The family owned Twisters Frozen Custard has become a fixture in Overland Park. Founded in 2003 by two families as one of the first businesses located in the Village of Overland Pointe at 135th Street and Antioch it is now a destination for families in the area and the many visitors to the sports fields along the 135th corridor. As part of the original development of the Village of Overland Pointe, restrictive covenants intended to protect businesses from direct competitors within the development were written into the declarations. A common practice in commercial development these covenants entice businesses to invest in a new development and encourage a mix of complementary rather than redundant businesses.
When the former KFC restaurant closed and the building right next door to Twisters sold, the owners were told the empty store had been sold to open a Dairy Queen Grill & Chill. Not only would the Dairy Queen pose a serious competitive threat, it would share an entrance with Twisters. Owners Kevin Forbes and Kevin Floyd understandably saw this as a threat to their entire business. Over the years, they had invested millions to buy and build their restaurant, developed their own unique brand, built a strong connection with the community, provided jobs and supported their families.
The new owner of the neighboring building was aware of the restrictive covenant stating that no other ice cream, frozen custard or yogurt store could be operated on that property, but chose to purchase and open the Diary Queen anyway. Learning of the potential new neighbor, Twisters worked with attorney Daniel Estes to pursue it options and enforce the restrictive covenant.
A temporary restraining order was immediately obtained in Johnson County District Court after the owner of the prospective Dairy Queen refused to acknowledge the violation of the covenant. Twisters ultimately had to proceed to a trial to the Court and prove the the Dairy Queen Grill & Chill had the “primary business” of the sale of ice cream. Unfortunately, the covenant didn’t define “primary” and no Kansas court had previously defined what constituted a primary business. Working with Twisters and digging into the business model of the Dairy Queen history and franchise system, our approach focused on the first – in time and importance – business of a Dairy Queen restaurant.
Without Blizzards, Dilly Bars, Peanut Buster Parfaits (all trademarked ice cream products)
and without the iconic ice cream cone with a curl on top (likewise trademarked),
it’s just a fast food restaurant, it’s not a Dairy Queen.
The Diary Queen franchisee argued that its primary business was whatever group of food products made up the majority of its sales and offered up data its other Dairy Queen Grill & Chill stores in rural parts of Missouri. Even looking at that sales data, the franchisee had to combine all other products other than ice cream sales to reach something close to fifty percent of sales. Interestingly, the franchisee also argued its soft serve ice cream was not included in covenant language because it didn’t meet the definition of ice cream in the FDA regulations.
While the sales data for the franchisee and for other Diary Queen Grill & Chill sales in the Kansas City showed that ice cream sales made up either the largest single product category or actually a majority of all sales, we questioned the very premise of Dairy Queen’s business. Based on the definition of “primary” as the first in time or most important aspect of the business, we demonstrated that Dairy Queen owed its existence to ice cream sales. Even though the Grill & Chill concept started in the early 2000’s included fast food meals on the menu along with the traditional, and even famous, ice cream products, we pointed out that a Diary Queen without ice cream simply isn’t a Diary Queen.
Twisters’ efforts to obtain a preliminary injunction were eventually successful, which lead the franchisee to later agree to consent to a permanent injunction barring the opening of a Diary Queen Grill & Chill in the property. Judge for Twisters was also entered on a counter suit against Twisters for interference with the franchisee’s contract with American Dairy Queen, the franchisor.
Unfortunately, the Dairy Queen franchisee and Twisters could not reach an agreement on the reasonable amount of attorneys fees owed to Twisters as a result of it having prevailed in the case. After filing a motion with the Court to recover its attorney’s fees, Twisters was awarded over $56,000 to reimburse it for its attorneys fees and expenses in the lawsuit. Along with the permanent injunction, receipt of the payment for the attorney’s fees and expenses resulted in the successful conclusion of the litigation.
Twisters will continue to provide its exceptional, hometown service and the highest quality frozen custard available. Stop by and support this Overland Park favorite.