When a company creates a successful business model it usually wants to duplicate this success in order to multiply its profit margin. One way to do this is to begin franchising its business model in order to expand the brand’s market. Restaurants are an example of a commonly franchised business type in Georgia. However, it is important for all parties to fulfill the terms of the franchise agreements in order to avoid the need for litigation.
Restaurant franchise Steak n Shake has allegedly failed to do this, resulting in litigation being filed by three franchisees. The dispute surrounds the company’s policy requiring franchisees to adopt the company’s uniform menu prices. The franchisees claim that the defendant company should not have required franchisees to conform to menu prices.
The plaintiffs, who have filed three separate lawsuits, are attempting to stop the company from terminating their franchise agreements. The franchisees are also alleging fraud as well as breach of contract. The plaintiffs in their separate lawsuits argued that the defendant company should not have forced franchisees to conform to the company’s menu policies since a federal appeals court already ruled in favor of another franchisee who previously challenged the practice.
This case illustrates how parties to franchise agreements may not always see eye-to-eye in Georgia or in any other state. Litigation may be the only solution when disputes are not able to be resolved between the parties. However, in order to prevail, a party to a business litigation case will have to effectively argue a strong legal argument in front of the court.
Source: Indianapolis Business Journal, “Steak n Shake dispute with franchisees reaches to Denver,” Scott Olson, Aug. 5, 2013