Bally Total Fitness bankrupt again
Chicago-based health club franchise Bally Total Fitness is in bankruptcy again with its new owner, Harbinger Capital Partners, less than 18 months after it emerged from a previous round of bankruptcy.
Executives of the 349-unit chain said in a court filing that it has had "extensive discussions" on a possible sale. Those discussions were not completed in time for the company to avoid a bankruptcy filing in December. Bally also is preparing a stand-alone bankruptcy plan in case those discussions fall through.
Membership declines and unpaid dues resulted in a 31-percent decline in revenues for the first nine months of the year, according to court documents.
Compounding the problems of the recession: In February Bally had to settle an SEC lawsuit over allegations that it underreported losses from 1997 through 2003. Then, in October, the company was sued by 24-Hour Fitness, the former employer of Bally's CEO Michael Sheehan.
That lawsuit alleges that Sheehan took private documents and information from 24-Hour Fitness shortly before accepting the leadership position at Bally.
Bally has 3.1 million members and 14,570 employees, according to court documents. It reported more than $1.5 billion in liabilities and less than $1.4 billion in assets.
Mrs. Fields gets co-CEOs
Mrs. Fields Original Cookies wants two people to guide its emergence from bankruptcy.
The Utah-based company, which owns the Mrs. Fields Cookies and TCBY Frozen Yogurt franchise systems, appointed John Lauck and Michael Ward its co-chief executive officers. They will be charged with helping the company improve its fortunes after a bankruptcy filing last year.
Each CEO will continue to oversee areas they previously managed. Lauck, who has been with Mrs. Fields since 2004, will oversee Mrs. Fields franchising, gifting, retail and licensing businesses, the TCBY unit, product development and marketing. Ward, a 17-year company veteran, will keep his previous role as chief legal officer. He will oversee the chief financial officer, information technology, international operations, purchasing, franchisee training, human resources, retail customer service and risk management.
Mrs. Fields filed for bankruptcy last summer to give it an opportunity to restructure its business, which includes 1,200 units for its two brands. It emerged from that bankruptcy 60 days later after it was able to reduce its debt level.
BBI reaches deal with Dixie Cream
It'll be up to Beautiful Brands to return Dixie Cream Donuts to prominence.
The franchisor of Camille's Sidewalk Cafe and Freshberry Frozen Yogurt reached a deal with the chain's Tulsa, Oklahoma-based owner, Daylight Donut Flour Company, to franchise and market the 12-unit concept. Beautiful Brands' support will include product development, marketing, real estate, architecture, legal, franchise sales and other aspects of franchise development.
The first corporate store will open in the spring.
Dixie Cream was founded in 1922 in Dallas and is known for being the first to develop a doughnut mix that required the additions of only flour and yeast. At its peak the company was a nationally known chain with more than 400 units.
Homewatch CareGivers opens in Panama
Full-service, in-home care provider Homewatch CareGivers opened a new international office in Panama City, Panama.
Located near the Edificio World Trade Center, the Panama office is a "strategic milestone" for the company, said Leann Reynolds, Homewatch's president.
"(The new office) positions our company to support those clients who choose to have medical procedures overseas, in popular destination countriesÉas part of the growing trend in medical tourism," she said.
DineEquity investors abuzz about store sales
DineEquity recently sold 66 of its corporate-owned Applebee's to franchisees. This wouldn't normally qualify as major news, yet it was met with huge cheers among investors in the beleaguered company.
Investors have punished DineEquity as they have other restaurant companies during the recent credit market slowdown. The company was created early last year when IHOP merged with casual-dining chain Applebee's. In pushing the deal, DineEquity CEO Julia Stewart said the company would pay down the debt IHOP needed to buy Applebee's by selling off corporate stores.
Declining credit markets, however, have raised questions about the company's ability to accomplish that goal. Sales slowed last year as prospective franchisees had a more difficult time finding credit and had less equity in their homes or stock portfolio to use as a down payment. Those concerns, combined with worries about the problematic environment for full-service restaurants, have resulted in a precipitous decline in DineEquity's stock price.
Shortly after the combination, the company's stock traded at more than $60 a share. By October it was down to around $7. That price more than doubled in late October, however, after the company announced the sale of the 66 units, which will enable DineEquity to reduce its debt by $59 million. While the stock price has fallen since, the sale nevertheless assuaged investors concerned that the company would be able to pull off its massive re-franchising efforts, which involves nearly 500 stores.
Court OKs Bennigan's acquisition
Reports of Bennigan's death were premature.
A federal bankruptcy court in Texas has approved Atalaya Capital Management's takeover of the Dallas-based casual-dining chain's franchise system - effectively keeping franchisees operating despite the corporation's attempted suicide through Chapter 7 bankruptcy.
Atalaya, a private equity group and one of Bennigan's creditors, replaced the board of the franchise system shortly before the bankruptcy. That move kept the franchisees from joining the corporation and company-owned stores in bankruptcy.
Joel Holsinger, a partner at Atalaya, said the company's goal is to help franchisees open up to 60 of the closed company-owned restaurants while opening new units in the U.S. and internationally. Four closed locations have since re-opened, and owners opened four new units.
Focus gets a new CEO
Former Arby's franchisee Russ Umphenour is the new CEO of Focus Brands. He replaces Steve Romaniello, who has been named chairman of the Atlanta-based franchisor and a managing director for its owner, the private equity group Roark Capital.
Umphenour has more than 40 years in the restaurant business. He started working at an Arby's in 1967 as a counter person then started his own company, RTM Restaurant Group, in 1973. By the time he sold it to Arby's owner, Triarc Companies, it was Arby's largest franchisee, with 775 units, 25,000 workers and $900 million a year in revenues.
Focus operates Carvel, Cinnabon, Schlotzsky's, Moe's Southwest Grill and Seattle's Best Coffee.
Max & Erma's CEO leaves
Robert Lindeman left his position as CEO of casual-dining franchisor Max & Erma's in November, only weeks after the 106-unit chain was bought for $10 million by G&R Acquisitions.
Lindeman worked his way up through the ranks at Max & Erma's and took over in 2007 when longtime chief executive Todd Barnum retired. He was not able to reverse the chain's financial slide - the chain lost $1.1 million in 2007 and another $2.3 million in the first half of 2008. G&R's acquisition took the company private and ended regular public reports of finances.
O'Neill takes over at Einstein Noah
Colorado-based bagel franchisor Einstein Noah Restaurant Group has a new CEO. The owner of the Einstein Brothers Bagels, Noah's New York Bagels and Manhattan Bagel brands last month appointed food industry veteran Jeff O'Neill to the top spot.
O'Neill joins the 600-unit system from the franchisee side of the franchise business. He was recently the CEO of Priszm Income Fund in Toronto, KFC's master franchisee in Canada.
O'Neill replaces Paul Murphy, who resigned after five years at Einstein's helm. Einstein Chairman Nelson Heumann said Murphy "decided to make a change" and has worked to ensure a smooth transition.
Cuppy's may be out of business
Cuppy's Coffee, the controversial chain that grew on the promise of being a lower-cost Starbucks, appears to have gone out of business amid strong indications of financial problems.
Franchisees and prospects ``say they haven't heard from the company or its owner, Dale Nabors, since a short conference call in October. Phone numbers for Nabors' offices in Muscle Shoals, Alabama, are disconnected. The company's Web site no longer lists contact information.
Neither Cuppy's, nor its sister company, Elite Manufacturing, their parent, Medina Enterprises, or owner FranSynergy have filed for bankruptcy as of press time, nor have they signaled a shutdown. But franchisees, former employees and attorneys believe they are no longer operating.
It is uncertain where this leaves the franchise, which at last count had 75 units. The company has no staff. Franchisees say they're getting merchandise directly from suppliers. Several prospective franchisees said they never received equipment they paid for and needed to open their businesses.
Amy Wiebers has been a Cuppy's franchisee since 2006. She considers herself satisfied with the company, but hasn't heard from Nabors since Labor Day, despite numerous phone calls. "I knew it was going to be a while, but he just never returned my calls," Wiebers said. "He may still have hope of turning it around, but to close shop and not put out an e-mail saying 'We're shutting down' just turns my stomach."
Cuppy's apparent shutdown represents another, ignominious chapter to the chain's troubled history. Complaints from franchisees regarding unpaid refunds and unfulfilled obligations have raged on several Internet Web sites and blogs. The company's problems have continued through two ownership changes and have resulted in numerous lawsuits.
A one-time consultant to the company, Nabors bought the chain in April and promised to make changes.
Instead, the problems mounted. Top officials resigned, including former executive vice president Theresa St. Clair and former CFO Don Ochsenreiter. Nabors moved the company to Alabama in August, taking a small number of employees with him amid reported financial problems. Ochsenreiter has since sued the company, saying he was due more than $130,000 in deferred salary and severance pay from his June resignation.
Cuppy's has yet to respond to that lawsuit, which was filed in October.
WFF registration now open
Registration is now open for the Women's Foodservice Forum's Annual Leadership Development Conference, which is scheduled for March 15-18 at the Gaylord Texan Resort and Convention Center in Grapevine, Texas.
Keynote speakers will include Robin Roberts, co-anchor of ABC News' Good Morning America, Julia Stewart, the CEO of DineEquity, and Tim Sanders, former leadership coach at Yahoo!. The conference will offer more than 50 sessions for 2,800 women and men to improve their skills, confidence and to network.
Registrations received before January 30 will receive special, early-registration pricing. For more information, visit www.womensfoodserviceforum.com.