Settlement in Burger King Franchise Dispute
Thursday, April 21st, 2011 | Lawyer Marketing
Any franchise dispute involving Burger King is always going to be of interest to a California franchise dispute lawyer, because the Miami-based company is almost completely a franchisee-based operation. This week, Burger King franchisees settled a business dispute with the company. Under the agreement, the franchisees will agree to dismiss the lawsuit, and Burger King, in return, will give franchisees more authority to set prices for several low-priced items on the restaurant’s menu.
Burger King is an almost 90% franchisee-based operation with most of its restaurants being operated by franchisees. In 2009, the Burger King franchisees represented by the National Franchisee Association filed a lawsuit against the company. The complaint was mainly based on Burger King’s decision to set the Value Menu price of its double cheeseburger at $1. According to the franchisees, this affected their profits. The complaint alleged that the franchise agreement did not allow Burger King to set the prices for the items on the menu.
On Monday, Burger King announced that it had reached an agreement with the franchisees. Under the agreement, it is working with the franchisees to allow them to have their input on the prices of items offered under the Value Menu. Franchises will also have a say in how long such promotional offers will continue. This agreement does not involve any monetary settlement.
Typically, fast food chains like Burger King use low-priced items like the one-dollar cheeseburger to lure customers into their restaurants. However, if these low prices are below cost, then the franchisees can expect to lose money. Franchisees are expected to pay royalties to the franchisor, in this case, Burger King Corporation. When too many sales involve low-priced items, then the franchisees could find that they are actually losing money from the sales of these low-priced items.
Settlement in Burger King Franchise Dispute
Horn
http://www.reuters.com/article/2011/04/18/us-burgerking-idUSTRE73H5F220110418
Any franchise dispute involving Burger King is always going to be of interest to a California franchise dispute lawyer, because the Miami-based company is almost completely a franchisee-based operation. This week, Burger King franchisees settled a business dispute with the company. Under the agreement, the franchisees will agree to dismiss the lawsuit, and Burger King, in return, will give franchisees more authority to set prices for several low-priced items on the restaurant’s menu.
Burger King is an almost 90% franchisee-based operation with most of its restaurants being operated by franchisees. In 2009, the Burger King franchisees represented by the National Franchisee Association filed a lawsuit against the company. The complaint was mainly based on Burger King’s decision to set the Value Menu price of its double cheeseburger at $1. According to the franchisees, this affected their profits. The complaint alleged that the franchise agreement did not allow Burger King to set the prices for the items on the menu.
On Monday, Burger King announced that it had reached an agreement with the franchisees. Under the agreement, it is working with the franchisees to allow them to have their inputs on the prices of items offered under the Value Menu. Franchises will also have a say in how long such promotional offers will continue. This agreement does not involve any monetary settlement.
Typically, fast food chains like Burger King use low-priced items like the one-dollar cheeseburger to lure customers into their restaurants. However, if these low prices are below cost value, then the franchisees can expect to lose money. Franchisees are expected to pay royalties to the franchisor, in this case, Burger King Corporation. When too many sales involve low-priced items, then the franchisees could find that they are actually losing money from the sales of these low-priced items.
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