If you are a fan of Steak ‘n Shake, prepare to be relieved (or surprised). The popular fast food chain will be returning to the Metro Denver area after being on hiatus due to a lawsuit between area franchise owners and the company’s Indianapolis based headquarters. A federal judge had ordered that the restaurants be closed pending resolution of several issues between the parties.
According to a DenverPost.com report, the two entities had been embroiled in a dispute over menu offerings and pricing. Steak ‘n Shake had accused the franchisees of violating corporate policies requiring store owners to stay within strict guidelines set by the corporate office. However, the franchisees claimed that they had no choice but to adjust their prices (and offerings) because the stores had been losing considerable amounts of money.
The franchisees also claimed that they had to deal with higher labor and supply costs that franchisees in other regions of the country did not have to work through. Nevertheless, corporate office was not pleased and sued in federal court.
While the restaurants will open sometime in November, the federal lawsuit is yet to be resolved. Meanwhile, new employees are expected to be hired before the restaurants open.
The legal and practical issues that often come about between franchisees and franchisors require experienced legal counsel; especially when new stores are planned or when existing stores are being sold to new investors. Having a seasoned attorney to negotiate terms and clarify misunderstandings can mean the difference between a successful franchise and years of litigation.
Source: DenverPost.com, Metro Denver Steak ‘n Shake to reopen in November, October 16, 2013