Ground Round Franchisees Enter into Agreement to Acquire Chain's Franchise Rights in $4.85 Million Transaction

…the Ground Round Franchisee Council has entered into an agreement to acquire the chain's franchise rights and will form a new, cooperatively owned franchise operation - one of the few of its kind ever created.

www.business.com
June 25, 2004

Ground Round Franchisees Enter into Agreement to Acquire Chain's Franchise Rights in $4.85 Million Transaction
Franchisees to Form One of the First Cooperatively-Owned Franchisors

PHILADELPHIA - (BUSINESS WIRE) - June 25, 2004—In a transaction valued at $4,850,000 and other consideration, the Ground Round Franchisee Council has entered into an agreement to acquire the chain's franchise rights and will form a new, cooperatively owned franchise operation - one of the few of its kind ever created. The sale is subject to the approval of the United States Bankruptcy Court for the District of Massachusetts, which has maintained jurisdiction over the Ground Round bankruptcy cases since their filings on February 19, 2004.

In a separate auction, the results of which had been previously announced, the Ground Round sold 26 of the 59 Ground Round locations that had been owned by The Ground Round, Inc. Members of the Franchisee Council operate an additional 73 Ground Round locations around the United States.

These individually owned locations have continued to operate and serve their customers despite the Chapter 11 filing by Ground Round. They will continue to be independently owned restaurants, even though their owners will be part of the new entity that will own the Ground Round franchise rights.

The purchase price includes $4.85 million in cash. The transaction includes mutual releases of claims by franchisees and the Ground Round.

The proposed sale and settlement was filed with the Bankruptcy Court on June 18, 2004. A hearing has been scheduled for July 7, 2004.

Craig R. Tractenberg, Partner, Nixon Peabody LLP, is the franchise partner advising the Ground Round Franchisee Council. Richard C. Pedone, Partner, Nixon Peabody LLP, is the bankruptcy partner providing advice to the Ground Round Franchisee Council.


Risks: Independent franchisee association, Franchisees move to buy system, Cooperatively owned franchise system, Bankruptcy, When the franchisor tanks, so does the franchisee, United States, 20040625 Ground Round

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