (Goldberg Segalla LLP) for Wingate Inns International, Inc.

Companies: Wingate Inns International, Inc.; R K Hospitality, LLC

News: FranchisingDistribution IllinoisNews