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Perkins franchisee files for Chapter 11 bankruptcy

Early ruling found 5171 Campbells Land Co. in default of royalties

A franchisee of 27 Perkins Restaurant & Bakery locations filed for Chapter 11 bankruptcy protection on Monday after losing the right to use the parent company’s name.

The franchisee, 5171 Campbells Land Co., based in Rankin, Pa., said in the U.S. District Court for the Western District of Pennsylvania filing that it had assets of between $1 million and $10 million and liabilities in range of $10 million to $50 million.

According to local reports, 5171 Campbells operates restaurants in Ohio, Pennsylvania and New York. Earlier this month, a federal judge in Memphis, Tenn., granted franchisor Perkins & Marie Callender’s Inc. a restraining order that kept the franchisee from operating under the Perkins name and ordered it to stop using signs, flags, menus and anything else displaying any Perkins trademarks, and also to change the restaurants’ phone numbers.

A June lawsuit said that 5171 Campbells had been in default of marketing contributions, royalty fees and transfer fees since April 2018 and had also failed to “uphold the standards set forth in the license agreements,” including carrying out required restaurant upgrades. The lawsuit said those fees amounted to $2.2 million.

According to a report in the Pittsburgh Post-Gazette, Campbells had itself bought the 27 locations out of bankruptcy in January 2018 for $7.8 million and promised to spend $12 million in upgrades over the next two years.

WKBN-TV of Youngstown, Ohio, reported that Monday’s bankruptcy filing occurred hours before a hearing in Tennessee on the permanent closure of the 27 locations.

Perkins & Marie Callender’s is itself up for sale and is considering filing for bankruptcy protection.

In June 2011, the company filed for Chapter 11 bankruptcy protection and emerged from it six months later.

According to Nation’s Restaurant News Top 200 data, Perkins had 356 locations at the end of 2018, with 239 of those franchised.

Contact Bret Thorn at [email protected]

Follow him on Twitter: @foodwriterdiary

TAGS: Finance
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