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Burger King, Texas franchisee settle lawsuit

Brand parent had sued over trademark infringement after rodent incident

Restaurant Brands International Inc., parent to the Burger King brand, and Fritz Management LLC, a franchisee it had sued over trademark infringement, have settled their disagreement in the wake of a widely publicized rodent incident at a South Texas unit operated by Fritz.

Guillermo Perales, the principal in Fritz Management as well as CEO of Dallas-based multi-brand franchisee Sun Holdings Inc., said in a statement this week that the legal action had caught him unawares after 20 years as a franchisee of Burger King.

“Certainly, I was surprised by the lawsuit,” Perales said. “The issue had been resolved quickly and properly at least a month earlier. While disputes happen in large business operations, what really matters is how they are handled.”

Burger King Corp. had sued in early April to remove its trademarks from 37 restaurants in South Texas after ending franchise agreements in the wake of a television station’s investigation of rats in at least one Harlingen, Texas, unit.

RBI’s Burger King division filed suit in U.S. District Court for Southern Florida against Irving, Texas-based Fritz Management and Perales after it said it had notified Fritz on March 22 that it was in default on 34 franchise agreements in South Texas and three additional agreements in Brownsville, Texas, after February inspections and a publicized rat incident.

The local Telemundo 40 station in February aired an investigation into reports of rats and baby rats in a Harlingen unit at 1902 S. 77 Sunshine Strip.

Burger King, in its lawsuit, claimed the franchisee’s sanitary practices had exhibited “conduct which is deleterious to and reflects unfavorably on them and the Burger King restaurant system by exhibiting a reckless disregard for the physical and mental well-being of employees, customers, BKC representatives or the public at large.”

Perales said this week that after learning about a claim of rodent activity in one of his recently renovated stores, he took immediate action and ensured the store was cleaned and passed several health department inspections.

“Resolving this issue amicably demonstrates the respectful relationship I have enjoyed and continue to have with Burger King,” Perales said. “My franchisor and I worked together, addressing the immediate operational issue at hand in Harlingen and communicating that all extra measures have been taken to return the newly renovated restaurant to its usual high quality and safe operation.”

In the weeks since the incident, Perales said he has shown his appreciation to customers by offering free Whopper Jr.s in a customer loyalty campaign.

Robert Zarco, a lawyer with Miami-based Zarco Einhorn Salkowski and Brito P.A. firm, represented Perales.

“My client is very happy that this type of tension, which sometimes happens in franchising today due to economic challenges and increased competition in the marketplace, can be amicably resolved quickly and fairly before the courts have to strongly intervene,” Zarco said.

Perales’ restaurant portfolio includes nearly 300 Burger King stores.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

TAGS: Franchising
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