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Raising Cane’s has filed a lawsuit against the mall, the Crossings of Hobart, and its owner, Ohio-based Schottenstein Property Group, alleging fraud and claiming its potential owner failed to disclose the existence of the chicken ban, which surely would have been a dealbreaker. The provision prohibiting him from selling chicken was imposed, the fast-food chain said in court documents cited in a Times of Northwest Indiana report, by a non-competition agreement the former owners had with a McDonald’s. neighbor in 1984.
“This case concerns the defendants’ scheme to induce Raising Cane’s to enter into a 15-year lease with rent payments to Crossings totaling millions of dollars, in exchange for a Raising Cane restaurant that the defendants knew was not would ever exist,” Raising Cane said. in the lawsuit, according to the Times.
But a lawyer for the defendants suggested Raising Cane’s should have read the lease more carefully – and done a title search. “The terms of the lease dealt with the existence of potential restrictions,” attorney Mario Little said in a statement to The Washington Post. “Raising Cane’s apparently failed to identify this restriction (which is accessible in publicly registered title records associated with the mall in question) via a title search which the lease expressly authorized Raising Cane’s to undertake.”
In the lawsuit, Raising Cane’s alleges the problem only came to light when Crossings of Hobart asked McDonald’s for a waiver to allow a Chipotle to open there. McDonald’s refused and noted that a Raising Cane’s would also violate the terms of its lease, which gave Golden Arches the exclusive right in the mall to sell boneless chicken products.
“Despite knowing that Raising Cane’s Chicken Fingers’ entire business model is based on the sale of chicken fingers, the defendants did not disclose this issue prior to signing the lease. In fact, the defendants specifically represented to Raising Cane’s that there was no exclusive right that would conflict with Raising Cane’s ability to operate its restaurant,” the lawsuit alleges, according to the report. “Incredibly, the defendants did not tell Raising Cane’s that he would not be able to sell his chicken fingers at the mall until almost eight months later, after seeing Raising Cane’s spend almost a year and more than a million dollars to develop his new restaurant. ”
The chicken chain is reportedly seeking cancellation of the 15-year lease and reimbursement for what it spent developing the site. “As a result of defendants’ wrongful conduct, Raising Cane has suffered damages and is entitled to termination of the lease and/or recovery of damages, including, but not limited to, recovery of more than $1 million he spent on development costs, as well as his lost profits,” the company wrote.
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But Little said in the statement to The Post and in a court filing that the fast food company was liable because it signed the lease. “Raising Cane’s claims lack merit as they are contrary to the lease negotiated and signed by Raising Cane,” he said in the statement. And he suggested the chain could still open its location – likely if it changed its menu: “Raising Cane has contracted for the construction and use of a freestanding quick-service restaurant – a use that remains available to Raising Cane’s.