Garden Grove, California--Officials at Shakey's Inc. are blaming two franchisee lawsuits for its inability to pay creditors and for recent corporate cutbacks, including slowdowns in the chain's overhaul campaign and the layoff of its director of operations. The pizza chain's statement of blame was made as some franchisees and former employees shed light on Shakey's recent internal debate about whether bankruptcy protection from creditors was the only solution to its legal and financial challenges. Comments by creditors and former executives have indicated that the company is past due on bills running into the hundreds of thousands of dollars.
Two separate lawsuits filed by franchisees in California seek millions of dollars in damages and allege, among other things, breach of contract, fraud and negligent representation. One of the suits could go to trial within a few weeks. -Nation's Restaurant News