Legal Briefing: Is Burger King's $1 Double Cheeseburger an Act of Bad Faith?

Legal Briefing
Legal Briefing

A daily look at legal news and the business of law. . .

Burger King Franchisees' Double Cheeseburger Lawsuit Goes Forward
Burger King's franchise agreements allow it to impose maximum prices for its products, something it has done since introducing its "value meal" menu in 2002 (a power most consumers, except those concerned with America's obesity epidemic, surely appreciate).

However, when the parent corporation added the double cheeseburger to that dollar menu in 2009, the National Franchise Association, which represents about 75% of Burger King franchisees, sued. Apparently, double cheeseburgers cost more than $1 to produce (another fact consumers probably appreciate: What could the double cheeseburger possibly be made of to cost less than $1 to produce?). So, by imposing the price on franchisees, Burger King was forcing them to absorb losses, even allegedly to the point of facing bankruptcy. Reuters reports that the lawsuit, at least the parts alleging bad faith by Burger King in forcing the $1 double cheeseburger price, has survived a motion to dismiss and will proceed to trial.

I don't understand Burger King's logic. How could it be good for either franchisees or the parent company if the cheap double cheeseburger triggers losses at the stores? I understand loss leaders, but the concept is that the lost revenue from one highly promoted product is overwhelmed by the increased profit by purchases of additional items by new and returning customers. The franchisees' claims of facing bankruptcy and severe losses suggest that the cheap double cheeseburger isn't an effective loss leader. Nonetheless, the case is at a very early stage, and perhaps it will turn out that the franchisees are just crying wolf. Maybe the $1 double cheeseburger is an effective strategy.

Unlike most lawsuits, this one suggests that the outcome will either be win-win or lose-lose. Either the cheap double cheeseburger helps revenue at the franchisee level and thus the parent level, or it doesn't. If it does, and the parent company wins the case, both sides win. If it doesn't, and the parent loses, both sides lose. Given that situation, I don't understand why the lawsuit exists. Isn't this an empirical question that both sides should be able to agree on? Oh wait, I'm assuming rational actors with access to good information.

And in the Business of Law. . .
The Connecticut Law Tribune advises soon-to-be law graduates to seek "alternative" careers, including taking nonlegal jobs and getting experience through pro bono work. What a rousing commencement speech that could inspire! And just think how much comfort graduates drowning in debt can take from this sage piece of advice from Quinnipiac University School of Law's associate director of career services: "I hear more of that, that a student needs to land a certain level of job to pay off loans. . . . You just have to be creative and find a way to do that."

More practical advice comes from the hiring partner of Jones Day, via an interview with the Am Law Daily.

It's not just new graduates getting squeezed by the law firm economy. Firms are beginning to balk at paying recruiters' fees reports the American Lawyer.

Speaking of lateral hires, Chadbourne & Parke continues its trend of hiring from in-house positions, picking up two new intellectual property attorneys, reports ABA Journal.