Shoney's to be acquired by Church's franchisee

ATLANTA Ga. The largest franchisee of the Church's Chicken chain has agreed to acquire Shoney's Restaurants from an affiliate of Lone Star Funds, the Dallas-based private-equity fund that bought Lone Star Steakhouse & Saloon Inc. late last year.

Shoney's buyer, Royal Hospitality Corp. here, said it acquired the trademark and all franchise rights to the Shoney's name on Jan. 1. Nashville, Tenn.-based Shoney's franchises 230 restaurants. The purchase of the 52 company-operated Shoney's stores will be completed by Feb. 1, Royal said.

Terms of the two-phase acquisition were not disclosed. Lone Star Funds bought Shoney's from shareholders for about $240 million in 2002. It agreed to sell the system to Brentwood, Tenn.-based Centrum Equities in mid-2006 for about $140 million.

Royal Hospitality is an affiliate of Royal Capital Corp., which operates 112 Church's fried-chicken restaurants in Arizona, California and Texas. Royal Capital is controlled by David Davoudpour, who already assumed the chief executive and chairman's posts at Shoney's.

In late summer, Centrum said it was backing out of its agreement to buy Shoney's from Lone Star Funds, citing concerns about the family chain's food-safety standards, among other factors.