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Could this possibly lead to more claims by franchisees?
Franchisees have filed class-action lawsuits against two major hotel brands, saying the companies are illegally taking loyalty fees for guests who, in some cases, don't even know they've been enrolled in frequent-stay programs.The suits, filed in U.S. District Court in Orlando last month, allege that Wyndham Worldwide Inc. and Choice Hotels International have inflated the ranks of their loyalty programs and are collecting fees from hotels when those guests stay at franchise properties.
Choice Hotels and Wyndham's hotel group said they do not comment on pending litigation. Choice's hotel brands include Clarion, Quality and Comfort Inn, while Wyndham's stable includes Days Inn, Ramada and Super 8. The suit was filed in Central Florida because the lead plaintiffs — Jade Hospitality LLC and Amar Shakti Enterprises LLC — are locally based.
The lawsuit claims that the franchisees were charged up to 5% in program fees, which violates their franchise agreements
At issue in the lawsuit are two practices: Auto-enrollment and "proactive matching." Franchisees say the hotel companies had been auto-enrolling guests who booked online into loyalty programs, unless the guests opted out. The matching happened when personal data were used to reward loyalty points to guests even if they didn't provide their membership information at the time of booking or check-in.Franchisees say the result was that they were paying program fees of up to 5 percent of gross room sales generated by the program guests, who may or may not have stayed at their property because of the loyalty program, and who may not have known they were entitled to benefits.
Read the Orlando Sentinel for details
About the Author: Ed Teixeira has over 35 years of franchise industry experience as a franchise executive and franchisee. He has served as a franchise executive in the c-store, manufacturing and home healthcare industries and has licensed franchises in Asia, Europe and South America. Ed operates FranchiseKnowHow which provides information and advice to prospective and existing franchisees and franchisors. He publishes newsletters for the franchise community.