Why are so many Burger Kings closing and going out of business?

Consumers in the Detroit area will be disappointed as 26 Burger King restaurants are closing down. EYM King of Michigan, the franchise head that was operating the locations at the behest of Burger King, has effectively ceased trading. The current agreement between Burger King and EYM is due to expire in April and with no agreement found EYM is losing their franchise license.

In a notice to Michigan’s Department of Labor and Economic Opportunity the company explained “unforeseen business circumstance” as the reason behind the closure. Burger King told CBS News that they could not comment due to pending litigation, which suggests financial trouble at EYM.

All 424 staff stand to lose their jobs and the restaurants will be closed by Saturday, 15 April.

What is a fast food franchise?

Fast food restaurants like Burger King and McDonald’s operate a franchise system in which the company grants the right to operate its concept to independent operators in exchange for a fee. The franchisee operates under the franchisor’s brand and business system to help them run their business. Originally, it was done to quickly grow the fast food business without an initially large financial investment.

Next time you check your receipt, have a look at the bottom. Instead of saying ‘Burger King’ it is likely to say the name of the franchisee.

Which restaurants are affected?

Outside of the 26 restaurants closing, there is no national slashing of the number of Burger Kings; this is a dispute between the franchiser and franchisee that has not been resolved.

The full list of closures: