The owners of Jacksonville's Edgewood Bakery in the city's Murray Hill neighborhood say they are open for business and committed to an out-of-court settlement with Jaguars owner Shad Khan, despite a high-profile lawsuit the billionaire has filed.
Khan, through his investment firm Stache Investments, has filed a lawsuit in civil Circuit Court asking for a declaration that Stache owns a majority interest in the business. The lawsuit is seeking complete control of the bakery on Edgewood Avenue, which has been in business for decades and is regarded as a Jacksonville institution.
"I was shocked when my husband told me they were claiming ownership, and when they sent someone in to try to terminate us and ask for our keys," said Carol Rykalsky. "I was under the assumption that Mr. Khan was trying to invest in the community and help entrepeneurs, not own them," she said.
Stache Investments first became interested in the couple's startup business Pure Treats when they ran a booth as a “creator” at the inaugural One Spark crowdfunding festival in 2013. Their concept was envisioned as creating a line of healthy foods and treats for schoolchildren as a means to combat childhood obesity.
To further their efforts, the Rykalskys bought the bakery in June with $800,000 from Stache Investments, under the name of U.S. Culinary & Beverage LLC. Stache was to have 20% control of the equity.
The couple's attorney, former Jacksonville City Councilman Jack Webb, disputes Khan's ownership claims. "The legal documents are less than clear. The claims of ownership are somewhat confused. Originally the deal was 20-80% ownership, 20% to Stache and 80% to the Rykalsys. Subsequently the claim became 100% which is actually reflected in an operating agreement dropped on my desk that no one from US Culinary had ever seen. The documents produced by Stache belie the representation that the evidence is clear. We filed a claim asking that the courts review all the documents. We don't want to litigate this thing. We hope that cooler heads prevail, people can get good information and we can work through these issues," said Webb.
Despite the termination notices, the Rykalsys continue to show up for work every day and stress all customers' orders, including those for wedding cakes, will be fulfilled. They dispute claims from Khan's spokesman, Jim Woodcock, that the business was being poorly managed.
“Mr. Khan regrets needing to take this step and will trust the legal system to take it from here and arrive at an appropriate resolution,” Woodcock said in a statement e-mailed to WJCT. “Mr. Rykalsky took exclusive control of the bakery’s operations, with the result today that Edgewood Bakery’s future appears to be in serious jeopardy."
Tom Rykalsky disagrees, telling First Coast Connect host Melissa Ross, "Everything was fine until I told them they don't own 100% of the business. Then suddenly, everything was terrible. They're even holding ingredients and materials we need to fulfill our customers' contracts."
The dustup with Edgewood Bakery is not the first time Khan has had a disagreement with a startup concern.
In October of 2013 the Jaguars owner pulled his funding from the local startup accelerator KYN, claiming the $1.1 million he'd invested wasn't being properly funneled to entrepeneurs seeking seed money.
No court date has yet been set for the dueling lawsuits filed in the Edgewood affair. Meanwhile, the Rykalskys say they're open to a settlement.
"Not only have we reached out to Mr. Khan about settling, we have investors that have come to the table to help us grow this company into the future," said Tom Rykalsky.
He continued, "We do have a patent pending for the process of us replacing fats and oils and other ingredients in baked goods. So that could be a very valuable prospect going forward."
Carol Rykalsky added, "My belief is that he (Khan) doesn't want to close Edgewood Bakery. But do we want Edgewood Bakery to be run by big business, or do we want it to be run by a local family?"
"The people in Murray Hill, that's what they want," she said tearfully. "They want the warm, smiling faces of a family."
