Burger King, franchisees agree to settle lawsuit over soda rebates

"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,'' NFA Chairman Bill Harloe said in a statement to members. Franchisees have gotten these “restaurant operating funds” for a decade or more based on the amount of soft drink syrup they purchase from Coca-Cola Co. and Dr. Pepper Snapple Group…Ultimately, it can help improve a restaurant's bottom line, particularly during tough economic times. Burger King had hoped to start taking 40 percent of that money this year as a way to increase its national marketing.

http://www.miamiherald.com/
March 5, 2010

Burger King, franchisees agree to settle lawsuit over soda rebates
Elaine Walker

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Score one victory for Burger King franchisees in their ongoing battle with the Miami-based company.

Burger King's National Franchisee Association reached an agreement with Burger King that puts an end to the company's plan to take a portion of the millions of dollars in annual rebates franchisees get from soda companies.

The deal finalized late Wednesday includes the dismissal of a class-action lawsuit the NFA filed last May in U.S. District Court, Southern District of California, against Burger King, the Coca-Cola Co. and Dr. Pepper Snapple Group.

“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,” NFA Chairman Bill Harloe said in a statement to members.

Franchisees have gotten these “restaurant operating funds” for a decade or more based on the amount of soft drink syrup they purchase from Coca-Cola Co. and Dr. Pepper Snapple Group. The money is supposed to offset the costs of purchasing, leasing and repairing the soda machines, as well as local marketing initiatives. Ultimately, it can help improve a restaurant's bottom line, particularly during tough economic times.

Burger King had hoped to start taking 40 percent of that money this year as a way to increase its national marketing.

Instead, Burger King and the franchisees agreed that the company will use the matching funds it usually provides for local marketing support instead to increase the U.S. national advertising fund. This will start happening in July and will be used to promote Burger King's new product launches.

“With increased national media, we believe we can achieve break-through consumer awareness for our brand and substantially enhance the return on our advertising investment,” Chuck Fallon, president of Burger King North America, said in a memo to franchisees.

http://www.miamiherald.com/2010/03/05/1514370/burger-king-franchisees-agree.html


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