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Outback settles franchisee lawsuit

Outback settles franchisee lawsuit

OSI Restaurant Partners LLC, operator of the Outback Steakhouse chain, has reached a settlement with T-Bird Nevada LLC, one of its largest franchisees, over a loan that was the subject of an Outback lawsuit against T-Bird two years ago.

T-Bird, which operates 56 Outback Steakhouse restaurants in California, has agreed to pay $33.3 million to OSI under the settlement, according to an OSI document filed with the U.S. Securities and Exchange Commission two days ago.

T-Bird has 60 days from Monday, when the deal was reached, to pay Outback, according to the SEC filing.

“We are pleased the matter has been resolved,” OSI chief legal officer Joe Kadow told Nation’s Restaurant News Friday.

Tampa, Fla.-based OSI sued T-Bird on Feb. 19, 2009, alleging that T-Bird defaulted on a bank loan that OSI had guaranteed. OSI claimed in the lawsuit that T-Bird therefore defaulted on its franchise agreement.

T-Bird principal owner Thomas Shannon was a close friend of Outback co-founders Chris Sullivan and Bob Basham when Shannon agreed in 1993 to open an Outback franchise market in California. Four years later, T-Bird received a $25-million loan from Bank of America to open more Outback Steakhouses in California, with Outback guaranteeing the loan.

In February 2001, the loan was raised to $35 million and extended through Dec. 31, 2008. T-Bird did not repay the loan, and the bank contacted Outback, which repaid the loan.

Less than two months later, in February 2009, Outback filed a complaint against T-Bird in Florida state court, alleging that T-Bird defaulted on the loan and franchise agreement. T-Bird countersued the next day in California.

Shannon could not be reached for comment at press time.

OSI also operates Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse and Roy’s Hawaiian Fusion Cuisine.

Contact Alan Snel at [email protected].
Follow him on Twitter: @AlansnelNRN

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