After following the Papa John’s case since last December, I’ve seen a lot of headlines. One headline that I didn’t expect to see (at least, not for a while) was that of John Schnatter sues Papa John’s.
Earlier this month, Schnatter was accused of using a racial slur in a conference call that took place in May. And he admitted to it, which is why the lawsuit is so unexpected. Usually, when someone accepts guilt, they don’t go off and do something to worsen the situation. Or bring more attention to it.
But that’s what he did.
John Schnatter Sues Papa John’s
Yesterday, there was a lawsuit filed in Delaware, which claims that the Papa John’s board acted carelessly. Schnatter reportedly believes a possible ‘coup’ could have been at the center of his departure from the board.
In the lawsuit, which was obtained by CNBC, it says that “instead of standing by” Schnatter, who founded Papa John’s in 1984 in Jeffersonville, Indiana, the company went forth with its “usual, and flawed, manner of dealing with false and mistaken reporting.”
The entire Papa John’s scandal has been messy from the start. From when Schnatter stepped down as CEO in December 2017 (not long after he placed blame on the NFL players who took a knee during the US national anthem) to now, when he resigned from chairman after being reported as—and then admitting to—using the N-word in a conference call.
As messy as it may be, Schnatter, 56, leaving the company seems justifiable. He appears to think otherwise. The lawsuit states that the founder suspects the board either “acted without adequate information,” or they “planned this coup in advance.”
Different Opinions
There are two ways to go about looking at this. Either you agree with the news of John Schnatter sues Papa John’s, or you are like the Company, who believe this is “an attempt to distract from his own words and actions.”
The remaining members of the Papa John’s management team stated to CNBC that they are “saddened and disappointed,” calling it not only a “needless” lawsuit but a “wasteful” one too.
However, parts of Schnatter’s decision to sue are understandable. After all, the man created a worldwide franchise out of nothing, seeing it through from the 80’s to 2018.
But being innovative and a good businessman doesn’t give you the right to speak down to others.
The Takeaway
So, John Schnatter sues Papa John’s but what do you think about the whole ordeal?
Personally, I think it’s unfortunate that someone who invested so much time in something wasted it by making ignorant comments. Whether a coup happened, I have no way of knowing—but I do know that removing Schnatter was probably best for the company in the long-term. I also know fighting back isn’t the way to go about things.
What do you think?
Anyone interested in the consumer industry, as well as anyone interested in becoming a consumer investor, should follow along with this story in the weeks to come.
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