Bennigan’s: Franchise Owners Shocked by Bankruptcy, Closings
July 31, 2008 by Sean Kelly
Filed under Business
(FranchisePick.Com) Related: Bennigan’s Files For Bankruptcy, Closes Company Locations
Larry Briski, president of the Franchise Operators Association for Bennigan’s, was taken by surprise Tuesday morning by reports that Bennigan’s parent Metromedia Restaurant Group was shuttering company stores and declaring bankruptcy in order to to liquidate its assets and shut down, citing $550 million in assets and about $150 million in debt.
According to an article in the Post-Tribune, franchisee Briski learned more on a conference call tuesday afternoon.
Briski said a Tuesday afternoon conference call with company officials affirmed Bennigan’s name and franchise operation would be sold to an Atlanta-based company. The firm, he said, is in the restaurant business and plans to continue the Bennigan’s franchise.
“This will assure us we will have longevity,” Briski said.
He said the new owners will do what it takes to build the brand. He does not anticipate major changes in the franchise operation but does expect to see better marketing and more innovative menu items.
“This is a very good thing for the franchisees,” he said.
…After meeting with corporate officials on several occasions, he said it was his understanding the company would close some underperforming corporate units.
“I was surprised by what they did today. I thought I was more or less in the loop,” he said.
Franchises that remain open still have access to franchise support, such as menu items, purchasing and the supply chain. Briski said his franchises will also welcome corporate coupons.
Briski said he wants to make sure customers understand only the corporate-run Bennigan’s restaurants have closed. “We are open,” he said.
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What I think is that a) the franchisor is not bankrupt, b) the trademarks were assigned, and c) the landlords of those restaurants are some annoyed to be dealing with mountains of rotting food that the cannot deal with!
I work for a company that manages and tracks gift cards and I’ve been following retailers filling for bankruptcy. Ponderosa and Bonanza are still accepting Metromedia gift cards. I’m not sure about franchise owned Bennigans’s. My advice? Go spend your gift cards, we simply do not know how long they will be accepting them. Don’t forget The Sharper Image incident: $25m in unused gift cards.
-Also, you can file a claim. Call this number for more details: 1-800-727-8355 and press 2
Michael:
Are you suggesting that the franchisor was going to sell anyway and this is just a way of casting off that which the buyer did not want to pay for?
Is this sort of like the Roy Snowden philosophy “The assets I shall sell, the rest can go to…”
Sean, this is just a standard way of doing business which foreign to most individuals who think that there is some integrity to paying all your bills.
S&A Restaurant had all their corporate stores individually incorporate.
In the 40 store bankruptcy, we will find all the locations that are crappy.
Just one more thing to look for in your pre-investigation due diligence checklist. Corporate stores individually incorporated means franchisor has plans at some time to shut them down individually.
Do you think that some of these stores took an a whole lot of debt recently – for items that went to other non bankrupt stores?
Jest asking
There is a golden opportunity for Mr. Briski and the FOA to offer franchises and financing for new franchisees. Why not buy up the corporate-owned locations and re-open? You could re-tool to your specifications, update the image, and bring in the “right” kind of people, whatever would benefit the brand value. Especially for current owners. Bennigan’s Corporate office did a disservice to the current independent owners. My local restaurant closed, taking with it my wife’s favorite MonteCristo sandwich. The rallying cry: “Save the MonteCristo!”
mdcnet1@gmail.com
So, what will happen to the deep fried Monte Cristo sandwiches?
In all seriousness, what does the above article mean to the franchisee’s?
This looks a little complex, especially considering bankruptcy changes everything!