Lawsuit Alleges Fraud by Fast-Food Operator
The parent of the Green Burrito fast-food chain committed fraud by insisting that independent franchisees order food from approved vendors and then taking kickbacks from the suppliers, according to a lawsuit filed Monday.
The lawsuit, filed in Orange County Superior Court, also alleges that the Anaheim-based Santa Barbara Restaurant Group had different requirements for Green Burritos located within Carl’s Jr. restaurants than for stand-alone franchises.
Santa Barbara Restaurant and Carl’s Jr. parent CKE Restaurants Inc. are controlled by restaurant and title insurance magnate William P. Foley II.
The lawsuit says the company established a menu system for the dual-concept outlets that has fewer choices and uses food with fewer fresh ingredients. The differences confuse the public and harm the plaintiffs, the lawsuit alleges.
Andrew F. Puzder, Santa Barbara Restaurant Group’s chief executive, called the charges “baseless. All franchise owners get suits like this from time to time,” he said. “It’s not a big deal. We’ll deal with it in due course.”
“There are some differences in the way foods are prepared,” he added, “but we do not prohibit the franchisees from preparing food in the same way it is prepared at Carl’s.”
The lawsuit was filed by Jack E. Brown and Terry Brown, who have a Green Burrito franchise in Pomona, and another franchisee in Alhambra. The lawsuit says it was also filed on behalf of the general public.
