The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Margaritaville’s Bahamian franchisee is urging the US courts to block the brand’s $250m operating partner deal with The Pointe and prevent it suffering “irreparable injury”.

Boss Investments, owner of the Margaritaville-flagged restaurant on Paradise Island, pictured, is alleging that the tie-up with the downtown Nassau resort development violates its own exclusive right to use the brand’s trademarks and intellectual property within Bahamian territory.

The company’s lawsuit, filed in the south Florida federal court on Friday, also claims that Margaritaville executives deterred it from opening a second restaurant location near Nassau’s cruise port to protect their “grander plans” at The Pointe.

Accusing Margaritaville, the lifestyle brand founded by US singer, Jimmy Buffett, of “deceitful” conduct by concealing its partnership with China Construction America (CCA), the Bahamian franchisee expressed fears that the larger, resort-centred location will “obliterate” its current cruise passenger customer base and “destroy” its business.

Boss Investments and its principals, Peter Maury and Mike Grandonico, said their expansion plans have been “completely shattered” as a result, with staff morale undermined because “they “now believe their jobs are in jeopardy” due to the competitive threat posed by The Pointe’s Margaritaville brand.

Mr Maury, who operates the Bay Street Marina located just behind Luciano’s Restaurant, did not return Tribune Business’s phone calls and e-mails seeking comment on the lawsuit before press time last night.

While Boss Investments’ legal move is unlikely to prevent CCA completing its development adjacent to the British Colonial Hilton, it could potentially strip The Pointe of its operating/brand partner and throw marketing efforts into turmoil if successful.

Should the US courts elect not to block Margaritaville’s deal with The Pointe, the Paradise Island restaurant owner said it will alternatively seek “whatever royalties, licence fees or other remuneration China Construction has paid - or will pay - to Margaritaville or its affiliates” in breach of the licence agreement with itself.

“This is an action for a permanent injunction to enjoin Margaritaville Bahamas, Margaritaville Enterprises and Margaritaville Holdings from developing, building, opening and/or operating the complex called Margaritaville at The Pointe with China Construction,” the Bahamian franchisee said in legal filings which have been obtained by Tribune Business.

“Boss has no adequate remedy at law, and monetary damages are inadequate to compensate Boss for its injuries, as the construction and development of Margaritaville at The Pointe will severely impact Boss’ first venue, wipe out any opportunity for a second venue, and render moot the exclusive ‘right of first refusal’ granted to Boss under the sub-license agreement for future venues.”

The Bahamian franchisee alleged that the brand’s partnership with The Pointe will cause it to “suffer grave damages”, especially the loss of future restaurant locations that it cannot open, as all “will now be dwarfed by the massive attraction of Margaritaville at The Pointe “.

The lawsuit’s filing is especially ill-timed for CCA and The Pointe, as it was filed just one day after the development’s entertainment complex was opened with a ceremony attended by the Prime Minister and several senior Margaritaville executives, some of whom signed the licensing contract with Boss Investments.

All indications suggest the filing was sparked by, or timed to coincide with, this opening given that Boss Investments first notified the franchisor its exclusive licensing agreement had been breached on February 6, 2018.

Adam Steinberg, the company’s US attorney, in a letter to Margaritaville Bahamas chief executive, John Cohlan, said it had only learned of The Pointe plans when they were released to the media on January 21, 2018.

“The discovery of the aforementioned Margaritaville project was shocking to say the least,” Mr Steinberg wrote, pointing to Boss Investments’ exclusive sub-licence to use the brand’s trademarks within Bahamian territory.

“Indeed, the ‘signature Margaritaville food and beverage concepts’ at Margaritaville at The Pointe will directly compete with Boss’s first venue, a Margaritaville concept located only two miles away from downtown Nassau,” he added.

“Moreover, Margaritaville at The Pointe, with the water park and massive amenities, will always win the customer.... and are nearly certain to drive the sub-licensee out of business. [It] has already caused a significant impact on its business due to employee concerns and the likely loss of key employees.....

“We further understand that Margaritaville has discussed the opening of Margaritaville at The Pointe with Boss’ employees, and that such discussions are impacting the employees’ morale as they now believe that their jobs are in jeopardy due to the fact that Margaritaville at The Pointe will undoubtedly negatively affect Boss’ business at [Paradise Island].”

A further exchange of letters resulted in Mr Steinberg writing to the franchisor on February 26, 2018, suggesting that the dispute could have been avoided if Margaritaville had negotiated with Boss Investments to amend the terms of its contract. The latter had agreed to such a change on August 7, 2014, to allow the opening of a Margaritaville-themed restaurant on Great Stirrup Cay, the private island used by Norwegian Cruise Line (NCL).

“Margaritaville owed a good faith obligation and fiduciary duty not to destroy the value of Boss’ exclusive licence,” Mr Steinberg wrote. “Clearly the resort, with its food, beverage and retail concepts operated under the Jimmy Buffett name, image and likeness (a strikingly similar product) will destroy Boss’ venue two miles away.

“Additionally, the construction and development of the resort will usurp the goodwill associated with Boss’ exclusive licence, and Boss has invested significant time, energy and money (many millions of dollars) to develop the goodwill associated with its venue.”

With plans for a second downtown Nassau restaurant “completely shattered”, Mr Steinberg added that Margaritaville’s tie-up with The Pointe had come as “a huge shock” to Mr Maury and Mr Grandonico.

This was especially since the lawsuit alleges they met with Bret Brown, Margaritaville’s director of international operations, in April/May 2017 to discuss Boss Investne