Milwaukee's Suburpia sandwich war

thedailylink.com

I last wrote about Suburpia's famous sandwich shops in a post "Milwaukee gas station robbery - the new normal" last year. I had little idea of the troubled history of their shops, I just have always loved their sandwiches. I attempted to stop there on the way to the Milwaukee airport to pick up my wife last week and missed the exit. Would have wasted my time, as the store was closed! Update: There is one going at 114th and Bluemound. Still very good!

Story thanks to Rick Romell of the Miwaukee Journal Sentinal. Link provided below:

Suburpia's ousted founder refuses to give up sandwich spices

Defying court ruling, William J. Foley adds to Tosa store's tangled history

Sept. 16, 2013  Amid a bitter dispute over a small but well-known business, the founder of the Suburpia sandwich shops has been ousted from the tiny chain's busiest location.

Forced by a court ruling, William J. Foley has handed over to former associates the keys to the Wauwatosa store, which revived a business that had thrived in the 1970s before skidding into bankruptcy, being sold to new owners and closing.

But in defiance of a judge's order, Foley has refused to surrender the shop's stock of the spices that help define Suburpia's sandwiches. It's personal property and he'll go to jail rather than turn the supply over, he said.

"I cannot give it up," Foley said Thursday just hours after Milwaukee County Circuit Judge Richard Sankovitz, during a hearing on potential contempt charges, directed him to do exactly that. "I'm not going to. I've spent 45 years doing this, and I've got a strong customer base and I'm not going to give away my family's birthright."

The spice war is the latest twist in what is shaping up as the strangest chapter yet in Suburpia's long, tangled history. It's a chapter that includes Foley's huge tax debt, unusual business arrangements and what Foley describes as a handshake deal with a former friend.

The future script is uncertain, but one possibility is dueling operations, both doing business as Suburpia.

Foley, who started the original Suburpia in 1967, claims primacy.

"There is no Suburpia without Foley," he said. "They have never operated the company, ever."

His friends-turned-foes, alleging misconduct by Foley, say they are the legitimate owners.

"Suburpia's been the icon forever, and we're trying to rock our baby and bring it back to what it should be," Marietta Duncan said last week, standing in the temporarily closed Wauwatosa store.

Duncan — part of the group awarded possession of the Suburpia at 10853 W. Blue Mound Road — is a pivotal figure in the battle. She testified in a deposition that she first met Foley about 20 years ago when he came to see her in her former capacity as an astrologer and consultant.

That was about when Foley was amid his first attempt — ultimately unsuccessful — to revive Suburpia. He had built the chain to more than 20 stores in the '70s, but by 1981 it was in Chapter 11 bankruptcy. The business was reorganized and sold, but three years later it was back in bankruptcy. A new owner bought it and ran it until 1989, then sold most of the shops to Subway and closed the rest.

Foley and Duncan's friendship grew, and by 2005 they were joining forces in yet another re-launching of Suburpia.

Staggering debt

But Foley had a problem: He owed a six-figure debt to the State of Wisconsin for unpaid taxes related to his previous ownership of Suburpia. The tax bill extended to the original business more than two decades earlier and had been fattened by mounting interest and debt that Foley says should be the responsibility of the chain's second owners.

In any event, the total stands at more than $1.3 million — enough to rank Foley at No. 11 on the state's delinquent-taxpayer list.

Foley already had spent a year in jail for failing to pay sales tax collected during his early-'90s iteration of Suburpia. As he planned the new venture, he didn't want to give the state Department of Revenue leverage to claim its proceeds.

So, Foley said, he and Duncan agreed that she would hold a 50% stake in a company called Sandwich Kings LLC — the largest single share — but that she would hold it on Foley's behalf. Duncan reneged on that deal, Foley said.

Not so, Duncan said. The 50% stake was never Foley's, but hers, she testified. She said she was given the ownership interest — for no initial investment — for the help she had extended to Foley over the years.

"It was an exchange of kindness," Duncan testified.

Dispute over profits

The other main partner was Christan Kramer, a former home-improvement business owner who also met Foley in the '90s.

Foley ran the business but received no paycheck. He did, however, draw what he called advances from Sandwich Kings' revenue. Who approved these?

"As the largest stockholder, I did," Foley said, "but they weren't great amounts."

Foley describes his withdrawals as appropriate. Duncan and Kramer, Sandwich Kings' president, disagree. Kramer, who testified in a deposition that he initially put close to $100,000 into the venture, also accuses Foley of hiding profits that should have gone to investors — a charge Foley denies.

The dispute boiled over early this year. On Jan. 8, Sandwich Kings fired Foley, and Kramer had the locks changed at the Wauwatosa shop. But the next day he found it open and running.

"Mr. Foley had taken the locks off of the store," Kramer testified.

The Kramer-Duncan faction said Foley and an associate were using a newly formed company to try to hold possession of the shop — which, in fact, they were able to do, operating as Bluemound Sandwich Kings Inc., until Sankovitz kicked them out on Sept. 6.

The judge gave Foley a few hours to hand over the keys and to "remove any personal belongings from the premises that are not used in the operation of the business."

He turned in the keys, but when he left the shop he also carried out its stock of spices. That, among other things, landed Foley back before Sankovitz last week facing a possible contempt citation.

Foley argues the seasonings are personal property, prepared by a spice company under a nondisclosure agreement with his daughter. But an irritated Sankovitz said Sandwich Kings had paid for its supply and now owns it.

It "appears to the outside world, Mr. Foley, that you're either trying to cripple the business or loot the business," the judge said. Foley later called that characterization "untoward."

Judges says order violated

Sankovitz also had ordered Foley not to operate any Sandwich Kings computers, and the judge was angered when Foley's attorney, Richard Schulz, acknowledged that one of the computers had been booted up. Schulz said Foley's faction needed information on the machine for two other Suburpia shops in the area, which they still operate.

But Sankovitz said that violated a clear order, and he referred to Foley as untrustworthy — drawing objections from Schulz.

The fight appears to be far from finished. As of Friday, Foley still held the spices,but the Wauwatosa Suburpia had reopened and, according to Duncan, was doing "excellent" business.

She wouldn't definitively say how the sandwiches were being seasoned, but said she "probably" was using spices she created. Those spices differ from the old Suburpia spices, "but not much," Duncan has said.

Kramer, meanwhile, said he and his partners should rightfully control not just the Wauwatosa shop but also those at 2264 N. Prospect Ave. and 116 E. Layton Ave.

Both sides are seeking trademarks. Sandwich Kings filed in February for the word Suburpia. In July, Foley's daughter applied to trademark The Original Suburpia.

And another front in the war may open soon: Last week Foley and an associate applied for a license to operate a fourth Suburpia, in downtown Milwaukee.

Update: July, 2015

By Rick Romell of the Journal Sentinel

William J. Foley, founder and once owner of the Suburpia sandwich shop chain, has been sentenced to 10 months in jail for unauthorized use of a credit card belonging to his former business partners.

Foley, 72, was charged last year with six felony counts related to unauthorized use of the credit card. In May, he pleaded no contest to a single count.

He later sought to withdraw the plea, but Milwaukee County Circuit Judge Dennis Moroney denied the motion. On Wednesday, Moroney placed Foley on probation for three years, with 10 months to be served in the House of Correction. He has work-release privileges if employed.

Foley built Suburpia into a popular chain in the 1960s and '70s, but later became enmeshed in a string of business and legal problems. His former partners now operate three area restaurants under the Suburpia name.

http://www.jsonline.com/business/suburpias-ousted-founder-refuses-to-give-up-sandwich-spices-b9995352z1-223854841.html