Perkins Restaurants in Bradford and in Olean, N.Y., will stay open despite a bankruptcy court ruling that other stores in the franchise must be “decommissioned,” according to a manager with the operation.
A stipulation and consent order was agreed upon Friday in U.S. Bankruptcy Court in Pittsburgh between franchise owners 5171 Campbells Land Co. Inc. and trademark owner Perkins & Marie Callender’s (PMC) LLC.
The court filing explained that Campbells became licensed in January 2018 to operate 27 Perkins restaurants, including the ones in Bradford and Olean. However, by May of 2018, Campbells had allegedly defaulted on the terms of the agreement by using unapproved products in the restaurants and failing to pay royalties and marketing funds.
The lack of payments led to the license agreements being terminated on June 5, 2018. A temporary licensing agreement was reached to allow for the continued operation of the businesses, but Campbells defaulted on that as well, the filing stated.
On June 3, 2019, PMC terminated the temporary licenses, saying Campbells owed more than $2 million, and told them to remove the Perkins name from its 27 restaurants. Campbells did not comply, the filing stated.
On July 8, Campbells petitioned for Chapter 11 bankruptcy protection. The two sides agreed to allow PMC to enter into lease agreements with other franchisees for the restaurants and to close 10 locations, including one in Warren. Campbells may continue to operate the 10 “decommissioned restaurants” as long as they are not similar to Perkins.
Paul Becker, regional manager with Campbells based in Northwest Pennsylvania, spoke to the Olean Times Herald on Friday evening. He said Campbells plans to continue operating “rebranded” versions of the 10 restaurants referenced in the filing.
Regarding the remaining 17 restaurants, the filing stated Campbells can continue to operate them until PMC enters into a new licensing agreement with a third party or until Aug. 10, whichever comes first.
Becker said the restaurants in Olean and Bradford would remain licensed Perkins restaurants. He said PMC would decide by the August deadline if the restaurants would become corporate-owned or if another franchisee would begin operating the locations.
On Friday afternoon, a manager at the Bradford Perkins said neither he nor the owners had any comment. The Perkins name was still on the exterior sign, and no apparent changes had been made with the menus or the restaurant’s interior.
The Olean Perkins on Friday was full of hungry customers. However, they were not offering gift cards, and a hostess who spoke to the Times Herald said the restaurant had stopped receiving its normal orders of pie.
Becker said those stoppages were part of the temporary licensing agreement PMC had with Campbells and should be reversed once either another franchisee or PMC itself begins operating the restaurant.
“Basically, the gift cards and the pies, those products will be back probably within the next week or two,” he said.
Becker added only 26 Perkins locations are currently operational, as one listed in Edinboro, Pa., was destroyed in a 2015 fire and had not yet reopened.
Becker said he has worked with Perkins Restaurants since 1982, starting as a cook at the Olean location. He related the current ownership changed in 2017, when court filings state Unique Ventures Group LLC, former licensee of 28 Perkins restaurants, filed for bankruptcy protection and Campbells submitted the best offer for those Perkins franchises.
“We’ve had a few different ownerships over the years, and that’s basically what this is. The product, everything is the same, it’s just who signs your paychecks is different,” Becker said.