NEW ORLEANS -- A dispute between Pizza Hut and southern Louisiana's primary franchisee for the brand has led to a lawsuit and the closure of 44 restaurants in the New Orleans and Baton Rouge areas.
The developments follow a protracted effort to transfer assets of the 44 Pizza Hut restaurants out of the ownership of Lundy Enterprises LLC. A copy of a federal lawsuit obtained by WDSU shows Larry and Marilyn Lundy as the defendants.
A spokesman for Larry Lundy told WDSU an unspecified number of restaurants have already closed their doors.
“Despite serious efforts on the part of Lundy Enterprises to continue to operate Pizza Hut locations throughout the Louisiana market, due to an ongoing dispute with Pizza Hut, the stores will remain closed for the foreseeable future," Lundy said in a statement. "We thank all of our customers for their loyal patronage and apologize for Pizza Hut's unfortunate decision to allow these stores to close for business. Lundy Enterprises will protect its rights to the fullest extent possible and is optimistic that the Pizza Hut stores will become operational again with the assistance of the justice system.”
Pizza Hut announced in a statement that all 44 restaurants will be closed for good, and the company will build all new restaurants in the region, investing $10 million over the next 18 months to create "state-of-the-art" facilities.
According to the lawsuit, a mediator last summer drew up terms of a settlement agreement addressing disputes between Pizza Hut and Lundy Enterprises. The dispute was a result of Lundy repeatedly failing to pay royalties, advertising fees and other related fees to Pizza Hut over the years. As part of the agreement, negotiations were to take place for the sale of Lundy's Pizza Hut assets and Lundy's franchise agreement would be terminated.
Last month, according to the lawsuit, a Pizza Hut subsidiary agreed to buy Lundy's southern Louisiana properties. The deal was contingent, however, on conditions that the lawsuit says Lundy did not meet.
According to the lawsuit, Lundy's debts outweigh the value of his assets.
When the deal fell apart, Pizza Hut moved in late December to sever its ties with Lundy and its restaurants and the agreement to purchase the properties was dissolved.
Now, Pizza Hut is seeking not only to close the 44 Lundy-operated restaurants but to claim financial damages it says it incurred from Lundy's use of Pizza Hut trademarks and systems beyond the franchise termination date last month.
Larry Lundy has been active in the community in a variety of ways. In 2007, he donated space in an eastern New Orleans building to temporarily house the 7th District of the New Orleans Police Department.
He has also opened his restaurants to trick-or-treaters on Halloween, providing what he called a "safe alternative" to traditional door-to-door visits by children.
Lundy's relationship with Pizza Hut dates back to the early 1980s.
At one point, Lundy owned and operated 67 Pizza Huts and employed as many as 1,200 people in the area. Many of his stores were damaged or destroyed by Hurricane Katrina, though most have since reopened.
Below is a list of the affected restaurants:
3535 Chateau Blvd, Kenner
1632 Lafayette St, Gretna
3934 Veterans Blvd, Metairie
6285 West Park Avenue, Houma
523 A St. Mary St., Thibodaux
3500 Kabel Dr., New Orleans
812 West Bank Expressway, Westwego
857 Terry Parkway, Gretna
810 Clearview Parkway, Metairie
5025 Lapalaco Blvd., Marrero
9721 Jefferson Highway, River Ridge
907 Grand Caillou Road, Houma
16156 West Main, Cut Off
1532 Gause Blvd., Slidell
4546 Highway 1, Raceland
2807 North Highway 190, Covington
4903 Prytania, New Orleans
3026 Gause Blvd., Slidell
3238 Severn, Metairie
221 West Oak, Amite
220 Cumberland, Bogalusa
1401 W. Airline Highway, LaPlace
2440 West Thomas, Hammond
1925 S.W. Railroad, Hammond
129 Highway 190, Slidell
270 Main Street, Baker
2628 South Sherwood Forest Blvd., Baton Rouge
4763 Airline Highway, Baton Rouge
5175 Florida Blvd., Baton Rouge
12222 Plank Road, Baton Rouge
15380 George Oneal Road, Baton Rouge
9186 Greenwell Springs, Baton Rouge
9848 Perkins Road, Baton Rouge
1183‐B Flannery Road, Baton Rouge
662 Jefferson Highway, Baton Rouge
815 Florida Ave., Denham Springs
3453 Highway 1, South Donaldsonville
1724 Main Street, Franklin
1542 Airline Highway, Gonzales
14112 Greenwell Springs Road, Greenwell Springs
7244 US Highway 90 East, Morgan City
228 Hospital Road, New Roads
526 U.S. 90, Patterson
24925 Highway 1 South, Palquemine