Raising Cane’s sues Indiana mall over lease flap

Raising Cane’s is, well, raising Cain.

The Louisiana-based chain that specializes in chicken fingers signed a 15-year lease with a total of $2 million in rental payments for plans to build a 3,000-square-foot restaurant with an outdoor patio and a double drive-thru at a former TGI Friday’s location in the Crossings of Hobart shopping center in Hobart, Ind., NWI.com reports.

But eight months and $1 million later, the company’s feathers were ruffled when it learned it couldn’t operate a location in the northwest Indiana shopping center due to an exclusivity agreement the property owner had with McDonald’s.

Raising Cane’s filed a lawsuit in Dallas federal court, alleging fraudulent inducement against the property owner, Schottenstein Property Group, and the Crossings of Hobart.

“Despite this restrictive covenant being a key negotiation point, defendants never told Raising Cane’s it had already given McDonald’s the exclusive right to sell chicken products at the shopping center,” the lawsuit claims.

The company was not made aware of the exclusivity right for months, after development was well underway, the lawsuit says.

“Defendants undoubtedly knew this but apparently did not care, as long as Raising Cane’s agreed to pay millions in future rental payments,” the lawsuit says. “Further, defendants were incentivized to defraud Raising Cane’s so they could use Raising Cane’s name in enticing other potential tenants to lease space at the shopping center.”

The restrictive covenant has been in place since 1994, and had been at issue earlier this year when Crossings of Hobart asked McDonald’s for a waiver to allow a Chipotle to open, the lawsuit claims.

McDonald’s declined and then told Crossings that having a Raising Cane’s open at the shopping center would also be a violation of its lease.

Raising Cane’s is seeking to void the lease, as well as recoup the money it invested in the project, NWI reports.

The chain also claims it has been damaged by having to find another location in the area, and is also seeking lost profits from the original location.

The law firm Norton Rose Fulbright represents Raising Cane’s in the lawsuit.

The rapidly growing chain, which is named after the company founder’s Labrador retriever, has more than 650 locations in 36 states and territories, according to Scrapehero.

— Ted Glanzer