Fleetcor Accused of Fleecing A Former Friend

When transportation giant, Airline Accommodations Solutions, LLC and Fleetcor Technologies Operating Company, LLC acquired Hotel Connections, later rechristened TA Connections, in 2020 it was largely seen as a great deal for all parties.  Hotel Connections, founded and solely owned by Ken Shanley, was the leading provider of hotel accommodations for airlines crews. This gave Fleetcor instant dominance in a lucrative, but complex, segment of the corporate travel business and  successful exit for entrepreneur Shanley. But apparently the relationship has soured.

Just last month, Shanley, as Flagler Holdings VI Beta, Inc filed a confidential lawsuit in Delaware courts accusing his former besties of violating the terms of their sales agreement. While the exact details of the allegations are under wraps, the lawsuit claims that Fleetcor violated the non-compete provisions in the agreement.

A non-compete covenant is typically made up of several clauses, all of which are meant to protect the business interests of the buyer from any form of unfair competition that may arise from the seller’s post-sale activities such as engaging in activities that may compromise the survival and profitability of the company. But this filing is anything but typical.

The Upside-Down Filing

The confidential nature of the filing keeps secret the details of the specific accusation, but a great concern for business buyers is that the sellers might use their influence to steal customers and former employees. Typically, a non-compete agreement would include tight restrictions on hiring former employees, as well as contacting previous customers. This scenario makes little sense here since the seller, in this case Flagler Holdings VI Beta, Inc and Ken Shanley, are bringing suit against the buyer, Fleetcor Technologies Operating Company, LLC for breaching the non-compete powerful idea agreement.

Non-compete agreements can also bar outgoing business owners from leveraging intellectual property for business benefit. But, again, in this unusual down filing, it’s the seller alleging that the buyer used information they bought unfairly to compete against them.

Tsk. Tsk, Fleetcor. What did you do? We’ll stay tuned to see how this plays out in the courts.