Shakey’s Settles Suit With Franchisees, Pizza Parlor Chain Seeks New President
By JENNIFER BELLANTONIO
Garden Grove-based Shakey’s Inc. has settled two lawsuits with disgruntled franchisees and is looking for a new president.
The pizza parlor chain reached agreement with two franchisees in June just before their suits were set to go to court, said Mick Clark, a plaintiff and president of Sterling Foods Inc. of Irwindale, which runs five Southland Shakey’s.
Clark declined to disclose terms of the settlements. But he said he and John “J.J.” McNulty, president of the Shakey’s Franchised Dealers Association who filed the second suit last year, will keep their restaurants in the Shakey’s chain.
Clark and McNulty, who operates an El Monte Shakey’s that’s been in his family since 1964, filed separate suits last year charging the pizza parlor chain with fraud and breach of contract, among other things.
The brouhaha had shaken things up at 70-unit Shakey’s, which said last year it planned to double the number of franchised parlors in the U.S. in the next five years, unveil new store prototypes and update its menu.
But plans were tabled.
Shakey’s officials said in May that the cost of fighting the suits dipped into its cash and put the planned expansion on the backburner.
Back then, Shakey’s president Sean Flynn wasn’t talking about making nice with franchises.
“No single franchisee, no matter how large or small, defines the future of this brand,” he said. “My job is to grow the franchise base by opening new stores. The silver lining to that particular cloud would be that we would get some very prime territories back, which we can refranchise.”
Flynn left the company soon after the suits were settled, Clark said.
Chin-Yong Wong, chairman of Inno-Pacific Holdings Ltd., Shakey’s Singapore-based parent, has assumed Flynn’s duties on a temporary basis, he added.
Calls to Shakey’s were not returned.
In the past franchisees have complained about management shuffle, with Shakey’s seeing 13 new presidents in about 14 years. Flynn, who was hired in 2001, was No. 13.
“Sean will probably be a scapegoat a year from now,” Clark predicted to the Business Journal in a prior interview.
Management woes are just part of the picture.
The company, which operated close to 400 U.S. restaurants at its 1970s peak, has closed troubled locations and struggled to lure new franchisees.
But things seem to be looking up, Clark said.
He said Shakey’s management has shown signs since the settlement that they will “move together with the franchise system more closely going forward into the future.”
“There are signs that the management style has turned around,” Clark said.
“It’s still early in the game yet and they’ve got significant obstacles to overcome but I think they’ve put themselves in a position now with a few key decisions to move forward in a positive manner,” he said.
