Issues large and small marked another litigious year for the U.S. franchising industry. To review the legal landmarks, we spoke with Leonard D. Vines, a partner at the St. Louis office of law firm Greensfelder, Hemker & Gale PC. Mr. Vines has represented both franchisers and franchisees. Here are edited excerpts of the discussion.
Wall Street Journal – By Richard Gibson:
THE WALL STREET JOURNAL: What were 2010’s most important franchising cases?
LEONARD VINES: One closely watched dispute was over whether Burger King could impose pricing on franchisees. The hamburger chain wanted franchisees to sell a double cheeseburger for $1, a price that franchisees said lost them money. The Burger King National Franchisee Association sued in November 2009, claiming that Burger King had acted in bad faith in setting such a low price, but a federal district court in Miami disagreed and dismissed the lawsuit. The court ruled that Burger King had broad discretion to adopt marketing strategies it judged vital to compete, and that the franchisees hadn’t shown that a single item “loss leader” threatened their viability. [The franchisee group and several individual franchisees have filed a motion with the court to reconsider, contending in part that facts uncovered after the ruling justify their filing an amended consolidated class-action complaint. The court hasn’t ruled on that. Burger King said it considers the motion without merit and “would continue to make Value Menu decisions after careful test marketing and with the best interests of our franchisees in mind.”] Read more.