Archive for Tuesday, February 15, 2011

Jefferson’s Restaurant assets to be sold at auction

February 15, 2011


Today, the Kansas Department of Revenue will begin overseeing removal of assets from Jefferson’s Restaurant, a once busy downtown establishment.

Remaining will be the hundreds of dollar bills that patrons pinned to the wall.

Unable to reach a payment agreement with the restaurant’s owner over unpaid taxes, the revenue department said Tuesday that Jefferson’s, 743 Mass., will not reopen and its assets would be sold at a public auction.

“We will leave things open as long as they are working with us, working to repay the debt,” department of revenue spokeswoman Jeannine Koranda said.

The restaurant, known for its monetary decor and fried food, opened in 2000 and was a popular spot for watching Kansas University basketball games.

On Feb. 8, the department of revenue and Alcoholic Beverage Control shut down the restaurant for failing to pay $46,848 in taxes.

At that time, owner Jason Franklin told the Journal-World that the closure involved a “misunderstanding” and that he hoped to reopen by last Friday.

The restaurant’s tax warrants date back to June 2009, when $39,648.98 was owed.

On Tuesday, Franklin said he couldn’t keep up with his taxes during the recession and fell behind. He had owned the restaurant for more than five years.

“I’m sorry. I wish I could stay open, wish things went better. Unfortunately, they did not,” Franklin said. “I appreciate all the support of all the loyal customers.”

The department of revenue has contracted with United Country Auction Services to handle the auction, which won’t be done at the restaurant. The company, which has an auction house in McPherson, said it is still working out the details of the auction.

As for the dollar bills still on Jefferson’s walls, Koranda said the money will stay. The property’s landlord has agreed to write a check in the amount of the dollar bills to keep them on the walls.


BruceWayne 7 years, 3 months ago

many here last week said it would reopen friday...what happened?

mr_right_wing 7 years, 3 months ago

You could try actually reading the'll find your answer.

BruceWayne 7 years, 3 months ago

my point was that many comments here last week claimed they knew the owner and situation and that it would reopen friday. guess they were wrong. you could actually stop being a troll.

Shane Rogers 7 years, 3 months ago

I would be very curious to know the dollar amount that was covering the walls and ceiling.

jstblv 7 years, 3 months ago

sure is funny how wheat state pizza could owe 200k+ in back taxes, be shut down and come right back to life. mmmm sounds a little crooked. I feel sorry for this guy maybe they should talk

TikiLee 7 years, 3 months ago

Sounds like Wheat State (wait for it...) had the dough.

Seriously though- it does appear that Wheat State had cash reserves enough to reopen, whereas Jefferson's did not. I'm not getting a "crooked" vibe at all. Some people have the cash, some don't.

Jeff Cuttell 7 years, 3 months ago

Wheatstate sold assets off to the GM. They are actually under different ownership

TikiLee 7 years, 3 months ago

Yeah, I know. But my explanation was funnier. ;)

alman84 7 years, 3 months ago

Olive you need to find better things to do with your time.

Emily Campbell 7 years, 3 months ago

Wheat State was sold, bought, and has payment plans set up to pay back the funds. Jefferson's failed to comply. Liked them, kind of, but not heartbroken. Find it weird that this article claims they were a popular spot for games... if they weren't close to closing time. We just started going there a few months back, and they kicked us out 15mins before the game was over because the closed at 10pm--it wasn't even 10:05!

Eddie Muñoz 7 years, 3 months ago


Why keep the dollar bills on the walls, though? Possibly for a new owner to come in and re-open it? fingers crossed

Majestic42 7 years, 3 months ago

It's a buffer fund in case the next place can't pay the bills. Bam.

PhogPhanatic 7 years, 3 months ago

I'm keeping my fingers crossed as well, I loved that place!

seriouscat 7 years, 3 months ago

The business climate in this town is just plain whacky. Seems being underhanded and attempting to pad the books is the just the way things are done around here in the restaurant biz. Is it because they rely on a bunch of naive college kids for both employees and customers, and they (college kids) have such low standards?

What's the matter with Lawrence?

MyName 7 years, 3 months ago

The restaurant biz has always had a high failure rate. It's got low margins and a place can be "trendy" one month and empty the next. What it sounds like happened is the business lost so much money in 2009 that it went under, but it was doing enough volume that it managed to limp along another year and a half. The bottom line is that the owner decided to stiff the tax man in order to either pay suppliers (so he could stay in business) or the staff (again, so he could stay in business). It may not have been smart in the long run, but I'd hardly call that "padding the books".

Shardwurm 7 years, 3 months ago

"Seems being underhanded and attempting to pad the books is the just the way things are done around here in the restaurant biz."

They're just following the example of the Univer$ity of Kan$a$.

lindsbug 7 years, 3 months ago

It's probably the "naive college kids," you're right. Let's tear down KU and watch the businesses in Lawrence thrive!

In perfect honesty, any restaurant is going to have "naive" college employees, unless you're an establishment like Pachamama's. That's true everywhere, even towns in Western KS with junior colleges. And as far as college students having low standards -- come on. I would say Lawrence has some amazing, healthy restaurants frequented by college students (Local Burger comes to mind). If college students have low standards, then the nation itself has low standards; look at the overwhelming number of McDonald's, Burger Kings, KFCs... those definitely are not being supported solely by students.

It's not the college students.

seriouscat 7 years, 3 months ago

Yeah I admit that was a poorly thought out reasoning. It just seems like there is an unusually high proportion of businesses that evade taxes around here. Maybe it's unfair to lump them all together as dishonest and underhanded, but there is a definite pattern there that deserves some scrutiny.

hail2oldku 7 years, 3 months ago

This is not unique to Lawrence.

Click on the link, type in a county or city in the search and behold the number of deadbeats that are DBA something or other.

bangaranggerg 7 years, 3 months ago

This is also not a situation where they just missed paying their income tax but rather they collected sales tax from customers and did not remit it, which is both stupid and straight up theft. I don't know KDOR to negotiate on failures to remit and I wouldn't expect them to considering it's pretty obviously not a misunderstanding or a situation in which they couldn't come up with the money.

notanota 7 years, 3 months ago

Perhaps we should expect businesses that collect sales tax to actually take that money and pay the state with it.

seriouscat 7 years, 3 months ago

I remember when Clinton was in office and welfare reform was the hot button issue and conservatives decried the 'victim mentality' of minorities and the poor. Lately it seems like everything they say (see above) is pages taken right out of the victim mentality playbook.

notanota 7 years, 3 months ago

I'd rather encourage businesses that don't steal from the people of Kansas.

dontcallmedan 7 years, 3 months ago

Darn liberals made it foggy this morning.

Prairielander 7 years, 3 months ago

Ummm..they weren't paying their sales tax so the State loses nothing. A new business will move in, pay the sales tax and the State profits.

farawayhawk 7 years, 3 months ago

Really? So when Bush was president the taxes were lower? Says here their tax debt date back to 2009. You conservatives just love to show your true colors. Doesn't matter what Obama does it will be wrong...right??

parrothead8 7 years, 3 months ago

The idiocy of defining a business that can't pay its bills as "an economically developed business."

The idiocy of logic that blames the tax collector for a business failing to pay taxes...when 99% of the businesses in town aren't having that problem.

The idiocy of assuming that a governor who has consistently pandered to the interests of the wealthy "is our only chance."

newsreader 7 years, 3 months ago

The State told Jeffersons they would keep them open.... " We will leave things open as long as they are working with us, working to repay the debt"

Did you people not read the article?

Obviously the owner made enough money, stashed it away, and doesn't want to pay it back.

BigAl 7 years, 3 months ago

Agreed. The state worked with Jeffersons as long as they could. The fact is that Jeffersons collected sales tax from customers and didn't pay it. They tried to pocket money that wasn't theirs.

Like bangarangerg says, this is straight up theft.

But people like Lawrenceguy40 says it is the "liberals".

Daniel Speicher 7 years, 3 months ago

Exactly right. Only two certainties in life, death and taxes. As a business owner you cannot expect to collect taxes from the customer and then fail to remit without consequences. If I were an employee of Jefferson's I'd be very angry. Day after day, they did their job and did it well, only to have a thief at the helm. That's really sad.

What's even more sad is that Jefferson's was a quality restaurant. Good food (especially their burgers and wings) and a friendly staff. I truly hope someone will come in and buy the place, re-open it as a similar venue and re-hire any employees who haven't found employment elsewhere.

The State of Kansas has been more than generous to even offer to allow the restaurant to stay open if they paid. They were well within their rights to shut it down for good until the entire amount was paid in full. That doesn't appear to be the case in this situation. In fact, it appears that a single dime has not been remitted. Irresponsible and very disappointing.

--Danny Speicher

Daniel Speicher 7 years, 3 months ago

Hmmm... Oddly enough, I do remember eating wings......

But, I'm probably confused to the definition of "food". My apologies.

bad_dog 7 years, 3 months ago

Gotta wonder how the Donner party or the trapped Chilean miners would respond to that statement...

Bite me, perhaps?

BigAl 7 years, 3 months ago

"Good business like this".... typical response from lawrenceguy40. This guy didn't pay sales taxes to the state for over 8 months. They collected these taxes from customers and still didn't pay. Good businesses don't do that. Good businesses pay their taxes.
We stopped in at Jefferson last summer and found that they couldn't serve beer because "the state messed up their liquor license". Yeah right. A few days later they had their license back after they paid the fees. Again, good businesses don't let things like that happen.

lawrenceguy40 makes absolutely no sense. Liberals or conservatives have nothing to do with this. Poor management has everything to do with it.

Daniel Speicher 7 years, 3 months ago

Although I agree with your sentiments on the owner, remember a bad owner does not a bad business make. Jefferson's really was a quality establishment and it is sad that the business (in a holistic sense) had to pay for the irresponsibility of one man.

--Danny Speicher

Shane Garrett 7 years, 3 months ago

To steal a couple of lines from the washboard guy "If money grew on trees. We would all be picking money for the man, on the money tree farm." Should have paid his sales tax.

BigAl 7 years, 3 months ago

Tom, you are welcome anywhere in Lawrence at any time. I would welcome the chance to have a cold one with you. Yes, we disagree on most issues (because you are wrong) but you still seem to be a likeable guy.

I too enjoyed a beer and fried mushrooms at Jeffersons. Too bad they will be gone and more people out of a job because of misguided management.

BigPrune 7 years, 3 months ago

This is most unfortunate, but it is something that small mom and pop stores experience moreso than a regional or national company. Most mom and pop stores go into business without enough working capital. Any business needs to be bringing in a million dollars a year to make it successful.

jessibean 7 years, 3 months ago

Jeffersons was one of my favorite restaurants in downtown Lawrence, and I will miss it greatly - but most of all I'm frustrated that this even happened in the first place. Like others have said, they collect sales tax from customers for a reason. Either they were figuring the taxes completely wrong, or someone was pocketing that money. Still, I will miss Jeffersons and $5 burger baskets and onion rings, sigh.

seriouscat 7 years, 3 months ago

Aren't the rental rates downtown bordering upon usury? I'm not equating correlation with causation, but BigPrune has a point about the mom and pop situtation. Who owns downtown?

frank regnier 7 years, 3 months ago

Poor management in some cases but not all. People would be shocked to hear how much "Landlords" get paid for their lease in downtown Mass. Maybe if the landlords of some of these businesses would not be so greedy, they could help the mom and pop type stores and restaurants survive especially during these hard times. Greed seems to be the driving force of this nation and I guess this won't happen. I guess it is goodbye Mom and Pops and welcome to Lawrence, McDonalds, Burger King and Taco Bell!

notanota 7 years, 3 months ago

At the same time, I bet they have to charge more to make up for the times when they have a property that sits vacant for months or years at a time waiting for a new tenant.

jafs 7 years, 3 months ago

It may be a vicious cycle - if rents were lower, there might be less down time.

Don Whiteley 7 years, 3 months ago

The closing of another good restaurant and establishment within the city. Pretty soon there's only going to be McDonald's left. From the amount they owe, I'd say it was probably the cost of Lawrence water that drove them into bankruptcy, as it is with many homeowners.

Prairielander 7 years, 3 months ago

Sorry distant, I'm not buying it. I ate downtown last night and their were plenty of good restaurants including five or six I have never been to. If anything there are too many and the competition kills off the poor concepts or mismanaged joints.

7 years, 3 months ago

I'm not sorry to see it go. The food was nothing special, the wait staff would ignore you if you looked "alternative" in any way, and it was just too small and dingy. And apparently the owners were borderline crooks.

mudd 7 years, 3 months ago

Amen! The staff was stuck up and they were alway rude to Kennyboy!

BigAl 7 years, 3 months ago

I noticed that too. It was still on after 8:00pm at least.

Lee Eldridge 7 years, 3 months ago

Leases are expensive because the tax rates for property owners downtown is high. Which creates an economic climate where only retail franchises and chains can absorb the costs. Becomes too expensive for the moms and pops / locally owned businesses.

And I'd suggest cutting the owner of Jefferson's some slack. It's tough to be a small business owner. He likely was NOT stashing away all that money. He was using it to pay his employees, employment taxes, the lease, food costs and expenses. When your expenses are higher than your income, you do the best you can and try to find solutions. There aren't always good solutions. He fell behind, and has now gone out of business because he couldn't catch back up. Doesn't mean he was a thief or a bad guy. And it doesn't even mean they were a bad business.

Darrell Lea 7 years, 3 months ago

What can happen with many privately owned businesses that are not generating enough revenue is they will take the sales tax money and pay whatever the most pressing bill is at the moment, simply to keep the doors open another day. This is gambling on a future uptick of revenues to pay back the sales tax money that was borrowed/misappropriated.

This sort of thing can soon become a death spiral, which may be what happened here. There's no way for the general public to know those kind of details.

There sure are a lot of vacant storefronts in downtown Lawrence these days. Perhaps that would be a good topic for a future LJW article.

Prairielander 7 years, 3 months ago

Downtown vacancy is relatively low. A retail study date July 2010 for Bauer Farms lists downtown vacancy at 1.8%, much lower than the rest of Lawrence (over 6%). Nationally, the retail vacancy rate is over 7%.

mrbig 7 years, 3 months ago

KS Dept of Revenue sales tax pay agreement payments are due on the 8th. My guess is that he made a payment arrangement with them, and did not pay on the 8th which is why they stepped in. Better to not fall behind at all: after all that sales tax money was never actually his to spend.

RibMan 7 years, 3 months ago

Lawrence is a tough market and downtown is especially tough due to a lack of parking. Taxes are too high and traffic is too low. Restaurants in that area need to take a hard look at whether having a wait staff is necessary. Labor costs have to be kept to an absolute minimum.

missmia 7 years, 3 months ago

Hope it doesn't turn into a chain restaurant.

booyalab 7 years, 3 months ago

It's already a franchise. I'm sure it will reopen, whether under new or old management.

Matthew Fowler 7 years, 3 months ago

I have really mixed feelings about Jefferson's. On the one hand, I liked the sporty atmosphere and the location was great for me to walk to lunch on the days when I got tired of brown-bagging it. The people were nice, too. On the other hand, seeing as how they were one of THE best businesses downtown, and had a steady, solid customer base, the owner COULD have, and SHOULD have paid his taxes.

aBabyAteYourDingo 7 years, 3 months ago

I used to eat there all the time, and I witnessed a gradual decline in the overall quality of the place. The girl managing would talk to the waitresses and customers in a way that made everyone uncomfortable. The AC was broken seemingly every summer...hard to enjoy fried food in a sweltering, crowded KS eatery in July. And the damn liquor license wasn't renewed on several occasions, which is inexcusable for any bar expecting success.

On one Sunday, their wing special day, my husband and I sat on the patio and saw tons of people walk in and quickly walk out after learning they had run out of 2pm. Apparently that happened most Sundays because their wings didn't arrive till Monday morning. Whatever it costs to keep enough wings on hand would have been met and exceeded by selling them at a profit, and that goes for everything else those people would have ordered, not to mention the tips the waitresses lost. It's just bad business.

I had lots of fun there, so it's sad to see this. Really it's just a cautionary tale for every prospective business owner. If you don't understand the work and sacrifice involved in making the place profitable, you are doomed to fail in a similar way. Jason probably never intended to evade tax payment, but he did so to keep the lights on, or keep the gas on, or the cable, or buy food/booze/supplies. I want to say it snowballed out of his control, but I heard often that he spent lots of money at the bars and that he drove two vehicles, one of which was a brand new truck. There’s nothing wrong with that if you take care of business, but if not it just seems excessive.

pace 7 years, 3 months ago

Our tax system just foreclosed a company in this town because they couldn't reach a compromise. The tax man plays hard ball but whose team do they play on? Their get tough on small business doesn't extend to big business. My guess is there wasn't enough political incentive to work with Jefferson's. The tax man doesn't get points for making deals with little guys, it makes deals when their bosses tell them to. A deal might of made a difference for this cafe. $40, 000 is a hole but one a good cafe could of dug it self out, given time. if given the opportunity. The state loses by not working carefully with the many small companies in trouble in this troubled times. You can replace one company but each death of a small business is lose not gain.

jafs 7 years, 3 months ago

It's been years - according to the article, there's been a close to $40,000 debt for a over a year and a half.

How much time should they be given?

eddog 7 years, 3 months ago

Henry T's should move in there. great food, smart tax paying owners. Hopefully open for breakfast and delicious tacos everyday, not just Sunday. Please hurry. I work downtown and am hungry.

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