This is the second article I’ve read, the first was by AP.
In a nutshell, a shopping center rented out a space to a startup company called Atom’s Juice Cafe. It is a 100% vegan place that serves juice, tea, soup and wrap-style sandwiches. Before they signed the lease, they had their menu ok’d by the company renting them the space, because they didn’t want to violate the no-competition clause with Subway, which was already in the shopping center. The management said it was not a problem and didn’t compete with Subway.
AFTER Atom’s opened up (which took their life savings and the savings of their family to do, and they could not afford to relocate their shop at this point) Subway started serving both juice and soup.
Now Subway is suing the management saying that Atom’s is in direct competition and violates their no-competition clause. THey say that Atom’s has to stop serving juice, soup, sandwiches and any other food or drink items.
In addition, the management is now suing ATOM’S for breach of contract for selling the very things that their contract said they could sell.
At this point I’m firmly on Atom’s side… but frankly I don’t understand the legal technicalities… who is right here?
I don’t know. The thee subways in my area of Seattle have ALWAYS sold soup and juice. Not good soup. Not good juice. But food-related products that could be labeled soup and juice by the undiscerning customer.
It sounds like the Subway owner is just doing the time honored business tradition of kicking, clawing and undercutting his competition at every turn in order to help his own business (He’s a franchisee, right) succeed.
It’s kind of a mean thing to do, but whatcha gonna do? It certainley isn’t worse than calling up random counter help (most likely, btw, some high school or college kid) at the Subway and quizzing them over the finer points of vegan nutrition. I wasn’t even aware that paper/wrap could be vegan one way or the other until I read the article.
The area they’re in is a mini-mall, isn’t it? I could see this being a ridiculous issue if they were in some kind of gigantic food court at a shopping mall, but from the picture it appears to be some kind of little 3 or 4 business thing like the ones that dot Hwy 99 in my area. Why did they select a location right next to a Subway in the first place?
Additionaly, (Sorry but the more I refer back to the Article In Question, the more it irritates me) I would have to ask the VegSource.com people whether they think quoting the manager of another “Good” Subway location in their story is a good idea. I’m going to guess that Ms. Tillman didn’t exactly clear her commentary with Subway Corporate legal before speaking to the media. This could cost her her franchise, under your typical franchise agreement, and lead to her being replaced with one of the “Evil” Subway managers that would check their lease for a non-compete clause.
First off, I have to admit that I’m a tad dubious of the source of this information. Not that I outright disbelieve it, mind you… but it seems to paint Atom’s as a holy angel and Subway as a whining crybaby.
Pushing past the slight (and most likely irrelevant) bias of the source (bias isn’t necessarily bad), I think the problem stemmed from the fact that FRP (the company that owned the strip mall) thought that Atom’s menu items WOULDN’T compete with Subway, and Subway thought otherwise. FRP should have discussed the contract with Subway to see if they considered if it would compete or not.
Subway’s is a fast-food establishment. By that very nature, any other store that also sold fast-food would automatically be in competition (by drawing potential customers away from Subway). Sucks for Atom’s, but a contract’s a contract, and FRP is more obligated to live up to Subway’s than Atom’s.
… But if a person lives very long around an area, there seems to be those places where nobody can survive a small starting business. That seems to drive down the price so that the shoe string folks can affords that location and the vicious cycle start all over again.
Why oh why won’t they ask around, look around and see what is happening? Not only in real estate, but small business’s of the food variety is that old adage of, “Location, Location, Location” so very important.
: Sigh :::;; I head that 98% of all small business that start up fail in the first two years.
I don’t know what the technicalities of the contract are either, but the underlying truth is that Subway doesn’t have to demand enforcement of every last jot and tittle of the contract. If you or I were in their situation, we’d likely recognize that at most minimal competition existed here, and not get our undies in a wad over it. Common sense would overrule the urge to enforce every last legal right in our posession.
What this underlines, once again, is the fundamental difference between corporate persons and flesh-and-blood human beings. There’s always the possibility that the latter will see reason. Corporations, OTOH, exist to maximize profits.
Though this seems to be less about maximizing profits in this individual instance than about making it clear to everyone that no other value should be expected to come into play in a corporate decision. It’s corporate evangelism, with the evangelistic message being, “Don’t fuck with us.”
Did you see that the second article (the one that inspired the first one listed) was from AP? Are you suggesting they have a bias too?
Anyway, regardless of why this place chose to open there, etc… do you think they are actually in competition? That is do you think that the clients of one place are likely to be swayed to go to the other very easily?
*Chetcuti said in addition to having insults hurled at them, “people from Subway” come in and order “meat sandwiches” in loud, sarcastic voices (Atom’s sells only soy sandwiches). Recently Chetcuti said he came out to the parking lot to find his car smeared with mayonnaise.
“Just today I saw Doris Odren in the parking lot, and she flipped me off,” John said.*
–This isn’t legal. It’s emotional.
The only people who “win” in a situation like this are the lawyers. And you know what? It ain’t really the lawyers fault.
One thing to remember about all this is that Subway does not directly run their stores. They sell franchises.
That means the Subway store is owned by local people as well. The probably put all their life savings into it too. My brother knows someone who opened a Subway. He and his wife cashed out their retirement account and put all their other savings into it. Their Subway store wasn’t sucessful, and they were completely wiped out.
So what you have is two local people who put all their life savings into their businesses. They both depend on their businesses to survive. The will both be wiped out if they go out of business. It’s not a good guy and a bad guy.
Possibly (in that they both serve what I would consider ‘Lunch’), but that really isn’t the issue. According to the quote in the AP article, the owners of ATOM’s Juice Cafe only are really expecting to draw about 5% to 10% of the total eating population. My question would be: Why start yourself off with a limitation?
By opening his business right next door to a Subway there are only two possible conclusions that I can draw. 1) He wants to compete with Subway. 2) He wants to attract just that 5-10% and no more (Since all of the middle of the road customers who might otherwise give ATOM’s a try are probably going to go to Subway).
There is a bagel shop here in Seattle that’s right next to a gaming store that I go to just about every week. We love the place, but the simple fact is had there been a Subway or better yet a Jack in the Box in the same little mini-mall, we never would have even tried the Bagel place. (P.s. Yes, I know people in Seattle can’t make a proper bagel, but I still enjoy them :)) Luckily, for us and for the business owner, he chose a location where there was no real competition for a few blocks.
Maybe he was offered a really sweet deal on the lease right there next to a Subway, but IMHO he should have taken into consideration the effect Subway was going to have on the growth of his business. And if he doesn’t care about expanding his customer base at all, I have to wonder what he’s doing running a business.
I consider myself a pretty nice guy, but if I could work in a town with no competition, you wouldn’t see me welcoming others in either.
But it seems to me that if they don’t demand enforcement of this clause now, they could be in danger of having it lose relevance. It’s better to nip this problem in the bud than fight it later with more stores.
The main dispute to me is between each individual food store and the management company. It seems to me that they are in breach of contract with both of these stores.
What I’m responding to, SPOOFE, is the notion (which I, perhaps inaccurately, read into your “a contract’s a contract” remark) that having a contractual right exempts the holder of that right from any considerations of right or wrong. It does not.
JDeMobray: Strip malls can be of varying sizes. Before enclosed malls came along, they were the main sort of suburban shopping. The ones where I grew up tended to have 20-25 stores in an arc around a central parking lot. The strip mall I do much of my shopping at, these days, has seemingly thriving restaurants right next to one another.
We don’t know how many shops FRP’s strip mall has, but it’s at least four, since the Subway and the vegan store are three doors down from one another.
I’m not sure why a ‘restriction’ of 5-10% of the eating population is such a restriction - everybody eats, and 5% of everybody is a fair-sized clientele. Though it’s obviously a very specific 5-10% of the population he’s after - see below.
My guess about his choice of location was that inexpensive locations are probably challenging to find in Grosse Point, and the guy took what he could get. He genuinely may not have regarded the Subway as his competition, whatever the local Subway owners think. His targeted market really doesn’t sound like a Subway crowd:
Freedom: no, I’ve never owned or operated a small business, but I know people who do. They frequently get along well with their ‘competition’, and get together to compare notes on how to make a buck. Maybe it’s because in their particular cases, there’s enough business to go around.
I’m not a lawyer either, thank the Lord, but I suspect the Subway owner could preserve her future rights by drawing up a contract with both the vegan restaurant and the strip mall owner specifying that she’s allowing this exception contingent upon the vegan restaurant keeping its offerings within very clear and narrow bounds.
But yes, from the article it appears as if the strip mall owner is in breach of two contracts. The vegan guy isn’t a party to the other contract, after all, and the strip mall owner should’ve given the Subway owner the opportunity to invoke her contractual rights before he agreed to lease to the vegan guy. Now it looks as if he may have two businesses that he’s obligated to ‘make whole’ - to restore them to where they were before he screwed up. Hope he’s got good insurance.
Um… are you saying that there shouldn’t be vegan or vegetarian restaurants??? Are you saying that two brothers who have a very solid moral&health objection to animal products should start serving them in their establishment which is 100% geared toward people who have a moral&health objection to animal products? Are you high?
I can’t speak for JDeMobray, but I had a similar reaction to the mention of the limitation … not that there should be no vegan/vegetarian restaurants, but that those restaurants might expand their client base. This might be what Subway is worried about.
I’m a proud meat eating person, but I also like good quality food, and a variety of it. If a vegan restaurant wanted my business, they might advertise the freshness of their food, that it is unusual, that it is healthy and tasty. If the choice is between a fresh and tasty veggie wrap, or a bland turkey sub, I’m not even thinking about the lack of meat when I make my choice. Why should the customers at the vegan restaurant only be vegans? I’m not Jewish, but the folks at 2nd Avenue Deli, a kosher restaurant, appreciate my business (and boy do I appreciate their food).
Personally, I don’t think this particular store is going to have a big effect on Subway’s business. Subway obviously thinks differently, and (from the news articles) they have a contract that allows them to make that determination. The strip mall is at fault for creating this conflict.
It seems to me that the property co. is in the wrong; they should have never leased to Atom’s in the first place, IAW their lease agreement with Subway.
Subway is suing the wrong people, IMHO. But, as RT pointed out, it isn’t about right or wrong, but the bottom line. Atom’s is less able, financially, to defend themselves than the owners of the strip mall, so under the hyena mentality of corporate balance sheets, Atom’s is the weakling they can cut from the herd and consume with the least amount of effort.
I feel sorry for Atom’s; they’re the little guy caught up in this mess, just trying to achieve their little slice of the American Dream while doing something that they believe in, and probably enjoy.
Freedom: I don’t care about the competitive nature of businesses; the Subway owner’s actions (hostility, vandalism) are unconscionable. They should keep their attitudes and actions in the courtroom, and not delve into intimidation tactics.
Their business should either succeed or fail on its merits, not their ability to harass or intimidate their competition. This isn’t la cosa nostra land.
You have taken my comments to a place that I did not mean for them to go. Usually, when I mean to say something, you can tell because I happen to write it right here in the post.
Had I thought they had to harrass threaten and vandalize someone else’s property, you would have seen me making off the wall comments about it. Instead, what I posted was that they demand enforcement of the clause in their contract that prevents the management from letting in other food establishments.
I feel kind of bad for the vegans, but legally their beef (sorry) is with the management company. Any illegal actions from the Subway people should be taken to the police and handled in a criminal court.
Talking specifically about Subway’s decision to enforce their contract:
This non-competitive clause in their lease is an asset. By assuming that they will relinquish any part of their assets without prior approval or compensation is theft. If someone went into your wallet and stole $5, you would be upset. Why should the owners of Subway relinquish even ONE possible customer if they have a contract that protects them? Do you expect Subway to play Mall Monitor and constantly approve the Vegans menu? What happens if they start drawing $400-$1000 a month away from Subway?
Life is bitch and I feel for the vegans, but I can’t blame Subway for not wanting them there.
Actually, it’s probably because they have no right to expect a zone without competition.
Let’s pick a profession out of a hat. For the moment, let’s pretend that your friends are computer experts. They go around getting paid to install programs, network computers or just trouble shoot for small businesses in the area. Your friends know each other casually, and often even field phone calls from the same businesses when a business is shopping around for the best computer guy.
If they both talk to one business, and then that business picks one of them, the other one has no right to be mad. Now let’s say the business picks one of the computer guys, and they sign a 3 year agreement for him to do all the independent computer work for the business.
Now the business looks around a year later, and decides they want to farm some work out to the other business.
Sorry. A contract is a contract. When you have a contract you make plans based around it. You have certain rights, and certain responsibilities. You stop advertising becasue you know you have this main account and you need to dedicate a large amount of time to it. You start budgeting based on the expected work. You do not roll over when the company tells you not to worry since they only plan on giving this guy 5-10% of the work.
You might even like this guy, but I don’t see what this has to do with the situation. The guy has no right to hold a grudge against you when you demand that your contract be honored.
Of course I’m not saying that there shouldn’t be vegetarian only restaurants. What I’m saying is (And I’ll be typing this really slowly :)) It doesn’t make sense to me to start a business with the intent of attracting 5% of the potential customer base.
If I was opening a Vegan sandwich bar, I would open it, like I should have said before, somewhere where there was no nearby direct or even indirect competitors. That way someone passing buy to do other shopping or what have you might see my business and say ‘Hmm, I’ve never tried a completely Vegan lunch, why not go for it now.’ rather than ‘Hunh, new place or Subway. I know that I don’t hate Subway. . .they serve me the same low quality food every time I go there. Why risk something I wouldn’t like?’.
And before you say that outlook is small-minded, I will agree with you. Unfortunately, that very same business plan (Providing the exact same tasting poor quality food no matter where on earth you are) has made McDonald’s a multi-billion dollar multi-natural corporation, while driving an awful lot of small business comptetitors straight to the poor house.
I just wouldn’t want to even set myself up for that. I don’t know why the owners of ATOM’s would, either.