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Legal Battle Between Steak ‘N Shake, Franchises Still Sizzling

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The Steak 'n Shake in Sheridan (credit: CBS)

The Steak ‘n Shake in Sheridan (credit: CBS)

CONTEST

SHERIDAN, Colo. (CBS4) – The legal battle between Steak ‘n Shake and its Colorado franchisees keeps cooking in court.

Local operators wanted help from a judge after the corporate headquarters shut off their cash registers over a dispute about food prices. The judge denied a temporary restraining order, which means not only will the cash registers stay off, but they may run out of food.

For the last two days the stores have been handwriting all their orders and will continue to do so. They also can’t purchase Steak ‘n Shake food from their supplier. It’s another step in the company trying to put a stop to the stores.

Signs greet customers on the door and drive-thru telling them the restaurant can’t process credit or debit cards. But for Phillip Piper the sign is only a doormat.

“This is the second time this week. This is the third, maybe fourth time I’ve been here,” Piper said.

Piper doesn’t mind paying cash for his steakburger craving. But mangers told CBS4 off camera Steak ‘n Shake pulling the plug on the store’s computer systems drove off 65 customers Thursday, more than 40 Friday, and 40 percent who went inside to eat left. That’s why the franchisees filed a motion against the company because they say shutting down the systems would be the “final death knell for these stores.”

“If they try to shut it down I would hope these people who took the risk to invest all this money in the enterprise could call it something else and keep doing business,” Piper said.

The chain says it ended its agreement with the franchisees because they charge more than what the Steak ‘n Shake corporation allows and wants the court to shut them down.

“I’d certainly like to pay less, but price issue in a situation where there’s no competition does not make a complaint,” customer Jim Blancett said.

As the case keeps cooking, Piper will keep satisfying his appetite.

“I wish them all the best of luck. In fact I might even come here more often just to show them some support,” Piper said.

CBS4 reached out to the franchisees for comment about the ruling but hasn’t heard back. The company is taking them back to court Aug. 23 to prevent them from using the Steak ‘n Shake name.

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