Burger King dismisses its suit against a large franchisee

The 37 locations in Southern Texas owned by Guillermo Perales will remain open.
Photograph: Shutterstock

Burger King has dismissed a federal lawsuit against one of its largest franchisees, enabling the 37 restaurants in Texas to remain open.

Court filings earlier this week indicated that both Burger King and Guillermo Perales have agreed to have the lawsuit dismissed.

Burger King had sued Perales and one of his companies, Fritz Management, seeking to terminate 37 locations after one of them was subject to a video showing rats in the kitchen.

Perales said in an email to Restaurant Business that none of the restaurants will be closed. He blamed the rodent problem at the location in Harlingen, Texas, on a recently completed remodel that left a hole in one of the walls.

That hole has since been patched up and the store treated. Perales said it had received top marks from local health inspectors, who gave the go-ahead for the restaurant to be reopened.

Perales said he is planning a “customer appreciation day” at the restaurant to get back in consumers’ good graces. Burger King sales in the area plunged in the aftermath of the incident, which went viral after employees took a video of the scene.

Burger King and its attorney did not respond to requests for comment on Thursday.

The settlement appears to end a dispute between the burger chain and Perales, one of the country’s largest franchisees and operator of about 800 locations. He also recently acquired the Texas-based Mexican chain Taco Bueno.

Perales operates about 300 Burger King restaurants in Texas and Florida, and also owns restaurants in the Popeyes, Krispy Kreme, and Arby’s systems, among others.

Perales pushed back hard against the lawsuit, hiring franchisee attorney Robert Zarco, who charged that the termination of the 37 locations was “improper” and part of an effort to get him to sell restaurants only to franchisees willing to develop new units.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Exclusive Content


Reaction to Wendy's dynamic pricing test reveals its risks

The Bottom Line: The burger chain mentioned last week that it would test the pricing strategy sometime next year. Consumers frustrated with prices reacted swiftly.


Why the Burgerim settlement exposes flaws in franchise oversight

The Bottom Line: The federal government allowed the chain’s founder to avoid major penalties by simply paying $1,000. What’s the point of regulation in the first place?


Why the Smashed Jack sparked record-smashing demand at Jack in the Box

Behind the Menu: The chain’s newest menu addition aims to break the mold on what a fast-food burger can be, and customers are buying in.