Burger King's National Franchisee Association Sues McDonald's For Losses Due to McDonald's Rigged Promotional Games
Approximately 50 people have pled guilty to criminal charges associated with the rigging of these McDonald's games.
The National Franchisee Association, Inc. ('NFA'), the official representative of the Burger King(R) franchisee community, announced it has filed a lawsuit against McDonald's Corporation (NYSE: MCD) seeking damages for unfair competition arising from McDonald's 'false, deceptive and/or misleading representations concerning promotional games that McDonald's used to attract customers to its restaurants and enhance customer loyalty from 1995 (if not earlier) through at least August 2001.' Approximately 50 people have pled guilty to criminal charges associated with the rigging of these McDonald's games.
The suit was filed in the United States District Court for the Northern District of Georgia, Atlanta Division under the Lanham Act, which prohibits false advertising to protect not only the rights of deceived consumers, but also the rights of competitors against unfair competition. The suit alleges that McDonald's rigged promotional games diverted business away from Burger King franchisees restaurants and allowed McDonald's to generate windfall profits, customer loyalty and market share that it would not otherwise have obtained.
The suit details how McDonald's contracted with Simon Marketing, Inc. to administer its promotional games, including its especially popular 'Monopoly' games. On August 21, 2001, however, the U.S. Department of Justice and the FBI announced the first eight arrests, including Simon's Director of Security Jerome Jacobson, of a criminal ring responsible for fixing McDonald's promotional games for years by embezzling at least $20 million worth of the rare, winning high-value games pieces. Then U.S. Attorney General John Ashcroft described the 'fraud scheme' as one which 'denied McDonald's customers a fair and equal chance of winning.' Subsequent court proceedings have documented that virtually all of the 'million dollar prizes' were wrongfully diverted from McDonald's contests at issue in the case.
The suit alleges that while McDonald's previously settled consumer claims by running more games -- with real million dollar prizes -- and paid a $16 million settlement to the company whose employee fixed the games, 'such settlements pale in comparison to the huge profits McDonald's reaped for years from luring customers away from its competitors with offers of hollow chances to win fortunes.'
An NFA spokesperson said, 'The promotions at issue in this case are not just games. In our industry, such promotions are a serious business with serious consequences because they are intended to increase customer traffic for the game sponsor to the detriment of the competition.' The spokesperson also noted that 'when McDonald's finally confessed to the public that its games had defrauded customers for years, even McDonald's had to acknowledge 'the duration of the alleged conspiracy, the lack of any meaningful oversight and the magnitude of the losses.' It is precisely for these reasons that the NFA has a duty to its members to pursue this case and remedy this wrong under the law.'
The National Franchisee Association (NFA) serves the Burger King Corporation (BKC) franchisee community through advocacy, education, networking, and member-focused services. The NFA is governed by a 29-member Board of Directors, composed of five executive officers, the presidents of 20 regional franchisee associations including Canada, two representatives from Europe and one representative from the Minority Franchisee Association and the Hispanic Franchisee Association. The Mission of the NFA is, 'To Improve, Preserve and Insure the Economic well-being of all members.'
The suit was filed in the United States District Court for the Northern District of Georgia, Atlanta Division under the Lanham Act, which prohibits false advertising to protect not only the rights of deceived consumers, but also the rights of competitors against unfair competition. The suit alleges that McDonald's rigged promotional games diverted business away from Burger King franchisees restaurants and allowed McDonald's to generate windfall profits, customer loyalty and market share that it would not otherwise have obtained.
The suit details how McDonald's contracted with Simon Marketing, Inc. to administer its promotional games, including its especially popular 'Monopoly' games. On August 21, 2001, however, the U.S. Department of Justice and the FBI announced the first eight arrests, including Simon's Director of Security Jerome Jacobson, of a criminal ring responsible for fixing McDonald's promotional games for years by embezzling at least $20 million worth of the rare, winning high-value games pieces. Then U.S. Attorney General John Ashcroft described the 'fraud scheme' as one which 'denied McDonald's customers a fair and equal chance of winning.' Subsequent court proceedings have documented that virtually all of the 'million dollar prizes' were wrongfully diverted from McDonald's contests at issue in the case.
The suit alleges that while McDonald's previously settled consumer claims by running more games -- with real million dollar prizes -- and paid a $16 million settlement to the company whose employee fixed the games, 'such settlements pale in comparison to the huge profits McDonald's reaped for years from luring customers away from its competitors with offers of hollow chances to win fortunes.'
An NFA spokesperson said, 'The promotions at issue in this case are not just games. In our industry, such promotions are a serious business with serious consequences because they are intended to increase customer traffic for the game sponsor to the detriment of the competition.' The spokesperson also noted that 'when McDonald's finally confessed to the public that its games had defrauded customers for years, even McDonald's had to acknowledge 'the duration of the alleged conspiracy, the lack of any meaningful oversight and the magnitude of the losses.' It is precisely for these reasons that the NFA has a duty to its members to pursue this case and remedy this wrong under the law.'
The National Franchisee Association (NFA) serves the Burger King Corporation (BKC) franchisee community through advocacy, education, networking, and member-focused services. The NFA is governed by a 29-member Board of Directors, composed of five executive officers, the presidents of 20 regional franchisee associations including Canada, two representatives from Europe and one representative from the Minority Franchisee Association and the Hispanic Franchisee Association. The Mission of the NFA is, 'To Improve, Preserve and Insure the Economic well-being of all members.'