In 2018, the fast food chain BurgerIM was the brand to watch. After opening 200 locations in three years and securing more than 1,200 franchise deals, the success of the rapidly expanding burger concept seemed inevitable. However, it turns out that BurgerIM’s rapid growth has masked a troubled operation, an operation that experts now call “one of the biggest franchise disasters in recent memory.” Just as quickly as it has seen apparent success, BurgerIM is currently experiencing an epic downfall – a downfall that could soon push it out of business… or worse.
According to Catering company, BurgerIM had a fleet of around 280 restaurants at its peak, all of which served slider-style burgers with various patties. The concept was born in Israel, where founder Oren Loni owned several food brands. Loni introduced the concept to the United States and began to integrate franchisees at a rapid rate. (RELATED: 7 New Fast Food Chicken Sandwiches Everyone’s Talking About.)
Operators interviewed by Catering company say that becoming a BurgerIM franchisee seemed to promise a lucrative, inexpensive, and risk-free opportunity, but soon it became clear that BurgerIM management had no intention of running a true franchise. Their only interest, the operators say, was to collect franchisee up-front payments of $ 50,000 as the company’s main source of revenue.
Many say they have struggled to open their restaurants due to construction expenses and leases that are much higher than BurgerIM estimates. The chain’s extensive and complicated menu also made operations too expensive. Dozens of people have closed their doors after only several months of activity or never fully opened before going bankrupt. It was reported that BurgerIM provided little support (even failing to collect monthly royalty payments from their operators, which resulted in employees spending months without pay).
In 2019, BurgerIM faced dozens of lawsuits from franchisees seeking reimbursement. At the end of the year, the company’s corporate team was unreachable and calls to the company’s head office went unanswered. According to reports, Oren Loni had left the country. Meanwhile, the company is said to still be making more deals with new franchisees, even in the event of bankruptcy.
As of March, the company has still not filed for bankruptcy, but it is under new management trying to save the brand. According to Franchise Times, BurgerIM reached a deal with the state of California, ordering the company to pay $ 4 million in fines for violating state franchise regulations and to reimburse more than $ 57 million in franchise fees. .
Most of the chain’s restaurants are now closed, some 125 sites still in operation… But not necessarily for long.
For more on restaurant bankruptcies, check out the 10 Biggest Restaurant Chain Bankruptcies of 2020, and don’t forget to Subscribe to our newsletter to get the latest restaurant news straight to your inbox.