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Former Holiday Inn Owners Sue and Lose over Franchisor Refusal to Renew Franchise Agreement

Jay Z. Dalwadi and Jay Shree Kapi spent millions building out a Holiday Inn hotel in downtown Houston in 2000 after receiving assurances from the franchisor, they say, that they could anticipate little problem in renewing their franchise agreement down the road. But in 2013 the franchisor refused to renew after receiving offers from others to build a Holiday Inn nearby.

Dalwadi and Kapi sued for breach of contract and fraud. They lost.

"They had a 10-year agreement and they wanted to extend it," [attorney Deborah] Coldwell, a partner in Dallas' Haynes & Boone who represents Holiday Inn, said of the plaintiff's claims. "Our client didn't have the duty to renew and so they sued us."

While the plaintiffs alleged Holiday Inn breached the implied covenant of fair dealing by not renewing their hotel's license, the hotel chain pointed to the language in the license agreement that provides "this license is not renewable."

…"In sum, plaintiffs have not identified the who, what, when, where and how of defendant's alleged misrepresentations that allegedly form the basis of fraud," [Senior U.S. District Judge Ewing] Werlein wrote. — John Council, Texas Lawyer

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