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Denny's Acts to Increase Black-Owned Franchises : Restaurants: The chain's parent firm makes a deal that could involve up to 47 outlets in New York and New Jersey.


Six months after agreeing to pay $45 million to settle discrimination charges, the parent of Denny's Restaurants said Tuesday that it has a deal with a black-owned company to acquire several Denny's franchises.

Atlanta-based NDI Inc., which currently owns and operates 23 Blockbuster Video Stores, will acquire or develop as many as 47 Denny's restaurants in New York and New Jersey over the next six years, said Flagstar Cos., Denny's Spartingburg, S.C.-based parent.

NDI said it will purchase 17 of Denny's company-owned restaurants this year. It has rights to purchase another five in 1995 and plans to build 25 new restaurants in the two states over the next five years.

Flagstar said the franchise agreement with NDI fulfills a commitment it made to the National Assn. for the Advancement of Colored People last year to increase the number of minority-owned Denny's across the nation.

Flagstar faced a firestorm of criticism from the NAACP and others in the past two years over thousands of claims by black customers who charged that personnel at Denny's restaurants offered inferior service to black customers and had policies to discourage black customers.

Many of the customer lawsuits were filed in California. Denny's currently has only one black-owned franchise in California, according to a Denny's spokeswoman. The company has more than 50 minority-owned restaurants across the country, including many owned by Asian Americans in California, the spokeswoman said.

In May, Flagstar settled with the U.S. Justice Department, pledging to end discrimination and increase minority hiring and also to increase the number of minority franchise owners.

"This is a major step for Denny's in meeting and, in fact exceeding, our commitment to increasing African American franchisees," Denny's President C. Ronald Petty said.

Denny's spokeswoman Karen Randall said the company has made good progress in recruiting African American franchisees, noting not only the agreement with NDI but also a so-called fast-track program that the company has developed to assist 15 new minority candidates in acquiring franchises.

Before the agreement was reached, Petty said Denny's had plans to take the number of restaurants owned by blacks from two to 22 and that its black management hires rose by 56% last year.

Earl Norsworthy, the only black Denny's owner in California, said that he and his Carson-based restaurant have received a lot of support from Flagstar and from black customers, who have been largely responsible for increased sales.

"I think they've got a good group," Norsworthy said of the company, "and they've certainly gone out of their way to help me."

NDI board member Richard Venegar said his company entered into the agreement solely because it represented a good business opportunity.

"We looked at this purely from an economic standpoint," Venegar said. "We're not doing this because we feel a social obligation to alleviate their problems."

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