http://www.bluemaumau.org/frontpagestories en Franchisor Cosi Files Chapter 11 Bankruptcy http://www.bluemaumau.org/15483/franchisor_cosi_files_chapter_11_bankruptcy <!-- google_ad_section_start --><p><img alt="" src="https://c2.staticflickr.com/8/7278/13279758183_699c320657_c.jpg" style="width: 670px; height: 326px;" />Fast-casual franchisor and restaurant operator Cosi, Inc. [NASDAQ:COSI] announced today that it has filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court, District of Massachusetts.</p> <!--break--><!--break--><p>The company hopes to obtain bankruptcy court approval with a $4 million debtor-in-possession financing that it has obtained to keep it liquid during the bankruptcy process. The insolvent company&#39;s board of directors unanimously decided that Chapter 11 was in its best interests so as to continue business operations while the court supervises the sale of its business.</p> <p>Cosi has entered into a nonbinding <a href="http://www.investopedia.com/terms/t/termsheet.asp" target="_blank">term sheet</a> with its lenders, AB Opportunity Fund LLC, AB Value Partners L.P. and one or more entities affiliated with Milfam II L.P. The creditors have proposed to purchase substantially all of Cosi&#39;s assets. Subject to bankruptcy court approval, their bid would serve as a &quot;stalking horse&quot; in a sale process under Section 363 of the Bankruptcy Code. That is to say, theirs is could be a favorable bid, if the court approves, to prevent opportunists and low-ball offers for the company. The deal is non-binding.</p> <p>&quot;We worked very hard to avoid this step,&quot; said Mark Demilio, Cosi&#39;s chairman of the board, but added, &quot;The company cannot continue to operate in its current financial condition, and that the best alternative for the company and its creditors would be to accomplish a sale through the bankruptcy process.&quot;</p> <p>Notice of the proposed sale to creditors will be given to third parties and competing bids will be solicited. Cosi&#39;s board of directors will manage the auction process and evaluate the bids in consultation with independent advisors.</p> <p>The bankruptcy comes a month after struggling Cosi <a href="https://www.google.com/url?q=http://www.bluemaumau.org/15389/struggling_cosi_sacks_ceo_cfo_resigns&amp;sa=U&amp;ved=0ahUKEwjU3q21lLPPAhXi1IMKHQJDChQQFggFMAA&amp;client=internal-uds-cse&amp;usg=AFQjCNH_pHeW_3LmUhtPC6x2Wmv2opZMoQ">terminated then-CEO R.J. Dourney</a>. Its chief financial officer also left.</p> <p>Today Cosi&#39;s interim CEO, Patrick Bennett, reassured its creditors, &quot;Cosi&#39;s core business and franchise base remain intact, and we filed with the liquidity resources necessary to carry out the restructuring plan.&quot; Bennett added: &quot;We believe this process will allow the company to right-size its balance sheet, reduce its debt and focus on improving the business and stabilizing the brand.&quot; Prior to the Chapter 11 filing, Cosi closed 29 of its 74 company-owned restaurants.</p> <p>Despite now being a diminished network of restaurants with an uncertain future, the company also reassured franchisees that their businesses should not be affected.</p> <p>&quot;The 31 franchised locations are unaffected,&quot; stated the company.</p> <p>Upon reading this, one quick service restaurant franchisee outside the Cosi system told this journal: &quot;I always love how franchisors filing for bankruptcy tell their franchised outlets that they are unaffected.&nbsp;Bull s_ _t!&quot;</p> <p>The influential watcher of the industry, who wishes to be anonymous, asks, &quot;What&#39;s the value of those [franchised] stores right now?&quot; The multiunit restaurant owner explains that if a Cosi franchisee now wants to sell its restaurant, the value of his Cosi branded restaurant just tumbled in the last few hours after the announcement of the bankruptcy.</p> <p>The multiunit franchisee also points out that Cosi franchisees can immediately expect a fall in store support from their franchisor as the franchisor struggles with its own survival. &quot;We&#39;ve seen this scenario play out many times,&quot; says the franchisee. He also predicts that a number of vendors will likely drop out or demand cash-on-delivery from franchisees, even though their franchise is supposed to be independent of the franchisor&#39;s business.</p> <p>Cosi says it will appoint a chief restructuring officer within 10 days to oversee its insolvency process.</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/15483/franchisor_cosi_files_chapter_11_bankruptcy#comments Mergers & Acquisitions Wed, 28 Sep 2016 23:24:38 +0000 Don Sniegowski 15483 at http://www.bluemaumau.org Consumer Confidence Index Increases in September http://www.bluemaumau.org/15480/consumer_confidence_index_increases_september <!-- google_ad_section_start --><p>Consumer confidence has improved from August to September. The Conference Board&#39;s Consumer Confidence Index grew to 104.1 in September from 101.8 in August. It was 100 when it was created in 1985.</p> <p>The non-advocacy, not-for-profit researcher also reported that consumers&#39; outlook for the labor market was more upbeat in September than in August, with the proportion expecting more jobs in the months ahead increasing from 14.4 percent to 15.1 percent. That was buttressed by news that gloomy consumers who expect business conditions to worsen actually declined from 11.4 percent to 10.2 percent. However, the number of consumers who expect business conditions to improve paradoxically went down from 17.6 percent to 16.5 percent.</p> <p>&quot;Consumer confidence increased in September for a second consecutive month and is now at its highest level since the recession,&quot; said Lynn Franco, director of economic indicators at The Conference Board. &quot;Consumers&#39; assessment of present-day conditions improved, primarily the result of a more positive view of the labor market. Looking ahead, consumers are more upbeat about the short-term employment outlook, but somewhat neutral about business conditions and income prospects. Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead.&quot;</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/15480/consumer_confidence_index_increases_september#comments Trends Tue, 27 Sep 2016 17:03:16 +0000 Don Sniegowski 15480 at http://www.bluemaumau.org Fight for $15 Workers to Stage Protest during Presidential Debate http://www.bluemaumau.org/15479/fight_15_workers_stage_protest_during_tonight%E2%80%99s_presidential_debate <!-- google_ad_section_start --><div class="photoright"><img alt="" src="http://www.bluemaumau.org/sites/default/files/resize/092616_2057_Fightfor15W1-320x102.jpg" style="height: 102px; width: 320px;" width="320" height="102" /> <div class="caption">Low Wage Workers&#39; Protest (Photo: $Fight for $15)</div> </div> <p>NEW YORK - Thousands of workers from New York and beyond will wage a major protest at tonight&#39;s Presidential Debate at Hofstra University, demanding a $15 an hour minimum wage and union rights.</p> <!--break--><!--break--><p>The &quot;Fight for $15&quot; fast-food workers have vowed to walk off their jobs in advance of the debate between Democratic candidate Hillary Clinton and Republican contender Donald Trump, showing their strength in uniting with other low-wage employees, including child care and home health care workers, and airport and maintenance workers. Tonight&#39;s protest also comes as voters across America say that the minimum wage is a decisive factor in the 2016 election. The ongoing demonstrations have also brought in advocates for economic, racial, and social justice to show their support.</p> <p>A year ago, BuzzFeed News reported that a poll that suggested low-wage workers could make up a powerful new voting bloc&mdash;one motived to register in droves in upcoming elections if a candidate promises a wage hike. The national survey, commissioned by the liberal-leaning National Employment Law Project, asked nearly 2,300 workers making less than an hour &quot;how candidates&#39; positions on minimum wage and labor rights would affect their decision to participate.&quot; Of those who were not currently registered to vote, 45 percent said they would either definitely or probably register if there was a candidate supporting a $15 minimum wage and a union for all workers. Of all registered voters, 65 percent said they would be more likely to vote in the 2016 presidential election if there was such a candidate.</p> <p>On fast-food worker voiced his opinion this week. &quot;When I first went on strike nearly four years ago in New York, everyone thought we were crazy. $15 an hour was never going to happen, they said.&quot; The KFC worker from New York, who is paid $10.50 an hour added, &quot;But we kept walking off the job and raising our voices in the streets, and politicians finally responded to us. Now, we won $15 an hour in New York, California and cities across the country because governors, mayors, city council members, and others realized we&#39;re not going to stop until all workers win pay that allows us to support our families.&quot; The worker, Alvin Major, said he and others will be out there Monday to make sure that, as Election Day nears, candidates know that if they want their vote, they need to come get it.&quot;</p> <p>After New York elected leaders responded to the workers&#39; demands for $15 an hour, raising pay for nearly 3 million people, those workers across the Empire State are still fighting for the right to form a union without fear of retaliation. And while workers in New York, California and cities like Seattle and Washington, D.C. are on their way to big pay raises for low-wage employees, there are still 64 million people living in America who are not paid enough to make rent or put food on the table, Fight for $15 advocates state.</p> <p>Alicia Hamiel, a McDonald&#39;s worker from Philadelphia, who makes $7.75 an hour said, &quot;We need to bring this change to Philly, Kansas City, Houston, Boston, Phoenix, Miami, and every city in between, because no one who works hard should have to ask extended family for rent money, or rely on government assistance for food.&quot; Hamiel said that is why she is traveling for hours to tell candidates on both sides of the aisle that if they want workers&#39; support, they have to promise to take the lead in supporting $15 an hour and union rights.</p> <p>One terminal cleaner at JFK Airport rallied the troops this week, encouraging families, coworkers, and churches to join in the worker protests during the Presidential Debate. &quot;This year we&#39;re mobilizing because poverty wages won&#39;t fly in America, and we&#39;re going to use our power to elect candidates who are dedicated to creating jobs that lift our families and our communities out of poverty.&quot;</p> <p><strong>What&#39;s Candidates position? </strong></p> <p>Last week, Associated Press economics reporter, in <a href="http://www.usnews.com/news/politics/articles/2016-09-21/why-it-matters-minimum-wage">U.S.News.com,</a> explained that the issue of raising worker pay is this: &quot;Modest income growth for most Americans, strikes by fast-food workers, and the rapid growth of low-paying jobs at the same time middle-income work shrinks have combined to make the minimum wage a top economic issue for the 2016 campaign.&quot; The report says millions could benefit: &quot;Raising the federal minimum wage from $7.25 an hour to $12 would lift pay for 35 million workers, or 1 in 4 employees nationwide, that according to the liberal Economic Policy Institute. But it says it would also boost costs for employers and may slow hiring. &quot;And,&quot; the reporter explains, &quot;it could lead to higher prices at clothing stores and restaurants and for other services.&quot;</p> <p>So, where do the candidates stand? The AP report says both have struggled to articulate their positions. &quot;Hillary Clinton says she supports raising the minimum wage to $12 an hour, rather than the $15 supported by advocates for low-income workers and by the Democratic Party&#39;s platform. But she also supports state and local efforts to push it higher than $12.&quot;</p> <p>On the other hand, Donald Trump is harder to pin down, the report says. &quot;Last fall he opposed any increase in the minimum, saying that overall wages were too high in the U.S. In July he said the minimum wage should be $10, but added that states should &#39;really call the shots.&#39;&quot;</p> <p>The Associated Press report delves into how the issue of wage growth came about, and how low-wage industries are increasingly where the jobs are. It states that three occupations had the highest employment in 2015: retail salespeople, cashiers and fast-food workers. It states, &quot;Together they accounted for 11.3 million jobs, or 8 percent of the nation&#39;s total.&quot;</p> <p><strong>-- </strong></p> <p><strong>Related Article:</strong></p> <ul> <li><a href="http://www.usnews.com/news/politics/articles/2016-09-21/why-it-matters-minimum-wage" target="_blank">Why It Matters: Minimum Wage</a> US News.com</li> </ul> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/15479/fight_15_workers_stage_protest_during_tonight%E2%80%99s_presidential_debate#comments The Economy 2016 presidential election fast food workers protest Fight for $15 job growth presidential debate union rights Mon, 26 Sep 2016 20:57:10 +0000 Janet Sparks 15479 at http://www.bluemaumau.org Lady of America Founder Crashes Lamborghini, Killing 82-Year-Old Uber Driver http://www.bluemaumau.org/15475/lady_america_founder_crashes_lamborghini_82yearold_uber_driver_killing_him <!-- google_ad_section_start --><div class="photoright"><img alt="" src="http://www.bluemaumau.org/sites/default/files/resize/092416_1510_LadyofAmeri1-320x189.png" style="height: 189px; width: 320px;" width="320" height="189" /> <div class="caption">Founder of Lady of America&#39;s crashed Lamborghini (Photo: Del Ray PD)</div> </div> <p>DELRAY BEACH, Florida &ndash; The multimillionaire founder of Lady of America fitness franchise slammed his yellow Lamborghini into the SUV of an 82-year-old Uber driver Thursday, after spending the afternoon eating and drinking with his girlfriend in downtown Delray Beach. </p> <!--break--><!--break--><p> Police say speed and alcohol played a role in the fatal accident.</p> <p>News reports stated that after being hospitalized with critical injuries, Roger Wittenberns told the police he and Patty Ann McQuiggin had left the restaurant in their matching yellow high-performance sports cars late afternoon and were speeding on Federal Highway. After the crash&nbsp;McQuiggin left the accident scene and abandoned her Porsche in the parking lot of Anthony&#39;s Coal Fired Pizza restaurant nearby. The police caught up with her later, their report said, and it was unclear how she got to her home in Vista Del Mar. Officers spoke to her briefly there, but she refused to provide an official statement.</p> <p>The victim, J. Gerald Smith, was driving home to Boynton Beach, while his wife was waiting dinner for him. Police said her husband was crossing Federal Highway west when Wittenberns&#39; speeding Lamborghini struck the front of Smith&#39;s Buick Enclave. Wittenberns was ejected from his vehicle but survived. Smith was not as fortunate. He later died at Delray Medical Center. Eloise Smith said, &quot;I made him dinner and he didn&#39;t come home. Until I see his body, it&#39;s like he just went out into space.&quot;</p> <p>Smith&#39;s wife said her husband had been driving for Uber to make extra money. An Uber spokesman said Smith was active and highly rated on the ride-hailing app. He said, &quot;We are deeply saddened by the loss of J. Gerald Smith. Our thoughts are with his friends and family.&quot;</p> <p>Investigators reported that alcohol and speeding were factors in the crash, the aftermath of which was captured in a Facebook live video by a resident nearby. He told readers, &quot;you could tell how incredible the impact was.&quot; Police said the crash was also captured on surveillance footage from cameras at neighboring businesses. They were still reviewing the footage yesterday as the investigation continued.</p> <p>Dani Moshella, police spokeswoman, stated that it was too soon to tell whether Wittenberns or McQuiggin will face any criminal charges. Investigators will look into the case and hand all information over to the State Attorney&#39;s Office, according to the Palm Beach Post.</p> <p>Roger Wittenberns, a former lifeguard with Jack LaLanne&#39;s health clubs, founded the Lady of America fitness franchise in 1984. He served as its CEO and president until he retired in 2005 to run Diversified Health and Fitness, a firm he also founded that operates several health clubs. Lady of America had been riddled with litigation during his ownership. Wittenberns&nbsp;is an avid enthusiast of luxury sports cars. Prior to yesterday&#39;s crash, his Facebook page was filled with photos of his yellow Lamborghini and him attending car shows all over the country.</p> <p>The Sun Sentinel reported that both Wittenberns and McQuiggin had their licenses suspended for driving under the influence of alcohol in the past, according to Florida&#39;s Department of Highway Safety and Motor Vehicles. McQuiggin&#39;s license was suspended for six months for a June 14, 2003 incident.</p> <hr /> <p><strong>Related Articles: </strong></p> <ul> <li><a href="http://www.palmbeachpost.com/news/news/delray-police-one-dead-in-wreck-north-of-atlantic-/nscbP/" target="_blank">Speed, Alcohol Suspected in Lamborghini Crash Killing SUV Driver, 82</a>- Palm Beach</li> <li><a href="http://traj.net/news/241879/fitness-chain-founder-driving-a-yellow-lamborghini-crashes-into-a-buick-suv-and-kills-82-year-old-uber-driver" target="_blank">Fitness Founder Crashes into SUV Killing Driver</a> Look News.org</li> <li><a href="http://www.sun-sentinel.com/local/palm-beach/delray-beach/fl-lamborghini-fatal-crash-20160922-story.html" target="_blank">Speed Alcohol Suspected in Lamborghini Crash that Killed SUV Driver</a> -Sun Sentinel</li> </ul> <!-- google_ad_section_end --> http://www.bluemaumau.org/15475/lady_america_founder_crashes_lamborghini_82yearold_uber_driver_killing_him#comments Legal Del Pay Police Founder Lady of America Roger Wittenberns Lamborghini crash Patty Ann McQuiggin Uber driver killed Sat, 24 Sep 2016 15:11:07 +0000 Janet Sparks 15475 at http://www.bluemaumau.org Marriott Buyout of Starwood Finalized, Becomes World’s Largest Hotel Chain http://www.bluemaumau.org/15472/marriott_buyout_starwood_finalized_becomes_world%E2%80%99s_largest_hotel_chain <!-- google_ad_section_start --><div class="photoright"><img alt="" src="/sites/default/files/resize/st-regis-doha-swimming-pool-670x248.jpg" style="width: 670px; height: 248px;" width="670" height="248" /> <div class="caption">Swimming pool of Starwood&#39;s St. Regis hotel in Doha, Qatar. (photo/starwood)</div> </div> <p>Marriott International&nbsp;Inc. (NASDAQ:MAR) announced this morning that its acquisition of Starwood Hotels &amp; Resorts Worldwide&nbsp;Inc. has been finalized. Marriott is now the world&#39;s largest hotel company with 30 hotel brands and 5,700 hotels in 110 countries. The company&#39;s expanded distribution of hotels has in one swoop more than doubled in Asia, the Middle East and Africa combined.</p> <!--break--><!--break--><p>&quot;With the addition of Starwood&#39;s strong brands, great properties, and talented people, we have dramatically expanded our ability to provide the best experiences to our customers,&quot; said J.W. Marriott, Jr., executive chairman and chairman of the board of Marriott International.</p> <p>Arne Sorenson&nbsp;is to remain president and chief executive officer of Marriott International. Marriott&#39;s headquarters will remain in Bethesda, Maryland.</p> <p>Of the new larger franchising company, Arne Sorenson stated: &quot;We can now provide a better range of choices for our guests, more opportunities for our associates, and greater financial benefits for our owners, franchisees, and shareholders.&quot;</p> <p>The acquisition was hotly contested. In the end&nbsp;Marriott outlasted Chinese rival bidder&nbsp;Anbang Insurance Group Company, which abruptly withdrew its offer for Starwood. But then Marriott had to wait quite some time for Chinese regulators to approve its merger in China. Announcement of China&#39;s approval was made on Tuesday, September 20.</p> <h3><strong><span style="color:#800000;">Lower cost of operation for franchisor, with&nbsp;more&nbsp;franchised hotels</span></strong></h3> <p>Marriott&#39;s buyout of Starwood enables the franchisor to expand the scope of its hotel distribution and brand portfolio, while realizing cost efficiencies in its corporate operations. Marriott uses an asset light franchising model to better leverage corporate staff to support franchisees. That is to say, the hotels that hoist its brand flags are essentially owned by franchisee property developers. The company is confident it can achieve $250 million in annual corporate cost savings. It reassures franchisees that they can expect better corporate sales expertise and improved account coverage and support with the combined organization. The company argues that this will provide its franchisees with better revenue opportunities and insights.</p> <p>&quot;These enhanced efficiencies and revenue opportunities should drive improved property-level profitability as well as greater owner and franchisee preference for the combined company&#39;s brands, which will encourage new hotel development,&quot; Sorenson said.</p> <p>A one-time transaction cost for the merger is expected to total approximately $140 million.</p> <p>For consumers, Marriott announced it will match member status across Marriott Rewards with Starwood Preferred Guest (SPG). Members will be able to transfer loyalty reward points between the programs for travel and exclusive experiences when they link their accounts later today. The company touts that the combined loyalty program will offer members new destinations,&nbsp;such as Aruba, Tuscany&#39;s Serchio Valley, Kruger National Park in South Africa, the Maldives, Bora Bora and Santorini, Greece.</p> <p>Effective today&nbsp;Marriott has expanded its board of directors from 11 to 14 seats. It has added director Bruce Duncan, chairman, president and CEO of First Industrial Realty Trust&nbsp;Inc. It has also added two former Starwood directors&ndash;Eric Hippeau, partner at Lerer Hippeau Ventures and Aylwin Lewis, chairman and CEO of Potbelly Corporation.</p> <hr /> <p><strong>Related reading</strong>:</p> <ul> <li><a href="http://bluemaumau.org/15465/marriott%E2%80%99s_acquisition_starwood_given_green_light_china">Marriott&rsquo;s Acquisition of Starwood Given the Green Light by China</a></li> <li><a data-ctorig="http://www.bluemaumau.org/14781/marriott_buys_starwood_create_world%E2%80%99s_largest_hotel_chain" data-cturl="https://www.google.com/url?q=http://www.bluemaumau.org/14781/marriott_buys_starwood_create_world%25E2%2580%2599s_largest_hotel_chain&amp;sa=U&amp;ved=0ahUKEwjMh7LV-6XPAhVs0oMKHb2qCRAQFggLMAI&amp;client=internal-uds-cse&amp;usg=AFQjCNEGo15T6qsLA55UYVDNdS2F9l8d-Q" dir="ltr" href="https://www.google.com/url?q=http://www.bluemaumau.org/14781/marriott_buys_starwood_create_world%25E2%2580%2599s_largest_hotel_chain&amp;sa=U&amp;ved=0ahUKEwjMh7LV-6XPAhVs0oMKHb2qCRAQFggLMAI&amp;client=internal-uds-cse&amp;usg=AFQjCNEGo15T6qsLA55UYVDNdS2F9l8d-Q" target="_top">Marriott Buys Starwood to Create World&#39;s Largest Hotel Chain </a></li> <li><a href="https://www.google.com/url?q=http://www.bluemaumau.org/marriottstarwood_merger_hits_china_snag&amp;sa=U&amp;ved=0ahUKEwjMh7LV-6XPAhVs0oMKHb2qCRAQFggIMAE&amp;client=internal-uds-cse&amp;usg=AFQjCNGcswe4y7otDLqokWTKtgpNw3n6LA">Marriott-Starwood Merger Hits China Snag </a></li> <li><a data-inlineentryid="YY0D3Jy7t1CWhrLu5wxLj67UxdhGpmT0Tr7HC32hdWk=_15757e0d089:44ff67e:eede4bae" data-navigation="inline" href="http://asia.nikkei.com/Business/Companies/Marriott-gets-a-boost-in-Asia-Pacific-after-Starwood-deal" id="YY0D3Jy7t1CWhrLu5wxLj67UxdhGpmT0Tr7HC32hdWk=_15757e0d089:44ff67e:eede4bae_main_title" target="_blank" title="Marriott gets a boost in Asia-Pacific after Starwood deal">Marriott gets a boost in Asia-Pacific after Starwood deal</a></li> </ul> <!-- google_ad_section_end --> http://www.bluemaumau.org/15472/marriott_buyout_starwood_finalized_becomes_world%E2%80%99s_largest_hotel_chain#comments Mergers & Acquisitions Fri, 23 Sep 2016 16:57:37 +0000 Don Sniegowski 15472 at http://www.bluemaumau.org Ex-Owner of Jreck Subs Pleads Guilty of Bilking Investors of $9.5M, Tax Evasion http://www.bluemaumau.org/15470/exowner_jreck_subs_pleads_guilty_bilking_investors_95m <!-- google_ad_section_start --><div class="photoright"><img alt="" src="http://www.bluemaumau.org/sites/default/files/resize/092216_2110_ExOwnerofJr1-321x74.png" style="height: 74px; width: 321px;" width="321" height="74" /> <div class="caption">U.S. Attny Hartunian (2nd from left)&nbsp;testifies before Judiciary Committee<br /> (Photo: US Justice)</div> </div> <p>WATERTOWN, New York &ndash; The former owner of Jreck Subs, a 40-restaurant franchise chain founded in 1967, pled guilty Monday to defrauding investors and lenders of at least $9.5 million and to evading paying taxes to the United States government, through a promissory note scheme that was in operation from 2005 to 2015.</p> <!--break--><!--break--><p>Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department&#39;s Tax Division, and U.S. Attorney Richard Hartunian for the Northern District of New York made the announcement, saying that Christopher M. Swartz entered his guilty plea to charges of wire fraud and tax evasion.</p> <p>&quot;Swartz used his business enterprises to steal from lenders, investors, and the United States, hiding behind an elaborate web of entities and financial transactions,&quot; Ciraolo declared, adding, &quot;This case serves as clear notice that no one is above the law, and those individuals who seek to evade their tax obligations will face prosecution and incarceration, regardless of the complexity of their schemes or economic status.&quot;</p> <p>U.S. Attorney Hartunian concurred saying, &quot;The defendant&#39;s wide-ranging, persistent, and lengthy fraud and tax evasion schemes cost investors and the IRS millions of dollars. My office is pleased to be part of the efforts by the Tax Division and IRS-Criminal Investigation to hold him accountable for his brazen conduct.&quot;</p> <h3><span style="color:#800000;"><strong>Jreck Sub&#39;s criminal scheme </strong></span></h3> <p>Swartz&#39;s criminal activity was instigated by Swartz through using his multiple interests in various food and restaurant businesses, raising money by fraudulently inducing lenders with the promise of repayment at high interest rates and ownership interests in his companies. He misappropriated and diverted funds received and when lenders and investors sought the return of their funds, Swartz attempted to lull them with false and fraudulent excuses, assurances, and partial payments, including payments by checks that he knew would bounce. The U.S. Attorney Office said Swartz also concealed his assets and income to avoid seizure and collection by lenders, investors, and judgment creditors, thereby attempting to prevent recovery of their funds.</p> <p>As part of his scheme, Swartz in 2009 used a promissory note and the offer of an equity interest in the Jreck Subs franchise to induce an investor group from New York City to provide $1.5 million in funds, including funds for the construction of new stores and growth of the restaurant chain. &quot;Swartz misappropriated and diverted a substantial portion of the funds. Swartz then solicited additional loans from this same group, fraudulently inducing them with a series of additional promissory notes, which he failed to honor while misappropriating funds.&nbsp; Swartz purported to secure some of the notes with fictitious and forged rebate agreements,&quot; the U.S. Attorney&#39;s Office stated.</p> <p>Swartz admitted that during the 10-year period, he also engaged in a tax evasion scheme, filing false tax returns that understated his personal income. &quot;Swartz diverted money from business accounts and disguised these diversions in the company records as, among other things, loans and business expenses.&nbsp; He made extensive use of cash to diminish the traceability of funds and concealed his ownership of various assets using multiple entities and nominees.&nbsp; Swartz also falsified partnership tax returns and attempted to impede the IRS&#39;s ability to collect employment taxes,&quot; the government offices stated in their announcement.</p> <p>&quot;As highly trained and experienced financial investigators, IRS special agents are particularly adept at tracing the flow of funds and uncovering hidden assets,&quot; said Special Agent in Charge Shantelle P. Kitchen of IRS Criminal Investigation, New York Field Office.&nbsp; &quot;Mr. Swartz&#39;s conviction serves as warning to anyone who schemes to divert money from a business in order to conceal income and evade taxes.&quot;</p> <h3><span style="color:#800000;"><strong>Swartz upcoming sentencing </strong></span></h3> <p>U.S. District Judge David N. Hurd scheduled sentencing for January 19, 2017.&nbsp; Swartz faces a statutory maximum sentence of 20 years in prison for his conviction on the wire fraud count, and five years in prison on the tax evasion count, as well as a period of supervised release and monetary penalties.&nbsp; As a condition of the plea agreement, Swartz agreed to an order of restitution payable to any individuals and entities determined to be, at the time of sentencing, victims of his schemes.</p> <p>The district court entered a preliminary order of forfeiture of assets, including forfeiture of Swartz&#39;s interests in the Jreck Subs franchisor corporate business, which receives royalty payments from store owners based on a percentage of store sales.&nbsp;Under current law, if a final forfeiture order is entered, criminally forfeited assets may be used as a source of funds to pay restitution to victims.&nbsp; According to court documents, the number of victims may be in excess of 130.</p> <p>Christopher Swartz is represented by Gabriel M. Nugent of Barclay Damon in Syracuse, New York.</p> <h3><span style="color:#800000;"><strong>Jreck Subs 50-year history </strong></span></h3> <p>Jreck Subs<a href="http://www.jrecksubs.com/History.html"> website</a> states that the company was started by five Carthage Central High School teachers who wanted to make extra money for their families. The first sub &quot;shop&quot; was a converted school bus that was parked outside the U.S. Army post in Watertown, New York. &quot;The business went so well that they formed a corporation in 1968 called Jreck Subs Inc., which was derived from the first letters of the five owners&#39; names,&quot; the web page states. It says, now at forty stores in northern and central New York, the company plans for significant growth. &quot;Annual food shows put on by Jreck Subs&nbsp;Inc. better acquaint the <a href="http://www.franchiseesjrecksubs.com/Location.html">franchisees</a> with various national vendors of both the food and food service equipment industries.&quot;</p> <hr /> <p><strong>Related Reading: </strong></p> <p><a href="file:///D:/Janet/Downloads/gov.uscourts.nynd.null.null.0.pdf" target="_blank">Christopher M. Swartz&mdash;Order Setting Conditions of Release</a></p> <!-- google_ad_section_end --> http://www.bluemaumau.org/15470/exowner_jreck_subs_pleads_guilty_bilking_investors_95m#comments Legal judgment & dispute resolution Christopher M. Swartz indicted Jreck Subs ex-owner charged with fraud U.S. Attorney Richard Hartunian Thu, 22 Sep 2016 21:10:30 +0000 Janet Sparks 15470 at http://www.bluemaumau.org Dunkin’ to Replace Retiring President with Hoffmann of McDonald’s http://www.bluemaumau.org/15469/dunkin%E2%80%99_replace_retiring_president_hoffmann_mcdonald%E2%80%99s <!-- google_ad_section_start --><p>Dunkin&#39; Brands Group&nbsp;Inc.&nbsp;(NASDAQ: DNKN), the parent company of Dunkin&#39; Donuts and Baskin-Robbins, announced this morning that David Hoffmann, 48, has been named president of Dunkin&#39; Donuts U.S. and Canada, effective October 3, 2016. </p> <!--break--><!--break--><p> Hoffmann replaces 62-year-old Paul Twohig, who will retire by the end of the first quarter 2017. Hoffmann joins Dunkin&#39; Brands after 22 years with McDonald&#39;s Corporation, where he most recently served as president of its high growth markets, which include&nbsp;China, South Korea, Russia,&nbsp;Italy,&nbsp;Poland, Spain,&nbsp;Switzerland, the Netherlands and related markets.</p> <p>In his new position, Hoffmann will be responsible for Dunkin&#39; Donuts operations and marketing in the U.S. and Canada, as well as global franchising and store development for both Dunkin&#39; Donuts and Baskin-Robbins. The new U.S. president will report to Nigel Travis, Dunkin&#39; Brands chairman and CEO.</p> <p>&quot;Dave is a proven leader with a wealth of quick service restaurant and franchising experience, and a solid track record of delivering growth in a wide range of economic and competitive environments. His financial and industry expertise, combined with his strong talent development skills and experience using digital technologies to enhance the restaurant experience, makes him uniquely positioned to help accelerate Dunkin&#39; Donuts&#39; strategic expansion in the U.S.,&quot; said Travis. The CEO further pointed out that the incoming president was part of the company&#39;s succession planning efforts to position Dunkin&#39; Brands for long-term growth.</p> <h3><span style="color:#800000;"><strong>Noncompete agreement </strong></span></h3> <p>Twohig joined Massachusetts-based Dunkin&#39; in 2009 as brand operating officer <a href="http://www.bluemaumau.org/contract_obligations_apply_all">amidst considerable legal</a> tension for allegedly <a href="https://www.google.com/url?q=http://www.bluemaumau.org/sites/default/files/Starbucks%2520v.%2520Paul%2520Twohig%2520COMPL%25205Oct2009.pdf&amp;sa=U&amp;ved=0ahUKEwiun6vDxqPPAhWM24MKHXQXBeoQFggFMAA&amp;client=internal-uds-cse&amp;usg=AFQjCNEZ2tQ-C5B68yxa7IZK7ysVTi24-A">violating his non-compete agreement</a> with Starbucks, where he was senior vice president of retail operations for the coffee chain&#39;s southeast United States division. Years later, Hoffmann has his issue with a non-compete agreement as well. Unlike Hoffmann, Twohig had taken considerable bonuses and benefits before leaving Starbucks.</p> <p>In Hoffman&#39;s case, McDonald&#39;s asserted in a filing yesterday with the Securities &amp; Exchange Commission&nbsp;that Hoffman&nbsp;had resigned Friday without signing&nbsp;a noncompete agreement, thus forfeiting certain benefits.&nbsp;Differing from the Starbucks episode, McDonald&#39;s stated in its filing, &quot;Mr. Hoffmann will forgo favorable post-termination treatment and will forfeit certain benefits, including all unvested cash and equity incentive awards.&quot; The company announced that Joseph Erlinger, a general manager for its Indianapolis region, would immediately take over Hoffmann&#39;s responsibilities for its high growth markets.</p> <h3><span style="color:#800000;"><strong>Franchisee response; McDonald&#39;s and Dunkin&#39; different</strong></span></h3> <p>A multiunit franchise owner interviewed by this journal was surprised by today&#39;s announcement by Dunkin&#39; because there had been no previous communication with franchisees. &quot;I do know that our cultures are different,&quot; said the franchise owner, expressing some concern about how well the new president might be able to make the adjustment from McDonald&#39;s to Dunkin&#39;.</p> <p>Although both are quick service restaurant concepts, there are franchise structural and governance differences between the chains. At the end of the second quarter 2016,&nbsp;Dunkin&#39; Brands restaurants were essentially 100 percent franchisee owned. Its chains include more than 11,900&nbsp;Dunkin&#39; Donuts franchises and more than 7,700 Baskin-Robbins franchised ice cream shops.&nbsp;It touts an asset light franchising model in which the franchisor owns little and is able to flatten its payroll. In return,&nbsp;its franchisees take more control.</p> <p>McDonald&#39;s is getting there. It is now 90 percent franchised in the United States and aims to refranchise more of its company restaurants.</p> <p>Most Dunkin&#39; franchisees own their store property. That is to say, Dunkin&#39; corporate essentially owns no restaurant property. In contrast, McDonald&#39;s franchisees mainly lease their property from the Golden Arches, which sets the lease price for its franchisees. Some complain that McDonald&#39;s uses that control over leases to jack up prices way too high in order to buoy up its own profits at the expense of its franchisees.</p> <p>Both chains have franchisee cooperatives. McDonald&#39;s has an independent national franchisee trust, called the Operator&#39;s National Advertising Fund. The McDonald&#39;s cooperative purchases, directs and manages national television advertising, not the franchisor. Likewise, the Dunkin&#39; network also has its own franchisee cooperative. But Dunkin&#39; franchisees are in charge of the national supply chain and food logistics, not advertising. Its franchisor is quite limited in making money through food markups.</p> <p>The Dunkin&#39; system has a franchisee advisory board. So does McDonald&#39;s. But in addition, the Dunkin&#39; system has an independent franchisee association, Dunkin&#39; Donuts Independent Franchise Owners Association, which has been known to successfully push for better franchising practices and contracts for all Dunkin&#39; franchisees, albeit in a capacity that is not recognized officially by the franchisor. McDonald&#39;s has a reputation of having a top-down command structure, a benign one, while Dunkin&#39; franchisees nowadays have push and pull with their franchisor.<span style="color:red"> </span></p> <h3><strong><span style="color:#800000;">Hoffmann&#39;s background and path</span> </strong></h3> <p>Hoffmann began his career with McDonald&#39;s as a crew member while in high school and later rejoined the company, post M.B.A., through its management training program. He holds a B.S. in accounting from Indiana University and an M.B.A. from the University of Chicago.</p> <p>A franchisee was pleased on hearing of Hoffmann&#39;s retail experience. &quot;At least he started as a crew member at McDonald&#39;s,&quot; says a&nbsp;multiunit owner at Dunkin&#39;. &quot;That&#39;s always a good thing when a [franchisor] executive has experience at the store level.&quot;</p> <p>After holding a series of field operations positions, Mr. Hoffmann moved to the corporate office where he held leadership positions in numerous key functions including strategy and insights, development, training, operations and supply chain. Prior to McDonald&#39;s, Hoffmann worked for Arthur Andersen.</p> <p>&quot;I look forward to working with the leadership team, the community of franchisees and the brand&#39;s talented employees to deliver on the strategic plans designed to drive Dunkin&#39; Donuts&#39; continued growth,&quot; says the incoming U.S. president of Dunkin&#39;.</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/15469/dunkin%E2%80%99_replace_retiring_president_hoffmann_mcdonald%E2%80%99s#comments Leadership change Thu, 22 Sep 2016 19:42:03 +0000 Don Sniegowski 15469 at http://www.bluemaumau.org Marriott’s Acquisition of Starwood Given the Green Light by China http://www.bluemaumau.org/15465/marriott%E2%80%99s_acquisition_starwood_given_green_light_china <!-- google_ad_section_start --><p>Marriott International&nbsp;Inc. (NYSE:MAR) and Starwood Hotels &amp; Resorts Worldwide&nbsp;Inc. (NYSE:HOT) announced yesterday that the Chinese Ministry of Commerce has given its approval for giant hotel franchisor Marriott to acquire Starwood. Marriott says it was the last regulatory approval required to complete the merger.</p> <p>Having obtained China&#39;s approval, Marriott and Starwood now have the green light to proceed with closing the acquisition. The companies expect the deal to be completed before the market opens on September 23, pending satisfaction of customary closing requirements.&nbsp; Starwood expects its shares will cease trading on the New York Stock Exchange before the market opening on September 23, 2016.</p> <p>After the merger&nbsp;Marriott will become the world&#39;s largest hotel company.</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/15465/marriott%E2%80%99s_acquisition_starwood_given_green_light_china#comments Hotel Wed, 21 Sep 2016 13:05:56 +0000 Don Sniegowski 15465 at http://www.bluemaumau.org