Here’s How We Got 260% More for a KFC Owner Who Technically Had No Claim
Cases or matters referenced do not represent the law firm's entire record. Each case is unique and must be evaluated on its own merits. The outcome of a particular case cannot be predicated upon a lawyer's or law firm's past results.
Every so often a case comes along that has no legal precedent on which to base your argument and you have to get creative. This case is one of them.
We increased a settlement more than 260% for a fast-food restaurant partnership who found themselves entangled in a highly complex situation. The client not only leased property from someone else, but also sub-let a portion of it to another tenant. The NCDOT argued our client (the lessor) had no claim. Technically they were correct. Yet we proved our client did indeed have a claim – a large one at that. We were able to successfully:
- Intervene in the condemnation regarding property our clients did not own.
- Develop our own legal theory in the absence of North Carolina legal precedents or provisions in the lease that applied to our clients’ unique situation.
- Find a critical resource at the 11th hour, just before trial, that supported our position, after scouring North Carolina and U.S. legal databases for established precedents and finding none. (That resource? An appraisal textbook.)
- Negotiate separate deals with the NCDOT for our client, our client’s landlord, and our client’s sub-lessor.
What Drives Fast Food Revenues?
Statistics show that the drive-thru window at a fast food restaurant can account for up to 75% of fast food sales. It’s fast and convenient. And that is the #1 reason more than two-thirds of us stop at fast food restaurants.
The drive-thru is so ingrained in American dining culture, there’s even a national holiday celebrating it. July 24th.
It stands to reason, if you take away the drive-thru, you are taking away the very reason most people might consider stopping at your restaurant to grab a quick bite. And you are taking away almost all the restaurant’s revenue stream.
Even so, the North Carolina Department of Transportation (NCDOT) failed to take that key point into consideration when they condemned a highly profitable KFC fast food restaurant on a heavily traveled highway in Spring Lake near Fayetteville and Fort Bragg. Fort Bragg is the nation’s largest army base, and among that particular KFC’s largest customer base.
But the NCDOT needed to widen Fort Bragg Blvd. and put in a median, so they closed one of the two driveways at that KFC facing Fort Bragg Blvd. After the taking, the one left open was only 5-feet wide.
They erected an unsightly chain link fence just a few feet from the front of the store so that there was no longer enough room to negotiate the drive-thru.
Shockingly, the NCDOT claimed the restaurant could still operate because they were leaving them one drive-thru and a tiny sliver of land.
Open for Business But…
C’mon! Who is going to stop at a KFC with one 5-foot drive-thru, minimal room to turn around or park, and encircled by a chain link fence? The width of a compact car is more than 5 feet and a standard SUV is 6-feet wide.
That’s exactly what our clients Nick Potter and Steve Paris, owners of this KFC, asked. No strangers to the fast food industry, they knew what they were up against and the detrimental impact this taking could have on their revenues.
The business partners are third-generation owners of KFCs and other fast food restaurants. Their business, Paris and Potter, dates all the way back to the early 1960s when their grandfathers were in the restaurant business together. The two patriarchs owned the very first KFC in North Carolina. Now Nick Potter and Steve Paris own and operate roughly 28 units throughout North Carolina and Myrtle Beach.
Even though they own the actual restaurants, they don’t always buy the land on which the restaurants sit. On this particular property, they had taken out a long-term lease.
“We had a long-term lease, and then we had subleased a portion of the property to another tenant. So the tenant was paying us rent. We were paying the landlord rent. It got very complicated,” Potter explained.
The NCDOT insisted that Paris and Potter were not eligible for compensation for the damages done to their KFC because they were not the actual property owners. Instead, they argued they should compensate the owner of the property.
To boot, there was another piece to this unprecedented puzzle – the sub-lessor to whom Paris and Potter had sublet part of their leased property.
All three entities claimed they had legitimate reasons why they should be compensated.
A Complex Situation
“It was a complex situation,” Mr. Potter recalled.
The KFC partners consulted with their business lawyer who recommended they contact attorney Jason Campbell, with the NC Eminent Domain Law Firm because of his experience handling business condemnations and having worked as a lawyer representing the NCDOT for many years.
“Jason had to figure out amongst all those three different competing interests, how to allocate the settlement, and I think he did a good job of navigating the complexities of the case and valuing each lease and each building to come up with what I consider was a very fair settlement for all parties.”
Jason was able to explain to the NCDOT why, even though they were not tearing down the building, they were restricting its use for a fast-food restaurant. The NCDOT finally conceded – the business would not be able to continue as a KFC.
There was a lot of money on the table and the situation could have been very contentious among all the parties involved.
Fair. Calm. Logical.
Potter confided, “I thought Jason's knowledge of the issues, of the lease, and the improvements, helped to come up with a fair valuation on the land and the improvements and how to allocate funds, and approach it in a fair and equitable manner. He was fairly calm and logical and thought through all the issues. I think that was absolutely necessary in a case as complex as ours where there were multiple parties and a sublease and a regular lease and a landlord and a tenant. He did a very good job of navigating all of that.”
What impression did Jason leave on Mr. Potter?
“I think the main thing is that Jason [focuses on] and does nothing but eminent domain condemnation. It's an invaluable resource as opposed to other firms that may not [focus on] one area. He’s very thorough and logical and explains things well to the client and presents issues in a very straight-forward and easy-to-understand manner for both the state in arguing certain things, and for the client. I think Jason did a good job keeping it calm and just matter-of-factly stating the facts of the case.”