August 19, 2025|Franchise Frontlines
August 19, 2025 | United States District Court, Middle District of Tennessee, Nashville Division | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge Eli Richardson of the Middle District of Tennessee denied a motion to dismiss by franchisee operators of a Clarksville, Tennessee Days Inn. Plaintiff Jane Doe alleged she was trafficked at the hotel between 2011 and 2014, bringing claims under the Trafficking Victims Protection Reauthorization Act (TVPRA). The franchisee defendants argued that her claims failed as a matter of law, particularly on the “participation in a venture” element. The court disagreed, holding that participation may be established through a commercial venture with traffickers—not limited to direct participation in a trafficking scheme. This distinction between commercial and trafficking ventures is significant in assessing liability for both franchisees and franchisors.
Relevant Background
Plaintiff alleged that from 2011 to 2014 she was trafficked at the Clarksville Days Inn, which was operated by the franchisee defendants under the Wyndham system. According to the complaint, her trafficker physically abused her, threatened her family, and forced her into commercial sex acts. Hotel staff allegedly observed a steady flow of men entering and exiting her room for short visits, even though they were not hotel guests. Security cameras captured this activity, yet the practice continued unabated.
Additional red flags were pervasive. Entire sections of the hotel were informally designated by staff as areas for prostitution, drugs, and trafficking. Rooms used by traffickers were found to be littered with sex and drug paraphernalia, while housekeeping was often refused for days at a time. Plaintiff alleged that franchisee employees knowingly rented rooms to traffickers, accommodated their requests for preferred room locations, and allowed activity to continue despite obvious indicators. Each rental generated revenue for the franchisee, and traffickers allegedly selected the Days Inn because they expected minimal interference from management or staff.
The complaint also asserted that the franchisee defendants had been educated on trafficking indicators through government and industry training materials. Reports and guidance documents had long warned the hospitality industry of its role in sex trafficking, urging hotels to identify and report patterns such as repeated male visitors, cash payments, and avoidance of housekeeping. Plaintiff alleged that the franchisee defendants either ignored these warnings or deliberately failed to intervene, even though they knew or should have known trafficking was occurring on their premises.
These allegations formed the foundation for claims of both beneficiary and perpetrator liability under the TVPRA. The franchisee defendants moved to dismiss, asserting that the revenues from room rentals could not constitute a “knowing benefit,” that they did not participate in a trafficking venture, and that any claims arising from events before August 2013 were time-barred.
Decision
The court rejected each of the franchisee defendants’ arguments. On the “knowing benefit” element, Judge Richardson held that rental income from traffickers plausibly satisfied this requirement, citing earlier cases holding that room rentals are a sufficient financial benefit.
The court’s most significant analysis concerned the second element, “participation in a venture.” The franchisee defendants relied heavily on the Eleventh Circuit’s decision in Doe #1 v. Red Roof Inns, where plaintiffs alleged franchisors participated in sex trafficking ventures and the court found the allegations insufficient. Judge Richardson distinguished Doe #1 by emphasizing that the plaintiffs in that case had framed the venture narrowly, focusing on direct participation in trafficking itself. Here, Plaintiff instead alleged that the franchisee defendants participated in a commercial venture with traffickers, namely the repeated renting of rooms and receipt of revenue from traffickers. As the court explained, this difference in how the venture is defined materially affects the analysis. The court also noted that the Eleventh Circuit itself had acknowledged that its conclusion turned on how the plaintiffs defined the venture in their pleadings.
Building on this reasoning, Judge Richardson concluded that Plaintiff had plausibly alleged venture participation by the franchisee defendants. He emphasized that there was an “ongoing business relationship” between traffickers, who used the hotel to conduct their operations, and the franchisee defendants, who profited each time a room was rented. This commercial relationship created the common undertaking involving risk and profit that the TVPRA contemplates. The allegations went beyond passive benefit, showing an arrangement in which traffickers could rely on the franchisee to provide space while the franchisee reaped consistent financial gains. The court therefore held that Plaintiff sufficiently alleged participation in a venture at the pleading stage.
Finally, the court rejected the statute of limitations defense, applying the continuing tort doctrine. Because Plaintiff alleged she was trafficked through at least October 2014 and filed suit in August 2023, the claims were timely.
Looking Forward
The ruling underscores that “participation in a venture” under § 1595 can be framed differently depending on whether the defendant is a franchisee or a franchisor.
For franchisees, venture participation may be found in routine business transactions with traffickers. Renting rooms despite obvious red flags, declining to intervene, and profiting from those rentals create a direct link to the trafficking enterprise. This case illustrates that franchisees’ operational decisions are scrutinized for constructive knowledge and their willingness to continue the commercial relationship.
For franchisors, the analysis is more attenuated. Courts are more likely to ask whether the franchisor’s role in system operations—such as revenue-sharing, reservation platforms, or oversight mechanisms—creates sufficient integration into the “venture.” As Doe #1 demonstrated, if plaintiffs define the venture narrowly as “sex trafficking,” franchisors may avoid liability absent allegations of direct participation. By contrast, if the venture is framed as the broader commercial operation of the hotel, franchisors face greater exposure if they are alleged to have known or should have known of trafficking indicators.
For the franchise community, the lessons are clear:
- Franchisees should implement and document staff training, reporting protocols, and guest monitoring measures to avoid claims that they “turned a blind eye.”
- Franchisors should carefully delineate their role in day-to-day hotel operations, ensuring their brand standards and revenue systems do not inadvertently resemble joint participation in franchisee-level misconduct.
- Both franchisors and franchisees benefit from proactive compliance programs and coordination on anti-trafficking initiatives, demonstrating that the brand and its operators take active steps to prevent misuse of hotel properties.
The court’s approach illustrates that liability may hinge on whether the alleged “venture” is defined as trafficking itself or as the commercial enterprise that facilitates it. This distinction will continue to shape how courts evaluate TVPRA claims against franchise systems.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
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