Lord Simcoe Day Franchise News
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Richard Solomon, Paul Steinberg, and myself met in Detroit over the weekend to plot, strategize and about killer pre-purchase franchise due diligence.
At the "Dearborn Inn in a suburb of Detroit, a nine hour non stop meeting took place amongst Paul Steinberg, Mike Webster and Richard Solomon, attending as Seamus Muldoon. We met to discuss the prospective feasibility of the Franchise Killer Pre-Investment Due Diligence Academy (The FKPIDDA - The Farkapaedia).
Throughout the nine hour session, there was never any dead air. If you stopped talking to breathe, you lost your position, as someone else immediately started speaking, having been holding his breath waiting until you had to inhale."
What happens when a franchisor goes bankrupt? Both John Tozi of Business Week, and Don Sniegowski writing at BMM write on the Bennigan's confusing bankruptcy.
Jon writes:
"Bennigan's closed all company-owned locations and announced plans to sell off the its assets. The remaining 138 franchisees are still operating, but they face a tough road ahead.
The first challenge for franchisees was to let customers know they were still open after the sudden closure of the corporate restaurants.
"We immediately went to local news coverage," says Larry Briski, president of the Bennigan's Franchise Operators Assn. and owner of four Bennigan's in the Chicago area. "Most of our franchisees did the same thing in their local markets."
John is right about this, most of the public will assume that since the corporate stores are shuttered the entire system is done. Not a good return on your $1 million investment.
Don writes:
"The franchising arm of Bennigan's and Steak & Ale concepts was quick to announce today that franchise owners were independent companies and not part of the Chapter 7 filing. The 138 domestic and international franchisee-owned restaurants will remain open and fully operational."
Most of the time the print media does a good job on business stories, but sometimes franchise and bankruptcy stories are harder because the involvement of complex law.
In this case, there are three online tools that you need to use: pacer.gov to check on the bankruptcy filings, caleasi to check on the franchise circular, and the US trademark database. (Pacer.gov requires an account and printing pages is 0.08 per page.)
I checked on pacer.gov on the status of the bankrupcty of S & A Restaurants.
There are only 40 entities involved, including Bennigan's Gift Card company. (Which presents a whole other problem for the franchisees.)
The owner of the Bennigan trademark , however is S &A Restaurant Corporation, according to the US Trademark Database.
Whoever the new owners are have not registered the assignment, yet.
But the franchisor, Bennigan's Franchise LP is not in bankrupcty.
There is one other mystery, correctly reported by the Indiana report:
"The chain's parent, Plano, Texas-based Metromedia Restaurant Group, seeks to liquidate its assets and shut down, citing $550 million in assets and about $150 million in debt."
I confirmed this with bankruptcy filing: the actual filing is less precise, but it shows that S & A is solvent! Having more assets than debt. Interesting story, which we will follow.
