Elaine Walker reports in the Miami Herald that the fight over Burger King’s $1 double cheeseburger landed in court, in a debate over whether the fast-food chain has the right to set pricing.
Burger King asked U.S. District Judge K. Michael Moore on Thursday to dismiss the class-action lawsuit filed by franchisees over the $1 double cheeseburger.
Miami attorney Michael Joblove argued that the issue of Burger King’s right to set maximum pricing was already decided last year in a ruling by the U.S. Court of Appeals in the 11th Circuit.
In that case the court ruled there is “simply no question that BKC had the power and authority under the Franchise Agreement to impose the Value Menu on its franchisees.”
“There is sound business judgment behind this,” Joblove argued Thursday in Miami federal court. “It’s not capricious. We’re responding to the competition. Everyone is out there with $1 products.”
Burger King’s National Franchisee Association filed suit last November in Miami over the $1 double cheeseburger, arguing that the company does not have the authority, under the franchise agreement, to “dictate maximum pricing.”
“We’re asking the court to declare the meaning under the contract,” said Paul Reynolds, a San Diego attorney representing the franchisees. “In our view it’s unambiguous in our favor.”
Moore did not rule Thursday on whether to dismiss the case.
Burger King franchisees have argued that the company only has the right to recommend pricing and it is the independent franchisees who set their own prices. Franchisees had twice voted down the $1 double cheeseburger before Burger King insisted on introducing it nationally.
The suit, which seeks class-action status, came after Burger King started requiring all franchisees to sell the double cheeseburger for $1. They claimed the item was costing them money, dragging down the average check and restaurant profitability.
As of April 12 Burger King allowed franchisees to raise the price of the double cheeseburger to as high as $1.29.
Burger King’s attorney also argued Thursday that the National Franchisee Association does not have the standing to bring a class-action lawsuit against the Miami-Dade fast-food chain. Joblove said the case would require individual franchisees to demonstrate they incurred losses selling the $1 double cheeseburger. Burger King’s fixed costs on the product give a profit margin of about 40 percent, he said.
But Reynolds argued that franchisees were concerned they might get “retaliated” against by Burger King for testifying as individuals.
“The claim is not an attempt to recoup losses,” Reynolds told the court.
Read more: Miami Herald