John Schnatter is talking with private equity firms to buy Papa John’s

John Schnatter is having trouble letting go.

The ousted founder of the Papa John’s pizza chain has reached out to a number of private equity firms in recent weeks to discuss partnering in a bid to buy the company, sources familiar with the situation tell CNBC.

Schnatter, who already owns roughly 30 percent of Papa John’s, is looking for capital to help support an offer, sources say. Several private equity firms have turned him down though, concerned about of the reputational risks inherent in partnering with him. Meantime, those interested in buying Papa John’s do not believe that working with Schnatter is the best path towards a winning offer, some of the sources say.

Schnatter was ousted as chairman earlier this year, when racially charged comments he made on a conference call leaked to the press. Since then, he has been locked in a bitter battle with the company’s board, whom he has accused of staging a coup to force his exit. The restaurant chain also adopted a defense mechanism known as a “poison pill” to prevent a hostile takeover from Schnatter or others.

As it grapples with its public relations crisis, shares of Papa John’s have fallen nearly 40 percent over the past year. The restaurant chain earlier this year hired Bank of America and Lazard as financial advisors as it looks to clean up the mess.

Papa John’s shares rose nearly 5 percent after CNBC reported Schatter’s interest in buying the company.

Papa John’s is actively talking with potential buyers, the sources say, cautioning a sale process is still in its early stage and may not ultimately result in a sale. A thorn in any sale, however, is Schnatter’s stake, with potential buyers leery of purchasing a company in which he continues to be involved, sources tell CNBC. It remains unclear how Papa John’s will address that issue.

Despite its public relations challenges, the restaurant remains a desirable target, should questions around its ownership be resolved, sources say. Pizza is one of the few food items that, like hamburgers, scales well internationally. With sufficient investments in technology, there may be opportunity to revive the brand to echo the resurgence enjoyed by Domino’s after its own technology investments.

Challenges, meantime, include a franchisee base that is fretting over the brand’s future and a company built on the back of football, as viewership of the sport declines. It also recently warned that falling sales put it at jeopardy of breaching a loan covenant, though its capital structure would likely be reworked in the event of a sale, one of the sources said.

Most likely buyers for Papa John’s include Wendy’s, Restaurant Brands International and Inspire Brands, which is majority backed by private equity firm Roark. The Inspire empire includes Arby’s, Buffalo Wild Wings and Sonic, once its $2.3 billion acquisition of the burger chain closes later this year.

The sources requested anonymity because the information is confidential. Schnatter wasn’t immediately available, Papa John’s declined to comment.