Former Popeyes Worker Awarded $31 Million in Lawsuit Against Sun Holdings

DALLAS, Texas – A former employee of Sun Holdings, the operator of Popeyes restaurants, has been awarded nearly $31 million in damages by a jury in a lawsuit against the company. Jerry Stockton, the former worker, claimed that Sun Holdings owed him a portion of the restaurants’ profits. The initial compensatory damages awarded to Stockton amounted to $15.6 million, with an additional $15.1 million awarded in punitive damages.

Stockton, who had served as the director of operations and later as the vice president of operations for Sun Holdings’ 150 Popeyes locations, filed the lawsuit one year after his retirement. He alleged that he was entitled to 5% of the operating profits as the “key operator” for the restaurants. Stockton claimed that he was encouraged to delay taking his share of the profits until his retirement and that his requests for the operating profits were repeatedly denied by Guillermo Perales, the owner of Sun Holdings.

In response, Perales stated that he had not promised Stockton 5% of the operating profits of the Popeyes units. He argued that the confusing language in the franchise agreement led to the misunderstanding. Perales explained that the provision regarding a “key operator” entitled to 5% of the profits was intended for investor-owned franchises, while Sun Holdings is solely owned by Perales himself. He also contended that the $31 million award was based on a 38% profit margin that did not account for costs such as interest and rent.

Sun Holdings, one of the largest franchisees in the industry, operates multiple brands including Burger King, Arby’s, Applebee’s, IHOP, Papa John’s, and Popeyes. Perales expressed his intention to appeal the jury’s decision.

The case highlights the complexities and potential disputes that can arise in franchise agreements. The interpretation of contract language and the expectations of key personnel can significantly impact the financial outcomes for both parties involved. With the potential for substantial damages at stake, it is crucial for franchise operators and employees to have a clear understanding of their rights and obligations.

Although the $31 million award is substantial, it remains to be seen whether Stockton will be able to collect the full amount. Appeals and further legal proceedings may follow, prolonging the resolution of this dispute.

This case serves as a reminder for franchise operators to ensure that their agreements are unambiguous and protect the interests of both parties involved. Clarity in the language and a thorough understanding of the terms can prevent costly legal battles and maintain a positive working relationship between franchise operators and employees. The outcome of this lawsuit will be closely watched within the industry as it may set a precedent for future disputes regarding profit-sharing arrangements.