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Burger King Cuts Ties With Franchisee Unit

October 21, 2005|From Dow Jones/Associated Press

DES MOINES, Iowa — Burger King Corp. has severed relations with the leadership of its U.S. franchisee organization, accusing it of disrupting the company's brand-building initiatives.

In breaking off all but minimal contact with those running the National Franchisee Assn., the fast-food chain's management said it would divert a $1-million subsidy from the group to the brand's advertising fund.

The association is believed to represent about 90% of Burger King's domestic franchisees.

In a letter to the association dated Sept. 30, Burger King North America President John W. Chidsey said the group's leaders had failed to publicly back efforts to expand restaurant hours and to promote competitive pricing initiatives and gift cards.

A letter Oct. 12 from association Chairman Daniel B. Fitzpatrick to the Miami company's management said its decision "to sever relations with the ... NFA is extremely regrettable."

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