Car rental firm goes Chapter 11

South Florida Transport, a Thrifty Car Rental franchisee in Lauderdale Lakes, filed for Chapter 11 protection Oct. 19 and is blaming its franchiser for its woes.

South Florida Business Journal
October 22, 2004

Car rental firm goes Chapter 11
John T. Fakler

South Florida Transport, a Thrifty Car Rental franchisee in Lauderdale Lakes, filed for Chapter 11 protection Oct. 19 and is blaming its franchiser for its woes.

A weak tourist season in January and March, followed by four hurricanes this fall and a contract dispute with the Thrifty franchiser in Tulsa, Okla., contributed to the company's demise, according to the law firm representing South Florida Transport in the proceedings.

Instead of working with South Florida Transport to help the company get back on its feet, Thrifty pulled the plug, cancelling the contract and withdrawing its cars, which were 1,150 of South Florida Transport's fleet of 1,600, said Dan Hardy, president of the franchise group of 10 stores filing the bankruptcy petition.

South Florida Transport has laid off close to 60 employees - about half of its workforce, said Hardy, who saw revenue peak at $15 million before the troubles began.

Negotiations with Thrifty to help with a financial reorganization outside of court broke down last week, he said.

"There is no litigation pending," said Kenneth B. Robinson, a partner and bankruptcy attorney with Rice, Pugatch, Robinson & Schiller in Miami who represents Handy and his partner, Alan Greenstein.
But Robinson, who filed the petition in U.S. Bankruptcy Court for the Southern District of Florida, alleges Thrifty's corporate office "used heavy-handed tactics" with its franchisee and was unwilling to renegotiate its debt.

"It's not unusual to have disagreements in terms of the relationship," Robinson said. "The goal is to reorganize, with or without Thrifty's cooperation or support."

Thrifty Rental Car Sales is a subsidiary of Tulsa-based Dollar Thrifty Automotive Group (NYSE: DTG), which operates more than 1,100 locations in 64 countries.

In August 2003, Dollar Thrifty announced its corporate operations subsidiary planned to buy most all the Thrifty Car Rental franchise operations in South Florida, which Dollar Thrifty said was the company's single-largest franchisee.

The South Florida operations at the time included in-terminal operations at the Miami, Fort Lauderdale and West Palm Beach international airports. Also included were 11 satellite locations in Miami-Dade, Broward, Palm Beach and Monroe counties.

As part of a 1997 corporate expansion plan, Thrifty Car Rental reopened locations in Miami and Fort Lauderdale, the third-largest U.S. car rental market.

Thrifty's Caribbean and Latin American headquarters is in Pembroke Pines.

Dollar Thrifty spokesman Jason Logan said the company's policy is not to comment on litigation or bankruptcy matters.

The reorganization petition lists South Florida Transport as having assets of $75,000 and debts at $8.6 million. Thrifty has an unsecured claim of $3 million.

"We've had some conversations with other franchisers," Hardy said, noting that only a few companies, such as Payless, have franchises available in South Florida.

Most don't have the power to get fleet financing and good insurance deals or lack the infrastructure to take reservations or connect to the Internet, a must in today's rental car marketplace, he said.

"If you don't have the Internet, you might as well be out of business," Hardy said. "It's a very competitive environment."

Hardy, who ran locations in areas hit hard by the recent hurricanes, said the bad weather "killed us."
"They all got hit hard," he said. "Every storm. We were shut down for a period of time and lost revenue. Since August, I don't think we had a full force running up until the first of October."

But Thrifty just wanted the cash, no excuses, he said.

Hardy said he remained current with most of his financial obligations to Thrifty through June, and managed to stay within the guidelines of the franchise agreement.

"When the hurricanes came and business stopped it just shut down," he said. "We told them [Thrifty] we needed help, would you take our debt and restructure it?"

Hardy said in addition to building up the Miami-Dade and Broward locations, he revitalized the West Palm Beach office and built it up to 1,500 cars, garnering it the distinction of a "model office" by the company.

"They wanted more money, a large infusion of cash and we just don't have it," he said.

"We didn't get any slack," Robinson said. "Dan [Hardy] has been in business 30 years and knows how to run a car rental business. We will get through this and this company will survive. That's the goal here."

E-mail Senior Reporter John T. Fakler at moc.slanruojzib|relkafj#moc.slanruojzib|relkafj


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