FERNDALE, Wash. — It was late August 2022 when it became obvious the Ferndale SONIC Drive-In at 1851 Main Street was not going to reopen anytime soon. Menu boards had been taken down, access to the property blocked by garbage cans and traffic cones and signs were posted around the property stating, “SONIC will be closed effective 8/31/2022 until further notice.” The Ferndale franchise and 9 others in Washington and Oregon were operated by Olympic Cascade Drive-Ins LLC (OCDI).
It was soon discovered that SONIC Drive-In locations in Ellensburg, Kennewick, Pasco, Yakima, Poulsbo, Wenatchee and in Renton along with 2 locations in Oregon had also “temporarily closed.”
Shortly before the location closings, court proceedings had begun between Sonic Industries LLC and OCDI in Oklahoma US District Court where Sonic Corporate is based.
According to court documents, in late November 2021, Sonic terminated the franchisees’ license agreement due to not fulfilling their financial obligations in paying royalties and fees.
In May of 2022, Sonic issued a notice of “Immediate Termination” of license agreements for all of the restaurants, demanding they cease operations under the SONIC Drive-In brand, remove all SONIC Drive-In brand signage and pay the outstanding royalties and fees, an amount now exceeding $2 million.
Sonic Industries LLC filed a complaint against a Poulsbo-based OCDI and other franchisees (the other franchisees were later dismissed from the case) on June 2, 2022. The complaint states that on or around September 2, 2021, Sonic had delivered a written notice of default and potential termination of license agreement for SONIC Drive-In restaurants located in Kennewick, Pasco, Wenatchee, Yakima, Ferndale, Poulsbo, Renton and Ellensburg. This action was said to have been based on the franchisees’ failure to pay almost $2 million in royalties and fees required under their license agreements. The company reported not having received any payments since October of 2021.
The complaint was filed with the court after the requested restaurant closures failed to occur. The court then issued an order to the franchisees on August 24, 2022, to comply with Sonic’s request to cease operations. It was after that court order that the menu boards were taken down and access to the property blocked.
Soon after the lawsuit naming OCDI as a defendant was filed, OCDI filed a countersuit naming Sonic Industries LLC as a defendant. OCDI claims Sonic overstated and failed to detail by location the specific amounts due under the License Agreements. This resulted, OCDI claims, in Sonic improperly terminating the License Agreements, a violation of the Washington Franchise Investment Protection Act and the Washington Consumer Protection Act.
The countersuit seeks an estimated $15,000,000 which was considered the value of 6 businesses impacted by the termination of the license agreements. In addition, the countersuit seeks tripled damages as required by the Washington Franchise Investment Protection Act and the Washington Consumer Protection Act.
In their response to their countersuit, Sonic Industries LLC denied the claims made by OCDI.
As of today, August 24th, the lawsuits remain ongoing, and no building permits or business licenses have been applied for at the Ferndale SONIC Drive-In location.