Sen. Feinstein Seeks FTC Investigation Into Alleged Burgerim Deception | Eater
"A fast-expanding, originally Israeli slider-focused burger franchise is facing allegations of deceptive franchising after a three-part investigation found it sold as many as 1,200 franchise licenses in 40 states over four years while prioritizing new license sales over supporting existing operators. Senator Dianne Feinstein has urged the FTC to investigate amid reports that many franchisees were lured with promises of quick profits and money-back guarantees that were never honored, and instead encountered high startup costs, a confusing menu that generated food waste and lost revenue, and a business model that collected little or no royalties. Roughly 200 locations are currently open but the vast majority are reportedly unprofitable, more than 100 have already closed, and the company now faces about 90 lawsuits — including one from influencer Jonathan Cheban over nonpayment and use of his likeness. The CEO allegedly fled the country in November, a chief restructuring officer has been appointed and bankruptcy has been contemplated, which could devastate struggling operators; individual franchisees recount severe personal losses, with some taking personally guaranteed SBA loans, selling homes, and even becoming homeless. Despite mounting legal and regulatory pressure — Maryland has suspended the franchise’s registration — the company has continued to market and sell new franchise agreements while reportedly failing to adequately respond to distressed franchisees." - Caleb Pershan
