Rent-A-Wreck , the company founded in Los Angeles in 1968, with the motto Don't Let The Name Fool You! has filed for bankruptcy. Rent-A-Wreck began as a pioneering concept: renting used cars for less at neighborhood locations. Airport based car rental was typical in the 1960s, and most renters were business travelers or vacationers renting while out of town. Media coverage, notably in the New York Times, Wall Street Journal and Mike Wallace show, sparked national interest in Rent-A-Wreck, and by 1973, the company had sold its first franchise.
Rent-A-Wreck of America Inc. has filed for Chapter 11 bankruptcy in Delaware, saying lengthy and costly litigation with the company's founder had strained its liquidity and forced it into restructuring as operational losses mounted. Gregg Steinbarth, Rent-A-Wreck director and general counsel, said that the company began experiencing serious issues following its 2006 acquisition by JJF Management Services Inc. that included lawsuits brought by the company's founder David Schwartz. Rent-A-Wreck has spent $2.7 million in legal fees and expenses defending the Schwartz litigation over the past 10 years.
Schwartz founded Rent-A-Wreck as an alternative to expensive car rental agencies by offering used cars to consumers for their rental needs. The company went public in 1985 and was acquired by JJF in 2006. There are currently 76 Rent-A-Wreck franchises in 28 states and on the island of St. Maarten. A master franchisee in Oslo, Norway, administers sub-franchises in Iceland, Norway, and Sweden.
Here's 72-year old Rent-A-Wreck founder Dave Schwartz in the boxing ring in 2008.The company is trying to avoid being knocked out.
The company came to court with a plan to right-size its franchise network by eliminating underperforming and non-performing franchise locations. It is hoped that the restructuring will allow the debtor to put more focus on its healthy franchises and bolster the inherent value in the Rent-A-Wreck name, as well as position the remaining locations for success after emerging from bankruptcy administration. It is expected to be business as usual for the time being at existing Rent-A-Wreck franchise locations.