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Executives Say Fast Food Chain in ‘Crisis’

September 8, 1989

ATLANTA (AP) _ Three senior executives of Arby’s Inc. said Friday the fast food chain is in a crisis and called on the company’s owner and its new president to restore stability while dealing with a hostile buyout bid by a franchisee group.

The statement by the executives came three days after President Len Roberts was fired in a clash with Miami financier Victor Posner, the chain’s principal owner, over Posner’s refusal to consider the $200 million buyout offer.

Posner on Wednesday hired Manhattan restaurant baron Irving Riese to succeed Roberts, who enjoyed great popularity among the chain’s franchisees.

Riese’s appointment drew fire immediately from the AFA Service Corp., an organization owned by Arby’s 500 franchisees that holds marketing and advertising rights to the company trademark.

″We have a franchise system, or several major franchisees, in revolt. And we need to get back a stable business climate,″ said Russ Cooper, the chain’s executive vice president for franchising and development.

″We are asking our new president and owner to establish that as soon as possible,″ Cooper said by telephone from Arby’s headquarters in Atlanta.

Cooper joined Frank Belatti, executive vice president for marketing, and Kam Nassar, executive vice president for finance and administration, in issuing a statement Friday pledging to employees and franchisees that they will ″ultimately resolve the current crisis.″

″After speaking with Mr. Riese, the AFA board and many groups of employees, it is clear - everyone is very much interested in helping to keep this great company moving forward, despite the differences which existed,″ the statement said.

Cooper said the company’s problems have resulted in a ″questionable investment climate″ that could hurt the company’s growth.

Meanwhile, Posner released a letter to franchisees maintaining he would not sell the company, which he acquired in 1984 as part of Chesapeake Financial Corp.’s $400 million purchase of Royal Crown Companies Inc. Posner controls DWG Corp., which owns 60 percent of Chesapeake.

The 2,100-restaurant chain had total revenue of $153.8 million and an operating profit of $20.7 million last year.

R.B. Partners Ltd., a group of franchisees operating more than 500 Arby’s restaurants, wants to buy out the chain, contending that Posner’s legal and financial difficulties threaten the company’s future.

Posner pleaded no contest two years ago to federal income tax invasion and was sentenced to five years probation on the condition that he pay all his back taxes, penalties, interest and court costs. He also was ordered to create a $3 million fund for the homeless.

A spokesman in New York for R.B. Partners said Friday the group is continuing its effort to gain control of Arby’s.

″Victor Posner’s statement has to be taken in view of his past actions,″ said the spokesman, who asked that he not be identified. ″We would assume he would naturally try to mollify the franchisees and then go about a divide-and- conquer strategy.″

Cooper, Belatti and Nasser signed a statement with Roberts earlier this week that was critical of Posner’s response to the R.B. Partners offer. That statement preceded the firing of Roberts.

Asked if their differences with Posner had been ironed out, Cooper said, ″We’ve all been asked to stay. We said we won’t abandon the franchisees or the employees.″

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