Business

Why you can’t (legally) buy a Big Mac in El Salvador

Signs outside this fast-food restaurant in San Salvador are covered following a judge's order on Aug. 30, 1997. A judge ordered a Salvadoran fast-food chain to cover up all McDonald's markings in its six restaurants after the U.S. burger giant sued the chain, saying it canceled its concession almost two years ago.
Signs outside this fast-food restaurant in San Salvador are covered following a judge's order on Aug. 30, 1997. A judge ordered a Salvadoran fast-food chain to cover up all McDonald's markings in its six restaurants after the U.S. burger giant sued the chain, saying it canceled its concession almost two years ago. Associated Press

When lawyers for corporate burger-and-fries behemoth McDonald’s and the pugnacious former owner of its El Salvador restaurants exchange their latest round of legal briefs in a federal courtroom Friday, it will mark the latest battle in the fast-food version of the Thirty Years War, a long and weird mutual Big Mac Attack in which nobody shows any sign of hoisting a white flag.

The highlights of the legal battle between McDonald’s and businessman Roberto Bukele over its 1996 decision to revoke the franchise for his restaurants in El Salvador are like a surreal blooper reel. McDonald’s forced Bukele to put tarpaulins that looked like giant plastic garbage bags over the golden arches outside his restaurants.

Bukele countered with newspaper ads featuring a trail of rubble and wreckage left by an enormous club-wielding clown who resembled a homicidal-lunatic version of corporate mascot Ronald McDonald. McDonald’s sent search-and-destroy teams to his restaurants to tear up all the napkins and paper cups with the company name on them.

Bukele retaliated with a court order forbidding the company to use 56 of its trademarks, everything from Big Mac to Quarter-Pounder to Ronald McDonald himself. Salvadorans, who’ve basically been curled up with a giant national bowl of popcorn watching this fight all these years, were particularly delighted by the injunction, known as an “embargo” in Salvadoran legal jargon. The country’s Facebook pages were suddenly dotted with copies of a meme showing an irate Ronald McDonald barking into a telephone: “Hello, Bukele? Embargo this.”

About the only things that seem to be missing from this story are the ubiquitous Russian hackers who seem to turn up in every narrative these day — and maybe they’re present after all. In 2010, Wikileaks released a vast trove of hacked U.S. State Department documents that included a cable from the American embassy in San Salvador about a 2005 meeting between then-U.S. Ambassador Hugh Barclay and two top McDonald’s officials.

The officials, according to the cable, asked Barclay to threaten the Salvadoran government that if McDonald’s didn’t get its way in the dispute with Bukele, the United States wouldn’t implement the newly passed Central American Free Trade Agreement (CAFTA). Though the embassy had been supporting McDonald’s, the cable said, the ambassador said he thought rewriting American trade policy to bring Bukele to his knees “ran directly counter to U.S. interests,” and declined.

(McDonald’s denies it did any such thing. “McDonald’s has always acted ethically in this case, and at no time sought to delay the negotiations over CAFTA,” a spokeswoman told the Miami Herald Thursday.)

The inscrutably oddball elements eventually seemed to invade every aspect of the case. When McDonald’s finally lost in 2012 — well, sort of finally, nothing in this story ever seems to end — and was ordered to pay a $23.9 million judgment to Bukele, the money allegedly went missing somewhere in the Salvadoran government’s Treasury Department, which has sidestepped questions about what happened to it.

“It’s quite a tale,” said Bukele, an on-gain, off-again resident of Coral Gables the 1960s. “And I don’t think we’ve finished telling it.”

The dispute has generated at least half a dozen lawsuits in New York and San Salvador as McDonald’s and Bukele juggle jurisdictions and legal precedents in search of the best line of attack. The action scheduled Friday in the U.S. southern district court in New York — basically updating the judge there on the progress of a suit in El Salvador — is unlikely to resolve anything.

“This case has a life of its own,” sighed James F. Moyle, Bukele’s New York attorney.

It’s a life that began in 1996, when McDonald’s told Bukele the franchise he had operated for 24 years and owned for 20 had expired and wouldn’t be renewed. Bukele, who had a 1994 agreement that he believed extended the franchise to 2014, refused to close or rebrand his restaurants.

The courtroom action soon began. McDonald’s won in the lower courts, which resulted in an order that permitted it to drape tarpulens over Bukele’s signs and snatch his napkins. But appellate courts sided with Bukele, which enabled him to grab all the McDonald’s trademarks. Eventually, Bukele won, resulting in the now-missing $23.9 million.

A McDonald’s spokeswoman says as far as the company is concerned, everything’s square on the payment: “Pursuant to the direction of the court, McDonald’s deposited this amount in a judicial account and in accordance with the law in August 2012.”

But Bukele is adamant that he was never told about that payment and he never got any of it. Between resolving that issue and Bukele’s new demand for $21 million in interest on the award, the case seems destined to plod through the Salvadoran courts for years to come.

It’s a dour postscript to McDonald’s badly timed decision to expand into Central America for the first time in the early 1970s, just as the region plunged into a cycle of long political upheaval and natural disaster. Three countries erupted into civil war while a series of earthquakes and hurricanes knocked down anything that hadn’t been blown up.

During El Salvador’s civil war from 1979 to 1993, Bukele’s restaurants were bombed, burned and robbed dozens of times by communist guerrillas who regarded those golden arches as a grating symbol of American imperialism. Two of his security guards were murdered during one of several kidnapping attempts.

“That’s one of the things that makes me bitter,” he said. “All throughout the war, there I was supporting [McDonald’s] them, and they didn’t help me out at all. They told me to get out of El Salvador because they were afraid that if I got kidnapped, they’d have to pay the ransom. Then, as soon as the war is over, they pull the rug from under me.”

In Nicaragua, the story was even stranger. The owner of the only McDonald’s there fled when Nicaragua’s leftist Sandinista guerrillas took over the government in 1979. But employees kept the restaurant open, with the owner’s tacit permission but without the knowledge of the corporation, operating it as a co-op.

As Nicaragua’s economy plummeted into economic brain death during the long civil war that followed, the quality of the food and drink turned so memorably awful that the novelist Denis Johnson set a chapter of his 1986 book “The Stars At Noon” there:

“With the meat shortage, you wouldn’t ever know absolutely, would you, what sort of a thing they were handing you in the guise of beef. . . . It’s the only Communist-run McDonald’s ever. It’s the only McDonald’s where you have to give back your plastic cup so it can be washed out and used again, the only McDonald’s staffed by people wearing military fatigues and carrying sub-machine guns.”

The news that they had a (horrible) restaurant in Managua was not greeted happily at corporate headquarters in Chicago. After a flurry of phone calls between the two cities, the Managua employees pulled the “Mc” of their sign and kept operating as Donald’s. But the menu still offered a Don Mac.

This story was updated to the correct the spelling of the name of James F. Moyle, Bukele’s New York attorney.

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