In the aftermath of last summer’s closing of dozens of locations of the Bennigan’s Grill & Tavern chain, a legal fight has erupted between the new owners of the Bennigan’s name and former Bennigan’s franchisees. 

A team from Smith, Gambrell & Russell comprised of corporate lawyers and litigators is advising Bennigan’s Franchising Co., a private equity fund-controlled outfit that owns the rights to the Bennigan’s dining concept and plans to re-launch the brand later this year.

The roots of the dispute lie in last July’s bankruptcy filing by S&A Restaurant Corp., the former parent company of Bennigan’s and Steak & Ale. When S&A filed for Chapter 7 to liquidate its assets, it also shuttered about 240 company-owned locations of Bennigan’s and Steak & Ale.

But more than 100 franchisee-owned locations of Bennigan’s remained open, according to court documents. These franchisees secured an agreement through the bankruptcy court for the new owners of Bennigan’s to continue to provide marketing and other support services to their locations.

Therein lies the disagreement. Some of those 100 franchisee-owned locations feel that the new owner of the Bennigan’s name—the Smith Gambrell client, Bennigan’s Franchising—reneged on its promise to continue to market the Bennigan’s brand and support programs like a Bennigan’s gift card.

Shumaker, Loop & Kendrick partner Peter R. Silverman in Toledo, Ohio, representing a group of those franchisee-locations, sent a letter to Bennigan’s Franchising Co., saying it had defaulted on its obligations under its franchisor agreement, according to court documents.

Bennigan’s Franchising’s counsel, Smith Gambrell partner John Spillman, responded with a letter saying that the franchisees were to blame. Spillman wrote that Bennigan’s Franchising had abided by all its obligations; furthermore, the franchisees violated their end of the bargain by not paying royalty fees to Bennigan’s Franchising.

Bennigan’s Franchising followed up Spillman’s letter by filing a suit in federal court in Texas against the franchisees.

Smith Gambrell litigation partner Jason Bell and associate John Autry are working with Spillman on advising Bennigan’s Franchising. Lynn Tillotson Pinker & Cox lawyers in Dallas are local counsel to Bennigan’s Franchising.

Bennigan’s Franchising is owned by an affiliate of Atalaya Capital Management, a private equity firm with offices in New York and Atlanta.