LOS ANGELES—On Dec. 12, a Los Angeles Superior Court judge ruled against Chin Yong Wong, chairman of the board of directors of Shakey's Inc. and managing director of Inno-Pacific Holdings Ltd, in a motion seeking a bond of $838,000 representing Wong's estimate of costs he would incur to defend himself against claims of fraud and negligent misrepresentation brought against him by 39 Shakey's franchisees.
According to a news release issued by the Shakey's Franchised Dealers Association (SFDA), Wong and Shakey's Inc. are defendants in an action brought late last year by franchisee plaintiffs, who are seeking as much as $15 million in damages. The case is set for trial on March 24, 2004.
Wong argued that the claims against him were frivolous, that he is likely to win the case against him and that Shakey's franchisees located outside of California should be required to post a bond in preparation of paying him for his anticipated legal fees.
The court rejected his request because it believed plaintiffs are likely to win the case. According to the release, the judge wrote, "Plaintiffs succeed in showing they have a reasonable possibility of succeeding against Defendant Wong for misrepresenting his willingness to negotiate with SFDA."
"On behalf of all dealers remaining in the Shakey's franchise system, we are pleased with the court's ruling," said John J. McNulty, Jr., president of the SFDA. "Shakey's corporate management has failed to live up to its obligations under its agreements with the dealers, and Shakey's refuses to take responsibility for the consequences of its actions. Mr. Wong has been the absentee chairman of the board of directors of Shakey's Inc. for nearly two years, and in that time the system has seen the dismissal of nearly all of its officers and employees and the complete abandonment of its franchisees, who desperately need franchisor support to succeed in a highly competitive restaurant market."
Shakey's was one of the first pizza franchise companies in the U.S., and it grew to number nearly 500 units nationwide. According to the release, today there are about 60 semi-autonomous units with their own menus, decorating styles and advertising using the Shakey's brand name.
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