Background
T&T Management operated a Country Inn & Suites hotel under a fifteen-year license agreement that granted it exclusivity within a protected geographic area. In 2022, Choice Hotels acquired the Country brand and subsequently licensed a WoodSpring hotel to a third party within that same protected area. T&T sued Choice, Radisson, and the third party, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and tortious interference with business expectancy. The district court dismissed all claims for failure to state a claim and denied leave to amend further.
The court’s reasoning
The court applied Florida law and found the license agreement’s language clear and unambiguous. The agreement defined Marks and System to refer specifically to the Country brand, while Section one point two subsection b paragraph two expressly granted the franchisor the right to license other trademarks and systems acquired by the franchisor. The court rejected T&T’s argument that the definition of Marks included Choice’s other twenty-one hotel brands. Because the contract permitted the licensing of the WoodSpring mark, there was no breach of contract. Consequently, the claims for breach of the implied covenant of good faith and fair dealing and tortious interference with a contract failed as a matter of law. The claim for tortious interference with business expectancy was dismissed as speculative. The court also affirmed the denial of leave to amend, noting T&T’s failure to act diligently and comply with procedural rules.
The plain, unambiguous language of the Agreement prohibits Choice from licensing the Marks within the Protected Area. The Agreement clearly defines Marks as the Country Inn & Suites trademark and the other identifiers for the Country System.
What it means going forward
Franchise agreements will be enforced according to their plain text, allowing franchisors to license acquired brands within protected areas unless the contract explicitly restricts such action. Plaintiffs must demonstrate a concrete business relationship rather than speculative future sales to sustain tortious interference claims.