Waffle House Inc.’s franchisees are being scattered, smothered and covered by the economic downturn.
For the second time in less than a month, a large Waffle House franchisee has filed for bankruptcy. This time, it’s the restaurant’s largest franchisee.
Northlake Foods Inc. filed for Chapter 11 on Monday in U.S. Bankruptcy Court for the Middle District of Florida, listing estimated assets and liabilities each of between $10 million and $50 million. Trenam Kemker partners Roberta Colton and Lori Vaughan in Tampa are bankruptcy counsel to Northlake, which is headquartered in Brandon, Fla.
In a court filing, Northlake attributed its bankruptcy filing to a decline in sales due to “current economic conditions.” Northlake also said its costs have risen because of the recent increase in the minimum wage. Northlake said it had 2007 sales of about $88 million.
On Aug. 25, SouthEast Waffles LLC filed for bankruptcy in Nashville, Tenn. SouthEast Waffles operates about 100 Waffle Houses in Tennessee, Alabama, Mississippi and Kentucky. Northlake operates 146 Waffle Houses, more than half of which are in Florida with the rest in Georgia and Virginia, according to a court document.
Northlake said it was forced into bankruptcy when Waffle House attempted to terminate its franchise agreement, according to a court docu
ment. Northlake said it received from Waffle House a final notification of termination on Monday and that Northlake filed for Chapter 11 at 3 p.m. on the same day.
Northlake listed Waffle House as its largest unsecured creditor, owing the Norcross, Ga. company about $551,580. Northlake said its largest secured creditor is Bank of America, which is owed about $9.7 million.
As in the SouthEast Waffles case, DLA Piper partner bankruptcy partner Philip Martino in Tampa is representing Waffle House in the Northlake case. DLA Piper litigation partner Lonnie Simpson, also in Tampa, is joining Martino on the Northlake case.