Double Whammy Hits a Perkins Franchisee
Perkins & Marie Callender's LLC filed August 5 for Chapter 11 bankruptcy protection.
“Perkins has a great model. That needs to go into this article,” Bill Kane told Franchise Times in an April 2018 “Pipeline” column about multi-unit franchisees. In the time since, both Kane’s Pittsburgh-based company and his Memphis-based franchisor Perkins & Marie Callender’s LLC have filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
Kane and three partners, coincidentally, acquired their 27 Perkins Restaurant & Bakery units—spread throughout Pennsylvania, Ohio and New York—in bankruptcy court proceedings in January 2018.
To add insult to injury, this June the franchisor charged that Kane’s company, 5171 Campbells Land Co., had never paid royalties, deferred royalties, marketing contributions and transfer fees. That's according to a breach of contract lawsuit filed in U.S. District Court for Western for Tennessee. The franchisor also permanently terminated the company’s franchise licenses.
A court document in the Campbells Land Co.'s bankruptcy case notes that Kane and one of his partners owe the franchisor about $2.2 million in fees. “They allege, and that’s subject to us disputing it,” said attorney Ryan Cooney, who represents Campbells Land Co. The company “was paying payroll, food costs and all sorts of other things. But, right. There are large liabilities. There is no doubt about that.”
Claims from among the 20 largest creditors range from $41,636 to $1,325,489, says the July 8 voluntary bankruptcy protection petition. Kane did not respond to calls or a text message seeking comment for this article.
The earlier lawsuit in the Tennessee court, however, was dismissed last month after Cooney negotiated the reinstatement of temporary franchise agreements to facilitate the sale of 17 of the 27 restaurants that operate as Perkins. He said the temporary agreements make it easier for the franchisor to sell the family restaurants.
“They have an incentive to get new franchise agreements with whomever the new buyers are,” Cooney said, in reference to the current sale process for Perkins & Marie Callender’s LLC, which filed for bankruptcy protection in early August.