Restaurant Dispute Over : Butterfield S&L; Settles With Love’s Franchisees
In an effort to mend fences and cut expenses, officials at Butterfield Savings & Loan Assn. in Santa Ana said Tuesday that the S & L has settled a dispute with a group of franchise holders in its Love’s restaurant chain and has turned over management of about 4,000 real estate properties it owns to a Washington state company.
The settlement of the restaurant dispute will mean the S & L’s Love’s Enterprises Inc. subsidiary in Brea is a “cash-positive operation,” said Ronald C. Mesker, president and chief operating officer of the chain of 26 barbecue restaurants. He would not say what “cash positive” meant.
The chain’s losing operations over the past few years contributed to the collapse of Butterfield, which federal regulators declared insolvent and took over last August. The regulators turned the operation of the S & L over to a management team from Downey Savings & Loan in Costa Mesa.
Meanwhile, Butterfield on Monday laid off the first “eight or nine” of 40 employees that it expects to cut from its payroll over the next three months as it turns over management of its far-flung real estate interest to Property Management Services Inc. of Vancouver, Wash., said Ann Bacon, Butterfield’s executive vice president and chief operating officer. She also is a senior vice president at Downey.
New Property Management
Most of the properties are apartment buildings in the Pacific Northwest and Texas but also include hotels in Florida and Minnesota. All the properties eventually will be sold, Bacon said. In the interim, PMSI will manage the real estate for an average 5% of gross income, less than what the operation was costing Butterfield with an in-house staff, she said. PMSI also will manage 62 real estate limited partnership syndications.
At Love’s Enterprises, Mesker was able to settle differences with 12 operators of 14 franchises who had been withholding royalty and equipment payments since April, 1985, after five years of mounting complaints of poor service. Butterfield had purchased the chain in 1983 from IHOP Corp. in North Hollywood, owners of the International House of Pancakes. Four of the 26 restaurants are company owned and operated, and the rest are franchises.
Settlement Details
As part of the settlement, reached verbally in January but only put in writing and signed recently, the franchisees paid $200,000 in equipment fees and an unspecified amount of royalties, said Mesker, who would not reveal the amount of royalties. They also agreed to contribute 2% of their sales to a cooperative advertising venture.
Love’s waived an unspecified amount of royalty payments and promised to help develop new menus, provide research and development, provide more frequent consultations and start a marketing and a radio-television advertising campaign on April 18.
“It was a fair and reasonable settlement and one that I think all parties are happy with,” said Mesker, who ran Love’s from 1973 to 1979 and was brought back last September by the new Butterfield team.
