A Burger King franchisee is closing 26 restaurants in Michigan after the company moved to terminate its franchise agreement, according to various court and regulatory filings.
EYM King of Michigan sent a notice to the Michigan Dept. of Labor and Economic Opportunity last week notifying the department of plans to close the restaurants over the coming weeks. EYM King started closing the restaurants earlier this month and expects to have closed all 26 by April 15. The closures will cost the jobs of 424 workers.
The notice said that “unforeseen business circumstances and not being able to reach a resolution with Burger King Corp.” was the cause of the closures.
That notice comes just weeks after Burger King sued EYM, saying that the operator had not paid required royalties, ad fund payments and other charges.
The lawsuit specifically mentioned 14 restaurants in Detroit, Livonia, Flint, Highland Park and Ecorse, Mich. But the closure notice lists another dozen additional locations.
EYM King was part of EYM Group, which also operates KFC, Pizza Hut, Panera Bread and Denny’s and is based in Texas. Burger King is no longer listed on the company’s website and the website for EYM King is no longer operational.
A representative from EYM would not comment, referring all questions to Burger King.
But the closures come amid enormous challenges for Burger King operators in recent weeks. Two major Burger King franchisees, the 118-unit Meridian Restaurants Unlimited and the 90-unit Toms King, have declared bankruptcy this year.
Burger King, whose parent company Restaurant Brands International has hired Patrick Doyle as executive chairman, is investing $400 million in marketing and remodels to turn the brand around. But it has also acknowledged that challenges among individual franchisees could lead to ownership transfers or other situations.
The company’s sales have struggled coming out of the pandemic. The average store generates $140,000 in earnings before interest, taxes, depreciation and amortization per year, which is low for a fast-food restaurant with a drive-thru.
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