CPK Finds Foreign Franchisors An Issue In Mexico

California Pizza Kitchen is a leader in the trend of foodservice chains fueling growth and earnings with increased overseas openings; the Los Angeles chain just opened its first store in India and its fourth unit in South Korea. But a dispute over CPK’s expansion in Mexico highlights a potential problem for chains working with franchise operators in other countries who develop different, sometimes competing brands.

According to Nation’s Restaurant News, the franchisor of a pizza-and-pasta concept in Mexico is attempting to stop CPK’s planned expansion south of the border through a legal dispute involving a franchise operator working with both companies there. The lawsuit, filed in Los Angeles in late July by Mexico City-based Remigio S. de R.L. de C.V., seeks a preliminary injunction that would bar CPK from opening more units in Mexico; end the recruitment of Remigio employees to CPK units; and require CPK to “divest itself of the entire interest in the CPK franchise in Mexico.”

The dispute involves multi-concept restaurant operator Alsea S.A.B. de C.V., which acquired CPK’s Mexico franchisee in 2008, about a year after CPK began its franchise expansion there. Remigio contends that deal interfered with a franchise agreement between Remigio and Alsea, which had already inked an agreement to franchise Remigio’s own pizza and pasta casual-dining chain, Italianni’s. According to the complaint, that agreement specifically barred Alsea from participating in competing businesses, including holding any interest in CPK.

CPK could not be reached for comment on the pending litigation. A hearing on the injunction is scheduled next week in Los Angeles.