FORT LAUDERDALE, Fla - May 8, 2002 - A suit alleging two counts of fraud and conspiracy has been brought against the corporations Wellesley Inn & Suites Franchising, Inc,. And Prime Hospitality Corp. (NYSE:PDQ).

"As a publicly-traded company, we feel it is imperative to make the public aware of the situation brought about by the actions of the sellers (Wellesley Inn & Suites Franchising, Inc,. And Prime Hospitality Corp.) of the hotel located at 5070 North State Road 7 in Fort Lauderdale, Florida," stated Prakesh Patel, owner, Sunrise Hotel Management, LLC, named Plaintiffs in the suit.
 

"The representatives of Wellesley Inn & Suites Franchising, Inc,. And Prime Hospitality Corp. did seek by their actions and inactions to inflate the property value during the sales process and increase their revenue at our (Sunrise Hotel Management, LLC and Prakash Patel) loss, to the tune of countless hundreds of thousands of dollars." The suit alleges that assets in the form of computer data were to be turned over to the purchasers on the closing of the sale. The computer data were detailed records including corporate clients and travel

Wellesley Inn 5070 North State Road 7 Ft Lauderdale, Fl

A key factor in the case indicates a significant and clear percentage of revenue to the property as represented by the defendants prior to completion of the sale was attributable to corporate clients and referrals from travel agents. The defendants did also without authority of the plaintiffs charge UPS shipping fees to the plaintiffs prior to completion of the sale to the plaintiffs.

To continue the use of the branding of the hotel, the plaintiffs were obligated to join a reservation system which listed this property, along with the other properties owned by the defendants, for referral.

"Because the defendants chose to refer potential business to properties which remained in their portfolio and to not refer them to our's, despite its location in closer proximity to clients' destinations, the defendants further injured our business," continued Patel.  "When other hotels were upwards of 85% capacity, our's was around 50%, with an additional $20 drop in average daily rate (ADR).

That translates into such a significant amount of money, we find it hard to calculate the total losses."

"The impact of this situation has caused us (the plaintiffs) to pursue recission of the Franchise Agreement," concluded Patel. "We hope, through this litigation, to make other potential Franchisees aware of the potential hazards they could encounter in their dealings with the defendants."