CINCINNATI — The Florida-based landlord that evicted dozens of Frisch's restaurants last year is now seeking more than $11 million in damages against the owners of Frisch’s Restaurants Inc. That could hamper efforts by three new companies trying to keep 31 surviving Frisch’s locations open.
Attorneys say the new companies — FBB IP LLC, FRM Holding Company LLC and FRM Franchising LLC — could eventually be asked to pay off Frisch's debts.
NNN REIT LP sued Frisch’s Restaurants Inc. in Georgia’s Fulton County Superior Court on Feb. 11. It claims Frisch’s owes $11.7 million in unpaid rent, failed to keep its properties “in good repair” and caused its landlord “undue trouble and expense” by acting in bad faith and being “stubbornly litigious.”
The Georgia lawsuit is one of five pending complaints in which Frisch's creditors are seeking monetary damages totaling more than $12 million.
The complaint seeks $11.7 million plus interest after Feb. 5, along with reimbursement of attorney fees and repairs to damaged restaurants.
The lawsuit names two defendants. Both are corporate affiliates of NRD Capital, the Atlanta-based private equity firm that bought Frisch’s in 2015. But the landlord’s attorneys have threatened to pursue assets transferred to other companies, formed by Frisch’s in November to enable a buyout by longtime Frisch’s managers.
In a Feb. 20 letter to Frisch’s attorneys, Jessica Salisbury-Copper questioned whether Frisch’s “attempted to avoid their creditors by transferring assets to affiliates,” according to documents filed in a federal lawsuit over the use of Frisch’s trademarks. “We look forward to engaging in discovery on these issues,” Salisbury-Copper added.
“It’s a pretty substantial threat,” said Todd McMurtry, an attorney who reviewed court records at the request of the WCPO 9 I-Team. Although he has no involvement in the Frisch’s cases, McMurtry has extensive experience in complex litigation and corporate law.
“If I was a creditor of the Atlanta-based Frisch’s, I’d like to know what those assets were (and) how much they received in payments for those assets,” McMurtry said. “That’s a key issue because if it wasn’t fair-market value, there’s a chance it could be a fraudulent conveyance.”
Georgia is one of many states that allow creditors to claim assets to settle debts if their transfer was intended to “hinder, delay, or defraud” creditors. McMurtry said recent disclosures in various Frisch’s lawsuits make him think that creditors will eventually pursue claims against multiple Frisch’s corporate entities, new and old.
“I’ve seen companies forced into bankruptcy, an involuntary bankruptcy action, and there, creditors can attempt to recover assets,” McMurtry said.
Attorney Ryan Hemmerle agreed the Georgia case could impact the long-term viability of the Frisch’s Big Boy brand.
“If they can connect the dots and make a salient case, the new Frisch’s is going to have problems, but it’s not a slam dunk,” said Hemmerle, who handles commercial litigation at the Strauss Troy law firm downtown.
Frisch’s declined to be interviewed for this story. But its public relations firm, Game Day Communications, provided statements attributed to Darrin White, CEO of Frisch’s Big Boy.
“We’re not backing down,” White said. “Frisch’s is here to stay, and we will continue delivering the food and experience our customers love. This lawsuit is about stopping a bad actor from misleading the public.”
Big Boy Battle heats up
The litigation over Frisch’s downfall is already complicated enough. To summarize, Frisch’s Atlanta-based owners paid $175 million for the iconic Cincinnati restaurant chain in 2015, then sold much of its real estate to Orlando-based NNN REIT. For a variety of reasons, Frisch’s fell on hard times and started missing its rent payments in February 2024.
After a default notice last August, NNN REIT filed 64 separate eviction cases against Frisch’s, which closed all but 31 restaurants and its commissary by the end of last year. Before the closures, Frisch’s announced on November 18 that two longtime Frisch’s managers had “acquired multiple locations and future development rights of the brand.”
The company’s press release didn’t provide many details about the deal. But a few facts emerged last month, when a new Frisch’s company, FBB IP LLC, accused Michigan’s Big Boy Restaurant Group of infringing on its trademarks. The lawsuit accused the Michigan chain of conspiring with NNN REIT to open rival Big Boy restaurants in Frisch’s franchise territory.
The Michigan chain has argued it was trying to protect the Big Boy brand from damage caused by Frisch’s. The case is still pending, but a federal judge has ruled Frisch’s is likely to succeed on the merits and temporarily blocked the Michigan chain from using the Big Boy name in Ohio. So, this month, the Michigan chain re-opened three closed Frisch’s locations under the name Dolly’s Burgers and Shakes.
Meantime, accusations continue to fly in federal court documents, where the Michigan chain questioned whether FBB IP owns the trademarks it sued to protect. FBB IP said that wasn’t relevant to the case. The Michigan chain also pointed out that Frisch’s owner, Aziz Hashim, identified himself as president and chairman of FBB IP in a court affidavit.
“Given that Frisch’s Restaurants owed NNN REIT more than $4.7 million, this appears to be a conveyance to avoid creditors,” the Michigan chain asserted.
To answer questions about the ownership of Frisch’s trademarks, Hashim filed a second affidavit that provided more detail about the sale of Frisch’s assets in November. Hashim said Big Boy trademarks were assigned to FBB IP as the result of an asset purchase agreement between Frisch’s Restaurants Inc. and FRM Holding Company LLC, an FBB IP affiliate.
Hashim’s affidavit raises some additional questions about the transfer of assets.
For starters, the assignment of trademark rights was signed by Hashim, on behalf of FBB IP, and Marshall Snook, president and CFO of Frisch’s IP LLC. Hashim is the founder of NRD Capital, while Snook is a Dallas-based owner, or principal, of the company.
Such discrepancies wouldn’t be enough to prove a fraudulent conveyance claim on their own, McMurtry said. But it might be enough to convince creditors to pursue such claims.
“The main thing that you need to prove a fraudulent conveyance claim is that the assets that were transferred out were for less than fair-market value,” McMurtry said. But “there are other criteria. Such as, did the same people that were running the original company that’s in debt, are they also involved in running the new company? The other thing is, are they engaged the same business? And did the transfer leave the old company, the debtor company, insolvent?”
Frisch’s has yet to reveal any financial details of the November transactions.
But it has asserted in court documents that FBB IP and its affiliates paid fair-market value for the intellectual property they sued to protect.
It’s also important to note that NNN REIT did not assert a fraudulent conveyance claim against Frisch’s in its Georgia lawsuit. And it didn’t name FBB IP or FRM Holding Company as defendants. Instead, it named Frisch’s Restaurants Inc. and FRI Holding Company, LLC. FRI is a legal entity that guaranteed payments under Frisch’s lease. Its sole manager is NRD Capital, according to federal court documents.
“It may be that NNN believes the FRI is financially solvent and that it can obtain all past due sums and attorney fees from the guarantor. In that case, there is no need to seek to hold ‘New Frisch’s’ liable for ‘Old Frisch’s’ debts,” McMurtry said. “If FRI cannot satisfy the sums due, NNN may go after ‘New Frisch’s.’”
Another wrinkle involves court disclosures by the Michigan chain. Turns out it tried to buy Frisch’s before the company transferred assets to its longtime managers in November.
“I don’t feel like we got close. I mean, we were never given financial statements,” said Tamer Afr, CEO of Big Boy Restaurant Group, in an interview. “On November 8, they sent a letter saying they transferred the intellectual property from the old company to a new Delaware-based company. And, I think upon receiving that, we sent them a notice that we were terminating their (brand) rights.”
Although he assumes the new Frisch’s affiliates are owned by NRD Capital, Afr admits he doesn’t know.
“I’ll let the legal proceedings play themselves out,” Afr said. “I know there’s lawsuits pending and I’m sure the truth and all the information will come out. Hopefully, from our standpoint, we can keep operating restaurants in this area.”
Afr’s counterpart at Frisch’s Big Boy said his company will win in court.
“Michigan-based Big Boy Restaurant Group is attempting a hostile takeover of locations they have no right to,” CEO Darrin White said. “They are trying to hijack Frisch’s goodwill and deceive our customers. We didn’t file this lawsuit lightly. This is about protecting our team, our franchisees, and the customers who deserve honesty, not deception.”
