Max & Erma Sold Out of Bankruptcy

Max & Erma, a chain of 68 company-owned and 28 franchised restaurants largely based around Ohio and Michigan, will be pulled out of bankruptcy by Concept Development Partners for a deal valued at $24.6 million.

Max & Erma’s had defaulted on a $23 million loan, a representative for Reinert told Nation's Restaurant News, and Reinert had planned to pay off the debt by selling corporate units to franchisees. Those plans fell through as tightening credit meant those franchisees could no longer secure financing to complete the purchases.

Max & Erma wanted franchisees to take the risk of the franchisor becoming illiquid and the trademark disappearing. Unfortunately, there were no loans to be had in this credit crunch for franchisees eager to buy. PLUS, the company had not had net profits in years. So no franchise buyers was followed by franchisor bankruptcy.

Franchisees will have to wait to see what the franchisor management team is like. Being small in numbers, Max & Erma franchisees have not organized an independent franchisee association for the brand.