Related topics

Burger King Moves to Assist Franchisees

February 4, 2003

MIAMI (AP) _ Super-sized debt from costly restaurant upgrades is choking some Burger King franchisees and in turn, the company’s ability to grow, so the fast-food giant is stepping in to help.

Burger King said Monday it will pay the fees for financial services firm Trinity Capital to evaluate franchisees who apply for help restructuring their debt.

Years of corporate mandates to renovate signage and revamp restaurant landscaping and decor, among other improvements, have left some franchisees in financial straits, said Rob Doughty, a Burger King spokesman.

After years of borrowing to improve their stores, many franchisees have been unable to pay their debts because of soft sales, he said. AmeriKing, one of the chain’s biggest franchisees, sought bankruptcy protection last month.

The franchisees’ financial situation is ``one of the most pressing issues facing the Burger King system today,″ Burger King chief executive Brad Blum said in a statement.

``The aim of this program is to help franchisees with financial restructuring so they can meet their obligations and become profitable again,″ Blum said.

All franchisees are eligible to apply. Los Angeles-based Trinity Capital will get to decide which franchisees it accepts as clients.

Trinity Capital, which specializes in restructuring financially troubled franchise companies, will work as a third party with the franchisees, negotiating with lenders and vendors to restructure payments, Doughty said.

In a statement, National Franchisee Association chairman Julian Josephson welcomed the move by Burger King.

``This is a significant step for the future of the Burger King brand, and a win-win opportunity for everyone involved,″ Josephson said.

Miami-based Burger King has seen profits decline the past year because of increased competition and a price war with McDonald’s.

In the past two months, the company changed hands from British liquor giant Diageo to a consortium of investors _ Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners. Within weeks, the new owners hired Blum and named Bob Nilsen president, both experienced chain restaurant executives.

Update hourly