In Georgia and across the country, many people “love that chicken” served at Popeye’s fast-food restaurants. The chain has approximately 3,000 locations across the country, but the mysterious closure of 16 Central Georgia outlets led to confusion and disappointed among patrons and community members. Now, a lawsuit between franchise owners has provided some insight as to what happened.
According to a complaint filed in Florida, Sailormen, Inc. agreed to sell the Popeye’s franchises to Tar Heels Spice, Inc., in a deal that included obligations for the buyer to cover certain costs, including rent, before the transaction closed. The lawsuit states that Tar Heels Spice set aside $1 million to cover these expenses. However, Sailormen alleges that the funds were not made accessible to them, leaving them unable to pay the agreed-upon costs.
Sailormen also claims that Tar Heels misused a portion of the reserved funds for other purposes. While Sailormen initially stepped in to cover the rent for four months, they ceased making payments in April 2024, citing Tar Heels’ failure to fulfill its financial obligations. Ultimately, the deal fell through, with Sailormen unwilling or unable to pay rent on the Central Georgia restaurants.
Franchise-related transactions and other deals can trigger business litigation claims when there is ambiguity or lack of compliance with contractual obligations. Arrangements by which one party promises to cover expenses while an agreement is pending are often not very well defined. Allocating and accessing escrowed funds, as seen in this case, can be a sticking point that derails transactions. Likewise, bigger a business deal gets, the more possibility there is for potential conflict.
The lawsuit between Sailormen, Inc., and Tar Heels Spice, Inc., illustrates how financial disagreements and contractual breaches can escalate into costly litigation. Business owners engaging in significant transactions should seek legal guidance to ensure that agreements are clear, obligations are met and financial safeguards are in place. As soon as a question about lack of performance arises, you should contact a seasoned commercial litigator.
At The Reddy Law Firm, P.C., we represent Georgia clients in all types of business disputes, including contract claims, employment-related actions and disagreements that rise between fellow partners or shareholders. Please call 678-629-3246 or contact us online to discuss your situation with an accomplished attorney. Our office is in Alpharetta.
