The economic realities of COVID-19 have created hardships for eateries looking to pay their bills, but the owners of a Joe’s Crab Shack claim that asking their landlord for a short-term rent reduction led to blackmail tactics, changed locks, and vulgar rants from their landlord’s CEO.
Crab Shack Acquisition NJ LLC filed a lawsuit on April 20 in Passaic County Court against Clifton Lifestyle Center LLC, a subsidiary of The Briad Group. Briad owns the Promenade Shops at Clifton, a collection of more than a dozen stores along Route 3 West.
The franchisees of Joe’s Crab Shack say that their restaurant has been operating at The Briad Group’s Promenade Shops without incident since 2010, but the coronavirus pandemic caused a “severe disruption” after their dining room was forced to close following an Executive Order from the Governor.
While continuing to operate as take-out only, the franchisees say they sent correspondence to The Briad Group informing them that their business was off 30%. They claim to have requested a reduction in total occupancy costs for a three-month period starting in April, with a promise to re-evaluate the situation in June.
When they received no response, the franchisees claim they informed The Briad Group that they would not be making their April rent payment. It was then that Briad CEO Brad Honigfeld, who is named as a defendant in the case, allegedly called them and offered to defer their base rent for two months in exchange for transferring 99% of the restaurant’s liquor license ownership over to The Briad Group.
The lawsuit says that such an arrangement “is likely prohibited by New Jersey’s Alcoholic Beverage Control Division” and that the offer was “unwarranted and extortionist.”
The franchisees claim that Honigfeld became “hostile and uncooperative” following the call and later sent them a letter demanding over $49,000 in rent for April, threatening to evict them if they failed to pay.
The franchisees allegedly responded to the letter by informing Briad that because the government effectively “condemned” the dining room portion of their restaurant under the COVID-19 restrictions, they were entitled to a rent reduction under their lease agreement. The restaurant claims they offered to pay Briad 5% of all their sales in the meantime until full operations resumed.
That offer ratcheted up Honigfeld’s hostility, according to the complaint. The franchisees say that on April 16, Honigfeld “threatened the safety of [their] workers” during a phone call and allegedly told them that he was a “cowboy” who “would rather f***ing burn down the building then [sic] have [Joe’s Crab Shack] stay there rent free.”
The next day, the franchisees claim they arrived at the restaurant to find a locksmith and security guard at the property. The lawsuit says they were forced to call the police, who then compelled the locksmith to grant them access to the building.
Following the incident, the franchisees say that Briad’s Chief Development Officer Jim Ardizzone reached out to them “attempting to play ‘good cop’ to Honigfeld’s ‘bad cop.” But while Ardizzone did offer them a rent deferral until September, he again insisted the deal include the transfer of the restaurant’s liquor license to The Briad Group.
“[Briad’s] attempts to leverage the pandemic to secure the liquor license and additional concessions…are unlawful and in bad faith,” the lawsuit says.
The Briad Group has not responded to our inquiry regarding the contents of the lawsuit. Besides the Promenade Shops at Clifton, the Livingston-based company owns Wendy’s locations across the U.S., several Marriott and Hilton hotels along the East Coast, and the Zinburger Wine and Burger Bar chain.
In addition to seeking unspecified damages for breach of contract and violations of New Jersey’s Consumer Fraud Act, the Joe’s Crab Shack franchisees want a restraining order and preliminary injunction against Briad to cease unlawful eviction and to have them refrain from further harassment. A hearing on the matter is scheduled for May 8 in front of Passaic County Judge Thomas Brogan.