Pioneer Take-Out Corp.--the Los Angeles-based fried chicken chain that filed for bankruptcy--has received a buyout offer from a group affiliated with a chain of recreation centers, it was announced Thursday.
The offer is the latest attempt to salvage the ailing franchise operation, which lost sales to competing fried chicken chains and has been sued by disgruntled franchisees.
A previous effort to sell Pioneer collapsed early this year when a group of investors who briefly took control of the 200-store chain was ousted by founder H. R. (Rick) Kaufman, who later forced Pioneer into bankruptcy.
Making the latest offer for Pioneer is Woodland Hills-based Intercoastal Properties Inc., a subsidiary of a Canadian company owned by Ira L. Young. Young is chairman of Malibu Grand Prix, a chain of 39 family recreation centers that often feature miniature auto race tracks. Last week, Young offered to buy the 41% of Malibu he does not already own for $4.63 million.
The dollar value of Intercoastal's offer was not disclosed. Intercoastal officials were not available for comment.
Intercoastal said its offer to purchase the chain has been approved by committees of Pioneer franchisees and unsecured creditors. The agreement must be approved by a bankruptcy judge. Intercoastal executives plan to present their case before the judge next month.
The offer is welcome news for weary Pioneer franchisees. A group of franchisees has sued Pioneer and Kaufman, claiming that Kaufman had provided fraudulent information to sell them franchises and inappropriately used money from Pioneer to finance his other investments. Kaufman has denied the claims.
New Ad Campaign
Kaufman, who founded the chain 27 years ago, agreed to sell the chain late last year to a group of investors headed by former state Assemblyman Terrence P. Goggin.
But after a dispute over payments, Kaufman locked Goggin and his group out of Pioneer's offices. Soon afterward, Pioneer filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
Since then, Pioneer has been operated by a crises management firm--Mellert, Hankin Inc.-- appointed by a court trustee. "The franchisees are feeling much better about their future prospects," said Tom Wheelock, a partner with Mellert, who has acted as Pioneer's interim president.
Royalty fees contributed by the franchisees paid for a Pioneer television and radio advertising campaign that made its debut on June 28--the first Pioneer ads to appear within a year, Wheelock said.
"We're really excited about it," Wheelock said. "Sales have increased significantly."
For some tired franchisees, the possibility of new owners and improved sales raises hopes they may find buyers for their stores.
"I put everything I own on the line to get this franchise," said one Los Angeles Pioneer franchisee who declined to be identified. "When things start flying again I plan to sell out. I wouldn't buy another one."