Copyright © 2016 Albuquerque Journal
WisePies could have a new, out-of-state owner soon – but the pizza chain’s name is likely to remain on New Mexico’s most famous sports arena.
The owners of the Albuquerque-based franchise operation are in final negotiations to sell a majority interest in the company to an out-of-state restaurant group, co-owner Mike Baird said this week in a Journal interview. The prospective buyer, which Baird declined to identify, will take over day-to-day operations and commit to fulfilling WisePies’ agreement with University of New Mexico for naming rights at its basketball arena, commonly called “the Pit.”
WisePies has not met its expansion targets and has faced a handful of tax liens, issues Baird blamed in part on underestimating how much it would cost to launch a franchising operation.
Three WisePies franchise stores owned separately by Baird, which are not part of the sale, also have had a history of tax trouble, racking up more than $150,000 in liens.
None of the other individual stores is facing tax liens, according to a WisePies spokeswoman.
Baird could not say if the buyer would keep WisePies based in Albuquerque but said the company’s commitment to UNM remains intact. After two payments of $100,000 each, the deal calls for a major payment escalation this year. Under the terms of the $5 million gift agreement, WisePies owes eight annual payments of $600,000 starting this December.
“That was one of the main reasons why we went with this group was they are dedicated to continuing that agreement,” Baird said in an interview.
Baird said the company buying the WisePies Franchise Services has the resources, financial and otherwise, needed to shepherd WisePies Pizza & Salad in an increasingly competitive fast-casual marketplace.
There currently are nine WisePies stores in operation. When signing the UNM agreement in late 2014, the company had three stores and said it planned to add 20 in 2015.
“You need millions and millions of dollars to start a franchise system properly, and that’s what we didn’t do – we tried to bootstrap it,” Baird said. “You have lofty goals when you get started with it and have all the best intentions of having everything grow the way you want it to, but it doesn’t always happen that way.”
Baird declined to disclose the sales price but said he and partner Steven B. Chavez will maintain some stake in the company.
Baird said he and Chavez set out to create a company, formally called WisePies Franchise Services, they could either sell or take public after five years. If the sale closes, it will come 2½ years after the first WisePies restaurant opened, something the owners consider a testament to the brand they built.
“Based on our business model, our five-year plan was achieved within two years. This made us a highly desirable candidate for acquisition by a larger restaurant investment group that sees the potential for national growth and development of a New Mexico-based company,” Chavez said in a statement. “Through strategic moves like the naming of WisePies Arena aka the Pit, we were able to garner national attention and reinforce our commitment to the future of the company.”
Baird said the deal would also help him clear a number of tax liens he’s faced both through WisePies and his other companies.
Since December 2014, a total of 20 liens have been recorded against WisePies Franchise Services, WisePies USA and individual franchise WisePies restaurants owned by Baird, according to a Journal search of Bernalillo County records. They reflect money owed to the New Mexico Taxation & Revenue Department, Internal Revenue Service and New Mexico Department of Workforce Solutions.
Only six have been released, according to the documents.
WisePies Franchise Services, which has the deal with UNM, is the chain’s corporate entity. Baird and Chavez own it together. County records currently show three liens against the company – one from the IRS and two from Workforce Solutions for missed unemployment insurance contributions – totalling $13,843.
Baird said the company has paid the outstanding tax bill, but the release does not appear in online records yet. He said the company is looking into the Workforce Solutions liens.
Two previous liens filed in 2015 have been released, according to county records.
In addition to the corporate office, three individual franchised WisePies restaurants owned separately by Baird are facing a combined 11 more liens totalling $168,291.
Records also reflect at least $603,000 in liens against other restaurant-related companies owned by Baird. That includes VSH, LLC, which does business as Vernon’s Speakeasy steakhouse and has 15 outstanding liens totaling $479,753.
That does not include an additional $243,083 in liens filed against “VSH LLC, Calico Cantina & Cafe,” which Baird said is not an actual entity and might represent some sort of duplication in the system.
Baird said some unexpected delays in completing the WisePies sale contributed to the growing tax debt and thinks the online records might not reflect all payments he has made. But he acknowledged that he owes a “significant” amount and said he has met with IRS and state tax representatives to discuss how the WisePies sale will allow him to cover all outstanding tax obligations.
“The purchase is plenty enough to take care of any debts that I have and clear everything up and allow me to move forward with everything else,” he said.