Burger King, franchisees drop soda-rebate lawsuit

Published: 07 Mar 2010 17:29:01 PST

* Burger King, franchisees drop soda-rebate lawsuit

* Shares up less than 1 percent

LOS ANGELES, March 5 - Burger King Corp and its franchisees have agreed to dismiss a lawsuit over the millions of dollars in rebates restaurant operators get from soft drink suppliers, the hamburger chain said on Friday.

Burger King in February paved the way for the agreement when it said it did not plan to take a portion of the rebates, which are given to franchisees by suppliers like Coca-Cola Co and Dr Pepper Snapple Group, to help pay for a larger national advertising campaign.

Burger King, which has been working to improve strained relations with franchisees, said it worked with franchisees on a new strategy for boosting the fast-food chain's national advertising fund.

Soda rebates are based on the amount of soft drink syrup a franchisee buys and are designed to cover the cost of equipment and local marketing efforts.

Such funds can be a lifeline for franchisees, who have seen their profits squeezed when their parent companies offer low-priced meals like $1 burgers to lure cash-crunched diners into stores.

Shares in Burger King were up 9 cents to $17.89, or less than 1 percent, in afternoon trade on the New York Stock Exchange.