Carl Karcher’s Private Deals and Public Fight : Management: Carl’s Jr. founder, restaurant chain board opponents go on the attack in letters to potential supporters.
The war of words between Carl N. Karcher and the fast-food chain he founded 52 years ago escalated Friday, with both sides posting letters to potential supporters.
Karcher wrote to franchisees who operate about 240 of the 650 Carl’s Jr. locations that company President Donald E. Doyle Jr. had a simple reason for supporting Karcher’s ouster as chairman two weeks ago. Doyle, Karcher said, wants to “take control of Carl Karcher Enterprises . . . to get rid of and discredit anyone and anything that threatens his position at the company.”
“He thinks of me of his Number 1 threat,” Karcher wrote. “He has booted me from the chairmanship, attacked my character and then even tried to humiliate me by barring me from my own office without a security escort.”
Karcher has not returned to the company’s Anaheim headquarters since Oct. 1, when the board replaced him as chairman and replaced him with longtime director Elizabeth A. Sanders. “He doesn’t want to go through the humiliation of, after 52 years of service to the company, having to get a security guard to unlock his office,” Karcher spokesman Steve Fink said Friday.
Karcher says he will fight to regain control of the company. At the same time, he is trying to solve personal financial problems generated by a string of investments that have gone sour.
On Thursday, Karcher turned over 641,000 shares of Karcher Enterprises stock to four Orange County businessmen who paid off a delinquent $4.8-million personal loan to Karcher by Commercial Center Bank.
That deal allowed Karcher to concentrate on protecting 3.98 million company shares that he used to secure a $25.1-million Union Bank loan that is now in default. Negotiations continued most of Friday with Union Bank, Fink said.
Karcher’s letter to franchisees reiterated his belief that franchisees and shareholders alike would benefit if the company agrees to test-market GB Foods’ Mexican-style fare at a handful of Carl’s Jr. locations. The Karcher Enterprises board last summer rejected that proposal, saying it offered no benefits to most shareholders.
In his letter Friday, Karcher described the test is a “bold, new innovative idea to jump-start sales.” He also told franchisees that GB Foods President William Theisen has agreed to cover the costs of testing the Green Burrito-brand products at 10 Carl’s Jr. restaurants.
Karcher Enterprises board members Doyle, Sanders, Kenneth Olsen, Peter Churm and Daniel W. Holden fired another salvo against Karcher, however, telling shareholders in a letter that they gave the Green Burrito proposal a “substantial” review before turning it down.
The board members said they reviewed Karcher’s proposal, even though it was not accompanied by “the substantiation routine to professional business proposals.”
According to the letter, the firm’s founder was removed as chairman because his continued presence created a “disruptive and uncertain atmosphere.”
The letter was not signed by either Karcher or his son, Carl L. Karcher, both of whom are members of the board.
According to the letter, Karcher rejected an offer to remain as chairman emeritus with an annual salary of $400,000 for five years. The company also offered to help ease Karcher’s financial distress by purchasing $16 million in stock from him, the letter stated.
Fink said Friday that the proposed compensation package “declined steadily” to $250,000 annually over the five-year period. “I think it’s significant that Don Doyle omitted that in his letter to shareholders,” Fink said. “It’s typical of the way he bends facts to suit his own purposes.”
