Papa John’s founder alleges extortion, says he shouldn't have resigned

Papa John's founder said “it was a mistake” to step down as chairman.

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He is also questioning how the company’s board investigated his use of a racial slur.

John Schnatter resigned last week after publicly apologizing for using the slur during media training with a marketing agency. Days later, in a letter to the directors reviewed by The Wall Street Journal, he accused the board of failing to do due diligence on the matter.

“The board asked me to step down as chairman without apparently doing any investigation. I agreed, though today I believe it was a mistake to do so,” Mr. Schnatter said in the letter, according to the Journal. “I will not allow either my good name or the good name of the company I founded and love to be unfairly tainted.”

Schnatter on Friday accused marketing agency Laundry Service of attempting to extort him for $6 million to keep his use of a racial slur during a May conference call from going public.

“They wanted $6 million to make it go away,” Schnatter said during an interview with WLKY, a Kentucky CBS affiliate. “They made it pretty clear. The words were, ‘If I don’t get my [expletive] money, I’m going to bury the founder. … I’m not for sale. They tried to extort us and we held firm and they took what I said and they ran to Forbes, and Forbes printed it.”

Laundry Service representatives did not immediately respond to a request for comment.

Schnatter, Papa John’s founder and former CEO, stepped down as chairman of the board last week after Forbes reported that he had used the N-word during a conference call with Laundry Service executives last May. The call had been intended as a training session on how to avoid public relations mistakes.

During the May conference call, Schnatter attempted to downplay his public criticism of the NFL’s handling of player national anthem protests, arguing that KFC founder Colonel Harland Sanders had “called black people [the N-word]” without facing a public outcry. Schnatter, while still serving as Papa John’s chief executive, said last November that the NFL had hurt the pizza chain’s sales.

Schnatter told WLKY that he was “actually kind of provoked” into using the racial slur during the call, the content of which he thought was confidential.

Papa John’s said in a statement late Sunday night that a special committee of its board members had approved a plan to oust Schnatter from company headquarters and remove him as an advertising and brand spokesman.

“As previously announced, Mr. Schnatter is no longer a spokesperson for the company or the brand,” Papa John’s said in a statement. “The company has specifically requested that Mr. Schnatter cease all media appearances, and not make any further statements to the media regarding the company, its business or employees.”

Papa John’s did not immediately respond to a request for comment on Schnatter’s claims that he was extorted.

Schnatter said he is “absolutely not” a racist.

“I don’t condone racism in any way. Period,” he said.

Major League Baseball and several of its individual teams suspended their marketing agreements with Papa John’s after Schnatter’s remark went public. Schnatter also stepped down from the University of Louisville’s board of trustees.