Idaho-based Burger King franchisee files for bankruptcy

POST FALLS, Idaho (AP) — One of the region's largest Burger King franchisees has filed for bankruptcy.

Garliz Investments LLC of Post Falls made the filing last week, citing weak sales caused by the chain's slumping national market share.

But the firm's co-owner Manuel Garcia said in court documents that he hoped to keep operating the company's 25 Burger King restaurants in Idaho, Washington and Oregon in business despite the bankruptcy. About 500 people work at the restaurants.

The company filed for Chapter 11 reorganization. Burger King's share of the hamburger market has fallen from 19 percent to 15 percent in recent years.

In court documents, Garliz Investments said its sales have dropped by 30 percent. Garcia listed debts of $19.3 million and assets of $5.8 million.

"The reasons for the decline are likely many, but there is no disagreement that sales nationwide have been in decline and that a notable percentage of Burger King franchises are in default, in bankruptcy or struggling to avoid both," Garcia said in court documents. "In the last three years, (the) Burger King system has seen approximately 1,500 stores close."

Garcia and his wife, Esther, formed Garliz Investments in 1996. The company borrowed more than $15 million from its largest creditors Citicorp and G.E. Capital for new restaurant locations, fixtures and remodeling.

Garliz Investments also owes Burger King $2.1 million in unpaid royalty fees and advertising-fund contributions, according to court documents.

The company hired a firm to negotiate a settlement with Burger King, Citicorp and G.E. Capital, according to the documents. But Burger King declared a default under its franchise agreements, and filed a lawsuit against Garliz Investment earlier this month.