Burgerim’s 78.9% SBA loan default rate — 45 defaults out of 57 SBA-funded locations — makes it the most failed franchise system in American history. The founder fled to Israel. The FTC took enforcement action. And hundreds of franchisees are left holding the financial wreckage: defaulted SBA loans, personal guarantee exposure, destroyed credit, and the question of whether any recovery is possible.

At Lopes Law LLC, we have recovered over $83,000 for franchise owners without litigation. This guide is written specifically for current and former Burgerim franchisees who want to understand their legal options for recovery. The situation is difficult — but it is not hopeless. There are viable paths to recovering a portion of your investment, reducing your debt exposure, and holding accountable the parties who profited from selling you a franchise that was destined to fail.

For a detailed analysis of why Burgerim failed and the red flags that were visible from the beginning, see our companion article on the Burgerim franchise failure.

What Legal Claims Do Burgerim Franchisees Have?

Despite the collapse of the Burgerim franchise system, defrauded franchisees have multiple potential legal claims. The strength of these claims varies by individual circumstance, but the systemic nature of the Burgerim failure means that many of the core legal theories apply broadly across the investor base.

Fraud and Misrepresentation

If Burgerim or its sales representatives made false statements about the profitability, viability, or operational support of the franchise — and you relied on those statements in making your investment decision — you may have claims for fraud and misrepresentation. Common misrepresentations in the Burgerim system included overstated revenue projections, understated startup costs, false claims about corporate support infrastructure, and promises about territory protection that were not honored.

Fraud claims are particularly powerful because they can sometimes pierce the corporate veil, exposing individual principals to personal liability. They may also support claims for punitive damages in some jurisdictions.

Violations of the FTC Franchise Rule

The FTC Franchise Rule (16 C.F.R. Part 436) requires franchisors to provide accurate, complete disclosure in the FDD and to deliver the FDD to prospective franchisees at least 14 days before any payment is made. The FTC’s own enforcement action against Burgerim alleged that the company failed to provide required disclosures and made misleading earnings claims outside the FDD. If you can document similar violations in your transaction, you have claims under the Rule.

Violations of State Franchise Disclosure Laws

Many states have franchise disclosure laws that provide additional protections beyond the FTC Rule. States like California, Illinois, Maryland, Minnesota, New York, and Virginia have registration requirements and disclosure standards that, if violated, give franchisees the right to rescission (getting your money back) plus damages. If Burgerim sold franchises in these states without proper registration or with deficient disclosure, those state law violations create independent recovery claims. For an overview of state-specific protections, see our franchise dispute resolution guide.

Breach of Contract

Even though Burgerim has effectively ceased operations, the franchise agreement is still a binding contract. If Burgerim failed to provide the training, support, supply chain, and brand management it was obligated to provide under the franchise agreement, those failures constitute breach of contract. Breach claims survive the collapse of the business and can be asserted against the corporate entity and, in some cases, against individuals who controlled the entity.

Claims Against Third-Party Brokers and Consultants

Many Burgerim franchises were sold through third-party franchise brokers, franchise consultants, and franchise development companies. If a broker or consultant recommended Burgerim to you, received a commission from the sale, or made representations about the franchise that turned out to be false, you may have claims against that broker or consultant. These claims are often more practically valuable than claims against Burgerim itself, because the broker or consultant may still be in business, have assets, and carry professional liability insurance.

How Do You File Complaints with the FTC and State Attorneys General?

Government complaints are an important part of the Burgerim recovery strategy — not because they produce immediate individual recoveries, but because they strengthen enforcement actions that can lead to restitution funds, and they create a public record of the franchisor’s misconduct that supports individual claims.

Filing an FTC Complaint

You can file an FTC complaint online at ReportFraud.ftc.gov or by calling 1-877-FTC-HELP. Your complaint should include:

• The date you purchased your Burgerim franchise
• The franchise fee you paid and total investment amount
• Whether you received an FDD, and if so, when you received it relative to your payment
• Any financial performance representations made by Burgerim or its sales representatives
• The gap between what was represented and what actually occurred
• Your total financial loss
• Any correspondence with Burgerim corporate, particularly communications where they acknowledged problems or made promises they did not keep

The FTC cannot pursue individual cases on behalf of specific franchisees, but FTC enforcement actions can result in court-ordered restitution that benefits all victims. Your complaint adds to the body of evidence supporting the FTC’s case.

Filing State Attorney General Complaints

File a complaint with the attorney general’s office in the state where you purchased and operated your franchise. State AG offices sometimes bring enforcement actions faster than the FTC, and state-level settlements can include specific restitution for victims within that state. Many state AG offices have dedicated franchise or consumer protection divisions that handle these cases.

What Are Your SBA Loan Workout Options?

For Burgerim franchisees carrying SBA loans, the loan situation is often the most immediate and pressing concern. With 45 SBA loan defaults in the system, lenders and the SBA are familiar with the Burgerim situation — and that familiarity can work in your favor when negotiating.

Offer in Compromise

An Offer in Compromise (OIC) allows you to settle your SBA loan for less than the full balance owed. The SBA evaluates OICs based on the borrower’s ability to pay, the collectibility of the full amount, and the cost-effectiveness of settlement versus continued collection. For Burgerim franchisees, the OIC process is strengthened by documented evidence that the franchise failure was caused by franchisor fraud, making full recovery from the borrower both unlikely and inequitable.

Structured Workout Agreement

A workout agreement restructures the loan terms — extending the repayment period, reducing the interest rate, or reducing the principal balance — to create a payment plan the borrower can sustain. Workout agreements require demonstrating both a willingness to pay and the financial inability to meet the original terms.

Bankruptcy as a Last Resort

In some cases, bankruptcy may be the most practical option for eliminating or restructuring SBA loan debt. Chapter 7 bankruptcy can discharge SBA loan obligations (including personal guarantee liability) for borrowers who qualify. Chapter 13 allows for restructured repayment over 3 to 5 years. However, bankruptcy has significant long-term consequences for credit, and it should only be pursued after all other options have been evaluated.

What Is Personal Guarantee Exposure and How Can You Defend Against It?

Personal guarantee exposure is the most serious financial consequence of the Burgerim collapse. When you signed your SBA loan, you almost certainly signed a personal guarantee making you individually liable for the full loan balance if the business cannot pay.

Personal guarantee enforcement can include:

• Wage garnishment: A portion of your paycheck is diverted to the lender
• Bank account levies: Funds are seized directly from your bank accounts
• Liens on real property: A lien is placed on your home or other real estate
• Seizure of personal assets: Non-exempt personal property can be seized and sold
• Credit reporting: The default and judgment appear on your credit report for 7 to 10 years

Defenses Against Personal Guarantee Enforcement

While personal guarantees are generally enforceable, there are defenses available in certain circumstances:

• Fraud in the inducement: If the franchisor’s fraud caused the franchise failure, and the franchise failure caused the loan default, the chain of causation from franchisor fraud to your personal guarantee exposure may support defenses in collection proceedings.
• Lender liability: In rare cases, if the SBA lender failed to follow its own underwriting standards — for example, if it approved a loan for a franchise with known high default rates without adequate disclosure to the borrower — there may be claims against the lender that offset the personal guarantee obligation.
• State-specific protections: Some states have homestead exemptions that protect your primary residence from certain creditors. Asset protection laws vary significantly by state.
• Negotiation leverage: Even without a formal legal defense, documented franchise claims against Burgerim give you negotiating power. A lender that knows you have viable claims against the franchisor may prefer to settle the guarantee for a reduced amount rather than pursue costly collection while you pursue your own claims.

When the Franchisor Has Fled the Country: Special Considerations

The Burgerim situation is unusual in franchise law because the franchisor’s principal — Oren Loni — left the United States and returned to Israel. This creates unique challenges and unique opportunities for franchisees pursuing recovery.

Challenges

Direct enforcement of US civil judgments in Israel is difficult. Even if you obtain a judgment against Loni personally, collecting on that judgment requires navigating Israeli courts, which may or may not recognize and enforce the US judgment. The practical cost of international enforcement often exceeds the judgment amount for individual franchisees.

Opportunities

The founder’s departure actually strengthens certain legal claims. Abandonment of the franchise system — ceasing to provide support, training, supply chain, and brand management — is a clear and unambiguous breach of the franchise agreement. It also supports claims that the entire franchise sales program was fraudulent from inception, because a franchisor that planned to build a sustainable system would not abandon it.

More importantly, the founder’s departure redirects attention to recoverable defendants: the US corporate entities, franchise brokers, consultants, landlords, equipment lessors, and any other parties that profited from the Burgerim scheme and remain within US jurisdiction.

What Is the Status of Class Action Proceedings?

Multiple legal actions have been filed against Burgerim and related entities. The FTC’s 2020 enforcement action is the most prominent. Individual and class claims have also been filed in various jurisdictions.

For individual Burgerim investors, the class action question requires careful analysis:

• Pros of class action: Shared litigation costs, strength in numbers, potential for systemic relief, and the ability to pursue claims that might not be economically viable as individual actions.
• Cons of class action: Individual recoveries in class settlements are often small relative to total losses, the litigation can take years, and class members may be bound by settlement terms they did not negotiate. You also give up the right to bring individual claims once you are part of a class.
• Alternative strategy: In many Burgerim cases, individual claims — particularly against franchise brokers or under state-specific franchise disclosure laws — may produce better recoveries than a class settlement. An individual claim allows you to pursue the full amount of your damages against parties who are specifically responsible for your investment decision.

At Lopes Law LLC, we evaluate both class and individual strategies for each Burgerim client. The right approach depends on the amount of your investment, who sold you the franchise, what state you are in, and the strength of your individual evidence. For more about how we approach franchise disputes generally, see our franchise dispute resolution guide.

What Documents Should You Preserve Right Now?

Evidence preservation is critical, and time is not on your side. The longer you wait, the more evidence may be lost — servers go offline, third parties discard records, and memories fade. Preserve the following immediately:

• The Burgerim FDD and all amendments (if you received one — the absence of an FDD is itself evidence of a violation)
• The signed franchise agreement and all addenda
• All marketing materials Burgerim provided during the sales process
• All correspondence with Burgerim corporate, sales representatives, and any franchise brokers or consultants
• Financial records: bank statements, P&L statements, tax returns, and any financial projections you were given
• SBA loan documents: loan agreement, personal guarantee, and all lender correspondence
• Lease agreements for your franchise location
• Equipment lease agreements and supplier contracts
• Records of the franchise broker or consultant who sold you the franchise, including any commission or referral fee disclosures
• Notes from discovery day, sales presentations, or any meetings where verbal representations were made

Store copies in multiple secure locations. Do not rely solely on digital storage that may be subject to loss or deletion.

What Is the Realistic Timeline for Burgerim Recovery?

Burgerim recovery is a multi-track process. Different recovery strategies have different timelines:

Recovery Path	Timeline	Cost
Dispute Review	1-2 weeks	$3,500 flat fee
FTC/AG Complaints	File immediately; resolution 6-24 months	Free to file
Claims Against Brokers	Demand letter: 2-4 weeks; negotiation: 2-6 months	$5,000-$10,000+ retainer
SBA Loan Workout	3-12 months	Attorney fees vary; some handled within retainer
Individual Litigation	12-36 months	$15,000-$50,000+ depending on complexity
Class Action (if joined)	2-5+ years	Typically contingency fee (25-40% of recovery)

At Lopes Law LLC, we have recovered over $83,000 for franchise owners without litigation. For Burgerim cases, the most cost-effective initial step is the $3,500 Franchise Dispute Review, which maps out every viable claim and provides a prioritized recovery strategy. For a full breakdown of franchise dispute costs, see our guide on how much a franchise lawyer costs.

Why You Should Not Wait to Pursue Recovery

Statutes of limitations are the most important reason to act quickly. Depending on your state and the type of claim, you may have as little as 2 years from the date you discovered (or should have discovered) the fraud to file a claim. Some state franchise disclosure law claims have even shorter windows.

Beyond statutes of limitations, there are practical reasons to act now:

• Third-party defendants may disappear. Franchise brokers and consultants who sold Burgerim franchises may change businesses, dissolve their companies, or otherwise become harder to reach over time.
• Evidence degrades. Documents are lost, emails are deleted, and memories fade. The evidence you have today is stronger than the evidence you will have in two years.
• SBA loan collection accelerates. The longer you wait to address your SBA loan, the fewer workout options are available. Proactive engagement with the lender produces better outcomes than reactive defense.
• Your financial position may change. Taking action now, while you still have assets to protect, gives you more leverage than waiting until collection actions have already been initiated.

Frequently Asked Questions About Burgerim Dispute Recovery

Reach out, we are friendly. Call now for a free consultation at (267) 777-9117 or schedule your free 20-minute consultation online.

Last updated: March 10, 2026