John Schnatter regrets stepping down at Papa John’s

The founder has hired a high-powered attorney and has taken aim at the company’s board.
Scott Mitchell

John Schnatter declared that he “will not allow either my good name or the good name of the company I founded and love be unfairly tainted” and says he regrets stepping down as Papa John’s chairman, according to a letter he sent to the company’s board on Saturday.

Schnatter has also hired a high-powered business attorney who has represented clients including Harvey Weinstein, Keith Olbermann and Conan O’Brien.

The letter, and the hiring of an attorney, suggest that Papa John’s founder is preparing to fight the board of the company he had led for decades. Despite his resignation as the company’s chairman, Schnatter remains a board member, and is Papa John’s largest shareholder, owning 30% of company stock.

“The board asked me to step down as chairman without apparently doing any investigation,” Schnatter wrote in a letter to the board, obtained by Restaurant Business. “I agreed, though today I believe it was a mistake to do so. I have checked with corporate governance experts who tell me that this was not a proper action by the board.”

The Wall Street Journal first reported the existence of the letter on Tuesday.

In a letter of her own to the board before an apparent meeting on Sunday, in which the board took further steps to distance itself from Schnatter, Glaser urged the company to investigate the matter “and fully inform itself as to what actually occurred.”

Schnatter in his letter provided additional details of the May 22 meeting with Laundry Service, the marketing company that Papa John’s hired to help him avoid public relations problems.

He said in the letter that Laundry Service “strongly urged that our company retain Kanye West as my co-spokesman in the television spots and other promotions. I told them that would not work because he uses the ‘N’ word in his lyrics.”

Schnatter then said that he was asked during the diversity training why he blasted the NFL over its handling of player protests during the anthem. Schnatter in November said that “The NFL has hurt Papa John’s shareholders,” blaming the protests for weak ratings and his company’s weakening sales.

It was then that he used the N-word. “I then said something on the order of, Colonel Sanders used the word N (I actually used the word) that I would never use that word and Papa John’s doesn’t use that word.”

“I never used the ‘N’ word in that meeting as a racial epithet, nor would I ever.”

Schnatter then said that on May 23 the company decided to fire Laundry Service, and that the company’s last day was July 2.

“We owed them approximately $1.3 million,” Schnatter wrote. “Of course, we said we would pay them what was owed, but they said they wanted $6 million because they claimed some of their people had been offended by what I said.”

He also said that one of the agency’s attorneys “said they would conduct a smear campaign against the company and me unless we paid them what he was asking for.”

In a memo to employees, Laundry Service called Schnatter's allegations "completely false," according to Adweek

The Forbes reporter contacted Papa John’s on Tuesday. His story was published on Wednesday morning, setting ablaze a firestorm that has since cost the company its sponsorship deal with MLB and many other teams and led the University of Louisville to remove the company’s name from its football stadium.

Papa John’s said on Friday that it would stop using Schnatter in the company’s marketing, and it has scrubbed his image, name and photos from the company’s website.

Schnatter in his letter blasted his company’s response to his comments about NFL player protests. “The fact is, we completely mishandled the NFL situation from a public relations standpoint, both the board of directors and company leadership,” he said.

He also charged some board members with “acting on rumor and innuendo, without any investigation—let alone a third-party investigation of the facts.”

“I am confident that an examination of the facts will bear out what I have written in this letter and show that once again our company has demonstrated that it does not know how to handle a crisis based on misinformation,” he said.

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