One hundred restaurants have already closed, and one Burgerim franchisee is now homeless
, Burgerim raced to sign up inexperienced franchise operators, selling as many as 1,200 franchise licenses to operators in 40 states over just four years. 200 Burgerim locations are currently open, though the “vast majority” are not profitable, according to Restaurant Business. One hundred have already closed, and many more may never open.
As Feinstein writes in her letter, “a number of franchisees report that they were the victim of false or misleading sales tactics, including offers by Burgerim to refund franchise fees, on which Burgerim has failed to follow through.” While promising fast profits and offering money-back guarantees, Burgerim instead delivered high upstart costs and a confusing menu that reportedly led to food waste and lost revenue.
And, bizarrely, franchisees tell Restaurant Business that Burgerim never even collected royalties from them. Instead, it was mostly interested in selling new licenses. “Either by design or by accident, Burgerim operated much like a pyramid scheme,” Restaurant Business concluded. Feinstein’s letter to the FTC arrives six weeks after Restaurant Business’ explosive investigation. Burgerim’s CEO, Oren Loni, fled the country in November, which is usually a bad sign for business, and Burgerim appointed a chief restructuring officer who has flirted with filing for bankruptcy. That could be a disaster for existing locations, Feinstein observes. “Many of the locations that have opened are struggling, and all would face severe consequences if Burgerim files for bankruptcy.
Burgerim also faces 90 lawsuits, including one filed by Jonathan Cheban, an influencer and Kardashian hanger-on known as Foodgod,
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