It’s been a bad year for Jack-in-the-Box franchisee Kobra Associates, an operator of 70 Jack in the Box locations in California. And 2010 doesn’t look like it will get any better. In September, Kobra surprised corporate headquarters by suddenly shutting down all its restaurants. It turned out that Kobra owner, Abe Alizadeh, owed $1.5 million in back taxes. The restaurants were back in business a day later, with Kobra seeking Chapter 11 bankruptcy protection. Now, Kobra faces a federal sexual harassment suit. The suit, filed by the U.S. Equal Employment Opportunity Commission, claims that Kobra failed to act against one of its Jack in the Box managers who reportedly referred to women as “sluts” and “whores” and touched them inappropriately. One employee was forced to resign in order to escape the unwanted attention of the manager, the EEOC said. We don’t know what happened to the manager, but given Kobra’s history, he’s probably in line for a promotion.
Brown’s needs green. In other bankruptcy news, Illinois-based Brown’s Chicken & Pasta Inc. is seeking Chapter 11 protection. Under a new restructuring plan, it plans to shorten its name to just Brown’s and introduce a “new decor, new logo, and a new attitude.” New attitude? We don’t even want to know. The company has $500,000 in assets and more than $2 million in liabilities, so maybe the new attitude will be to make some money for a change. Brown’s also plans to sell its company-owned restaurants and focus on franchising. The company currently has 39 stores in its system, compared to about 150 at its peak.
Big bonus. Dunkin’ Donuts is offering huge bonuses to franchisees. The company will pay $25,000 to franchisees if they refer a new store owner who opens one to five locations, and $50,000 if they open more. Typically, franchisors offer $10,000 referral bonuses, so Dunkin’s offer is extremely generous. This is all part the company’s efforts to aggressively expand its brand. “This is big money,” one Dunkin’ franchisee told The New York Post. “They must be really desperate to grow.” No word yet on what Canadian rival Tim Hortons is offering Dunkin franchisees to convert their locations. Earlier in the year, a prominent franchisee in New York switched all 13 of its Dunkin’ Donuts stores to Tim Hortons.