A federal district court in New Jersey granted summary judgment in favor of Choice Hotels International (“Choice”) in a trademark infringement action against a former franchisee who operated a hotel under Choice’s Econo Lodge trademarks. The court ruled over more than four years after the franchise agreement was terminated, and after contempt proceedings resulted from the franchisee’s violation of a preliminary injunction to stop using the trademarks.
Choice entered into a franchise agreement with AMBA Corporation (“AMBA”) in 2003. The agreement remained effective for 20 years. However, AMBA defaulted on their payment obligations in 2020, and as a result, Choice terminated the franchise agreement in January 2021.
Although Choice’s default notice directed AMBA to cease using its Econo Lodge trademarks, AMBA continued to operate the hotel using the Econo Lodge trademarks on exterior signage, interior materials, digital listings, and in conversations with the puFblic. Prior to filing suit, Choice issued two cease-and-desist notices asserting that AMBA’s continued use of the trademarks was unauthorized.
After initiating suit, Choice moved for a preliminary injunction. AMBA did not oppose the motion, but it continued to use the trademarks after the preliminary injunction was ordered. As a result, the court granted Choice’s motion for contempt and authorized the U.S. Marshals Service to seize infringing signage and other items from the property. AMBA completely ceased its infringing operations in March 2025.
Choice then moved for summary judgment. AMBA only opposed the calculation of monetary relief. The court found that summary judgment for trademark infringement was appropriate as a matter of law because the trademarks were incontestable and AMBA’s use of identical trademarks created a high likelihood of confusion, because guests may believe that AMBA’s hotel was still a part of the Econo Lodge system.
For damages, the court held that where a former franchisee willfully continued using the franchisor’s trademarks for four years, despite court orders and seizure by the U.S. Marshals, lost profits and damages were warranted.
Franchisors should frequently review their franchise agreements with franchise counsel relating to franchisees’ de-identification obligations to ensure their franchise agreements contain clear procedures to aid them in enforcing such obligations. Additionally, franchisors should ensure they have consistent processes in place to both track and take action in instances of trademark infringement to protect the franchisor’s brand and system.
Choice Hotels Int’l, Inc. v. AMBA Corp., Case No. 1:22-cv-4779 (KMW-AMD) (D.N.J. Nov. 25, 2025)
