Bankruptcy Puts End to Roscoe’s War With Franchisee
By CONOR DOUGHERTY
Staff Reporter
The Chapter 7 bankruptcy filing of its lone franchisee has brought to a close to a tumultuous chapter for Hollywood mainstay Roscoe’s House of Chicken ‘N’ Waffles.
Last month’s liquidation filing was made by Professional Business Network Inc., owner-operator of a franchised Roscoe’s Chicken ‘N’ Waffles in Carson and comes after a two-year legal spat with Rocab Inc., owner of the Roscoe’s brand.
The battle commenced in 1999 when PBN, founded in 1993 by four former Roscoe’s employees who intended to open a franchise in Washington, D.C., was sued by Rocab for alleged breach of contract.
PBN pulled back on the D.C. operation in favor of a smaller-scale design, called a “Cabin of Chicken ‘N’ Waffles” emphasizing take-out orders, in Carson. Rocab said in its filing that it agreed to the revised plan.
But, said Robert Cherry, the lawyer representing Rocab, PBN instead opened a full-scale restaurant, in violation of the franchise agreement.
Cherry said that prompted Rocab to file suit in November 1999, alleging, in addition to the unauthorized format, not using specified proprietary ingredients, improper employee training and menu selections inconsistent with Roscoe’s fare. Cherry also said PBN failed to pay royalties to Rocab.
“PBN was obligated to pay a royalty. In the 24 months they never paid a cent,” said Cherry.
Lawyers for PBN said Rocab, out to gain control of the Carson location, undermined the franchise effort.
“The franchiser would not provide (PBN) with support, including advertising and not providing the proper ingredients, which is why we contend the business failed,” said Ricky Ivie, a partner at Ivie, McNeill & Wyatt representing PBN.
“We contend there were several breaches of the franchise agreement, not the least of which related to the clear requirement that the parent company assist in the development of the new franchise and provide the ability for the franchisee to get established on a firm footing,” said Kendall James, another Ivie McNeill lawyer.
PBN responded to the Rocab suit with a counter complaint, filed in June 2000, contending that Rocab’s intention “was to allow PBN to expend more than $125,000 in developing a franchise site, then seek to take over the site by terminating the franchise agreement based on false allegations.”
The Chapter 7 filing, however, has put the litigation on hold.
Professional Business Network had $15,100 in assets and $201,859 in debts, according to the bankruptcy filing.
It’s unclear whether the legal battle will be the end of Roscoe’s plans for expanding by way of franchise operations. Jai Rich, one of Roscoe’s owners, declined to comment.
Roscoe’s House of Chicken ‘N’ Waffles, a venerable local eatery and destination for late-night partiers, was founded in Los Angeles in 1975. The first location opened near the corner of Sunset Boulevard and Gower Street, and Rocab has since opened up four other locations (not including the Carson): two in Los Angeles and one each in Pasadena and Long Beach.
Don DeBolt, president of the International Franchise Association in Washington, D.C., said the Roscoe’s case is far from unique.
“The initial suit usually includes (allegations of) failure to pay royalties and operating outside of the system standard those are typically the issues that come up.”
