The sale was approved shortly after the auction by Judge Leif Clark of the United States Bankruptcy Court for the Western District of Texas, San Antonio Division, with a targeted closing date of December 31. After that, Bobby Cox Cos. will operate the Schlotzsky's franchise system as a privately owned company. The sandwich maker, founded in Austin in the early 1970s, has been a public company for nearly 10 years, but declared bankruptcy in August.

According to those familiar with the sale, a number potential investors participated in the auction that took place Wednesday in Dallas, driving the price of the sale up nearly 15% over the reserve price of $25 million. Sam Coats, Schlotzsky's interim president and CEO, plans to remain with the company for an unspecified transition period. Based on the total outstanding liabilities and creditor's claims of Schlotzsky's, it isn't clear at this point if any proceeds from the sale will be distributed to Schlotzsky's unsecured creditors, and none will be available for shareholders.

Cox, who began his career in 1961 by owning and operating a snack bar in Odessa, is unusual in the retail business, in that his company is currently both a franchisor and a franchisee. The Bobby Cox Cos. franchises Taco Villa, Rosa's Café & Tortilla Factory, and Texas Burger, all of which operate predominately in the southwestern United States. The company has been a franchisee of Dairy Queen and Peter Piper Pizza, and is currently a franchisee of Dippin' Dots. Cox also operates 36 franchised Blockbuster Video stores in 14 markets throughout the Southwest, in addition to his restaurant holdings.

"Having been on both the franchisee and the franchisor side of numerous businesses over the years, I understand that the parent company only prospers when the franchise community is strong and successful," Cox says. "We'll do everything in our power to help franchisees reach their growth goals."

Though Bobby Cox Cos.' holdings extend far beyond the restaurant or even retail realm—including telecommunications, oil and gas production, custom food manufacturing, ranching and real estate development—the acquisition of Schlotzsky's represents a leap in magnitude for the Texas restaurateur. Currently the sandwich shop has 505 locations across the country (plus six in other countries), while Bobby Cox Cos.' chains have far fewer: Rosa's Café has 16 locations, Taco Villa has 11 and Texas Burger has five. Also, Robert Barnes, Schlotzsky's new president, owns and operates a two Rockin' Q Smokehouse and a concept called Coyote Beach Café, all in Odessa.