Karcher Keeps Arizona Branches in Family

Carl Karcher Enterprises, which had announced that it would sell or close its 40 Carl’s Jr. restaurants in Arizona, has found a way to keep things in the family.

Frank Karcher, youngest brother of the chain’s founder, said Wednesday that he has bought the franchise rights for a dozen of the Tucson outlets. He will step down as vice president of franchising for Carl Karcher Enterprises, a position he has held for the last five years, to run the Tucson operation.

The purchase price and financing details were not disclosed.

In April, Karcher Enterprises acknowledged that it had lost $5 million in Arizona during the previous year and announced a plan to convert its outlets there into franchises or to close them. Seven restaurants in greater Phoenix and two restaurants in Tucson were closed, said Patricia Parks, a company spokeswoman.

Another 19 restaurants were sold as franchises to former Karcher employees in May. Frank Karcher’s purchase of the dozen outlets in Tucson completes the restructuring, Parks said.

Karcher said he hopes that on-scene management and community involvement will turn business around. He plans, for example, to sponsor school athletics and achievement awards and to offer support for senior citizens’ events.

He also wants to open five or six more outlets within the next 10 years.

It costs $800,000 to $1 million to start an outlet, he said.

Douglas Christopher, a food industry analyst for Crowell, Weedon & Co. in Los Angeles, said the independence of a franchise could help Carl’s Jr. compete in the Tucson market. Because of the area’s weak economy, the market is highly competitive and price sensitive, and requires close surveillance.

“They are selling to an operator who can operate in that market,” he said.

Karcher, who started with Karcher Enterprises 35 years ago as a cook, worked in Tucson when the company opened its first outlets in the state in 1983. He is one of four brothers in the business; the others are Carl, who is chairman and chief executive; Donald, president, and Bernard, who operates another franchise.

Two of Carl’s sons, Joe and Carl Leo, also run franchises, Parks said.

More than 550 Carl’s Jr. outlets--owned, operated, franchised or licensed by Karcher Enterprises--are in California, Arizona, Nevada, Oregon and Japan.

Frank Karcher said he and his wife, Luci, have moved to Tucson with two sons, who are planning to work with the franchise. He said their enthusiasm for the new venture was not smothered by Tucson temperatures, which have reached 118 degrees this week.