Can chefs and restauranteurs avoid agreements with business partners whose post-deal statements or activities threaten to sully their brand? Here's what happened in two recently filed litigations on the issue, and some additional protections that business owners could incorporate into agreements.
Presidential hopeful Donald Trump recently sued the companies associated with the well-known chefs Geoffrey Zakarian and José Andrés. Trump's companies claim the chefs' attempts to disassociate themselves from Mr. Trump and his infamously inflammatory remarks about Mexican immigrants breached their agreements to build restaurants in Washington D.C.'s new Trump International Hotel in The Old Post Office Building. Both chefs maintain that Trump's comments entitled them to terminate their deals, with a spokesperson telling the press that "Simply put, Mr. Trump's comments made [Mr. Andres' company] ThinkFoodGroup's participation in this project impossible and constituted a breach which the landlord, Trump Old Post Office LLC, refused to remedy."
Trump Old Post Office LLC responded by filing a federal action against José Andrés's restaurant groups on July 31 and an action in D.C. Superior Court against Geoffrey Zakarian's groups on August 4. Each complaint alleges a breach of the sublease to operate a first-class restaurant in approximately 9,000 square feet of space in the building, a claim against each guarantor for performance of each tenant's obligations, and attorneys' fees.
With business owners or investors increasingly in the public eye, many high-profile restauranteurs will likely react by seeking greater contractual protections to ensure that their brands remain untarnished by the actions of their prominent deal partners. Several potential contract terms spring to mind: a so-called "morals" clause, common in many entertainment transactions, could allow a restauranteur to cancel the contract if the owner or CEO of a landlord's operation makes inflammatory statements or engages in disreputable behavior with which the restauranteur wants no association. Similarly, some type of "non-disparagement clause" would restrain a party from making statements or engaging in actions that negatively impact the restauranteur's reputation, products, services, management or employees, and could provide an exit from the contract. Business partners could simply agree to coordinate all press releases and public statements which could affect the business. Of course, as the Trump examples show, there may be public statements or actions that are so notorious or provocative that they effectively force the issue, regardless of what contract protections exist.
Business owners, chefs and restauranteurs alike may want to review their existing contracts and reexamine the terms of any pending new arrangements.
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