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Burger King Can’t Have it Its Way

SAN FRANCISCO (CN) - More than 50 Burger King franchisees say corporate headquarters can't force them to pay the $5 million the company agreed to pay a class of disabled customers who claimed 10 Burger King restaurants in California were not wheelchair or scooter-accessible. The franchisees say they had no part in the alleged wrongdoing, and the corporate demand for roughly $35,000 per outlet violates their franchise agreements.

After the class settlement was reached, Burger King sent a letter to each franchisee, demanding "that plaintiffs 'acknowledge their responsibility' for their restaurants," and repay Burger King "approximately $34,000 to $36,000 for each restaurant," according to the complaint. Burger King also demanded reimbursement of $2.5 million in attorneys' fees.

The franchisees say Burger King can't have it its way, and cannot demand that "franchisees whose restaurants were never visited by class plaintiffs" pay the corporation's $7.5 million bill for class damages and attorneys fees.

"Despite BKC's repeated demands and mischaracterization of the parties' obligations, plaintiffs have never acceded to BKC's interpretation of the parties' agreement. Plaintiffs deny and dispute that BKC is entitled to indemnification for any costs incurred in connection with the Castaneda [class action] suit pursuant to the franchise agreements."

Citing paragraph 13.C of the franchise agreement, the franchisees say, "Based on this provision, franchisees are not required to indemnify BKC in the event of BKC's negligence, which was the essence of the claims in the Castaneda suit."

The franchisees ask the court to find that the corporation was responsible for the claims in the class action, and the corporation is not entitled to indemnification from its franchisees. They also want the corporation enjoined from retaliating.

They are represented by Richard Stratton with Hanson Bridgett.

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