A group of Choice Hotels International Inc. (Choice) franchisees have filed a lawsuit that claims the hotel company is burdening operators with inflated costs for goods and imposing duplicative fees to boost its own revenue.
The franchisees claim Choice has set up its qualified-vendor program, which provides items hotel operators need, to extract payments from suppliers. The suit says vendors cannot be considered for inclusion in the program unless they pay an initial $25,000 fee.
In turn, those vendors pass expenses along to operators, according to the complaint from the franchisees. Operators of Choice hotels, for example, pay $34.50 for 10 pounds of frozen sausage links, while non-Choice franchisees pay $22.37 for the same quantity of the meat, according to the suit. “Choice knows that qualified vendors cannot sell goods and services to its franchisees at competitive prices,” the lawsuit says.
The franchisees also claim Choice finds ways to add fees and impose penalties on them to boost its share of the revenue generated at lodging properties they run. Choice said the company “will address the unfounded allegations at the appropriate time.”