A year ago, a group representing around 75% of Burger King franchisees filed a lawsuit against BK corporate, claiming that they were losing money on some products because they were not allowed to sell them for more than one dollar. And now a judge in Florida has dismissed the lawsuit, saying the King was within his rights.
When the lawsuit was filed, a rep for the National Franchisee Association had said that the all-inclusive cost to a franchise for a double cheeseburger was around $1.10/sandwich, meaning the restaurants were losing cash for each one they sold.
In April, Burger King Corporate raised the maximum price to $1.29, but franchisees still believed that the company didn’t have the right to unilaterally impose maximum prices.
However, the judge in Florida disagreed:
There is nothing about the pricing decision that suggests BKC was doing anything other than seeking to promote the performance of its franchisees. Nothing about this action suggests bad faith.
The South Florida Business Journal quotes an anonymous source as saying that the franchisees are still considering more legal action:
While franchisees are disappointed with the court’s ruling, the right to price is vital to entrepreneurs’ ability to run successful business operations. The NFA is reviewing all legal avenues before it including the right to appeal this maximum pricing issue.
What do you think — Should franchisees be able to determine their own pricing? Or should fast food companies be able to tell them that they might lose money on some sales if they think it will lead to greater overall sales?
Burger King franchisee suit dismissed [bizjournals.com]