A legal dispute between Pizza Hut Inc. and southern Louisiana's primary franchisee for the brand, has resulted in the closure of 44 restaurants in the New Orleans and Baton Rouge areas.
Franchisee Lundy Enterprise's store closures arose from difficulties in transferring 44 Pizza Hut restaurants out of its ownership and a statement by defendant Larry Lundy said "The stores will remain closed for the foreseeable future," and Lundy Enterprises is optimistic that the Pizza Hut stores will become operational again with the assistance of the justice system." Pizza Hut Inc. fired back with a statement that said the restaurants will be closed for good, but that the company will be building new restaurants in southern Louisiana and will invest $10 million in the project over the next 18 months.
The rift between Pizza Hut and Lundy Enterprises stemmed from old disputes and a new agreement to sell Lundy's Pizza Hut assets and terminate its franchise agreement. A Pizza Hut subsidiary later agreed to buy Lundy's restaurants, but the deal fell apart because Lundy Enterprise's debts outweighed the value of its assets. Pizza Hut cut ties with Lundy and the purchase agreement was abandoned. Pizza Hut is now seeking damages from Lundy's use of Pizza Hut trademarks past the franchise termination date.
Lundy Enterprises got hitched to Pizza Hut way back in the early 80's and at one point the franchisee owned over 60 Pizza Hut stores in the area. Looks like a divorce is imminent, but only time will tell who will be getting the alimony payments in this split.