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CHICAGO — Burger King franchisees sued the fast-food giant this week over its $1 double cheeseburger promotion, saying that they're losing money on the deal and that the company doesn't have the power to set maximum menu prices.
In its filing Tuesday in the U.S. District Court of Southern Florida, the National Franchise Association, a group that represents more than 80 percent of Burger King's U.S. franchise owners, said the $1 promotion forces restaurant owners to sell the quarter-pound burger with at least a 10-cent loss.
"New math, or old math, the math just doesn't work," said Dan Fitzpatrick, a Burger King franchisee from South Bend, Ind., who is a spokesman for the association.
After testing the $1 deal in markets across the country, the discounted burger went on sale nationwide last month even though franchise owners, who operate 90 percent of the company's 12,000 locations, twice rejected the product because of its expense.
"The current management team has disregarded rights that Burger King franchisees have always had," Pennsylvania franchise owner Steve Lewis said in a statement.
Denise Wilson, a spokeswoman for the nation's No. 2 hamburger chain, said the Miami restaurant company believes the litigation is "without merit," particularly after an earlier appeals court ruling this year showing the company had a right to require franchise owners to participate in its value menu promotions.
Restaurants, especially fast-food chains, have been slashing menu prices because of the poor economy. Executives hope the deeply discounted deals will bring in diners who are spending less when they eat out, or opting to stay home altogether.
When the $1 double cheeseburger was announced this fall, analysts said it could increase restaurant visits by as much as 20 percent. But despite that boost, a Deutsche Bank analyst said as much as half of the gain recorded from increased traffic could be lost because customers were spending less when they ordered food.
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