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Court Of Appeals Of Arkansas 2011 Term Paper

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BUSINESS CASE STUDIES

Business Case Studies: Holiday Inn Franchising, Inc. vs. Hotel Associates, Inc. Court of Appeals of Arkansas 2011 Ark. App. 147, 382 S.W.3d 6 (2011)

Parties

Holiday Inn Hotel (the defendant) and Hotel Associates Inc. (HAI) (the plaintiff) (Case Text, n.a.).

Facts

Buddy House was a trustworthy constructor and had been in business with Holiday Inn for several years. The contracts were even not present in the written form as they both had good faith in each other. However, Holiday Inn once asked Buddy House to renovate a hotel. The total cost of renovation was estimated to be quite high by Buddy House, and he asked Holiday Inn to extend the franchise for ten years. Holiday Inn set a condition only if the renovated hotel ran well in the period. Buddy House started operating the hotel under the name of Hotel Associates Inc. (HAI), but Holiday Inn did not still grant them the extension. After a while, Holiday Inn licensed another local hotel without informing HAI. After ten years, again, HAI applied for an extension, and Holiday Inn asked for the renovation worth $3 million (Case Text, n.a.). The refusal of the extension remained the same from Holiday Inns side. HAI sold the hotel for $5 million and filed a case against Holiday Inn for fraud. Holiday Inn appealed in Arkansas court.

Procedure

The lower court decided in favor of HAI and charged Holiday...

However, the charges were requested to be lowered, so HAI demanded that they remain the same again.

Issue

The central question...

…seeming relation of trust. HAI and Holiday Inn had been working with each other for several years, which meant that HAIs damages were purely financial and economic. There was no harm inflicted on anyones health or safety. The right to warrant the financial charges was rightful under the given circumstances.

Conclusion

Financial misconduct, misreporting, or misrepresentation are all normally counted as fraud. However, suppose there is no legal binding of any contract or even for the franchising for Holiday Inn and HAIs case. In that case, the relationship does count as the apparent binding of their relationship. The mutual benefits that both parties have been gaining with the element of trust for economic growth and social wellbeing were distorted by Holiday Inn with informational asymmetries, causing direct harm to HAIs informational and…

Sources used in this document:

References

Caruso, C.D. & Zarco, R. (2019, May 5-7). Franchisee litigation perspective: A practical guide to franchise litigation [Paper presentation]. International Franchise Association, 52nd Annual Legal Symposium, Washington DC, United States. https://www.franchise.org/sites/default/files/2019-05/FranchiseeLitigationPerspective.pdf

Case Text. (n.a.). Holiday Inn Franchising v. Hotel Associates. https://casetext.com/case/holiday-inn-franchising-v-hotel-associates-3/

Karpoff J. M. (2020). The future of financial fraud. Journal of Corporate Finance, 101694. Advance online publication. https://doi.org/10.1016/j.jcorpfin.2020.101694

The Harmonie Group. (2013, March). Franchisor Liability Issues. https://www.harmonie.org/file/Retail-and-Hospitality/RETAIL-FranchisorLiabilityIssues.pdf

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