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SALT LAKE CITY - As consultant to franchisors Bajio, LLC and Bajio Mountain West, LLC, Bradley T. Davis has a lot to say about the arbitration award presented to franchisees Brad and Sanford Woodward on July 27, 2011. Not only did he give his declaration in Fourth District Court in Utah, he also spoke with Blue MauMau.
Davis readily admits he was shocked by the amount of the award, $8.4 million. He said he had been hired to oversee the arbitration brought by the Woodwards, and when the dispute was initiated, Bajio was still struggling to survive.
Davis explained that the dispute arose over two restaurants being too close to each other. Bajio had to defend the Woodwards, even though their restaurant was built after the existing one. He said they jumped in to resolve that case to everyone's satisfaction, and then Brad Woodward decided to sue, even though he had no more infringement issue and his liability was zero.
Davis said Bajio Mountain West, the current owners, are independently funding the motions in court to set the award aside.
But he admits the situation was complicated. "In reality what we have here is that the economy has suffered and continues to suffer, and then we have a franchisee, Mr. Woodward, who wasn't able to pull out of it. Sadly, the Bajio brand as an entity died in large part because of the economy. But Woodward has elected to blame everything on the franchisor. That's not uncommon," Davis said.
He said he wasn't sure how many other Bajio restaurants were still operating under the brand, maybe about five. "When Bajio sadly failed, the franchisees were given a choice; close your store because we can no longer support the brand; or continue to operate your store independently without support. Davis said most of them closed down, but some sought out additional brands to go with.
Davis said there was no other litigation with the franchise owners. He knew of one other case that was resolved outside of court.
Regarding the Woodward arbitration, Davis said it should never have happened. "By law, you can't have an arbitration unless you have two willing parties." He said they were notified of the hearing but they did not have a counsel, they were out of business. "The arbitrator should have said I can't conduct a hearing because I don't have two willing parties. We were unable to be there," Davis explained.
When asked if they were required to notify the arbitrator and the Woodwards that they weren't going to be at the hearing, Davis said, "Oh, they knew. Our attorney had officially withdrawn from the case. This company was out of business. They absolutely knew."
But Davis insisted, "We completely disagree with the underlying facts of the Woodward case. We didn't have any money and we were out of business, so we didn't participate in the arbitration. To our surprise, the arbitration went forward. And to more surprise, the award that was granted was beyond belief."
Davis is now president and general counsel for Abundant Brands, affiliated with Subway franchises in Utah, which encompasses approximately 240 units. The company has several other brands and each has different ownership interests. Davis said Abundant Brands helps them to run the stores and oversees the companies' operations. They operate under contractual relationships.