Redevelopment Agency v. International House of Pancakes, Inc.

Section 1263.510 of the state’s Eminent Domain Law (Code Civ. Proc., § 1230.010 et seq.) provides that upon proof of certain facts, the “owner of a business conducted on the property taken” shall be compensated for loss of goodwill caused by the taking. The narrow question in this case is whether a franchisor who granted a franchise for operation of an International House of Pancakes restaurant on property later taken in eminent domain proceedings was entitled to claim compensation under section 1263.510, even though there was no partnership, joint venture, or agency relationship between the franchisor and the franchisee. The trial court concluded that the franchisor was not an owner within the meaning of the statute; we agree and affirm the judgment.

Factual and Procedural Background

a. The Franchise Agreement

Appellant is the International House of Pancakes, Inc., a Delaware corporation. Appellant owns and controls certain formulas and processes for the preparation of pancakes, which it promotes, sells, and merchandises through restaurants operating according to a standard plan under the name, “The International House of Pancakes.” Respondent is the Redevelopment…