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‘I am Papa John’: Pizza chain founder John Schnatter’s battle with the board heats up

Papa John's Pizza founder John Schnatter arrives at the 2012 Academy of Country Music Awards in Las Vegas.
Denise Truscello | WireImage | Getty Images

The Papa John's Pizza saga has reached new heights.

John Schnatter, the chain's founder, has created a website stating, "We are getting the truth out there," and is running a full-page ad in the Louisville Courier Journal on Wednesday telling employees how much he misses them.

The Save Papa John's website includes legal documents relating to Schnatter's feud with the board of the pizza chain, which has removed his "Founders Agreement" from its site, has taken him off marketing material and stopped him from using corporate headquarters.

The Papa John's board acted after Schnatter appeared on Louisville television claiming that PR agency Laundry Service tried to extort $6 million from the pizza chain. Schnatter filed a lawsuit against the board on July 26, accusing it of negligence.

Under the headline "I am Papa John," Schnatter states on his website that he loves the company and its employees. "I built Papa John's from the ground up and remain its largest shareholder… The board wants to silence me. So this is my website, and my way to talk to you."

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In a letter to Papa John's employees, Schnatter denied that he wanted his image removed from offices and marketing. 

"This is not the case at all. As you all know, Papa John's is our life's work," he wrote.

Papa John's maintains that Schnatter asked to have some items with his likeness removed from the corporate office. The company did not specify which items, however.

Schnatter stepped down as chairman in July after Forbes reported that he used the N-word during a media training call with Laundry Service in May. But legal documents on Schnatter's website state: "There is a world of difference between using the word as a slur — demeaning someone by calling them that word — and quoting that word," a statement previously reported by Forbes. Schnatter claims he was emphasizing that it was "utterly wrong and inappropriate" to use the word.

He is feuding with the company he built into the U.S.'s third-largest pizza chain, saying executives should reinstate him as CEO. He quit the chief executive role in November after saying: "NFL leadership has hurt Papa John's shareholders," when players knelt during the national anthem. Papa John's was a NFL sponsor but the association ended three months early after Schnatter's comments, which provoked public outrage.

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Schnatter then promoted longtime staffer Steve Ritchie into the CEO role but told CNBC earlier this month: "Franchisees don't believe in this leadership, don't believe in this management team and I don't believe this board has the oversight or the confidence to help steer the company in the right direction."

Reports of a toxic culture at the pizza chain surfaced in July, including allegations of sexual harassment involving Schnatter that resulted in at least two confidential settlements, which he disputed when contacted by Forbes.

Delaware Court of Chancery documents on Schnatter's website, dated August 20, say that he has heard about senior staff members' inappropriate behavior from employees since he stepped away from day-to-day management and appeared to push Ritchie under the bus. "While the July 19 (Forbes) article took certain facts out of context to be critical of plaintiff (Schnatter), and plaintiff disputes many of article's assertions regarding his conduct, the July 19 article reported that 'under [Steve Ritchie's] watch, the culture at Papa John's devolved.'"

A Papa John's spokesperson said in an emailed statement: "We are not, nor should we be, dependent on one person. Papa John's is 120,000 corporate and franchisee team members around the world. Stakeholders, including customers, franchisees, employees, and investors, have expressed strong support for the actions we have taken to separate our brand from Mr. Schnatter. No matter what John does, he will not be able to distract from the inappropriate comments he made. We appreciate this support and are confident we are taking the right steps to move the company forward."

Schnatter had not responded to CNBC's request for comment by the time of publication.

This story has been updated to include a statement from Papa John's.

  • CNBC's Sarah Whitten and Kate Rogers contributed to this report.