THE SIGNAGE FOUNDATION FOR COMMUNICATION EXCELLENCE, INC.

The on-premise sign, when standing alone, should be considered and regulated as a full function communication and design system. In any commercial setting, the sign should be easily visible and readable; where appropriate, the company "signature" should be integrated into the message. When used correctly, the sign enhances product or service recognition and maximizes recall of other media messages, thereby providing the business immediate market advantage.

The importance of the single on-premise sign was the subject of a seminal California case, Denny's Inc., et al v. City of Agoura Hills, 97 C.D.O.S. 6341 (1997), Second Appellate District. The City is a picturesque suburban community situated in the foothills of western Los Angeles County; a portion of the City is bisected by a major and high volume freeway which is part of US Highway 101, locally referred to as the Ventura Freeway. The City desired to enhance its visual aesthetics - a purpose generally within local police powers. As a part of its enhancement program, the City enacted a sign ordinance which, among other things, prohibited all pole signs, with the exception of a few under six feet in height; the ordinance did permit "monument signs", if they did not exceed the six foot limit.

The affected business proprietors identified by the City as being in violation of the ordinance exhibited the traditional type of large freeway pole signs which announced the location of the business by name and/or logo, and considerably exceeded the new height limit. Under the sign ordinance, the pole signs became non-conforming on March 20, 1985, and following an amortization period of eight years, were subject to removal on March 20, 1992. During the amortization period, the affected businesses unsuccessfully applied for zoning variances, and litigation ensued.

The businesses alleged that the City's sign ordinance violated Section 5499 of the California Business and Professional Code, which in essential part proscribed the removal of any on-premise sign on the basis of height or size if topographical circumstances would materially impair the visibility of a conforming sign or the sign user's ability to adequately and effectively continue to communicate with the public through use of a conforming sign; if impairment of visibility or ability to communicate would result as a consequence of enforcement of the ordinance, the offending sign could remain and would be deemed conforming, as a matter of law. Section 5499 controlled all sign ordinances adopted after March 12, 1983. The City's ordinance was enacted in 1985; the affected business establishments and their signs all predated enactment.^[29]

Based on Section 5499 and its preemption of local law, the businesses requested an injunction against City enforcement of its ordinance as against them; the City concurred that the State code applied to its ordinance, but in essence countered, as a defense, that other merchants in the area with conforming signs were enjoying vigorous business and healthy sales. The trial court rejected this argument.^[30]

One of the businesses affected by the City's ordinance was a Burger King franchise located adjacent to the Ventura Freeway. The subject's pole sign was highly visible both ways to potential customers traveling the freeway. Traffic counts showed that 88% of those vehicles passing the restaurant did so via the freeway; the other 12% passed by on local frontage roads. Due to surrounding topographical circumstances (e.g., the business site was lower than the freeway), a sign of the type and height required by the ordinance could not be seen by either north or south bound motorists; neither could the business premises be seen until it was too late to safely exit the freeway. Thus, forced takedown of the offending pole sign would render the site essentially invisible and incapable of attracting the freeway motoring impulse buyer.

The Agoura Hills Burger King, and its sign, were specifically built to service Ventura Freeway motorists, and its profit structure was designed with that in mind. Corporate field studies found that nearly 60% of the store's business was attributable to its on-premise sign. Even after factoring down the potential loss in business attributable to loss of the sign from 60% to 37.5% (a compromise or "averaging" between Burger King's data and that of the City's expert), corporate accountants found that the franchisee would lose a profit of $2 million over a 15 year period -- the term left on the lease at the time of controversy. Using the higher 60% business loss calculation - a calculation the corporation believed more accurate, the lost profit would equal $3.2 million, perhaps forcing the franchisee out of business.

A comparison was also made between the Agoura Hills Burger King and another Burger King in Camarillo, a mile further down the freeway. As with the Agoura Hills site, the Camarillo premises were not visible from the freeway, and although the store had a pole sign, the sign was visible only to southbound traffic and could not be seen until the motorist had passed the appropriate exit.

Because of both lack of visibility and ready access from the freeway, the Camarillo Burger King relied much more on the local population and local frontage road traffic than the Agoura Hills store, and not surprisingly, its sales were only 48% of the sales achieved by the Agoura Hills site. The difference in volume tended to support a finding that up to 60% of the sales of the Agoura Hills Burger King flowed from its visibility to traffic in both directions for distances great enough to provide ample time for the unfamiliar driver or impulse purchaser to exit safely. Additionally, Burger King Corporation permitted a deviation from its customary practice of siting only one franchise per 5-mile radius trade area because only the Camarillo location was considered trade-area oriented; the Agoura Hills franchise was strictly "point of purchase" or freeway oriented, expected to draw only a small percentage of the local consumer pool.

In addition to data provided by Burger King, the studies and surveys provided by all business litigants similarly found that extensive adverse impact to business revenues and profits would result if their pole signs, visible to the freeway, were removed. Among the other litigants were McDonald's and Texaco.^[31]

The trial court concluded that enforcement of the ordinance would result in a material impairment of all plaintiffs' ability to adequately and effectively continue to communicate with the public due to topographical conditions, which included trees, hills, concrete highway structures, other buildings, utility poles and wires, vehicles traveling the freeway, and any other visual impediment other than the natural limits of human eyesight.^[32] The court then ruled that the attempted enforcement of the City's ordinance was in contravention of the Business and Professions Code, that plaintiffs could keep, maintain and exhibit the disputed signs at their respective business premises, that such signs would be deemed in conformance, and that the City, because of its "wrongful and on-going conduct", was permanently enjoined from enforcing the ordinance as against the plaintiffs. On appeal by the City, the appellate court affirmed the trial court's decision.

The appellate court in upholding the trial court's decision did not reach the commercial impact of the ordinance, deciding the case on the narrow question of "material impairment of visibility. "However, the trial court clearly paid attention to the economic research and data submitted not only by the affected businesses, but also by the City's own expert, who agreed that significant losses in customer base and business revenues would result from the loss of signage.^[33]

In the Agoura Hills Burger King case, lack of freeway visibility of the premises itself precluded the business from overcoming the sign height restriction by alternate forms of signage. Had a "signature" building, for example, been a viable alternative (because the site itself was effectively visible to the freeway), the Agoura Hills Burger King, and other freeway merchants similarly situated and adversely impacted by the City's height restrictions, may not have litigated for ten costly years ... costly to both the businesses and the city.^[34] Although the Agoura Hills matter was decided in California, the findings, conclusions and decisions of California appellate courts are generally accorded great respect in sister states and federal courts. Therefore, a review of trial and appellate court documents in this case, including market survey exhibits, is recommended for all interested parties, no matter where residing or doing business.