Miami-based Zarco Einhorn Salkowski & Brito, P.A. set up camp in California to represent its clients — franchisees of the El Pollo Loco restaurant chain in a territorial dispute with the franchise — on a contingency basis. On May 1, a California jury found that El Pollo Loco Inc. encroached on plaintiffs Michael and Janice Bryman’s territory by building company-owned restaurants in the same area, in Lancaster, California. Furthermore, El Pollo Loco did give the Brymans the right of first refusal to run the company-owned stores. Those stores siphoned revenue from the Brymans’ location, the suit said.
The jury found the franchisor violated the implied covenant of good faith and fair dealing — and not the actual terms of the contract — which Zarco called ground-breaking. The jury ruled in favor of the plaintiffs and awarded $8.8 million, a ruling the defendants’ legal team said it will appeal.
Firm Founder Robert Zarco said he believes the ruling set a new precedent in franchise law.
“We made new law in franchising again yesterday!” Zarco wrote in an email to the Franchise Times on May 2, the day after the verdict. The article continued:
He wrote the franchisees’ prior lawyer had previously voluntarily dismissed the case three days before trial, “after having been paid over $800,000 in fees and costs, believing the case was a loser.”