Giordano's settles royalty dispute with franchises

The trustee for Giordano's Enterprises Inc., the owner of Chicago's World Famous Stuffed Pizza, announced that he quickly settled most disputes with franchisees who were on what the trustee called a “royalty strike.”

In a statement yesterday, the trustee said that all franchisees are now purchasing supplies from “the approved supplier.” Although he said “certain issues” are unresolved, he expects to have everything settled in 30 days.

On June 27 the trustee sued about 30 franchisees to prevent them from interfering with sale efforts by refusing to pay royalties. He contended the franchise operators were trying to force a sale at a price below market.

The pizza maker filed to reorganize in February. The Chapter 11 trustee was appointed in May after Giordano's fired its bankruptcy lawyers and hadn't paid $47,450 in fees owing to the U.S. Trustee system.

Giordano's filed in Chapter 11 with six company-owned stores and joint ventures for four more. In addition, 41 stores are operated by franchisees or a joint venture. The company owns the real estate for 20 of the stores.

Fifth Third Bank was owed $45.5 million on two loans, court papers said. The business was acquired in 1988 by the Apostolou family.

The case is In re Giordano's Enterprises Inc., 11-06098, U.S. Bankruptcy Court, Northern District Illinois (Chicago).