News
Burger King franchisees withdraw soda rebates suit
March 7, 2010
The National Franchisee Association, which represents a large portion of U.S. Burger King franchisees, has settled its class action lawsuits against Burger King Corp. and soft drink vendors The Coca-Cola Co. and Dr Pepper Snapple Group Inc.
The franchisee group had filed suit against BKC after the company announced last May its plans to divert and reallocate franchisees' soda rebates as part of their restaurant operating funds in order to boost national ad spending. Several weeks ago, BKC and its franchisees agreed to a resolution that would boost the national ad fund while allowing operators to continue to receive 100 percent of the soda rebates.
BKC chairman and CEO John Chidsey explained the new plan at the Deutsche Bank Securities Small and Mid Cap Conference in Naples, Fla., in mid-February. He said then that the new plan calls for the company to cease matching franchisees' local marketing contribution, resulting in a $36 million increase to the ad fund. Franchisees agreed to make up that difference in local ad spend over the next two years.
BKC said in a statement that it is pleased that the company and the National Franchisee Association have mutually agreed to dismiss the lawsuit.
BKC leadership and a diverse, cross-section of franchisees recently collaborated on a new approach to bolster the brand's national media fund and provide incremental dollars to promote new products and dayparts. This new approach does not involve the reallocation of these restaurant operating funds.
BKC takes great pride in our franchise system and working constructively and collaboratively with our franchisees to strengthen the Burger King brand as a whole and move the business forward.
William Harloe, chairman of the NFA, sent in a statement on March 4 notiftying the Burger King franchise community that the agreement was finalized in a legal document and the suit dismissed.
On behalf of the NFA, I believe this excellent result is testament to the fact that, when we come together as franchisees to protect our mutual business interests, we can and will prevail. We know your　personal efforts, as well as NFA actions representing your best interests, led to this positive result. On behalf of your NFA officers and board, we thank you.
The NFA also filed a class action lawsuit against BKC regarding pricing for the $1 double cheeseburger last fall. Chidsey has said last month that the burger's price will change to $1.19 in April and that a double hamburger with one slice of cheese will replace the double cheeseburger on the value menu. Despite that announcement, the NFA has "no updates to report regarding the pricing suit," said Kristi Keith, spokeswoman for the NFA.
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