Jack in the Box franchisee closes 70 units amid tax disputeJack in the Box franchisee closes 70 units amid tax dispute

Alan J. Liddle

ROSEVILLE Calif. Jack in the Box franchisee Kobra Associates Inc. said state tax challenges caused it to “temporarily close” 70 Northern California restaurants at midnight on Wednesday.

The Roseville, Calif.-based company is affiliated with real estate development firm Kobra Properties, which filed for Chapter 11 bankruptcy protection from creditors in December.

Kobra Associates recently was cited by the California State Board of Equalization as among the top 250 corporate taxpayers with the largest delinquent sales and use tax. The Board of Equalization said Kobra Associates owed $1.5 million in such taxes and that Food Service Management Inc., a firm related through common ownership by Kobra principal Abe Alizadeh, owed about $547,000.

Kobra staff referred callers with questions about the restaurant closures to a recorded phone message. That message said the shut down of the 70 units was for “business purposes” and was “not at all related to health and safety issues, nor to Jack in the Box operations.”

“The franchise operator is currently engaged in negotiations with the State Board of Equalization” and “is working to resolve issues pertaining to taxes,” the recorded message continued. “We look forward to a successful resolution that will allow the reopening of our restaurants as soon as possible.”

Kobra’s phone message ends: “We apologize for any inconvenience to our valued employees and loyal customers.”

Representatives of the franchisor, San Diego, Calif.-based Jack in the Box Inc., did not respond to an e-mail message seeking comment as of press time.

Kobra Associates, apart from its alleged tax woes and the financial challenges faced by bankrupt affiliate Kobra Properties, was sued last November for allegedly failing to pay hourly night shift employees for all work performed, including overtime wages. They also allegedly denied workers legally required rest and meal breaks. The lawsuit seeking class action status was filed in Sacramento County Superior Court and lists as the plaintiff former Kobra Associates employee Patricia Morgan.

Contact Al Liddle at [email protected].