CHARLOTTE N.C. A Hooters franchisee with financial ties to franchisor Hooters of America Inc. has agreed to buy the concept’s founder, franchisee Hooters Inc., from its nine owners in a deal valued at $55.1 million.
The buyer, the investment firm Chanticleer Holdings Inc., said the deal should close before July 31. It indicated that many of the nine individuals selling their Hooters Inc. stock would remain involved with the company. The deal requires that Hooters Inc., or H.I., be converted from a business development company into an operating company, according to Chanticleer, which is based here. It indicated that it would pay for the acquisition by raising equity and taking on debt, with the transaction contingent on obtaining that financing.
H.I. created the Hooters concept in 1983 and licensed development rights to the casual-dining brand a year later to the company that became Hooters of America, or H.O.A. H.I. subsequently sold the trademark to H.O.A. but continued to operate the restaurants it opened under what Chanticleer described as “a perpetual irrevocable license agreement with greatly reduced royalties.” H.I. also had the right to acquire other Hooters franchisees. It currently operates 22 units, in Florida, Chicago and New York City.
Chanticleer said it has a connection to H.O.A. as the lead investor in a $5 million, three-year promissory note that was granted to Robert Brooks, the franchisor’s former chairman. The 6-percent note is secured by and includes conversion rights to 2 percent of H.O.A.’s stock, according to Chanticleer.
Chanticleer said it also holds an option to develop Hooters franchises in South Africa, which it is currently exercising.
The investment concern said the units it is buying have some of the highest sales within the Hooters system. The chain consists of 433 restaurants in 28 countries.
