What appeared to be a straight-forward business transaction has turned into a messy legal battle involving a venerable central Ohio business and its former partner.

Following the move earlier this month of two Block's Bagels locations near Bexley and in the North Market becoming Fox's Bagel and Deli, the owners of Block's have sued Fox's owner Jeremy Fox.

In a lawsuit filed Oct. 12 in Franklin County Court of Common Pleas, Block's Bagels, founded in 1967, alleged that Fox violated a 10-year supply agreement originating in 2016.

Also named in the suit are Fox's father, Ronald Fox; Sammy's Bagels, which Fox owns; and two companiesat one point owned by Fox, Fox's Foods and FRG Enterprises.

Last week, the court granted a temporary restraining order Block's sought against Fox. Judge Jaiza Page ordered that Fox cannot breach its supply agreement and is prohibited from purchasing products other than from Block's.

The 2016 supply agreement allowed Fox to use the Block's name as well as market and distribute bagels and related products in exchange for Block's being the exclusive supplier of Fox's products.

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According to the lawsuit, Fox's company has not paid annual licensing fees and performance bonus payments, the latter of which required Fox to make payments "equal to 5 percent of the gross revenue in excess of $500,000, with a ceiling of $1,000,000, in annual sales generated from the Bexley store." The lawsuit claims the Bexley location has exceeded $1 million in revenue each year under the supply agreement.

The suit also alleges that Fox did not exercise the option to purchase Block's. In addition, the complaint alleges that Fox possesses equipment used at the original Block's location, at 3415 E. Broad St., that has never been paid for, and during the agreement sourced products elsewhere, in violation of their agreement.

The lawsuit further notes Fox's purchase of Sammy's Bagels, a competitor of Block's, and the forming of a new company, FRG Enterprises, that Block's claims was used to avoid obligations of the original company, Fox's Foods.

Block's claims in the lawsuit that the abandonment of the supply agreement has harmed the company through a loss in revenue. The lawsuit also states due to the agreement, Block's backed away from opening a new Bexley-area location, after closing the original East Broad Street location in 2016.

In a statement, Fox said his company is prepared to make its case in court.

"We recognize and respect the Block family's legacy in this community, and have spent years in conversations to try and reach common ground and resolve this matter. Unfortunately, it became clear that an agreement to purchase the company could not be reached," said Fox.

"The financial risk of trying to complete a purchase transaction with a company carrying significant debt was too great, forcing us to make the difficult but necessary decision to move on," said Fox. "It is our responsibility to do what is right for our business and our employees – assuming a business that was unhealthy simply did not meet that obligation."

Block's attorney, James Arnold, said "we are extremely disappointed that we were forced to file a lawsuit. ...

"We had no choice but to file suit or dozens of workers could have lost their jobs. We are grateful that the Court has entered a temporary restraining order enjoining the defendants from any further breaches and allowing our innocent employees to remain employed.  We look forward to a hearing on the merits to fully vindicate our remaining rights."

tmoorman@dispatch.com

@TaijuanNichole

This article originally appeared on The Columbus Dispatch: Block's Bagels sues Fox's Bagels & Deli owner for violating agreement