Cafe Society

Judge gives Steak 'n Shake two more weeks to make hamburger of local franchisees

Steak 'n Shake fans were thrilled when they learned the popular Midwestern chain was finally, finally coming to Colorado. And when the first Steak 'n Shake opened in Centennial in November 2011, the lines were long. These days, though, as Jenn Wohletz discovered when she recently reviewed the restaurant, it's the wait for your food that's long -- and you may not get what you ordered. And even if you do, it may bear no resemblance to the original Steak 'n Shake items. That's one of the reasons the Indiana-based chain wants the Baerns family, which opened two franchise stores in Colorado, to stop using the Steak 'n Shake brand. And yesterday, a judge gave the company two more weeks to argue its case. See also: At Colorado's first Steak 'n Shake a lawsuit may be the least of the problems.

Officials with the Indiana-based chain and the franchise owners argued their cases before U.S. District Judge Raymond Moore at an all-day hearing on August 23; yesterday the judge gave the company until September 9 to submit more arguments for why it should be granted an injunction against Larry, Christopher and Kathryn Baerns, which would prohibit them from using the Steak 'n Shake name.

Former Westword writer Julie Jargon, who's now a staffer for the Wall Street Journal, profiled the fight between Sardar Biglari, the CEO of Steak 'n Shake, and several franchisees in an article last week. "Relations between Mr. Biglari and his Steak 'n Shake franchisees began to sour three years ago," she reports, "when the chain adopted a policy requiring franchisees to offer a set menu with all items, except breakfast, priced by the company and to offer all company promotions, including one called '4 Meals Under $4.'"

The company claims that the Baernses did not offer the value menu, and charged more for other items. And in July, Steak 'n Shake terminated their franchise agreement -- and earlier this month, cut off their access to the company's computer system.

Moore granted the Baernses a temporary restraining order, ensuring that their two restaurants can use the system. The franchisees have countersued the company, saying Steak 'n Shake misrepresented how much money they could make from their restaurants. And they're not alone in those complaints. As Jargon reports, Steak 'n Shake's oldest franchisee sued the company, and three other franchisees have cases pending in the Indiana courts.

There's a whole lotta shaking going on at Steak 'n Shake these days.

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