Restaurant Brands International Inc. is being accused of using its control over Carrols Restaurant Group Inc., a Burger King and Popeyes franchisee that RBI acquired in May, to force the company into a $1 billion buyout, in a civil lawsuit filed earlier this month.
A pension fund is suing Restaurant Brands International, the Toronto-based company that owns Burger King, Popeyes Louisiana Kitchen, Tim Hortons, and Firehouse Subs, over claims it forced Carrols, which had been publicly owned, into an underpriced transaction.
The civil suit was filed Oct. 7 in Delaware Chancery Court by Plymouth County Retirement Association.
The lawsuit claims RBI indicated it would block the franchise owner from expanding, giving investors a “Hobson’s choice” between letting the company wither or taking the only deal the company could get, according to Bloomberg Law.
RBI completed its Carrols acquisition in May.
Restaurant Brands International offered $9.55 a share in the all-cash transaction, which was announced in January, and said it would spend $500 million reimaging about 600 Carrols-owned restaurants as part of its “Reclaim the Flame” plan, announced in fall 2022.
The company also said it would refranchise most the acquired portfolio to new or existing smaller franchise operators over the next seven years.
Representatives from Restaurant Brands International had not responded by press time.
Carrols operated 1,023 Burger King restaurants in 23 states and 59 Popeyes restaurants in six states. Carrols had operated Burger King restaurants since 1976 and Popeyes restaurants since 2019.
Burger King, founded in 1954, operates and franchises more than 19,000 restaurants in more than 120 countries and territories.
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