International Law

Burger King's Opening Hours

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Ryan, writing at the Franchise Pundit, has a good observation about why it is important to have good counsel read a franchise agreement.

"Three Burger King franchisees in Florida found that every word counts in the franchise agreement.

Burger King's franchise agreements mandate operating hours "at a minimum of 7 a.m. to 11 p.m, seven days a week, 52 weeks a year, unless otherwise authorized or directed by BKC or unless prohibited by applicable law."

The franchisees argued that the language only gave Burger King the authority to exempt franchisees from those minimum hours, but not to mandate extended hours. 

The franchisor argued the language clearly gives them the right to require additional hours.

I agree with the franchisor that the language "unless otherwise...directred by BKC" clearly gives BKC the authority to change the hours of operations."

The franchise lawsuit was described as follows:

"The franchise owners are all based in South Florida and operate a total of 57 stores.

According to the lawsuit, the corporation recently demanded they keep stores open until 2 a.m. on certain nights and open at 6 a.m. on certain days. Previous contracts had only required staying open until 11 p.m. and opening at 7 a.m.

In a written statement, Burger King said it was confident that it has the right, under its agreements with franchisees, to set required hours of operation, which it claims is in line with local competitors.

Robert Zarco, counsel for the franchisees argued:

"The three franchisees, which together own 57 Burger King locations, allege that forcing them to stay open into the early morning creates a greater chance that employees or customers could be subject to crime or other dangerous situations.

They also claimed sales in those hours aren't enough to keep up with the higher salary, energy and insurance costs associated with staying open late.

"The financial impact on the franchisees is devastating," said Robert Zarco, an attorney who represents the plaintiffs.

The plaintiffs in the suit are Ramalco Corp., Southern Management Corp., Tri- Management Co. and Furman's Inc. Southern Management and Tri-Management are both controlled by the same individual franchisee.

The complaint has the backing of Burger King's National Franchisee Association, which represents more than 1,200 franchisees in the system. In a statement, the group said that it has heard similar concerns from franchisees nationwide."

This is the classic battle between a franchisor who earns money on the gross profits versus the individual franchisee who earns money of the net profits. It makes sense for the franchisor to require franchisees to stay open longer, even though each individual franchisee might lose money on the extra hours.

Full post as published by Misleading Advertising Law on November 07, 2008 (boomark / email).