The presence of a Burger King branch in Ma’aleh Adumim has created a crisis situation of unforeseeable implications between Rikamor, the Israeli franchisee, and world management.
"The dispute between the local concession and the international Burger King chain is purely a business dispute", says chain spokesman Arnon Perelman. However, the dispute could come before the court, if and when Meshulam Riklis, holding 92% of the shares of Rikamor, decides to sue the chain, demanding that the branch be kept open.
"The franchisee misled the chain in applying for a license for this specific branch", Perelman maintains. Concerns in the industry say that the instruments of application for opening the branch, as submitted by Rikamor, specified Israel rather than the Territories, even though Rikamor’s license also includes activities in the Palestinian Authority Territories.
The sources also maintain that the agreement for leasing the branch was signed as early as September 1998, unknown to the international chain, and after the chain had refused to approve the opening of a branch in the Territories several months previously.
The Rikamor spokesman commented that the process of approving the Ma’aleh Adumim branch was identical to that applying to all other branches. Sources in the sector add that a representative of the international chain actually visited Israel for the purpose of approving the branch.
There are also conflicting opinions in the sector as to the course events and how and why the crisis surfaced. Some sources maintain that the crisis commenced after radical Muslim organisations in the United States started militating against the existence of the branch. They said that management’s decision to close the branch, or to operate it without the "Burger King" brand-name, amounts to their buckling under pressure.
Some sources hold the opposite view, maintaining that the affair started even earlier, when an article on the subject was published by the Bloomberg news network, at the beginning of July, following an interview with Kobi Hayoun, manager of the Burger King chain in Israel. This gave rise to months-long negotiations between the parties, in which the opening of the branch was examined.
Burger King, the sources maintain, finds itself at the centre of a political crisis, which it neither had nor has any desire to enter, and accordingly decided to withdraw the Ma’aleh Adumim branch franchise. The Burger King management and Rikamor knew, the sources say, that it was not a wise move to open a branch in a sensitive location, giving radical Muslims or Jews a weapon in hand.
Perelman utterly rejects all complaints of surrender to Arab pressures. Burger King, he says, was one of the first companies to enter Israel, it has a branch in Jerusalem, it made its product kosher and is making Israel a leading supplier for the chain.
Riklis is prepared to go all the way to a court judgement. As a Jew, he views the closure of the branch as an injury and as succumbing to Arab pressure. As a businessman, he regards the closure of the branch as a violation of his rights and a breach of contract.
Sources in the sector associated with both parties assess that the affair will not lead to the dissolution of the Rikamor franchise agreement, signed for twenty years. Burger King’s vice president for communications is currently in Israel, until the crisis is resolved, and the chain has also hired the services of a public relations person and a communications advisor to handle the problem.
Published by Israel's Business Arena August 29, 1999