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El Pollo Loco loses Mexican rights

LAREDO Texas El Pollo Loco Inc. has lost its rights to develop or franchise restaurants under that name in Mexico under a judge’s decision in a trademark dispute between the U.S. operator-franchisor and a company co-owned by the chain’s Mexican co-founder.

 

AU.S. District Court in Texas also ordered Costa Mesa, Calif.-based El Pollo Loco Inc. to pay $22 million in damages to the plaintiff in the lawsuit, El Pollo Loco S.A. de C.V.

 

 

El Pollo Loco Inc. said it intended to appeal the ruling.

 

 

The lawsuit was filed by a company co-owned by Juan Francisco Ochoa, who founded the chain in Mexico in 1975 and later sold U.S. rights to the brand, though he retained rights to use the trademark in a certain area of his home country until 1996. At that point, Ochoa's company signed over contractual rights to El Pollo Loco Inc. with the agreement that the chain would expand into Mexico.

 

 

El Pollo Loco Inc. operates or franchises about 385 units in the United States.

 

 

In 2004, Ochoa sued El Pollo Loco Inc. on behalf of his company, saying the U.S.-based operator-franchisor breached its agreement by failing to develop restaurants in Mexico. In Monday's decision, the judge upheld a jury's earlier decision in favor of the plaintiff.

 

 

In addition to the damages, El Pollo Loco Inc. was directed by the judge to return its rights to use the El Pollo Loco trademark in Mexico, as well as any sublicenses or other agreements the company has entered into there.

 

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