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Dairy Queen Supplier Sued

Posted on: Sunday, 9 April 2006, 18:00 CDT

By David Clouston, The Salina Journal, Kan.

Apr. 8--A long-time Salina business that formerly supplied Midwestern Dairy Queen restaurants with products is being sued for more than $642,000 by creditors, court documents show.

Officials with McCune Paper Co. Inc. have not responded to repeated requests from the Journal for an interview concerning the lawsuits against the company.

The company has not yet answered the suits filed in Saline County District Court, and its attorney wasn't available for comment Friday.

"It's disappointing because the firm still has the McCune name. The McCunes would never have let that happen themselves," said Sandy Buster, whose family owns and operates the Dairy Queen at 321 N. Ninth.

Florence McCune started McCune Paper with her husband, Don. After his death in 1961, she remained the owner and president of the business, whose office and warehouse occupy a historic brick structure at 254 N. Santa Fe.

She retired in 1998 and died three years ago. The company was sold after her death. It's not known who purchased the firm.

For more than 50 years, McCune Paper warehoused items such as cups and napkins, frozen food and dessert products for Dairy Queen stores.

McCune Paper truck drivers stocked more than 100 Dairy Queens in four states. At the same time McCune continued to supply other types of businesses with other kinds of paper products.

"They're doing their paper business. But a lot of their paper business was small," said Dick Montgomery, a Dairy Queen owner in Council Grove. "That is, it wasn't in tractor trailer-load quantities, whereas they did business with us in tractor trailer-load quantities.

"In my opinion, they were using the Dairy Queen side of the business to make their paper side of the business profitable," Montgomery said.

Montgomery also serves on a national distributor council for Dairy Queen restaurant operators. Dairy Queens operate under franchise or license agreements with the American Dairy Queen Corp., headquartered in Edina, Minn.

In October 2005, ADQ and McCune mutually agreed to terminate McCune's warehouse agreement, according to one the lawsuits, filed by ADQ.

Since the termination of the agreement on Jan. 31, ADQ claims, McCune has refused to pay service fees and past-due product invoices totaling $62,615.48.

Changes after the sale Montgomery said store owners began noticing changes after McCune Paper was sold.

"After the sale we began seeing more and more times when they didn't have product in the warehouse. It became worse and worse. I can't remember that being an issue when Mrs. McCune was the actual owner," he said.

"Frankly, the old McCunes provided home-town kind of service to Dairy Queens, which isn't available any more," Montgomery said. "Really, I think it's a loss for everybody."

He said the McCune warehouse has a refrigerated dock where ice cream products can be delivered and maintained at temperature.

"It was impressive when you were inside," he said. "It's an ancient building, and they were only using a fairly small part of it. The freezer part was fairly new."

Under the contract with Dairy Queen, McCune employed a number of warehouse people and truck drivers, plus five or six front office personnel devoted just to Dairy Queen's business, Montgomery said.

He said a representative from McCune attended a meeting of Dairy Queen distributors and vendors in Sonoma, Calif., in October.

"You wouldn't have thought they would have spent the money to send her to Sonoma, California, and then walk away from it. But that's what they did," he said.

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Copyright (c) 2006, The Salina Journal, Kan.

Distributed by Knight Ridder/Tribune Business News.

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BRK,

Source: The Salina Journal

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