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Friday, Jun 14, 2024

Restaurants– Taco Bell franchise firm files for bankruptcy

Thirty-four Taco Bell restaurants owned by a San Diego company went into default late last month. At the time, creditors were reportedly owed $33 million.

The restaurants are owned by Golden West Tacos, Inc., with franchise agreements set up with Golden West president, CEO and owner Karl James.

Golden West owns and operates 49 Taco Bell restaurants in San Diego County and outlying cities. It has been a franchisee since 1989.

The company filed a Chapter 11 bankruptcy proceeding in San Diego on Nov. 15, according to Luce, Forward, Hamilton & Scripps LLP, a local law firm representing Golden West.

A statement from Luce confirmed Golden West has been “struggling” over the past year. Sales revenues at some of Golden West’s Taco Bell locations have fallen, the firm said.

The company filed for bankruptcy to give itself a chance to solve its financial problems, according to Luce.

James was unavailable for comment.

Laurie Gannon, a spokeswoman for Taco Bell Corp. in Irvine, released a statement on the Golden West foreclosures.

“While I can’t comment on the financial situation of any one franchisee, we have, in fact, worked with Golden West Tacos over the course of the last year to try to help them improve their business situation,” Gannon’s statement read.

Taco Bell is “working to ensure that these restaurants remain open,” it later said. Taco Bell is owned by Tricon Global Restaurants, Inc.

The two companies are working “to create a stronger marketing strategy,” according to the Luce release.

According to County Records Service, a local foreclosure listing company, the beneficiaries of the loan are Greenwich, Conn.-based Franchise Mortgage Acceptance Co. and affiliates.

In a Nov. 8 letter to an employee of County Records Service, James’ attorney said the two companies have been trying to resolve the company’s financing issues with its creditors.

The letter also said that the financing problems were caused by a decline in sales that was not caused by operations.

Also, a franchise development agreement between Karl James, Golden West chief operating officer Victor Silva and Diedrich Coffee Inc. was terminated in September.

Irvine-based Diedrich announced the termination earlier this month in its first-quarter report.

In the agreement, first announced Nov. 16, 1998, James and Silva were to build and operate 50 Diedrich coffeehouses and an undisclosed number of carts and kiosks in San Diego, Palm Springs and Temecula.

James and Silva had planned to run the coffeehouses under a new operating entity, Rocket Enterprises, Inc., according to Diedrich.

Representatives from Diedrich would not comment further.


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