A federal judge in Denver has ordered two Colorado Steak 'n Shake restaurants to close.
According to The Denver Post, a Steak 'n Shake location in Centennial and one in Sheridan are required to abruptly stop operations because of a preliminary injuction to shut them down.
The news is the latest development in a case between the franchise restaurant chain, and the Baerns family who operate the two restaurants. The franchise claims the family did not follow rules of an agreement which required all the chain's restaurants to follow standard guidelines for pricing and promotions.
The battle began when customers began to wonder why they were being charged $5.08 for items which were supposed to be $4 The Post reported. The company was apparently able to do this through a la carte pricing on computerized cash registers.
While the Baerns' felt they followed requirements to remain consistent with offering the same price for all items as other locations, like the national $4 menu to anyone who asked for one, U.S. District Judge Raymond Moore did not agree, The Post reported.
Despite the ruling, both locations were open Wednesday The Post reported. This is expected to change however when Steak 'n Shake files a $50,000 bond with the court Thursday.
According to the Post, The judge's order will not be lifted until a trial is held in the case between the two sides. No official trial date has been announced.
"The Court recognizes that ... they increased their prices and undertook other actions to enable the businesses to become profitable," Moore said in a 42-page opinion The Post reported. "That motive does not alter the terms of the franchise agreement or authorize (them) to breach their terms.
"It is rank resistance to the promotion hiding behind a mask of linguistic cooperation," he said. "It simply cannot be fairly said that (the) franchisees offered the $4 menu to customers by opting to offer it only on their terms and only to those customers fortunate enough to have heard about the promotion through means other than through" corporate advertisements.
As part of the order, the Baerns' must take down anything in their locations that advertises the company including removing signs, displays, emblems and menus.
They must also change the colors on the restaurants' interior and exterior and all of the decor and design.
The family cannot operate a competing business within five miles of any Steak 'n Shake restaurant, but can do so anywhere else in Denver The Post reported.. The family's plans are also unclear.
The company's restaurant in Colorado Springs is not affected by the ruling since it is operated by a different franchisee.
