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Hooters franchisor airs concerns about franchisee’s purchase

ATLANTA The franchisor of the Hooters casual-dining chain expressed concerns Monday about the pending acquisition of a second franchisee by a Charlotte, N.C.-based investment firm, noting that its approval of the $106 million deal was never sought.


Hooters of America Inc. said in a statement that its contract with the franchisee, 45-unit Texas Wings, prohibits franchise rights from being transferred without the franchisor’s consent. That approval was not solicited before Texas Wings announced its pending acquisition by Chanticleer Holdings Inc., HOA said. The deal was announced on July 9.



Similarly, HOA said, it was not provided with an opportunity to purchase Texas Wings before the company entered into the sales pact with Chanticleer. A right of first refusal is included in Texas Wing’s franchise contract, according to the franchisor.



HOA also expressed concerns that Chanticleer was trying to buy a second franchisee before closing on the previously announced purchase of Hooters Inc., a 22-unit franchisee. That $55.1 million deal, announced in March, was scheduled at the time to be completed by July 31, HOA said.



“We are concerned that Chanticleer may be attempting to create an illusion that it has certain rights and understandings that extend beyond what it actually has,” said Coby Brooks, president and chief executive of HOA.



Hooters Inc. operates restaurants in New York City, Chicago and Tampa Bay, Fla. All of the restaurants operated by Texas Wings, the chain’s largest franchisee, are in Texas. The two purchases would make Chanticleer by far the largest franchisee in the system, with 67 of the 440 restaurants franchised or operated in total by HOA.



Chanticleer, a public company, had yet to file a response with regulators or post one on its website as of this posting. Nor was a response posted by Texas Wings.


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