BURGER King chiefs are using the Federal Court to pressure the owner of Tamworth's Hungry Jack's to close – at a cost of 45 local jobs.
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The fast food chain claims five Hungry Jack's outlets, which franchisee Callas Holdings operates, in Tamworth, Erina, East Maitland, Lake Haven and Port Macquarie, pose a public health risk and should be shut down to prevent damaging the company's reputation.
This week the court was told that the restaurants were being stocked using unauthorised food suppliers and unrefridgerated freight transport because Burger King had terminated their franchise agreement with the owner of the restaurants, Callas Holdings director Ken Folley.
The agreement was terminated in August after Callas Holdings allegedly failed to pay Burger King $262,000 in royalties and advertising fees. Early last month, The Leader revealed that the Tamworth restaurant had failed to open for trading and some staff members claimed to have been owed wages.
The store did re-open for trading for at least one day in December but was then closed without explanation. A Tamworth Hungry Jack's employee said the restaurant was due to re-open this morning at 11am.
At this stage, only the Port Macquarie restaurant had permanently closed.
Yesterday, Tamworth Regional Council's property and commercial division manager Chris Johnston confirmed the council leased the Peel St restaurant site to the Hungry Jack's
franchisee.
In recent years, two other restaurants have occupied the building, Matilda's and Burger King.
If the Tamworth Hungry Jack's closed for good at least 45 staff members would be without work.
Central to Burger King's argument, in the case before Justice Michael Moore, is that customers continue to link the outlets to the Burger King/Hungry Jack's logo.
"It is critically important ...that those franchises are to conform with the Burger King system and maintain uniformity," Barrister James Miller told the court.
"How could they guarantee a familiar taste, the essential ingredient to successful franchising, if the lettuce was from somewhere else? And wouldn't customers turn against HJ if they knew staff were not being paid?
"So (Mr Folley) has no right to use the trademarks but he is continuing to use them and Burger King is suffering damage to its reputation."
The Sydney Morning Herald reported that Justice Moore had reserved his decision because he was concerned about the way the termination notice for the franchise agreement was served on Mr Folley's 10-year-old son at the family's home.
