Five Closed Fast-Food Outlets Still In Limbo

By Ryan McCarthy, Neighbors Staff Writer

South Placer Neighbors, Sunday, November 29, 1998

Burger King may have sold its last Whopper at 4210 Rocklin Road.

All corporate logos identifying the franchise food outlet are gone.  Although a sign says the store is being remodeled, both Cindy Schaer and Robert Zarco are skeptical.

Schaer, economic development director of the city of Rocklin, told a recent chamber of commerce meeting that, despite the sign, no work has been under way for weeks.

Zarco, a Miami, Fla., attorney who represented KSSA Enterprises, owners of the Burger King in Rocklin as well as two outlets in Auburn and single stores in Cameron Park and on East Bidwell Street in Folsom, said the fast food king in not coming back.

"I don't believe Burger King is going to open these restaurants," said Zarco. "They could have reopened already.  Burger King can build a whole new restaurant in three months."

A Burger King on Iron Point Road in Folsom, which is separately owned, is open and not a part of the closings.

The September shutdown of the five outlets, Zarco said, came after Florida-based Burger King settled a lawsuit with KSSA and bought the restaurants the firm owned.

Burger King had contended that KSSA violated quality, service and cleanliness standards-a claim the firm and its principal Kaleem Syed and Shoukat Ali denied.

Settlement came a day before a court hearing on the matter, attorney Zarco said.

Charles Nicolas, a spokesman for the Burger King Corp., said, "Plans are in the works" for the five closed stores.

The fast food outlets will be reopened or sold, Nicolas said.  "We'd like to move them as quickly as possible," he said. "Obviously we're in business to make money."

Of the fate of the five closed stores, he said, "We want to make sure it's best for the community and it's best for Burger King.

Susan Longenecker, manager of the Best Western Golden Key on Lincoln Way in Auburn, wants to see something done about the Burger King near the motel.

"It's in terrible disrepair," Longenecker said. "Garbage is all over the place."

Resolution of the legal issues between Burger King and KSSA included an end to a separate legal action filed last year by KSSA against Jim Otto, the former Oakland Raider who had owned the five fast food outlets.

Otto sold the Burger King restaurants to the Southern California-based company for $2.5 million in 1996.

KSSA had contended that Otto failed to disclose plans of another franchise to build restaurants in the regional trade area.

Otto's attorney John Rueda of Sacramento said in documents filed at the Historic Courthouse in Auburn that his client denied the allegations and would "vigorously defend this matter at trial."

Rueda said Otto provided KSSA with a file containing correspondence of his protest to the Burger King Corp. over plans for more stores in the are.

The new buyers say they never received such information.

"Mr. Otto vehemently asserts he did so, KSSA vehemently asserts that he did not," the attorneys for each side said in a joint letter filed in connection with the case.

Rueda, representing Otto and KSSA attorney Patrick Carter of San Francisco both said they could not discuss the settlement terms of the case.

Otto said, "It was thrown out of court." And that KSSA just dropped it because the firm knew it was to going to prevail.  He said the new owners didn't properly run the Burger King they bought in 1996.

"Their operations were poor," said Otto, whose likeness long appeared on an Interstate 80 billboard promoting his Burger King on Lincoln Way in Auburn.  "That's what caused their demise."

He said of the stores closing, "I'm very sad that where I served Whoppers to people they can't get Whoppers."

Irvine resident Shoukat Ali, a principal with KSSA said, "I would just have to say no comment."

Best Western manager Longenecker said she remembered the Burger King on Lincoln Way when Otto was the owner.  Cars lined up at the drive-up window and the restaurant was busy, she recounted.

"After KSSA bought it, the business started going down," Longenecker said.

Otto said he received calls from Burger King customers advising him of problems with the stores and asking him why he didn't improve operations.

Otto said he explained to callers that he had sold the stores and was no longer the franchisee.

KSSA said a new Burger King opened by Sydran Food Service two years ago in Loomis on Horseshoe Bar Road across form Raley's Supermarket severely affected sales at the Burger King Rocklin.

Sales declined 30 percent after the Loomis franchise opened, according to the firm.

San Francisco, attorney Carter, representing KSSA, said in documents filed in connection with the case that the impact of the competing store in Loomis was "particularly damaging because Rocklin was the best of the five stores sold by Mr. Otto to KSSA."

The new owners, Carter said, relied on Rocklin's sales "to carry the much less successful stores that made up the deal."

Carter said KSSA suffered financial losses on a monthly basis by operating the Burger King outlets. "The stores had not done well," he said.

Syed and Ali had sought to rescind their purchase of the fast food outlets through the lawsuit.

Burger Kings' purchase of the five stores and subsequent shutdown surprised Carter.

"I haven't seen stores---that number, in that concentrated an area---simply close down," he said.