The Franchise Memorandum

Jiffy Lube was recently sued by a real property company under which Jiffy Lube served as both the landlord and tenant of property located in Anne Arundel County, Maryland. Bird Realty Ltd. P’ship v. Jiffy Lube Int’l, Inc., 2012 U.S. Dist. LEXIS 177207 (D. Md. Dec. 14, 2012). Jiffy Lube entered into a prime lease for the property in 1989 and immediately thereafter entered into a sublease with the plaintiff. The plaintiff, in turn, subleased the property to a subsidiary of Jiffy Lube.  Through a series of mergers, Jiffy Lube assumed the obligations of the property as both landlord and tenant to the plaintiff. Jiffy Lube then terminated the lease with the prime landlord at the end of 2008. The plaintiff sued when Jiffy Lube stopped paying rent, contending that Jiffy Lube was obligated to continue to pay rent because the sublease between the parties had automatically renewed until December 2014. It sued for nonpayment, breach of contract, breach of fiduciary duty, and tortious interference with prospective economic advantage. Jiffy Lube moved to dismiss the complaint. 

The court granted Jiffy Lube’s motion, finding that the plaintiff’s interest in the property expired when Jiffy Lube terminated the prime lease, and therefore there could be no claim for nonpayment of rent. As to the other claims, Plaintiff alleged that Jiffy Lube was required to extend the prime lease for the plaintiff’s benefit and that the language in the sublease provided for this automatic renewal. The court disagreed. The sublease required the plaintiff to provide notice to Jiffy Lube if it wanted Jiffy Lube to extend the prime lease’s term. Because there was no evidence of this written notice, the court dismissed the remaining claims in the complaint without prejudice.