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By Khaleda Rahman
National Correspondent
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Hooters is being sued by a former top executive, who alleges the company fired him after not paying him commission he earned.
Michael Arrowsmith, of Hillsborough, Florida, was hired as the company's chief development officer in June 2022. His role involved overseeing the growth of corporate and franchise locations, according to a press release issued by the company. Arrowsmith received a letter with an offer of employment on June 1 that year, according to a lawsuit he filed against Hooters of America (HOA) in the U.S. District Court for the Middle District of Florida on Wednesday.
According to the complaint, which Newsweek reviewed, the letter said that as well as receiving an annual salary of $275,000, Arrowsmith would be "eligible to earn a bonus in the form of commission on franchise sales."
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Arrowsmith "performed his work well and met the qualifications for earning commission" on such sales, the lawsuit said. He was due to be paid commission after his efforts resulted in a development agreement with Best Wings LLC in July 2023, according to emails included in the complaint.
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But days after he complained in November about not receiving the commission, he was terminated, the lawsuit said.
Shaina Thorpe, an attorney representing Arrowsmith, said her client is "seeking compensation for the value of the work he performed for HOA, whether that value was guaranteed by a contract or otherwise."
Thorpe said Arrowsmith "is also seeking to recover the lost wages and benefits, emotional damages, and other expenses incurred as a result of HOA's unlawful retaliation against him." She said that "final calculations on lost commission will be made as information is uncovered in the course of litigation."
Newsweek has reached out to Hooters via email for comment.
The complaint noted that Hooters CEO Sal Melilli congratulated Arrowsmith on the deal the following month, and told him his commission would be processed in "normal payroll." The company's chief financial officer also confirmed she was providing the information to payroll.
The commission he was due was $105,000, according to Arrowsmith's email correspondence included in the complaint.
The complaint goes on to say that after not receiving the payment, Arrowsmith emailed Melilli to remind him that the commission was due to him as part of his compensation package.
In that email, he told Melilli that he had agreed to "a below market salary" that board members "insisted upon" because "I believed in the Hooters brand and in my ability to market and sign-up franchisees."
He wrote that "per my employment package, that amount is due to me as part of my compensation. My employment agreement does not have a provision regarding openings, only signings."
Arrowsmith's employment was terminated "without cause" later that month, the complaint said.
A letter dated November 30, 2023, from Hooters said Arrowsmith's employment was terminated "for cause," but did not elaborate. It said that he would be eligible to receive severance pay for three months.
The lawsuit accuses the company of breaching Arrowsmith's employment agreement by not paying the commission due or the severance pay.
Arrowsmith is seeking financial damages, reasonable attorney's fees and costs and "any and all other relief permitted by law deemed just and proper by the court."
The complaint says he suffered damages in excess of $75,000.
Hooters "has not presented an actual, lawful reason for Mr. Arrowsmith's termination," Thorpe said. "It is our position that HOA terminated Mr. Arrowsmith in retaliation for his reports of unlawful conduct and falsely deemed it to be 'for cause' in the November 30, 2023 letter so HOA could try and avoid its obligation under Mr. Arrowsmith's employment contract to pay him a severance.
"We also believe that the unlawful termination was an effort to avoid fairly compensating Mr. Arrowsmith for the hard work he had put into growing the HOA brand, just when that hard work was coming to fruition."
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