The Herald, Sharon, Pa.

Local News

November 14, 2008

Lube franchisee sued first, calls action ‘heavy handed’

By Joe Pinchot

SHARON — The DuBois man whose company was sued over a Quaker Steak and Lube franchise near State College said in a statement Friday that the suit is a “heavy-handed action” in response to a suit he filed against Quaker Steak and some of its executives.

Larry Salone and his two companies, Salone Holdings and Bono Holdings Inc., filed a suit in August as part of its bankruptcy proceeding against Quaker Steak and Lube Franchising Corp., Sharon, Gary J. Meszaros, George S. Warren III, Andy Gunkler, Dennis J. Lieb, Michael J. Stack and John Votino.

The suit charges Quaker Steak and its executives with fraud, breach of contract, defamation, conspiracy and other claims.

Salone claims Quaker Steak officials lied to him about the prospects for profitability of opening a Quaker Steak franchise. The executives predicted Salone could take in $100,000 a week in revenues, and Warren and Meszaros told Salone “State College was a slam dunk market.”

Salone borrowed about $3.5 million for construction, equipment, furniture and fixtures for the restaurant in Adams Township, which opened Jan. 18, 2006. Salone eventually defaulted on those loans, and filed for bankruptcy.

The franchise took in only $40,000 to $50,000 a week in revenues, short of the $80,000 a week needed to break even, the suit said.

“Defendants later admitted to Plaintiffs that the structure that they advised Plaintiffs to build, and that they approved, is too large for the size of the market,” the suit said.

Quaker Steak did not provide adequate training, startup marketing and operational support, as was required in the franchise agreement, and forced Salone to use “costly food vendors and limited food menu choices, which were not profitable and which placed Plaintiffs at a considerable disadvantage in the marketplace.”

“Upon information and belief, QS&L; intends to drive Plaintiffs out of business and to resell the rights to the restaurant locations to another Quaker franchisee,” the suit said.

Salone is seeking $5 million in damages.

Quaker Steak & Lube Franchising Corp. and QSL Intellectual Properties Corp. sued Bono Nov. 7 to stop it from operating its restaurant as a Quaker Steak franchise.

Quaker Steak said it terminated its franchise agreement with Bono because the company was not paying royalty or research, promotion and marketing fees.

Salone said in the statement released by his law firm, Lynch Weis of Cranberry and Pittsburgh, he intends to pursue his suit, even if Quaker Steak is successful in forcing him to stop operation as a Quaker Steak franchise.

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