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LAWRENCEBURG, Ky. – Dairy Cheer franchisor Lou Compton cut a deal with Smashburger executives last year over trademark issues and then skipped town.
The legal battle between Dairy Cheer “Home of the Smashburger” and the newer Denver-based Smashburger franchise chain ended in a settlement for an undisclosed amount in mid- to late-2011. Compton first approached the company’s general counsel John M. Moore with “exorbitant demands,” including a demand for a one-time payment of $750,000 upfront and continuous royalty payments between $30k and $15k per store in Lexington.
Compton, without warning, closed her own restaurants before Christmas, leaving employees without paychecks. Some received checks that bounced.
“I work two jobs and the thousand dollars I made here was for Christmas,” one worker told an NBC television crew in Lexington. She said her kids would not have Christmas.
The Anderson County Sheriff's Office confirmed that Compton is wanted on 14 arrest warrants, including five Class D felonies for theft by deception over $500 and nine Class A misdemeanors. A local newspaper reported that approximately 30 employees were stiffed by the Dairy Cheer franchisor and owner for a total of $12,000.
The restaurant’s former general manager Catherine Zimmerman said she is thrilled to see criminal charges brought against Compton. “I won’t rest until she’s behind bars, Zimmerman told The Anderson News. She thinks the Dairy Cheer owner may be somewhere in Louisville. “She was nice enough to issue me a W-2 [tax form] on the bounced checks she gave me, and they were postmarked Louisville,” Zimmerman added.
When the Dairy Cheer “Home of the Smashburger” employees complained publicly about not having enough money to pay their bills, the community stepped up and donated thousands of dollars in cash and gifts.
Blue MauMau contacted County Attorney Bobbi Jo Lewis to find out what the current status was on the case. Ms. Lewis confirmed Compton was on the run. The county authorities were actively looking for the former franchisor.