Denny’s Signs Pact Assuring Minority Hires : Discrimination: Parent firm reaches agreement with NAACP following charges that blacks were denied service.

In the wake of charges that it has been guilty of racial discrimination at several of its Denny’s restaurants, the chain’s parent company on Thursday signed an agreement with the NAACP pledging to hire and promote minorities and increase purchases from minority-owned businesses.

The value of the “fair share” agreement, which includes direct financial benefits for minority workers and franchise owners as well as anticipated indirect opportunities for minority entrepreneurs, was estimated at more than $1 billion over the next seven years.

NAACP leaders and executives of Flagstar Companies Inc., the Spartanburg, S.C.-based company that owns Denny’s and other food service firms, announced the deal at a news conference at the NAACP’s Baltimore headquarters.

“This billion-dollar package will set a standard for future relations between the civil rights movement and corporate America,” the Rev. Benjamin F. Chavis Jr., executive director of the NAACP, said in a statement.

Jerome J. Richardson, Flagstar’s chairman and chief executive, said the pact should put to rest any questions about his company’s commitment to equal rights.

“The partnership we began working on 18 months ago and have signed today with the NAACP is a loud and clear signal that Flagstar does not tolerate discrimination, that all people are welcome in our restaurants and that we are building a culturally diverse company,” he said in his statement.

After their morning appearance in Baltimore, Chavis and Richardson flew to an afternoon news conference in Charlotte, N.C., where NAACP officials announced their support for Richardson’s efforts to win a National Football League expansion franchise for the Charlotte Panthers.

The NAACP’s decision to back Richardson’s bid for the football team revealed a split in the usually united civil rights facade. It also drew negative reaction from attorneys representing clients who are suing Denny’s for racial discrimination.

The efforts of Richardson Sports, a Flagstar subsidiary, to purchase a football franchise have been challenged by the Rev. Jesse Jackson, who has picketed Denny’s restaurants. Jackson has said the repeated charges of racial discrimination at Denny’s raise questions about whether Flagstar should be allowed to own an NFL franchise.

In a June 17 letter to NFL Commissioner Paul Tagliabue, Jackson noted that Denny’s was set to sign a consent decree to end discriminatory practices at its California restaurants on the same day that seven black Secret Service agents allegedly were denied service at a Denny’s in Annapolis, Md.

“Could the irony be any greater?” Jackson asked in his letter. “I think the people of Charlotte are deserving of an NFL team . . . but whether this is the right ownership group . . . is another question.”

Under terms of the agreement, Flagstar will create 325 new management positions, at an average annual salary of $42,000, in its 2,000 restaurants nationwide. The company promised to grant minority ownership to at least 53 of its restaurants by 1997.

Additionally, Flagstar said it will spend 10% of its marketing budget with minority-owned media, 12% of its purchasing budget with minority firms and 15% of its professional services--such as banking, accounting and legal activities--with minority firms.

Officials from the NAACP and Flagstar also agreed to participate in a jointly administered random testing program to ensure that all customers are being treated fairly.

Attorneys representing the plaintiffs in two separate discrimination suits said the NAACP agreement with Flagstar does nothing to change their complaints that Denny’s discriminated against their clients.

“We are going to go forward to find the real scope of the problems at Denny’s,” said Teresa Demchak, an attorney representing plaintiffs in the California suit. “The agreement they struck with the NAACP does not allow for relief for those injured by the discriminatory practices at Denny’s.”

John Relman, an attorney for the Washington Lawyers Committee, which is representing the Secret Service agents, was more blunt. He said the company may have sought an agreement with the NAACP to improve its chances to win a football franchise.

“I find it amazing that Jerry Richardson is willing to run around America and cut deals with third parties and has yet to sit down with the alleged victims of discrimination,” he said. “I think it is transparent what Jerry Richardson is doing and is not unconnected to his trying to get a football team in Charlotte, N.C.”

Flagstar, with 120,000 employees and $3.7 billion in sales in 1992, owns and operates Denny’s, Hardee’s, Quincy’s Family Steakhouses and El Pollo Loco restaurants. It also provides food concessions and services through its Canteen Company subsidiary. Until last month, the company was named TW Holdings Inc.

Officials at El Pollo Loco, which is headquartered in Irvine, declined comment on the settlement or any aspect of the Mexican-style, flame-broiled chicken restaurant chain’s hiring policies.

At Flagstar, spokeswoman Elaine Richner said the agreement with the NAACP is national in scope and that no information could be provided about the impact of the plan on a single part of the company’s holdings.

There are 19 El Pollo Loco restaurants and 27 Denny’s Restaurants in Orange County.

Times staff writer John O’Dell in Costa Mesa contributed to this report.