The Herald, Sharon, Pa.

Business

November 12, 2008

Quaker Steak & Lube sues former franchise holder

By Joe Pinchot

SHARON — Quaker Steak & Lube Franchising Corp. and QSL Intellectual Properties Corp. have sued a DuBois company, claiming it is continuing to operate a Quaker Steak & Lube restaurant after Quaker Steak terminated the franchise agreement.

The Sharon companies — QSL Intellectual controls the Quaker Steak trademarks — also have asked for a temporary restraining order and preliminary injunction to stop Bono Holdings Inc. from operating the Patton Township restaurant as a Quaker Steak and Lube until the suit is resolved.

A woman who answered the telephone at the restaurant Wednesday identified the eatery as a Quaker Steak and Lube. She took a message for Larry Salone, who controls Bono Holdings, and said Salone was not there.

Quaker Steak said it entered into a franchise agreement with Bono on Aug. 1, 2005, for Bono to operate a restaurant in or near State College.

Bono agreed to pay 5 percent of its gross sales to Quaker Steak, in addition to a fee for research, promotion and marketing. Bono has failed to make timely payments of either fee since September 2007, Quaker Steak said in the suit filed Friday.

On Jan. 25, Quaker Steak sent Bono a franchise termination notice saying Bono owed it $57,136 in royalty fees and $8,792 in RPM fees, plus interest. Quaker Steak extended a period to pay all defaults until March 26, but Bono filed for bankruptcy on March 13.

The bankruptcy court allowed Bono to pay Quaker Steak $6,000 a month, and to defer Quaker Steak’s rights until Sept. 8, unless Bono sold the restaurant.

Quaker Steak said it terminated the franchise agreement on Oct. 6 and Bono had 30 days to furnish evidence it was no longer operating a Quaker Steak franchise.

On Nov. 5, Quaker Steak representatives went to the State College restaurant and found that the restaurant was still operating as a Quaker Steak franchise, including using Quaker Steak’s computer software, trademarks, trade dress and trade secrets.

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