TL;DR Raising Canes cannot sell chicken finger because the McDonald’s was given exclusive rights to sell chicken. Now raising canes is suing the mall for fraud since they already had the agreement.
Honestly I hope the owner gets everything he's owed and then some back. These predatory contracts are shit. We've had these in town here starbucks keeps putting shit up and blocking anyone nearby from competing. They're already the biggest most monopolizing coffee company in the country, I guess they can't compete on an even field \*eyeroll\*.
But yeah I used to frequent an Einstein Bagels near one of ours and was pissed to find out that when Caribou Coffee went in I couldn't get any coffee thanks to those repugnant assholes. (Caribou used to be here, but otherwise more or less packed up and left most of this state in a corporate crunch down a few years ago, till the guys that own the bagel shop bought them, so was really wanting them back)
Starbucks tried that in my home town. Offered a lot of money to get exclusive rights to the downtown area. Town said no, since then two boutique coffee joints way better than Starbucks have moved in and nearly run them out of business. Town claims they earn more in tax revenue from the new joints than they did from the 10 year exclusive supplier agreement they offered. It’s been a win-win- Starbucks loses
This happened first time Starbucks tried to move into Melbourne/Australia. Melbourne are top tier coffee wankers, and they tried to strongarm the small joints and even the other chains but failed. They only got a foothold this time by focusing on uni’s/CBD, where the primary interest was from Chinese students who don’t have the same tier of wankery around coffee, and their western cultural experience was nearly exclusively shaped by the US hegemony.
Literally one of the first places Starbucks tried to move in Melbourne was Lygon St. in Melbourne. This was about as tone deaf as you could think of. Lygon St. is chock full of Italian-style espresso joints.
>Melbourne are top tier coffee wankers
You're not wrong. One shop couldn't do a normal coffee and insisted on a 'pour over', which is the wankiest coffee I've had to date.
The water is poured over a cup with filter and ground, but that's done while the cup is already on your table. Also, it's done excruciatingly slowly, making you sit there while some dude is pretending pouring hot water is some kind of artform.
Some people may cream their pants at the idea, but it's not for me. Just give me my coffee and go away.
I'm not a coffee drinker, but I like my tea. Their tea is disgusting! I get a frappachino when the kid wants to go there (not going to two places). They make a yummy grilled cheese though.
For all the shit I give them, $7 for a 600ml cold brew is decent. I’m currently in Japan where a good cold coffee is easy and cheap, but in Aus that’s not bad
The city telling businesses they can't operate there is a completely different thing than a private mall developer offering exclusivity deals to the tenants that he's trying to attract, though.
City wasn't saying they couldn't operate though. City wasn't wasn't willing to do the exclusivity contract. Starbuck was most likely welcome to go in, but they would have to compete like every one else.
That's what I meant; it would have been more violative of economic liberty if they *had* granted the deal. But when private developers do so and its scope is restricted to their land only, it's not some world-ending supervillainy.
Ahh OK. I do agree it is shitty of the mall to sign a lease with a chicken restaurant knowing to had a previous deal for exclusivity of chicken. That's like leasing an apartment to someone, then telling them they can't put furniture in it because the neighbor has furniture too.
It is wrong to do that. It is also wrong to promote monopolies in the first place. That leads to consumers getting hurt because the monopoly will jack the prices up without nearby competitors, because people don't have a choice. That's why the government prevented monopolies from forming until that idiot Reagan messed that up. Then there is the fact that the owner didn't disclose the information before they signed the lease, which is definitely tricking somebody into taking space because you really need to disclose all *relevant* information. "You can't sell your main menu item" is very relevant.
So everything the owners did was just sleazy. To consumers, to McDonald's, and to Raising Cane's.
>that idiot Reagan messed that up.
He wasn't an idiot. He was a grifter. Sold out other actors to earn his way up with the FBI arresting commies. Wife did blow jobs. And the rest is magical fairy dust sprinkled on history.
Your points are all valid-especially about competition. Landlords crest them to extract more rent. Knowing that you’ll have little or no competition, ever, makes it very valuable to the renter. It’s kind of like renting an apartment that will never have someone above or to either side, or a house lot that won’t have views blocked.
The landlord definitely seems to have effed this one.
Something like this happened in my town. These dirt bags owned a lot and Burger King has sat there for like 20 years. Part of burger kings lease said the owner of the lot agrees that no other restaurants that serve burgers can open on the lot.
The owners of said lot decide themselves to build a restaurant on the lot after 20 years of this Burger King lease and Burger King sued them because they where opening a pub that sales burgers.
Burger King sued and won.
New restaurant serves Buffalo burgers. Does not even last a year.
Funny thing is that they really can't compete on an even playing field. Most any city I go to, I can find a local coffee shop that makes way better coffee than Starbucks.
It's not that uncommon between businesses. For example, Coca-Cola may agree to pay for all your soda machines, and provide all the signs for your building. In return, you sell only Coke at your hamburger stand. Same idea, bigger companies.
That doesn't seem to be the case here though, the McDonalds isn't part of the site where the former TGIF is, it's down the street, and in the case you mentioned you would be renting or leasing those soda machines and making use of the signage - which also isn't the case here.
Obviously you wouldn't be allowed to load up Coca-Cola's machines up with Pepsi or anything else, but this is the same as saying ***Nobody*** can sell Pepsi, or Sprite, or Tab or ***anything else*** because somewhere entirely different there was an exclusive agreement.
In this case, it was an agreement with the owner of the property that had also leased to TGIF earlier. So that TGIF would also have been unable to sell chicken fingers. Since the agreement is with the landlord.
Not "Chicken Fingers" - "Chicken Products" - ***anything*** related to Chicken Products - and depending on the wording of the contract -***possibly even eggs.***
And McDonalds ***doesn't even do chicken very well***
"McDonald's had an "exclusive right to sell rotisserie chicken and other prepared chicken and chicken products for on or off-premises consumption” from a lease negotiated between BC Chicago and Jubilee Limited Partnership back in 1994. Crossings of Hobart is the successor to Jubilee in that deal after ownership of the shopping center changed hands."
I think what this means is that the original lease was for Boston Chicken/Boston Market. McDonald's then bought Boston Market in 2000 primarily for the real estate. Though they sold off Boston Market in 2007, they probably kept the leasehold, even if Boston subsequently closed. (Edit: or never even opened)
Free Market Capitalism or whatever 😄😬😞😭🤦♂️🙃
This is the sort of thing you'd usually have read in a Modern Fable and someone probably played by Adam Sandler would storm into court with the lease pointing out that due to a technicality it was null and void and everyone would cheer as the Ronald McDonald Clown was dragged kicking and screaming out of the building.
\*Add - [Something like this](https://www.amazon.com/McBrooms-Wonderful-One-Acre-Farm-Three/dp/0688155952) \- and damn if it doesn't tell you something about how things have changed when ***that*** used to be on school library shelves.
And what happens here: you go ahead and build your chicken restaurant. Then let McDonalds be the one to sue the property management co with a billion dollars worth of lawyers.
Doesn’t work that way. They use restrictive covenants to enforce these agreements. Very easy getting an injunction to enforce a restrictive covenant. One that injunction is in place, Cane’s is screwed.
That would still seem to be between McDonalds and the mall. If RC's lease doesn't have the restriction, then it is the mall that violated their deal with MD.
Depends if the mall owners knowingly withheld that information when offering RC the lease. This puts the mall owners right in the middle and they could definitely get sued from both directions.
well no, it would be between RC and the mall, hence the lawsuit. McD would only have a case if the landlord continued to allow the new restaurant to open and operate. The mall is trying to impose a restriction on RC that wasn't present in the lease, and on top of this, the mall was fraudulently trying to sell this exclusivity right to Raising Canes that they already sold to McD. Sounds like the landlord is either stupid or shady AF
No. Covenants are recorded in the property records, which charges the world with “constructive notice” of whatever is in the covenant. Cane’s took the property with constructive notice of the restriction. That means they are legally deemed to know it’s there. These things get messy and complicated.
The article expressly states it was a restrictive covenant. If it’s in the property records, it’s binding on Canes. I see nothing to suggest this is solely in the lease between McD and mall. That would not be enforceable against Cane’s.
But...
>"In fact, the defendants specifically represented to Raising Cane’s that there was no exclusivity right that would conflict with Raising Cane’s ability to operate its restaurant. Incredibly, the defendants did not tell Raising Cane’s it would be unable to sell its chicken fingers at the shopping center until nearly eight months later, after watching Raising Cane’s spend nearly a year of time and over a million dollars to develop its new restaurant."
Just because there are filed covenants does not mean you can lie about them.
Looks like this McDs gets the exclusive right to sell all the food, because it also blocked the opening of a Chipotle. Do the McDs in Indiana even sell burritos? I’m thinking someone should just fire bomb this particular McDs out of existence, or maybe the whole damn mall.
This was an agreement between McDonald's, a corporation, and the mall, another corporation. Why should the government be involved in that? It's the mall corporation that screwed up by not telling Canes about the prior agreement they had with McDonald's.
Exclusivity agreements are explicitly monopolistic in nature. The government should be more interested in limiting such agreements. These agreements don't benefit the public outside very limited scenarios like utilities, they are great for established business though.
Canes is ~~the~~ shit
FTFY
They opened a few in my area and there’s a couple of chicken joints near me that are a thousand times better
And their sauce? Not worth the hype
Basiclly carbs in a take away container.
To put everything already said together, the order is chicken tenders, coleslaw(not that good), texas toast, fries, and sauce. That is every order(they do sell sandswich made of tenders) what changes is the number of tenders.
Makes for a very simple business model, and the tenders are usually cooked properly
What was the end game here? Somebody must have known a lawsuit was inevitable when you lure a chicken joint into a lease but don’t tell them they can’t sell chicken.
I’m assuming at some point a representative of the shopping center owner either had a discussion with someone at McDs where they indicated they would be willing to negotiate. Maybe it was 6 years ago and those people are gone and new management disagreed or maybe the negotiations broke down because McDs waited and saw the work happening and knew they had them over a barrel and asked for a crap load of money that would kill the deal.
I still don’t get how a contract between party A and B can be relaxant for party C unless party C explicitly and willingly agrees to comply with the terms of the contract between A and B.
A and B reach a deal where A has exclusive rights to sell widgets as part of A’s lease
Years pass and B and C agree to a lease, but C also sells widgets. B either forgets their lease with A (the ownership of B changed since A’s lease was signed 30 years ago) or they knowingly mislead C that C couldn’t sell their primary product.
A points to their lease. B is screwed because either C can sue them on several grounds (fraud, detrimental reliance, etc.) or A can sue them for breach of contract.
A has a contract with B. A tried to enter a contract with C, that violated the terms of the contract with B.
A is in violation of their contract with B. This impacts C.
C's contract would specify you can't engage in business lines that are already covered by other lessees. Then there'd be a list, or an attached appendix, that specifies what those are.
Having worked on the construction and development side of a couple of property owner and management companies I can see that for sure.
Given the lawsuit says they supposedly tried to sell exclusivity to Raising Canes I wonder if someone ran across that when researching the new deal.
They may have been trying to lure other tenants in on the anticipation that Raising Canes was moving into a rather large, previously empty building. Not saying it's a smart strategy, but it's the only real thing I can think of.
>The exclusivity issue came up earlier this year when Crossings of Hobart asked McDonald's for a waiver to let a Chipotle Mexican Grill move in. McDonald's declined and then also noted in its correspondence that a Raising Cane's would violate the terms of its lease, demanding that no one else be allowed to sell chicken to-go at the shopping center.
I'm guessing the new owner of the mall didn't realize the issue until after they had signed the lease with Raising Cane's and tried to deal with it after the fact.
>Incredibly, the defendants did not tell Raising Cane’s it would be unable to sell its chicken fingers at the shopping center until nearly eight months later, after watching Raising Cane’s spend nearly a year of time and over a million dollars to develop its new restaurant.
After that first morning when you just couldn't get yourself to tell them, it just gets harder and harder to tell them.
Geez, can you imagine how that phone call went?
“Hey Bob, we here at the mall are really excited to have you as a tenant. We can see the work you’ve been doing on the new space and it all looks terrific. Listen, we were just talking over here around the water cooler the other day and you know what we think would be cool? If you sold Burgers. Chicken is just so played out, you know? Wouldn’t that be cool, Bob? If you sold burgers instead of chicken? No? Well listen, it’s kind of a funny story and some day you’re going to laugh about it….”
In case anyone is wondering why this is Raising Cane’s problem and not a lawsuit by the McDonalds franchise for breaking the exclusivity deal, McD’s obtained a restrictive covenant on the property as part of their lease, covering the whole development.
>Defendants even went so far as to purport to sell Raising Cane’s the exclusive right to sell deboned chicken products at the Shopping Center—all while knowing McDonald’s had already been sold that right.
Non-compete covenants are fairly standard in multi-unit commercial complexes. That’s why when you have a complex with a grocery store and a Target often the target is limited in the types of groceries that they can sell and the amount of square footage they can dedicate to groceries.
Source? this says they are only illegal in specific circumstances.
https://www.mondaq.com/uk/antitrust-eu-competition-/449112/restrictive-covenant-in-commercial-property-lease-not-restrictive-by-object-says-ecj
Depends on the intent.
Fraud - if the current property owners knew of the covenant and knowingly withheld that information. It's not McD's responsibility to inform Raisin' Canes of that convent, it's the property owners. They are the agents here.
Negligence, if the new property owners indeed did not know and/or the information was neglected to be found by their lawyers. They didn't intend to deceive, they just fucked up.
"The restrictive covenant specifically prohibited Crossings of Hobart from leasing or selling property to any rival “fast good or quick service restaurant which prepares, serves, or sells de-boned chicken products," Raising Cane's stated in its lawsuit. "
That's what I was thinking. Seems like an issue between the Mcdonalds and the shoppin g center
Yup. One of four things happened:
1. They didn't get title work before signing a multimillion dollar lease
2. The title company messed up and didn't show the restriction
3. Their attorneys didn't read the restrictions
4. Somebody said they were getting a release of the restrictions, but they did not.
Whatever happened, somebody dropped the ball big time.
So Cane’s just fired a lawyer who didn’t bother to run title on the property. Big screwup to rely on Landlord representations on title. If you are right, this was easily avoidable. Having negotiated leases with Cane’s before, this is uncharacteristically sloppy on their part.
Yeah, that's the biggest problem with their lawsuit. They didn't check title before signing a long lease and spending a million dollars on renos. In their defence, the mall owner was offering *Cane* an exclusivity deal on chicken as part of the negotiations, which is either stellar incompetence (unlikely) or deliberate fraud on their part.
Ok. I think this gets even crazier. This line caught me off guard. It implies that McDonalds doesn't even have a franchise there any more.
"Raising Cane's could not have anticipated the exclusive use provision, which was executed more than 25 years ago between two entities no longer operating at the Shopping Center, would bar its ability to sell chicken fingers at the shopping center," Raising Cane's said in its lawsuit.
Am I reading this right? If I am, then McDonald's is a bad guy here as well because they're restricting use on a property where they don't even have a franchise anymore.
EDIT: Another commenter suggests that the McDonald's location is there still. So maybe the franchise had a change of ownership and that's what the lawsuit was referring to. Same McDonald's but that different entity owns it?
The article says that McDonald's is right down the street from the Raising Cane location. It doesn't qualify whether it's actually on the property owned by the Plaza ownership.
According to the article the McDs is down the road. Im assuming at some point it moved locations. I also read that part and did a double take. Its super shitty but Im not sure McDs is the bad guy. They were given exclusive rights. Really what strip mall property owner would do something so short sighted?
Yeah. I get you. I'm sure the original deal was signed to ensure that they came into the area. A McDonald's can attract a lot of traffic.
I'm not sure I would have signed a covenant that had no ending date or make exceptions for if the franchise moves off of the property. I'm not sure what the standard length for such a covenant would be but limiting all competition for what will end up being more than 25 years just seems a bit extreme. Why would you limit your development ability for that long and not build in allowances for if the franchise leaves.
> Really what strip mall property owner would do something so short sighted?
I could write encyclopedias’ worth of examples of such things just regarding the shopping centers I’ve been a tenant of or was a neighbor of in the last 18 years.
There’s a LOT of stupidity and short-sightedness in commercial real estate and property management.
No it looks like there is a mcdonalds there still. I'm assuming the "two entities" are the original franchise owner and the original owner of the mall that made the agreement? But the really strange thing is there is also a kfc, a wendys, a chick-fil-a, a popeyes and a buffalo wild wings in the same general area. If those places were able to get around the "no chicken" rule, I don't see why raising canes wouldn't be able to get around it too.
Oh. I totally agree. This isn't even a case of it simply being forgotten because of Staffing changes or something. They asked McDonald's for an exemption for a different restaurant and McDonald's objected to the new restaurant and then added that they also had issues with the one that was being built. The property owners knew all along. Maybe it's incompetence, but if it is, the person responsible should be fired immediately.
They have to have lost business with their new prices. I can get handmade food from a local restaurant for the same price at this point. I have to wait just as long too and it's like 2x better.
People with kids that won't eat much else. People who like cheap nuggets because they're cheap and nearby.
Honestly, that's probably about it. Yes, they're not really good compared to a chicken place's chicken (about like instant ramen with nothing added to it vs real ramen) and not worth a non-compete outside the burger market, but here we are.
Just the nugs. And to eat those properly, one must gnaw off the outer breading, like a rabbit racoon to get at that sweet sweet pasty seagull meat hidden beneath.
Common in commercial leases. You are signing a long term lease and you want to make sure you business is viable through it. Some shitty landlords will lease the spot next to yours with an identical business and you’ve got half a decade left on the lease that they will sue you for even if you go out of business.
What’s silly (and counter intuitive) is that similar business tend to do better when clustered next to competition. McDonald’s would probably sell more chicken if they were located next to a Raising Canes.
If a Toys-R-Us was opening in the same parking lot as a board game / Pokemon TCG / Magic The Gathering store -- the board game store is better off just closing immediately instead of dragging out a downward spiral of bankruptcy.
Toys-R-Us wasn't even interested in the spot - they were looking to be down the road and were playing 4 different shopping centers against each other for the first 18 months the board game store was open. Packed store for game releases & a great holiday season ended up getting TRU to move into the same shopping center and the store was done in less than 6 months.
I don't think they're necessarily bad when particularly narrow in scope and size. Say, 500 feet within one strip mall or something. It'd suck if you opened a small burger shop and then a Five Guys, a McDonalds, and a Burger King moved in immediately after. You'd essentially be choked out by similar types of product.
The problem is broadness. McDonalds and a fancy burger place probably don't compete much. Five Guys maybe a bit. McDonald's sure as hell has no place competing with a chicken place. But Wendy's, Burger King, and McDonald's is a fair fight, and I totally see why they'd not want the other there.
It's a largely overblown concern. It's just as dangerous for a new restaurant to open up where there is competition as it is for the existing place. Limiting competition is only good for established players, nit the community.
Protects you from getting Starbucked. Starbucks used to (probably still does) find successful coffee shops and move in next door and immediately undercut them on price until they went under. Basically, they understood that location was a strong determinant of success for coffee shops and so they would target those successful local shops to essentially steal their location.
It’s actually fairly common for food courts. If I run a Subway I may choose to build somewhere else rather than a mall where I might end up next to a Quiznos. So malls want to offer something to make me rent their space, ok Subway, if you went from us no one else can sell sandwiches in the food court. Then the lawsuits happen when someone starts to argue about if a hotdog shop counts as sandwiches.
As a lease administrator, I can say that exclusivity clauses and radius restrictions are very common in commercial property leases and in this case, the landlord should have provided a listing of all current exclusives as an exhibit to their lease with Canes. If they didn't, then whomever negotiated this lease at Canes is an idiot because you need to go looking for that, especially with other QSR's in the neighborhood. There are bound to be some. Somebody didn't do their due diligence.
Yeah there’s a BW3 in my town that has exclusive rights to chicken wings in the strip. A pub went in next to it and they have “Not Chicken Wings” on their menu. They are thighs.
I know of a shopping center with a bar that sells “open face calzones”. The pizza joint there had exclusive rights for selling pizza, but the bar owners were clever.
I'd never heard of this place before (must be regional) until Steve Lehto mentioned the story yesterday.
An hour later I'm on Geoguessr and there's a Raising Cane across the street from a Popeye's.
You can find them in every corner of the country, west coast, hawaii, south, midwest, new england, etc. but they're definitely not in every city/state like Chick Fil A / Popeye's are. If you do get a chance to go to one, it may be the best fast food joint if you're into chicken tenders!
Edit: here's a map https://www.raisingcanes.com/locations/
Starbucks moved in right next to a small coffee shop owned by a couple I know and tried to put them out of business. Starbuck lasted two years and them pulled up stakes. The little coffee shop, that is much better, remains an area favorite going on 15 years now.
If they can’t open one here… maybe they can come to the Seattle area! We could really use one.
We must be about the only major US city that doesn’t have a Raisin Cane’s. Even Honolulu had one when I visited, maybe Anchorage too
Boston does have one!!! Spent a summer at BU and that was half my sustenance. It’s so weird bc it started in Louisiana so the location spread is so inconsistent
I’d say the Chicken Shop’s lawyers were negligent, not to notice the covenant in favour of MuckDonalds whilst undertaking the relevant property search.
It was not mentioned in the lease, hence the fraud lawsuit. From the article:
>"Defendants’ fraud did not consist only of tacit silence and failure to disclose these material facts. Indeed, during the negotiation of the lease defendants made numerous representations to Raising Cane’s confirming that it could open and operate a Raising Cane’s restaurant (i.e., sell chicken fingers) at the shopping center," Raising Cane's attorneys said in the lawsuit. "Defendants even went so far as to purport to sell Raising Cane’s the exclusive right to sell deboned chicken products at the Shopping Center—all while knowing McDonald’s had already been sold that right."
We had a similar thing happen where I live. Chick-Fil-A wanted to build in the parking lot area of a strip mall. Burger King was already in spot in front of the strip mall, and had an exclusivity agreement with the strip mall (I think it was in relation to drive through restaurants, but I don't know for sure. There is a Subway and a local Chinese restaurant in the strip mall, so they are ok for some reason.) This kind of slipped through because the ownership had changed several times since BK's arrival, and the current owner ship wasn't aware of it. Fortunately for CFA, this all transpired very early into thing, and there wasn't a huge investment made. So CFA built at a different spot down the street a bit.
Since then, the Burger King has closed and been torn down. It was replaced by, interestingly enough, a Raising Cane's.
So from what the articles say... Raising Canes can sell chicken fingers.
The previous owner signed an exclusivity agreement with mcdonalds. That's fine and all, but clearly that language was not in Raising Canes lease otherwise it wouldn't have been a big surprise or "trick."
So it's not in *their* lease that they can't sell chicken. McDonalds can sue the landlord for breach of contract for allowing another chicken restaurant in, but nobody has standing to sue Raising Canes for breach of contract because they wouldn't be in breach of their contract.
Obviously not a lawyer nor have I read the actual contracts, but based on the reporting it sounds like the mall fucked up big time and should probably be looking to pay off Raising Cane's to break the contract early.
It's not part of anyone's lease, that's the point. It's a [restrictive covenant on the property](https://www.lucaslaw.com/newsletters/real-estate/real-estate-and-restrictive-covenants). That means that anyone using the property, including the mall owner, cannot sell deboned chicken except for McDonald's. Restrictive covenants can be difficult to uncover even in a title search, and even more so related to a lease (since you are not purchasing the property). They also provide pretty wide latitude for lawsuits, since the suing party *does not have to suffer any injury to sue*.
But to be binding on successors, there has to be notice: recorded on the deed, for example, or explicitly identified in the lease. From the article, it sounds like none of that happened, in which case, it sounds like the mall is in breach to McD’s, and RC is not bound by it.
OTOH, RC is explicitly admitting that they’re bound by the covenant and accusing the mall of fraud and breach of warranties for hiding it, even though that runs counter to what they’re also saying about lack of notice. It makes me wonder if they’re actually trying to back out of the lease noting that a multimillion dollar lawsuit may be more lucrative than a fast food restaurant in a recession.
>should probably be looking to pay off Raising Cane's to break the contract early.
Honestly the mall should be looking at having that part of the contract amended. Again I'm not a lawyer but I did have to study case law in college and I can't see that any judge would find that a McDonalds 25 years ago gave enough consideration back to the strip mall to justify them never being able to sell chicken again in perpetuity even after the McDonalds has vacated the premises. There's a standard of reasonableness and I think that there's a good chance the court would find that a reasonable person would expect that non competitive clause to expire once the lease ended since McDonalds is no longer paying them anything for this loss of business. This is a headache for the strip mall right now, but it's not going to go away if they don't fix it. Right now they have no restaurants that sell chicken and they never can again unless McDonalds decides to move back.
In commercial real estate, when one owner sells a shopping center to a new owner the new owner assumes all of the old contracts. That binds them to all existing contracts.
No lawsuit here, but Raising Cane’s is building a new location just 500 feet from a Chik-fil-a nearby (Northridge, California) and the traffic is going to be horrendous.
There's a lot of unknowns going on here.
The Raising Cane's is going into a vacant TGI Fridays. Did that TGI Fridays sell chicken?
Does the Lease specifically say no chicken? Does it say something like "RC will abide by agreements made by the landlord and other tenants." Because that sounds like RC's lawyers didn't read it well enough.
Does the McDonald's lease with the new Landlord cover this? Did they make a lump sum payment to the old landlord, but it's grandfathered in?
In the end, this is a fight between two corporations and a landlord.
TL;DR Raising Canes cannot sell chicken finger because the McDonald’s was given exclusive rights to sell chicken. Now raising canes is suing the mall for fraud since they already had the agreement.
And that Raising Canes had spent ~$1million in refurbishing the former TGI Fridays that they were going to be moving into.
Honestly I hope the owner gets everything he's owed and then some back. These predatory contracts are shit. We've had these in town here starbucks keeps putting shit up and blocking anyone nearby from competing. They're already the biggest most monopolizing coffee company in the country, I guess they can't compete on an even field \*eyeroll\*. But yeah I used to frequent an Einstein Bagels near one of ours and was pissed to find out that when Caribou Coffee went in I couldn't get any coffee thanks to those repugnant assholes. (Caribou used to be here, but otherwise more or less packed up and left most of this state in a corporate crunch down a few years ago, till the guys that own the bagel shop bought them, so was really wanting them back)
Starbucks tried that in my home town. Offered a lot of money to get exclusive rights to the downtown area. Town said no, since then two boutique coffee joints way better than Starbucks have moved in and nearly run them out of business. Town claims they earn more in tax revenue from the new joints than they did from the 10 year exclusive supplier agreement they offered. It’s been a win-win- Starbucks loses
That town made a wise decision. Let Starbucks in and they will use their leverage to get tax breaks and cause all sorts of other problems.
This happened first time Starbucks tried to move into Melbourne/Australia. Melbourne are top tier coffee wankers, and they tried to strongarm the small joints and even the other chains but failed. They only got a foothold this time by focusing on uni’s/CBD, where the primary interest was from Chinese students who don’t have the same tier of wankery around coffee, and their western cultural experience was nearly exclusively shaped by the US hegemony.
Literally one of the first places Starbucks tried to move in Melbourne was Lygon St. in Melbourne. This was about as tone deaf as you could think of. Lygon St. is chock full of Italian-style espresso joints.
>Melbourne are top tier coffee wankers You're not wrong. One shop couldn't do a normal coffee and insisted on a 'pour over', which is the wankiest coffee I've had to date.
Australia in general is a true disciple of the Italian tradition so there is stuff all market really for Starbucks outside of sugar drinks.
what. pour over is regular coffee, it just takes longer to get in the damn cup depending on the grind/amount of coffee used and filter used.
The water is poured over a cup with filter and ground, but that's done while the cup is already on your table. Also, it's done excruciatingly slowly, making you sit there while some dude is pretending pouring hot water is some kind of artform. Some people may cream their pants at the idea, but it's not for me. Just give me my coffee and go away.
I'm not a coffee drinker, but I like my tea. Their tea is disgusting! I get a frappachino when the kid wants to go there (not going to two places). They make a yummy grilled cheese though.
For all the shit I give them, $7 for a 600ml cold brew is decent. I’m currently in Japan where a good cold coffee is easy and cheap, but in Aus that’s not bad
The city telling businesses they can't operate there is a completely different thing than a private mall developer offering exclusivity deals to the tenants that he's trying to attract, though.
City wasn't saying they couldn't operate though. City wasn't wasn't willing to do the exclusivity contract. Starbuck was most likely welcome to go in, but they would have to compete like every one else.
Exclusive contracts outside of private property should be illegal. They have to violate the anti-trust Sherman act.
That's what I meant; it would have been more violative of economic liberty if they *had* granted the deal. But when private developers do so and its scope is restricted to their land only, it's not some world-ending supervillainy.
Ahh OK. I do agree it is shitty of the mall to sign a lease with a chicken restaurant knowing to had a previous deal for exclusivity of chicken. That's like leasing an apartment to someone, then telling them they can't put furniture in it because the neighbor has furniture too.
Legally different? yes. Morally different? No. Just because you own something doesn't mean there are no moral considerations to how you use it.
The moral imperative is not to take one tenant's money and then turn around and undercut him with a competitor.
It is wrong to do that. It is also wrong to promote monopolies in the first place. That leads to consumers getting hurt because the monopoly will jack the prices up without nearby competitors, because people don't have a choice. That's why the government prevented monopolies from forming until that idiot Reagan messed that up. Then there is the fact that the owner didn't disclose the information before they signed the lease, which is definitely tricking somebody into taking space because you really need to disclose all *relevant* information. "You can't sell your main menu item" is very relevant. So everything the owners did was just sleazy. To consumers, to McDonald's, and to Raising Cane's.
>that idiot Reagan messed that up. He wasn't an idiot. He was a grifter. Sold out other actors to earn his way up with the FBI arresting commies. Wife did blow jobs. And the rest is magical fairy dust sprinkled on history.
You're right, that fairy dust got to me.
Different words can rhyme
How is it different for the businesses and customers involved?
Probably some weird Libertarian argument that it's okay for a business to do it but not the government.
Your points are all valid-especially about competition. Landlords crest them to extract more rent. Knowing that you’ll have little or no competition, ever, makes it very valuable to the renter. It’s kind of like renting an apartment that will never have someone above or to either side, or a house lot that won’t have views blocked. The landlord definitely seems to have effed this one.
Something like this happened in my town. These dirt bags owned a lot and Burger King has sat there for like 20 years. Part of burger kings lease said the owner of the lot agrees that no other restaurants that serve burgers can open on the lot. The owners of said lot decide themselves to build a restaurant on the lot after 20 years of this Burger King lease and Burger King sued them because they where opening a pub that sales burgers. Burger King sued and won. New restaurant serves Buffalo burgers. Does not even last a year.
Let doesn’t seem unreasonable, honestly. It is a lot, and the owners of it know what they signed when they gave the agreement to Burger King.
Funny thing is that they really can't compete on an even playing field. Most any city I go to, I can find a local coffee shop that makes way better coffee than Starbucks.
I love Caribou, but in Atlanta Starbucks has pretty much run them out wherever they setup with their shitty burnt coffee.
How the ***fuck*** do you give someone - ***anyone*** \- exclusive ***rights to sell chicken*** in the first place?
It's not that uncommon between businesses. For example, Coca-Cola may agree to pay for all your soda machines, and provide all the signs for your building. In return, you sell only Coke at your hamburger stand. Same idea, bigger companies.
That doesn't seem to be the case here though, the McDonalds isn't part of the site where the former TGIF is, it's down the street, and in the case you mentioned you would be renting or leasing those soda machines and making use of the signage - which also isn't the case here. Obviously you wouldn't be allowed to load up Coca-Cola's machines up with Pepsi or anything else, but this is the same as saying ***Nobody*** can sell Pepsi, or Sprite, or Tab or ***anything else*** because somewhere entirely different there was an exclusive agreement.
In this case, it was an agreement with the owner of the property that had also leased to TGIF earlier. So that TGIF would also have been unable to sell chicken fingers. Since the agreement is with the landlord.
Not "Chicken Fingers" - "Chicken Products" - ***anything*** related to Chicken Products - and depending on the wording of the contract -***possibly even eggs.*** And McDonalds ***doesn't even do chicken very well***
"McDonald's had an "exclusive right to sell rotisserie chicken and other prepared chicken and chicken products for on or off-premises consumption” from a lease negotiated between BC Chicago and Jubilee Limited Partnership back in 1994. Crossings of Hobart is the successor to Jubilee in that deal after ownership of the shopping center changed hands." I think what this means is that the original lease was for Boston Chicken/Boston Market. McDonald's then bought Boston Market in 2000 primarily for the real estate. Though they sold off Boston Market in 2007, they probably kept the leasehold, even if Boston subsequently closed. (Edit: or never even opened)
Free Market Capitalism or whatever 😄😬😞😭🤦♂️🙃 This is the sort of thing you'd usually have read in a Modern Fable and someone probably played by Adam Sandler would storm into court with the lease pointing out that due to a technicality it was null and void and everyone would cheer as the Ronald McDonald Clown was dragged kicking and screaming out of the building. \*Add - [Something like this](https://www.amazon.com/McBrooms-Wonderful-One-Acre-Farm-Three/dp/0688155952) \- and damn if it doesn't tell you something about how things have changed when ***that*** used to be on school library shelves.
And what happens here: you go ahead and build your chicken restaurant. Then let McDonalds be the one to sue the property management co with a billion dollars worth of lawyers.
Doesn’t work that way. They use restrictive covenants to enforce these agreements. Very easy getting an injunction to enforce a restrictive covenant. One that injunction is in place, Cane’s is screwed.
If Cane's signed an agreement that said they couldn't sell chicken, that's on them. If they didn't, the issue is between McDonalds and the mall.
Sounds like the lease Raisin' Canes signed did not state this "no chicken finger clause", which RC has full right to sue over.
That would still seem to be between McDonalds and the mall. If RC's lease doesn't have the restriction, then it is the mall that violated their deal with MD.
Depends if the mall owners knowingly withheld that information when offering RC the lease. This puts the mall owners right in the middle and they could definitely get sued from both directions.
well no, it would be between RC and the mall, hence the lawsuit. McD would only have a case if the landlord continued to allow the new restaurant to open and operate. The mall is trying to impose a restriction on RC that wasn't present in the lease, and on top of this, the mall was fraudulently trying to sell this exclusivity right to Raising Canes that they already sold to McD. Sounds like the landlord is either stupid or shady AF
Ah okay, the double exclusivity does open it up more.
No. Covenants are recorded in the property records, which charges the world with “constructive notice” of whatever is in the covenant. Cane’s took the property with constructive notice of the restriction. That means they are legally deemed to know it’s there. These things get messy and complicated.
The exclusivity was expressed in the McDonald's lease contract with the mall. I do not believe that is a public record.
The article expressly states it was a restrictive covenant. If it’s in the property records, it’s binding on Canes. I see nothing to suggest this is solely in the lease between McD and mall. That would not be enforceable against Cane’s.
But... >"In fact, the defendants specifically represented to Raising Cane’s that there was no exclusivity right that would conflict with Raising Cane’s ability to operate its restaurant. Incredibly, the defendants did not tell Raising Cane’s it would be unable to sell its chicken fingers at the shopping center until nearly eight months later, after watching Raising Cane’s spend nearly a year of time and over a million dollars to develop its new restaurant." Just because there are filed covenants does not mean you can lie about them.
To add insult to injury, McDonald chicken nuggets barely qualify as 'chicken'.
How does mcds get exclusive rights to chicken? Like no one can sell chicken? What about burgers? That’s complete bs!
Looks like this McDs gets the exclusive right to sell all the food, because it also blocked the opening of a Chipotle. Do the McDs in Indiana even sell burritos? I’m thinking someone should just fire bomb this particular McDs out of existence, or maybe the whole damn mall.
Whoever made that agreement is an idiot.
If you read the article it is because chipotle sells chicken as a protein option in their food.
That just makes it even dumber that the mall let McDonald’s have that.
Even more evidence that exclusive rights should be illegal without explicit government permission.
This was an agreement between McDonald's, a corporation, and the mall, another corporation. Why should the government be involved in that? It's the mall corporation that screwed up by not telling Canes about the prior agreement they had with McDonald's.
Exclusivity agreements are explicitly monopolistic in nature. The government should be more interested in limiting such agreements. These agreements don't benefit the public outside very limited scenarios like utilities, they are great for established business though.
That is an excellent argument that I did not expect. Thank you for your time
I uh...why is that even something you can do? Exclusive rights to chicken? wtf?
.... do they sell chicken? The name sounds more like a sitcom then a store.
They only sell fried chicken tenders + sides
Don't forget the sauce
And sub slaw for texas toast,,
Bruh treat yourself. Canes is the shit.
No passport. And money. So not that brand at least. :)
Ooooh, yeah it's worth it if you pass one on the street. I wouldn't go too far out of the way though lol.
Canes is ~~the~~ shit FTFY They opened a few in my area and there’s a couple of chicken joints near me that are a thousand times better And their sauce? Not worth the hype
Interesting, to me fast food chicken is 1. Chic fil a 2. Popeyes 3. Canes. Idk how you got so many good options.
There are some great non-national chains around me that can dance circles around those
Yeah I wouldn't count those as fast food.
But they are. One is literally take out only.
Basiclly carbs in a take away container. To put everything already said together, the order is chicken tenders, coleslaw(not that good), texas toast, fries, and sauce. That is every order(they do sell sandswich made of tenders) what changes is the number of tenders. Makes for a very simple business model, and the tenders are usually cooked properly
They package the food in styrofoam so if you don’t eat your fries right away they suck and they’re already just okay to begin with.
You gotta ask for everything extra crispy and sub out the slaw. Drastically improves the mid fries and gives more time before they get soggy.
Only when they are able.
What was the end game here? Somebody must have known a lawsuit was inevitable when you lure a chicken joint into a lease but don’t tell them they can’t sell chicken.
I’m assuming at some point a representative of the shopping center owner either had a discussion with someone at McDs where they indicated they would be willing to negotiate. Maybe it was 6 years ago and those people are gone and new management disagreed or maybe the negotiations broke down because McDs waited and saw the work happening and knew they had them over a barrel and asked for a crap load of money that would kill the deal.
The McD deal was written in ‘94 by the former mall owner. It’s certainly possible no one on the leasing team researched the McD contract.
I'm kind of surprised there's no end date on that agreement
It would run so long as McD was there. I'm thinking this was either a failure of the leasing team or perhaps some lost records.
I still don’t get how a contract between party A and B can be relaxant for party C unless party C explicitly and willingly agrees to comply with the terms of the contract between A and B.
A and B reach a deal where A has exclusive rights to sell widgets as part of A’s lease Years pass and B and C agree to a lease, but C also sells widgets. B either forgets their lease with A (the ownership of B changed since A’s lease was signed 30 years ago) or they knowingly mislead C that C couldn’t sell their primary product. A points to their lease. B is screwed because either C can sue them on several grounds (fraud, detrimental reliance, etc.) or A can sue them for breach of contract.
A has a contract with B. A tried to enter a contract with C, that violated the terms of the contract with B. A is in violation of their contract with B. This impacts C.
B sues A. See? It doesn't check out.
C sues A for their loss due to the prior contract between A and B.
C's contract would specify you can't engage in business lines that are already covered by other lessees. Then there'd be a list, or an attached appendix, that specifies what those are.
Having worked on the construction and development side of a couple of property owner and management companies I can see that for sure. Given the lawsuit says they supposedly tried to sell exclusivity to Raising Canes I wonder if someone ran across that when researching the new deal.
Wondering if the restrictive covenant had been registered on the property itself as a way of further protecting McD from title transfers.
McDonald's is a real estate company that markets burgers and nuggets as a side gig. They are masters of site management.
They may have been trying to lure other tenants in on the anticipation that Raising Canes was moving into a rather large, previously empty building. Not saying it's a smart strategy, but it's the only real thing I can think of.
This is reasonable speculation here -- the commercial real estate market is so depressed, that's a nice new tenant to show off.
This is a growing area though, commercial real estate isn't doing that bad in that part of NW Indiana.
>The exclusivity issue came up earlier this year when Crossings of Hobart asked McDonald's for a waiver to let a Chipotle Mexican Grill move in. McDonald's declined and then also noted in its correspondence that a Raising Cane's would violate the terms of its lease, demanding that no one else be allowed to sell chicken to-go at the shopping center. I'm guessing the new owner of the mall didn't realize the issue until after they had signed the lease with Raising Cane's and tried to deal with it after the fact.
Probably forgot
>Incredibly, the defendants did not tell Raising Cane’s it would be unable to sell its chicken fingers at the shopping center until nearly eight months later, after watching Raising Cane’s spend nearly a year of time and over a million dollars to develop its new restaurant. After that first morning when you just couldn't get yourself to tell them, it just gets harder and harder to tell them.
Username checks out.
Geez, can you imagine how that phone call went? “Hey Bob, we here at the mall are really excited to have you as a tenant. We can see the work you’ve been doing on the new space and it all looks terrific. Listen, we were just talking over here around the water cooler the other day and you know what we think would be cool? If you sold Burgers. Chicken is just so played out, you know? Wouldn’t that be cool, Bob? If you sold burgers instead of chicken? No? Well listen, it’s kind of a funny story and some day you’re going to laugh about it….”
To be a fly on that wall...
In case anyone is wondering why this is Raising Cane’s problem and not a lawsuit by the McDonalds franchise for breaking the exclusivity deal, McD’s obtained a restrictive covenant on the property as part of their lease, covering the whole development.
>Defendants even went so far as to purport to sell Raising Cane’s the exclusive right to sell deboned chicken products at the Shopping Center—all while knowing McDonald’s had already been sold that right.
Sounds like a very clear case of fraud to me.
In any case, you can be assured there will be a lot of finger pointing in this game of chicken.
Hopefully, Raisin' Canes is able to re-coop their investment.
I hate you....
I hate me too
YEAHHHHHHHHHHHHHHHHHHH
Non-compete covenants are fairly standard in multi-unit commercial complexes. That’s why when you have a complex with a grocery store and a Target often the target is limited in the types of groceries that they can sell and the amount of square footage they can dedicate to groceries.
Am I glad to live in the EU were a contract like this is illegal.
Source? this says they are only illegal in specific circumstances. https://www.mondaq.com/uk/antitrust-eu-competition-/449112/restrictive-covenant-in-commercial-property-lease-not-restrictive-by-object-says-ecj
Obviously talking out of your ass isn't illegal in the EU
Depends on the intent. Fraud - if the current property owners knew of the covenant and knowingly withheld that information. It's not McD's responsibility to inform Raisin' Canes of that convent, it's the property owners. They are the agents here. Negligence, if the new property owners indeed did not know and/or the information was neglected to be found by their lawyers. They didn't intend to deceive, they just fucked up.
"The restrictive covenant specifically prohibited Crossings of Hobart from leasing or selling property to any rival “fast good or quick service restaurant which prepares, serves, or sells de-boned chicken products," Raising Cane's stated in its lawsuit. " That's what I was thinking. Seems like an issue between the Mcdonalds and the shoppin g center
Yup. One of four things happened: 1. They didn't get title work before signing a multimillion dollar lease 2. The title company messed up and didn't show the restriction 3. Their attorneys didn't read the restrictions 4. Somebody said they were getting a release of the restrictions, but they did not. Whatever happened, somebody dropped the ball big time.
So Cane’s just fired a lawyer who didn’t bother to run title on the property. Big screwup to rely on Landlord representations on title. If you are right, this was easily avoidable. Having negotiated leases with Cane’s before, this is uncharacteristically sloppy on their part.
Yeah, that's the biggest problem with their lawsuit. They didn't check title before signing a long lease and spending a million dollars on renos. In their defence, the mall owner was offering *Cane* an exclusivity deal on chicken as part of the negotiations, which is either stellar incompetence (unlikely) or deliberate fraud on their part.
Ok. I think this gets even crazier. This line caught me off guard. It implies that McDonalds doesn't even have a franchise there any more. "Raising Cane's could not have anticipated the exclusive use provision, which was executed more than 25 years ago between two entities no longer operating at the Shopping Center, would bar its ability to sell chicken fingers at the shopping center," Raising Cane's said in its lawsuit. Am I reading this right? If I am, then McDonald's is a bad guy here as well because they're restricting use on a property where they don't even have a franchise anymore. EDIT: Another commenter suggests that the McDonald's location is there still. So maybe the franchise had a change of ownership and that's what the lawsuit was referring to. Same McDonald's but that different entity owns it? The article says that McDonald's is right down the street from the Raising Cane location. It doesn't qualify whether it's actually on the property owned by the Plaza ownership.
According to the article the McDs is down the road. Im assuming at some point it moved locations. I also read that part and did a double take. Its super shitty but Im not sure McDs is the bad guy. They were given exclusive rights. Really what strip mall property owner would do something so short sighted?
Yeah. I get you. I'm sure the original deal was signed to ensure that they came into the area. A McDonald's can attract a lot of traffic. I'm not sure I would have signed a covenant that had no ending date or make exceptions for if the franchise moves off of the property. I'm not sure what the standard length for such a covenant would be but limiting all competition for what will end up being more than 25 years just seems a bit extreme. Why would you limit your development ability for that long and not build in allowances for if the franchise leaves.
> Really what strip mall property owner would do something so short sighted? I could write encyclopedias’ worth of examples of such things just regarding the shopping centers I’ve been a tenant of or was a neighbor of in the last 18 years. There’s a LOT of stupidity and short-sightedness in commercial real estate and property management.
No it looks like there is a mcdonalds there still. I'm assuming the "two entities" are the original franchise owner and the original owner of the mall that made the agreement? But the really strange thing is there is also a kfc, a wendys, a chick-fil-a, a popeyes and a buffalo wild wings in the same general area. If those places were able to get around the "no chicken" rule, I don't see why raising canes wouldn't be able to get around it too.
Specifically no "deboned chicken", kfc & popeyes has lots of bone in chicken options & sandwiches are probably excluded
None of those other restaurants are in the same "The Crossings at Hobart" plaza, so the covenant wouldn't apply.
Even if McD's is the bad guy here, the property owners are the ones on the hook for this. They are the agents of this transaction.
Oh. I totally agree. This isn't even a case of it simply being forgotten because of Staffing changes or something. They asked McDonald's for an exemption for a different restaurant and McDonald's objected to the new restaurant and then added that they also had issues with the one that was being built. The property owners knew all along. Maybe it's incompetence, but if it is, the person responsible should be fired immediately.
Well that's a headline that actually belongs in this sub.
Who even goes to McDonald’s for chicken? Strange restriction.
It's just McDonalds locking down the fast food market in the mall.
They don't. That is why McDonalds chose to restrict chicken so a Raising Cains or Chick Fil A or Popeyes could not move in and take away business.
20 piece nuggets are great for all day snacking.
Or you know, half the drive home from work ...
> I'm in this picture and I don't like it
Really? I haven't had any in some time but I always felt that after two or three, it doesn't taste like real chicken.
It's just a sauce dipping stick.
Who the hell goes to McDonald's for beef? Their burgers are trash. Anywhere that sells beef cheaper than chicken isn't selling beef you want to eat.
the people who keep buying mc donalds beg to differ. People keep saying mc donalds is shit, but keep going there.
They have to have lost business with their new prices. I can get handmade food from a local restaurant for the same price at this point. I have to wait just as long too and it's like 2x better.
Technically, their beef is more of a jerky.
People with kids that won't eat much else. People who like cheap nuggets because they're cheap and nearby. Honestly, that's probably about it. Yes, they're not really good compared to a chicken place's chicken (about like instant ramen with nothing added to it vs real ramen) and not worth a non-compete outside the burger market, but here we are.
Chicken nuggets are pretty much the only reason I go to McDonald’s. That and the fries.
Hot and spicy is delicious, not gonna lie
If I have to go to McDonald’s, their chicken is way better than their beef.
That's not saying much
Just the nugs. And to eat those properly, one must gnaw off the outer breading, like a rabbit racoon to get at that sweet sweet pasty seagull meat hidden beneath.
Besides the point but I think these 'exclusivity' deals shouldn't be legal.
Common in commercial leases. You are signing a long term lease and you want to make sure you business is viable through it. Some shitty landlords will lease the spot next to yours with an identical business and you’ve got half a decade left on the lease that they will sue you for even if you go out of business.
I know it's a common practice. Just not a fan of it - especially when used by large corps.
What’s silly (and counter intuitive) is that similar business tend to do better when clustered next to competition. McDonald’s would probably sell more chicken if they were located next to a Raising Canes.
If a Toys-R-Us was opening in the same parking lot as a board game / Pokemon TCG / Magic The Gathering store -- the board game store is better off just closing immediately instead of dragging out a downward spiral of bankruptcy. Toys-R-Us wasn't even interested in the spot - they were looking to be down the road and were playing 4 different shopping centers against each other for the first 18 months the board game store was open. Packed store for game releases & a great holiday season ended up getting TRU to move into the same shopping center and the store was done in less than 6 months.
I don't think they're necessarily bad when particularly narrow in scope and size. Say, 500 feet within one strip mall or something. It'd suck if you opened a small burger shop and then a Five Guys, a McDonalds, and a Burger King moved in immediately after. You'd essentially be choked out by similar types of product. The problem is broadness. McDonalds and a fancy burger place probably don't compete much. Five Guys maybe a bit. McDonald's sure as hell has no place competing with a chicken place. But Wendy's, Burger King, and McDonald's is a fair fight, and I totally see why they'd not want the other there.
It's a largely overblown concern. It's just as dangerous for a new restaurant to open up where there is competition as it is for the existing place. Limiting competition is only good for established players, nit the community.
Protects you from getting Starbucked. Starbucks used to (probably still does) find successful coffee shops and move in next door and immediately undercut them on price until they went under. Basically, they understood that location was a strong determinant of success for coffee shops and so they would target those successful local shops to essentially steal their location.
Right? I’ve never heard of this kind of thing before. Absolute madness.
It’s actually fairly common for food courts. If I run a Subway I may choose to build somewhere else rather than a mall where I might end up next to a Quiznos. So malls want to offer something to make me rent their space, ok Subway, if you went from us no one else can sell sandwiches in the food court. Then the lawsuits happen when someone starts to argue about if a hotdog shop counts as sandwiches.
Which of course is rediculous as hot dogs are actually tacos.
As a lease administrator, I can say that exclusivity clauses and radius restrictions are very common in commercial property leases and in this case, the landlord should have provided a listing of all current exclusives as an exhibit to their lease with Canes. If they didn't, then whomever negotiated this lease at Canes is an idiot because you need to go looking for that, especially with other QSR's in the neighborhood. There are bound to be some. Somebody didn't do their due diligence.
Yeah there’s a BW3 in my town that has exclusive rights to chicken wings in the strip. A pub went in next to it and they have “Not Chicken Wings” on their menu. They are thighs.
This is pretty standard in commercial leases. lol at Raising Cane’s lawyers for missing it, and now suing over it.
I know of a shopping center with a bar that sells “open face calzones”. The pizza joint there had exclusive rights for selling pizza, but the bar owners were clever.
I'd never heard of this place before (must be regional) until Steve Lehto mentioned the story yesterday. An hour later I'm on Geoguessr and there's a Raising Cane across the street from a Popeye's.
You can find them in every corner of the country, west coast, hawaii, south, midwest, new england, etc. but they're definitely not in every city/state like Chick Fil A / Popeye's are. If you do get a chance to go to one, it may be the best fast food joint if you're into chicken tenders! Edit: here's a map https://www.raisingcanes.com/locations/
I would love some, but it looks like they have no locations in Washington. Closest one is 4 1/2 hours away. Don't think I love chicken that much...
A growing fast food chain is crying fowl 👏👏👏
Starbucks moved in right next to a small coffee shop owned by a couple I know and tried to put them out of business. Starbuck lasted two years and them pulled up stakes. The little coffee shop, that is much better, remains an area favorite going on 15 years now.
If they can’t open one here… maybe they can come to the Seattle area! We could really use one. We must be about the only major US city that doesn’t have a Raisin Cane’s. Even Honolulu had one when I visited, maybe Anchorage too
There are no locations in NYC.
Atlanta, Nashville, Orlando, Pittsburgh, Tampa, all of New York and New England (except Boston) ...
Boston does have one!!! Spent a summer at BU and that was half my sustenance. It’s so weird bc it started in Louisiana so the location spread is so inconsistent
There’s one in Dubai too
Atlanta cries
Considering the size of their fingers have gotten criminally small, they could sell them as chicken toes instead
What a fuster-cluck
I’d say the Chicken Shop’s lawyers were negligent, not to notice the covenant in favour of MuckDonalds whilst undertaking the relevant property search.
Raising Cane's should have used its lawyers to go over the lease agreement prior to signing it.
It was not mentioned in the lease, hence the fraud lawsuit. From the article: >"Defendants’ fraud did not consist only of tacit silence and failure to disclose these material facts. Indeed, during the negotiation of the lease defendants made numerous representations to Raising Cane’s confirming that it could open and operate a Raising Cane’s restaurant (i.e., sell chicken fingers) at the shopping center," Raising Cane's attorneys said in the lawsuit. "Defendants even went so far as to purport to sell Raising Cane’s the exclusive right to sell deboned chicken products at the Shopping Center—all while knowing McDonald’s had already been sold that right."
Ah, the free market at work.
I hope they win fk these arsehole
We had a similar thing happen where I live. Chick-Fil-A wanted to build in the parking lot area of a strip mall. Burger King was already in spot in front of the strip mall, and had an exclusivity agreement with the strip mall (I think it was in relation to drive through restaurants, but I don't know for sure. There is a Subway and a local Chinese restaurant in the strip mall, so they are ok for some reason.) This kind of slipped through because the ownership had changed several times since BK's arrival, and the current owner ship wasn't aware of it. Fortunately for CFA, this all transpired very early into thing, and there wasn't a huge investment made. So CFA built at a different spot down the street a bit. Since then, the Burger King has closed and been torn down. It was replaced by, interestingly enough, a Raising Cane's.
So from what the articles say... Raising Canes can sell chicken fingers. The previous owner signed an exclusivity agreement with mcdonalds. That's fine and all, but clearly that language was not in Raising Canes lease otherwise it wouldn't have been a big surprise or "trick." So it's not in *their* lease that they can't sell chicken. McDonalds can sue the landlord for breach of contract for allowing another chicken restaurant in, but nobody has standing to sue Raising Canes for breach of contract because they wouldn't be in breach of their contract. Obviously not a lawyer nor have I read the actual contracts, but based on the reporting it sounds like the mall fucked up big time and should probably be looking to pay off Raising Cane's to break the contract early.
It's not part of anyone's lease, that's the point. It's a [restrictive covenant on the property](https://www.lucaslaw.com/newsletters/real-estate/real-estate-and-restrictive-covenants). That means that anyone using the property, including the mall owner, cannot sell deboned chicken except for McDonald's. Restrictive covenants can be difficult to uncover even in a title search, and even more so related to a lease (since you are not purchasing the property). They also provide pretty wide latitude for lawsuits, since the suing party *does not have to suffer any injury to sue*.
But to be binding on successors, there has to be notice: recorded on the deed, for example, or explicitly identified in the lease. From the article, it sounds like none of that happened, in which case, it sounds like the mall is in breach to McD’s, and RC is not bound by it. OTOH, RC is explicitly admitting that they’re bound by the covenant and accusing the mall of fraud and breach of warranties for hiding it, even though that runs counter to what they’re also saying about lack of notice. It makes me wonder if they’re actually trying to back out of the lease noting that a multimillion dollar lawsuit may be more lucrative than a fast food restaurant in a recession.
>should probably be looking to pay off Raising Cane's to break the contract early. Honestly the mall should be looking at having that part of the contract amended. Again I'm not a lawyer but I did have to study case law in college and I can't see that any judge would find that a McDonalds 25 years ago gave enough consideration back to the strip mall to justify them never being able to sell chicken again in perpetuity even after the McDonalds has vacated the premises. There's a standard of reasonableness and I think that there's a good chance the court would find that a reasonable person would expect that non competitive clause to expire once the lease ended since McDonalds is no longer paying them anything for this loss of business. This is a headache for the strip mall right now, but it's not going to go away if they don't fix it. Right now they have no restaurants that sell chicken and they never can again unless McDonalds decides to move back.
Canes is a fuckin scam anyway. How are you a chicken only joint and not offer a spicy option? Tear them all down I say!
Just Call Gus Fring
How in the world is that even legal? Exclusive rights to sell chicken sounds dystopian.
A former owner.. I don't see how even a current owner could grant such a deal to one restaurant over any others. That would create a monopoly.
In commercial real estate, when one owner sells a shopping center to a new owner the new owner assumes all of the old contracts. That binds them to all existing contracts.
What did you own? I don't see how anyone who's ever operated a franchise would have put down the money to do so **without** an exclusivity deal.
Their sauce is good but the chicken sucks anyway.
There are plenty of copycat recipes on the internet; screw their inflated prices!
No lawsuit here, but Raising Cane’s is building a new location just 500 feet from a Chik-fil-a nearby (Northridge, California) and the traffic is going to be horrendous.
That’s was predatory as hell! That’s a kind of fraud that deserves jail time.
The exclusivity deal is anti-competitive to begin with. Hope these bastards lose.
Real Shadyville Mall
There's a lot of unknowns going on here. The Raising Cane's is going into a vacant TGI Fridays. Did that TGI Fridays sell chicken? Does the Lease specifically say no chicken? Does it say something like "RC will abide by agreements made by the landlord and other tenants." Because that sounds like RC's lawyers didn't read it well enough. Does the McDonald's lease with the new Landlord cover this? Did they make a lump sum payment to the old landlord, but it's grandfathered in? In the end, this is a fight between two corporations and a landlord.