McDonald's settlement reported

February 26, 1997|By Liz Bowie | Liz Bowie,Sun Staff

McDonald's Corp. has agreed to pay Baltimore franchisee Osborne A. Payne a reported $1.7 million for his three restaurants in order to settle a lawsuit that Payne had brought against the company, according to a source who asked not to be identified.

Payne, who opened his first restaurant on North Avenue in 1972, claimed that the hamburger chain had hurt his profits by opening competing restaurants too close to his. Payne lost $300,000 in gross sales -- a 14.6 percent decline -- at his Broadway restaurant when a new franchise opened at Moravia and Harford roads, his lawsuit against McDonald's claimed.

But two weeks ago, U.S. District Judge Alexander Harvey II said the license agreement Payne signed with McDonald's did not guarantee him any exclusive or territorial rights around his restaurants. Payne had indicated that he would appeal.

In the settlement, McDonald's bought the restaurants from Payne and agreed to make some regular payments if Payne agreed not to appeal Harvey's decision. "Long before Osborne Payne decided to involve lawyers, McDonald's was committed to help him pay off his debts and leave with financial security in consideration for his many years with McDonald's. That's what has happened," said Jane Hulbert, a McDonald's spokesman.

Payne's attorney, Robert Zarco, said McDonald's was now operating the three city restaurants Payne has owned for many years and wanted to sell. "Mr. Payne will be able to comfortably retire," Zarco said.

Pub Date: 2/26/97

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