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Franchisees, the impact of Eminent Domain for access to the right of way

Over the next five years, the federal government plans to spend more than $1 trillion on a wide range of infrastructure projects, including road expansions, bridge repairs, and transit and network upgrades. electric (to name a few). Some projects will require the government to exercise its eminent domain power to seize private property to create new access rights-of-way or extend existing access rights.

Franchisors and franchisees must pay particular attention to road widening and bridge improvement projects since they often involve the modification of highway accesses and the construction of sidewalks. These projects often negatively impact aisle access and site maneuverability and can result in the loss of parking spaces. In addition, franchisors and franchisees should review the condemnation clause of their real estate leases to know their rights, if any, in the face of site modifications caused by the government project. Condemnation clauses in leases are rarely negotiated and often ignored by the parties.

When the government acquires the entire property belonging to a private owner, the taking is a “full taking”. However, for many infrastructure projects, the government only needs part of the ownership, resulting in a “partial takeover” of ownership. This article will focus on partial recipes.

When the government seeks to expand a road or improve a bridge, it often seeks to bring access to property “up to code” and bring it into compliance with applicable law. For example, a small retail site may have 3 or 4 curb cuts along the frontage of a property, which may violate existing ordinances due to the number, location or size of the cuts. border. When the government decides to put Code access points as part of a road or bridge project, an owner may be forced to close some openings, modify others, or relocate the access points. access. Depending on the configuration of the property, changing access can devastate a franchise site. In addition to changing the size and location of the access, the government will often take land adjacent to the highway to widen the road or install a sidewalk. Although the hold is only 10 to 15 feet, it can significantly impact the usefulness and value of the property and result in loss of parking space or interference with the driveway.

It is important to note that some access changes are not compensable, even if the changes are devastating to a business. Government management of highway access sometimes falls within the parameters of the government’s “policing power”, which can relieve the government of the obligation to pay just compensation. The interplay between the exercise of police power and the just compensation due to a landowner for taking land is a challenge for even the most experienced and prominent estate lawyers, so it is crucial to retain the services of a experienced lawyer.

What should a franchisor or franchisee do when he discovers that a local project is moving forward?

First, determine if there will be any road work that may require access to their property to be altered. If there is to be a change in access, the owner should consider engaging the services of a traffic engineer to review the change and determine if the change will impact the use of the site (i.e. trucks ).

Second, if changing access is a problem, owners should consider hiring an experienced lawyer to present their objections to the government. Objection deadlines are often short, so act quickly. The attorney can explain the hearing process, prepare witnesses, and cross-examine government engineers.

Third, landowners must determine whether the government’s actions compel the government to pay fair compensation for damages caused by the project. Any land grab will require the government to pay fair compensation to the owner, but a change in access may or may not require the payment of fair compensation. Damage analysis in partial takeover cases can be complicated since the owner must not only consider the current use of the property, but also future uses (i.e., how will the takeover affect future plans for site expansion).

If the franchisor or franchisee is a tenant, a new level of complexity is added to the situation. For example, some leases require the landlord to notify the tenant of certain government measures or allow a tenant to apply for a rent reduction if a certain number of parking spaces are lost. Also, if the lease is an emphyteutic lease, the lessor may not have the same incentive to challenge the access modification. It is extremely important to have an open line of communication with the owner and to work together to minimize the impact of the catch.

“Location, location, location” is a mantra in the real estate industry. However, access and site layout are often just as important to franchises, and changes in either can devastate the business. If the government is looking to do work on or near your property, find out exactly what is happening and be prepared to protect your property rights.