Burger King's Franchise Missteps May Flame-Broil It For Some Time

Last Updated Feb 25, 2010 6:05 PM EST

With the recent news that Burger King (BKC) is pulling the plug on its $1 double-cheeseburger promotion, we've found the bottom in the dollar-menu wars. Unfortunately, the ill will generated by BK's insensitivity to the concerns of its franchisees will likely continue to flame-broil the company for a long time to come. Begun last October, the promo engendered open hostility at many franchisees, who claimed they were losing a dime on each sale. In November, a majority of them sued in BK's home state of Florida, charging that the mother company didn't have the right to dictate the burger's maximum sale price. Now BK has backed off, allowing franchisees to substitute a double burger with one cheese slice instead of two to offer a better profit margin.

Tellingly, it was the second lawsuit the franchisee's national association filed against BK last year -- the first sought to retain soda-purchase rebates for franchisees that BK wanted to divert to its national advertising fund. BK announced that along with dropping the compulsory dollar double-cheese, it would also cease pursuing the soda rebates.

There seems to be a troubling disconnect here between Burger King headquarters and the franchisees out in the trenches who are trying to make a buck in a tough economy. Hopefully, these gaffes will lead to headquarters brass getting front-line franchisees more in the loop as they develop initiatives. Otherwise, BK could easily face further franchisee revolts. One development this week that may ease some of the tension: BK unveiled a new premium burger line, Steakhouse XT, which will offer franchisees more of a profit-margin opportunity with prices from $3.99 to $4.49. Image via Flickr user keepwaddling1, CC 2.0

  • Carol Tice

    Carol Tice is a longtime business reporter whose work has appeared in Entrepreneur, The Seattle Times, and Nation's Restaurant News, among others. Online sites she's written for include Allbusiness.com and Yahoo!Hotjobs. She blogs about the business of writing at Make a Living Writing.