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Belleville Hofbräuhaus closes as legal fight over franchise trademarks continues

Hofbräuhaus on a sunny day.
Derik Holtmann
/
Belleville News-Democrat
Belleville’s Hofbräuhaus was closed over the weekend as a legal fight over a local franchise agreement continued in federal court.

Editor's note: This story was originally published in the Belleville News-Democrat.

The Hofbräuhaus German restaurant in Belleville listed itself as temporarily closed on social media Monday as it faces a federal lawsuit over continued use of the franchise’s trademarks.

The lawsuit was originally filed in Nevada, where the Hofbräuhaus of America LLC is based. It was moved to U.S. District Court for the Southern District of Illinois in January at the same time the two sides ended settlement negotiations that had been ongoing for months.

Hofbräuhaus of America states in the federal lawsuit that it terminated its franchise agreement with Hofbräuhaus in Belleville because the owners allegedly did not pay royalties when required.

Belleville Hofbräuhaus disputes that allegation in its own federal lawsuit in the Eastern District of Missouri. The franchise argues the fees were actually incorrectly calculated, and it overpaid Hofbräuhaus of America.

In addition to the payment dispute, the parent company alleges other contract violations, including failure to maintain the required daily operating hours for seven days a week, conform to the brand’s full menu template and employ an approved authentic German or Austrian style band, among other alleged issues.

William Guy Crouch now controls the business at 123 St. Eugene Drive in Belleville through a court-appointed receivership.

Crouch and lawyers representing Belleville Hofbräuhaus in the litigation could not be reached for comment Monday. A lawyer for Hofbräuhaus of America also could not be reached for comment.

Hofbräuhaus of America requested Crouch immediately shut down operations of the Belleville restaurant and begin “de-branding” the building in a Feb. 26, 2022 letter, according to the corporation’s lawsuit.

Hofbräuhaus of America’s trademarks include the architectural design of the building, which is copyrighted.

The parties had been in settlement talks since July. Federal judges twice issued stays, putting a stop to legal proceedings at the request of both parties since, according to court records, progress was being made toward a resolution.

But Hofbräuhaus of America stated in court documents that it broke off negotiations in December when it learned Belleville Hofbräuhaus was serving domestic beer and had installed arcade games and pool tables in further violation of the franchise agreement.

It argued the domestic beer and arcade “goes against the carefully curated aesthetic of the Hofbräuhaus brand.”

“Counsel for Hofbräuhaus, Eric Hone, attempted to address these issues with (Crouch),” a status update filed with the Nevada court stated. “However, attempts to rectify these violations to the Franchise Agreement were met with resistance and (Crouch) has taken the position that the HB-Belleville Brewpub can do what it likes while the receivership is in place.”

In December 2019, lender Royal Banks of Missouri alleged in a petition filed in St. Louis County Circuit Court that Hofbräuhaus developers failed multiple times to pay restaurant sales tax when it was due.

The court agreed and appointed Crouch receiver, giving him “complete and exclusive control” over the business affairs.

Belleville Hofbräuhaus was closed over the weekend. On Sunday, the restaurant listed itself as “permanently closed” in its hours of operation on its Facebook page, but that was changed to “temporarily closed” on Monday.

The restaurant opened in March 2018, which was about two years later than the original developers said it would open. Hotels, a conference center and other restaurants were also part of the proposal, but they were never built.

The city of Belleville spent $2.42 million to extend sewer lines to the development site. It also granted several types of tax incentives worth up to $32.36 million to the Hofbräuhaus developers, but those incentives were based on future revenues generated at the site and were not paid upfront.

Lexi Cortes and Jennifer Green are reporters with the Belleville News-Democrat, a news partner of St. Louis Public Radio. BND reporter Mike Koziatek contributed information to this report.

Lexi Cortes is an investigative reporter with the Belleville News-Democrat, a news partner of St. Louis Public Radio.
Jennifer Green has been with the Belleville News-Democrat since 2006. She covers restaurants and business openings/closings. Green is a 2001 graduate of Southern Illinois University Edwardsville.