MIDDLETON, Wis. -- PDQ Food Stores, a 46-store convenience chain based here, was sold to its employees under an Employee Stock Ownership Plan (ESOP). With 550 employees, and stores in Wisconsin, Minnesota and California, the company became 100 percent employee-owned as of last Thursday, the Wisconsin State Journal reported, citing PDQ Food Stores’ spokesman Phil Troia.

Jeff Jacobsen, son of PDQ founder Sam Jacobsen, sold the company for an undisclosed price. "He decided to pursue other interests and gave us the opportunity to buy the company under the ESOP," Troia said. "We’re excited about the opportunity."

The management structure, headed by President Jerry Archer, will remain the same, the report stated. Not all employees will be immediately eligible for the plan, Troia said, though he declined to provide further details about how the ESOP will work.

Under a typical ESOP, a company’s stock is held in trust and distributed to employees annually in a manner similar to retirement benefits. When employees leave the company, they either receive the cash equivalent of their stock or sell the stock back to the company, Loren Rodgers, a project manager with the National Center for Employee Ownership (NCEO) of Oakland, Calif., told the Wisconsin State Journal.

In most cases, a lender provides the money to buy the stock although sometimes the sale is financed by the seller, who receives tax benefits when selling to an ESOP.

Three of the nation’s five largest employee-owned companies are supermarkets, according to NCEO. The largest is Publix Supermarketsof Lakeland, Fla., with 142,000 employees. The second largest is Hy-Vee of West Des Moines, Iowa, with 51,000 employees.

The impact of an ESOP varies, according to Rogers, who said at most companies, the effect is minimal. ESOPs often are formed so owners can sell the business, he noted. In most ESOPs, employees do not buy the stock. Instead, it is awarded to them annually, sometimes based on compensation levels or seniority.

PDQ founder Sam Jacobsen opened his first store in 1948 under the Tri Dairy name. He changed the name to PDQ upon opening his second store in 1962.