News & publications
The King is dead?- 28/09/2010
Burger King has been sold to private equity firm 3G Capital for $3.26bn (£2.1bn).
Burger King is the second-largest hamburger chain in the world and has 12,100 outlets worldwide. However, whilst many fast food chains have done very well in the current challenging economic environment (notably Domino's and rivals McDonalds) with consumers in this country and elsewhere 'trading down' in their eating habits, Burger King has been struggling and recently forecast continuing weak demand for the rest of 2010. In contrast, McDonalds has managed to transform its fortunes with a revamped menu including a focus on healthier options and a more sophisticated décor and branding for its restaurants. Analysts have suggested that BK needs to undertake a similar exercise to brighten its locations and will need to work on this with its network of franchisees. The take-over by 3G may make more funding available for this.
A franchisor's ability to require franchisees to refurbish their outlets and who bears the cost of this is something which needs to be clearly set out in the franchise agreement or it can become a major point of dispute, particularly where large powerful networks of franchisees are involved. Dairy Queen is one example of a franchisor which has recently experienced strong franchisee revolts over refurbishment costs. Obtaining advice on the drafting of your agreements at the outset can avoid issues later on.