A former Culver’s franchisee who has charged the Prairie du Sac, Wis.-based burger chain with discrimination after it refused to allow him to build a location on Chicago’s South Side will be able to argue his case at trial, a federal judge ruled this week.
U.S. District Judge Thomas Durkin refused to dismiss a case brought about by former franchisee Michael Wilbern, which should enable the case to proceed to trial.
“Unfortunately, Chicago has very segregated housing patterns, and we have all these communities that are job deserts and food deserts,” said Wilbern’s attorney, Carmen Caruso. “Michael Wilbern tried to change that, but couldn’t because of the things we allege in the lawsuit.”
Culver Franchising System Inc., or CFSI, has denied the allegations.
“The judge determined that certain issues of fact exist in this case and that it will proceed to trial,” the company said in a statement. “He did not make any ruling on the merits of the case. Culver Franchising System Inc. strongly and categorically denies the discrimination charges contained in this lawsuit.
“CFSI embraces diversity in race, religion, age and sexual orientation as it relates to team members, franchisees, suppliers and our valued guests. CFSI looks forward to responding to these charges in court and feels confident it will be exonerated.”
At issue in the lawsuit is whether Culver’s discriminated against Wilbern in its treatment of the former franchisee and his effort to build a location on the South Side of Chicago.
Wilbern had managed a dozen KFC locations and a Taco Bell in urban Milwaukee when he decided to get into the Culver’s system. According to the lawsuit, Wilbern tried repeatedly between 2003 and 2012 to build a location in predominantly black communities in the South Side of Chicago. He claims he was denied those locations every time, even though local officials offered him tax incentives to open the location.
Those incentives would have made the location cost effective. One of the sites Wilbern wanted was near a successful Chili’s restaurant, Caruso said.
Instead, Wilbern argues that he was steered toward sites in the western suburbs. He ultimately opened a location in the mostly white suburb of Franklin Park, Ill. He went along with the location so as not to “rock the boat,” and build a relationship, according to the lawsuit.
Yet Wilbern claims that the location ultimately failed because its fixed costs were higher than usual, due largely to a leasing arrangement with the landlord.
He also claims that the company refused to let him raise prices to pay for those costs, and that two other operators were allowed to open within five or six miles of the location. Those locations cannibalized his business, he said.
Wilbern says Culver’s refused to provide a guaranty that would have enabled him to refinance the lease and avoid bankruptcy. Wilbern lost his lease, and his franchise agreement was terminated. A white franchisee that owned one of the nearby locations took over the restaurant, according to the lawsuit.
Wilbern currently works as a security guard but, according to Caruso, is still looking to get back into the restaurant business.