Pioneer Chicken files bankruptcy for 2nd time in just 2 years.Pioneer Chicken files bankruptcy for 2nd time in just 2 years Los Angeles-based Pioneer Chicken Co. has declared Chapter 11 bankruptcy for the second time in two years, causing franchisees last week to allege To state, recite, assert, or charge the existence of particular facts in a Pleading or an indictment; to make an allegation. allege v. they have been fried - twice. The latest red-tide of ink was caused not by the 160 franchisees, but by losses on 26 company-owned stores, said a franchisee leader. "There has been gross mismanagement mis·man·age tr.v. mis·man·aged, mis·man·ag·ing, mis·man·ag·es To manage badly or carelessly. mis·man  age·ment n. . The vast majority of
money was lost in the company-owned stores," said Rod Jarboe,
president of the National Association of Pioneer Owners, and a
franchisee in Hemet.
Jarboe added, "Additionally, there are questions about funds that were deposited into an advertising account (by franchisees). We have not been provided a proper accounting of the funds." The owners of Pioneer Chicken, Ira Young and Bernard Shapiro Bernard Jack Shapiro, OC, GOQ, Ph.D (born June 8, 1935) is a Canadian academic, civil servant, former Principal and Vice-Chancellor of McGill University from 1994 to 2004, and the first Ethics Commissioner of Canada between May 17, 2004 and March 29, 2007. , could not be reached for comment. The pair bought Pioneer out of a previous Chapter 11 bankruptcy in September 1989 for about $7 million. The 160 franchisees each pay between $3,000 and $4,000 a month to franchisors Young and Shapiro in rent, royalties and contributions to an advertising account. Royalties are equal to 4.9 percent of franchisee revenues. Franchisees have largerly kept up their half of the bargain, sending money to the franchisor, said Jarboe. But the franchisors tried to start a new mini-chain - four company-owned fast-food restaurants named "California Chicken" - that flopped miserably, he said. Meanwhile, about nine of the 26 company-owned stores have been closed, said Jarboe. The Pioneer Chicken franchisees have hired counsel - Scott Dew dew, thin film of water that has condensed on the surface of objects near the ground. Dew forms when radiational cooling of these objects during the nighttime hours also cools the shallow layer of overlying air in contact with them, causing the condensation of some of the Century City-based Levene & Eisenberg firm - to pursue their interests in U.S. Bankruptcy Court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. here. Dew said a botched botch tr.v. botched, botch·ing, botch·es 1. To ruin through clumsiness. 2. To make or perform clumsily; bungle. 3. To repair or mend clumsily. n. 1. advertising job has cut the wings off many franchisees. "The franchisors have not been effective in advertising for more than four months. In a competitive industry like the fast-food business, that can spell death," said Dew. Both Dew and Jarboe contrasted the current franchisor performance with that of Jeffrey Coyne, a lawyer with the Coudert Bros BROS Brothers BROS Benefits and Retirement Operations Section (King County, Washington) BROS Barnes and Richmond Operatic Society (London, UK) . law firm who acted as trustee and ran the Pioneer Chicken company from January 1988 through September 1989. Coyne is credited with hiring Jack Roth, owner of the Century City-based Admarketing ad firm, who designed an effective Pioneer television ad. The TV spot touted Pioneer's virtues relative to those of a major competitor's. "That was the best year I ever had," said Jarboe, of the time when Coyne ran the Pioneer franchise. Overall Pioneer sales increased 25 percent in the Coyne days. Relations with the new franchisors started off well, but soured when Young and Shapiro insisted on more and more audits of Pioneer franchisees, said Jarboe. "The franchisees are not stealing money. I kept telling them that. They kept on auditing, using in-house and hired auditors, and never came up with anything." Jarboe said he once told the franchisors that, based on orders of bulk poultry poultry, domesticated fowl kept primarily for meat and eggs; including birds of the order Galliformes, e.g., the chicken, turkey, guinea fowl, pheasant, quail, and peacock; and natatorial (swimming) birds, e.g., the duck and goose. , they must know how much chicken franchisees were selling and therefore it would be impossible for franchisees to steal without being caught. But, said Jarboe, "They said, `Yeah, but some franchisees could be going out and buying chicken off the books not recorded in the official financial records of a business; - usually used of payments made in cash to fraudulently avoid payment of taxes or of employment benefits. See also: Book .'" Efforts towards new products - including a non-fried chicken to compete with charbroiled poultry - stalled mid-air, said Jarboe, while advertising laid an egg. "If they had spent the time on developing the company, instead of always auditing, they might have made the company a success," said Jarboe. The franchisees also lost out in Pioneer's 1988 bankruptcy, in which it has been alleged that funds were misappropriated mis·ap·pro·pri·ate tr.v. mis·ap·pro·pri·at·ed, mis·ap·pro·pri·at·ing, mis·ap·pro·pri·ates 1. a. To appropriate wrongly: misappropriating the theories of social science. , said attorney Dew. Additionally, franchisees have filed a class-action suit Noun 1. class-action suit - a lawsuit brought by a representative member of a large group of people on behalf of all members of the group class action against the previous Pioneer Chicken owner, alleging he oversold Oversold In technical analysis, it is a market in which the volume of selling that has occurred is greater than the fundamentals justify. Notes: It is the opposite of overbought. the value of Pioneer franchises. Many of the franchisees are Asian and Indian nationals who bought Pioneer Chicken stores as a means of obtaining U.S. citizenship, under U.S. laws in effect in the mid-1980s. They answered ads placed overseas by the previous Pioneer Chicken owner. That suit is pending settlement. Said Jarboe last week, "We just need an owner that understands the restaurant business. This is a good franchise with a very loyal customer base." |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion