Payne loses lawsuit against McDonald's Judge says contract does not guarantee exclusive territory

Fast food

February 14, 1997|By Liz Bowie | Liz Bowie,SUN STAFF

The owner of several Baltimore McDonald's restaurants lost his battle against the fast-food giant in federal court yesterday.

Osborne A. Payne, a 71-year-old Baltimore businessman, sued the hamburger chain, claiming that his profits dropped after the company opened competing restaurants too close to his.

He sought damages and said the company failed to help him find buyers for his restaurants.

But Senior U.S. District Judge Alexander Harvey II said yesterday that the license agreement Payne signed with McDonald's does not guarantee him any exclusive or territorial rights around his restaurants.

"This is by no means over. We will keep pursuing this," said franchisee specialist Robert Zarco, a Miami attorney who represented Payne.

Payne opened his first McDonald's restaurant on North Broadway in Baltimore in 1974, the first black to do so in the city. He now owns two others, on Greenmount Avenue and North Avenue.

After the decision, McDonald's attorney, Stephen Sachs, said: "Nobody is gloating. McDonald's strongest sentiment is sadness. We very much regret he chose to take this route."

Sachs said the company was in the middle of fruitful negotiations with Payne when he decided to stop talking and filed his lawsuit.

"He's been a partner of ours and a longtime associate. Court is the last place we wanted to end up," said Jane Hulbert, a spokeswoman for McDonald's.

Payne is not alone in his struggle with McDonald's. Several franchisees across the country have filed lawsuits against the company over the same and similar issues in the past year as the fast-food chain launched an aggressive campaign to grow.

The lawsuit said Payne lost $300,000 in gross sales -- a 14.6 percent drop -- at his Broadway restaurant when a new franchise opened at Moravia and Harford roads.

During testimony at a recent hearing in the case, attorneys for Payne said he was "on the verge of bankruptcy."

Zarco said he has "alternative legal theories to address the predatory practices" over which Payne had sued.

Pub Date: 2/14/97

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