Raising Cane's can't sell chicken products because of landlord's exclusivity deal w/ MacDonald's
[I just saw this today on LinkedIn](https://therealdeal.com/2022/11/12/raising-canes-sues-indiana-mall-over-lease-flap/). Lots of blame to go around. On a side note, it's mentioned in the article that Raising Cane's should have done a title search. I only do title searches for real estate sales not leases. Am I missing something?
[{"id": "izeflob", "text": "There\u2019s a host of remedies that a tenant should have in the lease for this type of issue. First is an exhibit that shows all the exclusive uses/restrictions that Raising Cane\u2019s would be subject to. If McDonalds\u2019 was listed, Raising Cane\u2019s counsel should make the lease contingent on LL obtaining a waiver. If McDonald\u2019s wasn\u2019t listed in the exhibit, then Raising Cane\u2019s would say that they weren\u2019t aware of it and therefore it\u2019s really not their problem. It\u2019s the LL\u2019s problem. \n\nSeparately, Raising Cane\u2019s should have negotiated for self-help/offset rights. A LL default, which this would be, would entitle them to deduct rent for periods that they aren\u2019t able to operate for their Permitted Use. Of course, that doesn\u2019t mean a LL would agree to self-help/offset rights for any/all tenants. But it is another mechanism to account for unforeseen situations without specifically drafting with encumbrances on title in mind.", "replies": [{"id": "izgggbm", "text": "This guy Leases.\n\nDo you think Canes continue their development and open for business and let the Landlord deal with the ramifications from McDonalds? Or would Canes then be open to a lawsuit from McDonalds? \nIn theory its the Landlord\u2019s fault, so I\u2019m wondering if Canes could be liable is they just continued their operations, except for the obvious risk of opening a business that could be closed within a couple years.", "replies": [{"id": "izgzrik", "text": "See my comment in the other chain. Raising Cane\u2019s and McDonald\u2019s aren\u2019t in privity of contract with one another, so McDonald\u2019s would have recourse against the LL.", "replies": [], "depth": 3}], "depth": 2}, {"id": "izgv5ou", "text": "You seem to have a better handle on this than I do, but my understanding is that R. Cane\u2019s has no obligation to McDonalds.  The mall had an obligation to restrict future tenants activities.  If R. Canes has no restriction in their lease, then McD\u2019s beef is with their landlord, not R. Canes.  \n\nOn another note, my understanding is that unless an area is a desert with significant geographical separation, then having competitors is more likely to make the pie bigger, rather than make each slice smaller.  Once you hit critical mass of options, it becomes the **car dealer, restaurant, shopping, healthcare provider, or whatever** location, and people flock there for the genre,and pick a specific provider later.", "replies": [{"id": "izgzkca", "text": "That\u2019s correct, if LL let Raising Cane\u2019s operate, Cane\u2019s doesn\u2019t have a risk of getting sued for a violation by McDonalds. The LANDLORD is in default under the recorded McDonald\u2019s restriction. McDonald\u2019s would give the LL a notice of violation and the only real remedies would be either for the LL to have Raising Cane\u2019s cease operations, or LL and McDonald\u2019s would work out a sum of money to McDonald\u2019s to permit Raising Cane\u2019s to operate.", "replies": [{"id": "izhm455", "text": "Yep, this. Ive seen these in many leases, and it is a condition in the lease between LL and tenant. They should have included a similar clause restricting raising cane in the lease.\n\nMy guess is the mall thought the pad site or exterior store was not covered. But they done and fucked up. The mall will have to pay damages for sure. And in fact thr mall cant stop raising canes from operating and will literally have to buy them out (after negotiation). Looks like negotiations failed and the mall is fucked.\n\nLeasing agent is getting fire for sure. Probably the VP of leasing and mall GM as well for being fuckwits that let this happened.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "izeghi0", "text": "Not all agreements need to be recorded on the title necessarily. I had the same question, but as someone pointed out, It's fairly uncommon to record entire leases, at least where I work. Therefore even if Raising Canes pulled title, it may not have shown up. At that point it's the landlord's responsibility to disclose those material facts, however it's likely Cane's representatives did ask and they were either lied to, misled or someone on the LL's side just majorly messed up and missed it.\n\n&amp;#x200B;\n\nedit: clarity, grammar", "replies": [{"id": "izelh8y", "text": "Correct, chicken monopoly agreement would probably not show up on a title search.", "replies": [{"id": "izfz6ai", "text": "Now that\u2019s a board game I\u2019d play.", "replies": [{"id": "izhvvn7", "text": "Back in the early 2000s I called the real estate department at a very well known chicken franchise about a possible development site. \n\nHe was kind enough to look up the demos on that site and said.  \n\n\u201cOur demographics are showing a less than optimal Chicken Index.\u201d \n\nNo explanation was given.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "izekqba", "text": "Not an attorney, but I feel this should be an easy win Raising Cane's attorneys. The LL rejected a Chipotle lease earlier this year on the basis of the McDonald's exclusive right to sell chicken. \n\nAnd then they turned around and said nothing to Raising Cane's, who exclusively sells chicken.", "replies": [], "depth": 1}, {"id": "izh15c8", "text": "This is a huge miss....I don't know how this lease got executed. I also don't see how this could be the tenant's problem given they would have the permitted use to presumably operate a restaurant that sells chicken...I do wonder what the permitted use says specifically. Regardless of what it says, the owner had to know this tenant sells chicken as a large percentage of their overall sales. I've heard of the landlord/ownership group before and briefly looked at their website; they've been around for a while and should know what they're doing. Did someone of lower seniority get involved and screw this up? Though this is definitely more than a one person screw up. Landlord also got the tenant to front the TI work...the landlord had to wonder when this was going to blow up...maybe someone thought they could eventually get a waiver from McDonald's....crazy that McDonald's was able to get an exclusivity so long ago when I'd think chicken wouldn't be their major seller but that may just be good foresight and you use your leverage when you're wanted in a center. Time to sit down and eat \ud83c\udf7f. Hope the \"tenant\" can get their money back and should get out of their lease obligations.", "replies": [], "depth": 1}, {"id": "izhheei", "text": "Canes is struggling with this big expansion push. They are incredibly weak with development/ due diligence", "replies": [], "depth": 1}, {"id": "izhhvoa", "text": "\u201cDefendants undoubtedly knew this but apparently did not care, as long as Raising Cane\u2019s agreed to pay millions in future rental payments,\u201d\n\nRegardless what people think, malls and outlets are dying off, the above sentence sums it all up. McDonald\u2019s may have done some early exclusivity but come on, I know RK had a team review the lease and do their DD. Mall probably said \u201cwhoopsie, didn\u2019t see till after :/ \u2026.don\u2019t forget that rents due every 1st of the month :)\u201d", "replies": [], "depth": 1}, {"id": "izhivyz", "text": "Canes is definitely not to blame here. No possible way that they would have reason to believe this would be a possibility. I\u2019m confused as to why the landlord thought he/she would legally get away with this. Both McDonald\u2019s and canes could sue, it\u2019s a lose-lose for the landlord.. Canes will prevail.\n\nI guarantee the landlord\u2019s commercial loan is almost due and was hoping that cane\u2019s lease would significantly boost the resale value.", "replies": [{"id": "izqo96c", "text": "I'm laughing out loud reading this. The landlord is fucked and probably made a lot of people's lives unnecessarily terrible trying to save his ass with a bad deal. What an idiot", "replies": [], "depth": 2}], "depth": 1}, {"id": "izixlp8", "text": "Welcome to Raising Canes\u2019s where we don\u2019t sell chicken. Would you like to try our 3 piece roll combo? It comes with 3 free chicken tenders.", "replies": [], "depth": 1}]