September 18, 2007
A Dearth of Donuts in Chicago
Sweet Traditions LLC, the Krispy Kreme franchisee in the Chicago area, has filed a voluntary petition for Chapter 11 bankruptcy reorganization. According to this article, the company plans to close about half of its 15 Chicago-area stores as it reorganizes. According to Sweet Traditions, a lease dispute, as well as some of the corporate practices at franchisor Krispy Kreme Doughnuts, Inc. (including a one-time requirement that franchisees build spacious and costly factory stores), are to blame for the franchisee’s financial troubles.
No Fraud at Jackson Hewitt
Following recent allegations from the Department of Justice and the Internal Revenue Service that several franchisees had engaged in fraudulent tax preparation activities, Jackson Hewitt Tax Service conducted an internal review and recently announced that none of its corporate employees were involved in any fraud. Former IRS Commissioner Fred Goldberg led the internal review and did not find any evidence that the tax prep chain’s corporate employees knew about the alleged fraudulent activities.
Muscovites and Mochaccinos
Residents of Moscow (aka Muscovites) in need of a mochaccino have a new menu: Starbucks has opened its first café in Russia, just outside of the capital city. The food menu at the Moscow Starbucks features traditional offerings like blueberry muffins, as well as dishes designed for the local market such as honeycakes and mushroom sandwiches. The coffee chain’s entrance into Russia follows the resolution of a lengthy legal dispute with a Moscow lawyer who claimed the rights to the Starbucks trademark and tried to sell the rights back to the Seattle-based company. A second Starbucks café is due to open later this year on Moscow’s historic Stary Arbat street.
New Details About the Sale of Applebee’s to IHOP
New details are emerging about the sale of Applebee’s to IHOP, first described in a July 18 Blog posting. See below. A proxy statement that Applebee’s International, Inc. filed in early September revealed that the Applebee’s board voted 9-5 to sell the company to IHOP Corp., with dissenting votes coming from top executives including the chief executive, chief financial officer and chairman and past CEO. The dissenters voted against the deal on the ground that the IHOP proposal of $25.50 a share was unfair to stockholders. The Applebee’s-IHOP deal still faces approval by the Applebee’s shareholders. If the deal does not close, Applebee’s will pay a $60 million breakup fee to IHOP.