FDD Items 3 & 4 · 2024 filing

Clarion / Clarion Pointe litigation history

What Clarion / Clarion Pointe disclosed about lawsuits, arbitrations and bankruptcy in the 2024 Franchise Disclosure Document. Item 3 lists the material legal actions a franchisor must report; Item 4 covers bankruptcy. This is the franchisor's own disclosure, not a court record, and not legal advice.

Items 3 (litigation) & 4 (bankruptcy) at a glance

What the filing discloses

Cases disclosed: 91; Item 3, as counted in the filing

Largest settlement, franchisor's own cases: $85K; As stated in Item 3

Bankruptcy (Item 4): None; Franchisor, parent, predecessor or officer

Filing year: 2024; Disclosures cover the prior ten years

Extracted from the 2024 Franchise Disclosure Document

Item 3: litigation

Pending: (1) Norma Knuth class action re destination marketing fees in Canada; (2) Jai Sai Baba LLC et al. (approx. 90 franchisees alleging discrimination/RICO) stayed pending arbitration, with related DIP Hospitality arbitration; (3) T&T Management Inc. alleging breach of license agreement and trade secret misappropriation. Prior year: numerous franchisor-initiated royalty/liquidated damages collection actions and IP enforcement post-termination.

Item 3 (litigation) · 91 matters disclosed · 3 pending listed

Litigation cases

The franchisor and its predecessor

Pending (3)

T&T Management, Inc. v. Choice Hotels International, Inc., Country Inn & Suites by Radisson, Inc. and Sunshine Fund Port Orange, LLC
pending
Brought by a franchisee · filed 2023-06-26 · United States District Court for the Middle District of Florida · 6:23-cv-01187
“… United States District Court for the Middle District of Florida, Case No. 6:23-cv-01187”Page 24 of the 2024 FDD, Item 3
Outcome: “The Court has not yet ruled on the pending Motions.” (page 25)
Jai Sai Baba, LLC, et al. v. Choice Hotels International, Inc., et al.
pending
Brought by a franchisee · filed 2020-06-12 · United States District Court for the Eastern District of Pennsylvania · 2:20-cv- 02823
“… United States District Court for the Eastern District of Pennsylvania, Case No. 2:20-cv- 02823 On June 12, 2020 (amended on July 15, 2020), approximately ninety current and former franchise owners that own and operate one or more Choice branded hotels (“Plaintiffs”) filed suit against Choice and Choice Hotels Owner Council”Page 24 of the 2024 FDD, Item 3
Outcome: “On March 19, 2021, the Court granted motion. This case remains stayed, and the parties provide the Court with monthly status updates.”
Within this matter, as the filing narrates it
- Choice Hotels International, Inc. v. DIP Hospitality, LLC, et al.
  pending
  Brought against a franchisee · names the franchisor · filed 2021-04-09 · American Arbitration Association · 01-21-0003-7036
  “… American Arbitration Association, Case #01-21-0003-7036 On April 9, 2021, Choice initiated this arbitration to pursue contractually due franchise fees, a promissory note balance, and lost profit damages from the franchisees in the amount of $498,495.93.”Page 24 of the 2024 FDD, Item 3
  Outcome: “The arbitration hearing concluded in 2023, and the parties are waiting for an arbitration award to be issued in the matter.”
Counted as one matter, the way Item 3 groups it.
Norma Knuth v. Radisson Hotels International, Inc., et al.
pending
Country Inn & Suites by Radisson, Inc. ("Country"; Item 1 calls CIS Radisson 'our predecessor'); Radisson Hotels International, Inc. is the lead defendant · filed 2014-12-05 · Court of Queen’s Bench for Saskatchewan · QBG No. 2560 of 2014
“… Court of Queen’s Bench for Saskatchewan, Court File No. QBG No. 2560 of 2014 On December 5, 2014, Norma Knuth filed a complaint under the Class Actions Act against over 25 named defendants, including Country, alleging that the defendants wrongfully collected undisclosed destination marketing fees”Page 23 of the 2024 FDD, Item 3

Concluded (4)

Dahya Investments Incorporated, et al. v. Choice Hotels International, Inc., et al.
judgment
Brought by a franchisee · filed 2021-06-29 · American Arbitration Association; United States District Court for the District of Maryland, Southern Division · #01-21-0004-5563 (AAA); 8:2023cv01685 (D. Md.)
“… American Arbitration Association, Case #01-21-0004-5563 United States District Court for the District of Maryland, Southern Division, Case No. 8:2023cv01685”Page 32 of the 2024 FDD, Item 3
Outcome: “A Final Award was issued on May 9, 2023, against Choice and in favor of Dahya in the amount of $882 and in favor of Choice and against Dahya for the sum of $603,483.00. Choice filed a motion to confirm the Final Award against Dahya and the Final Award was confirmed into a judgment on January 17, 2024 at the motion to seal hearing.” (page 33)
Highmark Lodging, LLC, et al. v. Choice Hotels International, Inc., et al.
judgment
Brought by a franchisee · filed 2021-06-29 · American Arbitration Association; United States District Court for the Eastern District of Pennsylvania · #01-21-0004-5554 (AAA); #5:20cv2823 (E.D. Pa.)
“On June 29, 2021, Highmark Lodging, LLC and Darshan Patel (“Highmark”) filed an arbitration against Choice Hotels International, Inc. and Choice Hotels Owners Council in conjunction with the underlying action.”Page 32 of the 2024 FDD, Item 3
Outcome: “A Final Award was issued on July 27, 2023 against Choice and in favor of Highmark in the amount of $740,072.25. Highmark filed a motion to confirm the Final Award and Choice filed a motion to vacate in part. Choice’s motion was denied, and a final judgment was entered against Choice in the amount of $779,398.40 on March 4, 2024.”
Sender Kohl v. Choice Hotels International, Inc.
settled
Brought by a franchisee · filed 2018-10-29 · United States District Court for the Southern District of Florida, Fort Lauderdale Division; American Arbitration Association · #0:18-cv-62597 (court); #01-19-0000-1797 (AAA)
“On October 29, 2018, Sender Kohl filed an action against us seeking damages in an unspecified amount. The complaint alleged breach of contract, breach of the implied covenant of good faith and fair dealing, fraud and material misrepresentations.”Page 32 of the 2024 FDD, Item 3
Outcome: “On August 25, 2021, the parties settled this dispute. As part of the settlement, Choice agreed to pay its former franchisee $85,000.00 in exchange for dismissal of the arbitration.”
Wydredge, L.L.C., H & P Investments, Clayton Wyman, Barry Eldredge and James Rumpsa v. Choice Hotels International, Inc.
settled
Brought by a franchisee · filed 2012-08-31 · American Arbitration Association · 16-114-000517-12
“On August 31, 2012, Wydredge, L.L.C., H & P Investments, Clayton Wyman, Barry Eldredge and James Rumpsa filed an arbitration demand against Choice Hotels International, Inc. The arbitration demand sought unspecified damages for unjust enrichment, intentional misrepresentation, negligent misrepresentation, breach of contract, and breach of implied covenant of good faith and fair dealing.”Page 32 of the 2024 FDD, Item 3
Outcome: “On July 7, 2014, the parties settled this dispute. As part of the settlement, Choice made certain concessions to franchisees in connection with two existing franchise agreements for other properties owned by franchisees reducing the royalty rate to 4.65% for 24 months and 4.25% for 24 months respectively.”

Status not stated in the filing (7)

144 Investors, LLC and Surjeet Kaur
Brought against a franchisee · filed 2023-08-11 · U.S. District Court Eastern District of New York (Brooklyn) · 1:23cv06066
“ACTIONS INITIATED BY CHOICE TO ENFORCE INTELLECTUAL PROPERTY RIGHTS – POST TERMINATION Defendant Venue Case Number Filing Date 144 Investors, LLC and Surjeet Kaur U.S. District Court Eastern District of New York (Brooklyn) 1:23cv06066 August 11, 2023”Page 31 of the 2024 FDD, Item 3
67585 Hacienda, LLC and Calvin Chun
Brought against a franchisee · filed 2023-01-31 · American Arbitration Association · 01-23-0000-4410
“… American Arbitration Association 01-23-0000-4410 January 31, 2023”Page 25 of the 2024 FDD, Item 3
Donald R. Dreiske, Lance B. Stuart, James R. Stuart, Harvey W. Lester and Rebecca Kenny
Brought against a franchisee · filed 2023-01-31 · American Arbitration Association · 01-23-0000-4309
“… American Arbitration Association 01-23-0000-4309 January 31, 2023”Page 25 of the 2024 FDD, Item 3
Jai Sai Baba, LLC, Dipesh Patel and MDPD13 Investments, LLC
Brought against a franchisee · filed 2023-01-19 · United States District Court for the District of Maryland, Southern Division, transferred to United States District Court for the Eastern District of Pennsylvania, Philadelphia · 8:2023cv00146 8:2023cv03360
“… United States District Court for the District of Maryland, Southern Division, transferred to United States District Court for the Eastern District of Pennsylvania, Philadelphia 8:2023cv00146 8:2023cv03360 January 19, 2023 August 25, 2023”Page 25 of the 2024 FDD, Item 3
Jeet Hospitality, Inc. and Indravaden Patel
Brought against a franchisee · filed 2023-02-02 · American Arbitration Association · 01-23-0000-4726
“… American Arbitration Association 01-23-0000-4726 February 2, 2023”Page 25 of the 2024 FDD, Item 3
Le Cercle Rouge, LLC, David Adehou and Milan G. Mody
Brought against a franchisee · filed 2023-01-31 · American Arbitration Association · 01-23-0000-4439
“… American Arbitration Association 01-23-0000-4439 January 31, 2023”Page 25 of the 2024 FDD, Item 3
SC Hotel Group, LLC, SC Hotel Partners, LLC, Lajwanti Gandhi and Rolan Chowdhury
Brought against a franchisee · filed 2023-01-18 · Circuit Court for Montgomery County, Maryland · C15CV23000171
“ACTIONS INITIATED BY CHOICE TO RECOVER ROYALTIES, LIQUIDATED DAMAGES AND OTHER DEBTS OWED TO CHOICE HOTELS Defendant or Respondent Venue Case Number Filing Date SC Hotel Group, LLC, SC Hotel Partners, LLC, Lajwanti Gandhi and Rolan Chowdhury Circuit Court for Montgomery County, Maryland C15CV23000171 January 18, 2023”Page 25 of the 2024 FDD, Item 3

This list shows 14 of the 91 matters Item 3 discloses; the rest are in the filing.

One proceeding above is indented under the matter it belongs to because the filing narrates them inside it — an appeal, a consolidated case, a related arbitration. Each carries its own quote and page. They are counted with their matter, not as extra matters, so this list and the 91 Item 3 discloses agree.

Item 3 lists the litigation the franchisor must disclose; a matter against a parent, an affiliate or a named officer is not a matter against the franchisor, and pending claims are allegations, not findings.

Disclosure signals that moved the score

How this shows up in the verdict

54 active royalty recovery lawsuits by franchisor indicate widespread payment disputes and cash flow problems among franchisees
High cumulative litigation count (62+ actions) suggests adversarial franchisor-franchisee relationship

The verdict grade is FranchiseVerdict's editorial assessment across SBA loan performance, unit growth, revenue and disclosure signals. It is not investment advice.

Before you weigh a lawsuit

How to read Item 3

A franchisor must disclose pending actions and any material civil action involving the franchise relationship, plus convictions or civil judgments for fraud, unfair or deceptive practices, or franchise-law violations, going back ten years. A case the franchisor brought against a franchisee counts too. Item 3 does not include every dispute: settled claims below the materiality line and matters resolved in private arbitration can be absent.

Questions worth asking current and former franchisees, using the contact list in Item 20:

Were you, or anyone you know in the system, party to a dispute with the franchisor?
Was it resolved by settlement, arbitration or a court, and on what terms?
Has the number of disputes gone up or down since you signed?

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