Beach Franchisee Defaults In OC

OCEAN CITY— Despite granting an extension and favorable terms for catching up, resort officials this week were left with little choice but to terminate a midtown beach rental franchisee and debar him from future consideration.

In August, Randy Dougherty, operator of the beach rental franchise for the parcel between 57th Street and 59th Street came before the Mayor and Council requesting an extension for his installment payments owed for July and August. The franchisee cited a slow start to the season, including bad weather through much of June, along with other economic challenges, for the reason for the request of the extension.

Dougherty told the Mayor and Council his business at the midtown parcel had since picked up and he anticipated getting back on track, but was seeking more time to get caught up. City Clerk Diana Chavis said the franchisee was seeking a 30-day extension, hopefully seeking to pay his $4,000 July payment in August and his $4,000 August payment in September. As a show of good faith, Dougherty brought a check for $2,000 to the meeting as a first installment of sorts.

Every three years, the town bids out the beach rental franchises by different areas throughout the town and the successful bid for the parcel between 57th Street and 59th Street came in at $10,000 per year for each of the three years, or a total of $30,000.

Dougherty did make his full payment in 2021, but for the aforementioned reasons, he struggled with making the 2022 installments, which is why he sought the extension plan that was ultimately granted. However, Chavis explained since the council voted to grant the extension, unforeseen circumstances arose that led to the franchisee defaulting on the payment program.

“Mr. Dougherty emailed on September 19 advising he had to leave Ocean City for a couple of days after the meeting at City Hall due to a family emergency,” she said. “He hired someone to work the stand for the rest of the summer and was able to make enough money to meet the financial obligations to the city.”

In short, the franchisee’s three-year obligation to the town was $30,000, of which he paid in full in year one. In year two, he made a partial payment of $6,000, for a total of $16,000 for the three-year contract, resulting in a deficit of $14,000 still unpaid. Chavis said per town code, the parcel was offered to the second highest bidder at $9,000 for the remainder of the contract but that franchisee declined.

Chavis’ recommendation was to terminate the franchise based on no further payment, debar the operator and refer the matter to the city solicitor for collection action and possible litigation.

The council voted unanimously to approve the city clerk’s recommendations. Councilman Mark Paddack said he was disappointed it didn’t work out.

“I remember this discussion,” he said. “I really hoped he would hold up his end of the bargain. Once he reneged, we were left with little choice.”

In a related issue on Tuesday, the council voted to approve the auction of the beach rental franchises in December. At the request of Chavis, who conducts the auctions and monitors the beach rental franchise program, the section set for auction are the parcels between the Inlet and 27th Street, or essentially the valuable Boardwalk area. Of the 34 parcels, 20 first-time successful bidders have exercised their options, leaving 20 to be auctioned in December.

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.