spanner in the works of a bid to outlaw restaurants with a foreign flavour in Bermuda.

United Bermuda Party insiders said yesterday that the opinion was currently being examined because there appears to be "a potential problem'' with the legality of the Prohibited Restaurants Act.

But they declined to elaborate on what the opinion might be and where the problem could arise.

A serious legal doubt, however, could mean new Governor Thorold Masefield might refuse to give the Royal Assent to the Act even if -- as expected -- it passes its third reading in the House.

Premier Pamela Gordon also declined to discuss the issue, but confirmed: "We are waiting for clarification of an opinion which we have received.

"But in all fairness to my colleagues, I would be out of order to address it publicly until we have had the proper time to examine it.'' It has been suggested the retroactive aspect of the Act -- outlawing franchises operating after May 10 last year -- could be a problem.

The claims of potential legal pitfalls came despite assertions by UBP rebel Ann Cartwright DeCouto that the Act was watertight. It is due to come before the House for its third reading on June 20.

Disagreement over franchise bill Mrs. Cartwright DeCouto and four other MPs, Trevor Moniz, Dr. Clarence Terceira, C.V. (Jim) Woolridge and Dr. David Dyer -- dubbed the Rebel Five -- sponsored the act through the House of Assembly and passed it with Progressive Labour Party backing. That backing is set to continue.

The Five caused a massive split in Government last year when Mrs. Cartwright DeCouto introduced the bill, which was designed to outlaw fast food franchises.

Mrs. Cartwright DeCouto's legislation was framed to block operations like McDonald's -- but only covered restaurants which started operations after May 10, 1996.

The backbench revolt began after Minister of Finance Grant Gibbons earlier approved an application by Grape Bay Ltd. -- a company run by ex-Premier Sir John Swan and Government backbencher Maxwell Burgess -- to operate a McDonalds. Previous Government policy appeared to be against such franchise operations.

The issue has been complicated by the fact that three rebels, Dr. Terceira, Mr. Woolridge and Dr. Dyer, are now Cabinet members.

The rebels insist that they became Ministers under Dr. Saul on the understanding that they would always vote for measures to block fast food franchises in Bermuda.

The Royal Gazette understands party leaders have held meetings with the rebel group to try and thrash out an acceptable compromise over the issue -- without success.

Options available to the party including putting on the Whip, risking confrontation with the rebels or a free vote, allowing anti-franchise MPs to vote their conscience.

Another possibility would be whipping the vote -- but releasing the three rebel Ministers. That would likely cause fury among loyalists. Another option could be MPs in favour of the Grape Bay Ltd. incorporation absenting themselves from the House when the Act comes up.

Mrs. Cartwright DeCouto could not be contacted last night, but Mr. Moniz said: "I've heard rumours here and there -- if someone has an opinion, please let me see it. There are all these ghost opinions around.

"If there was any substance, they would come out and say it publicly and not hide behind whispers.'' RESTAURANTS EAT