• 11
  • November
    2011

Last month we shared a story with you about the Atlanta Bread Company franchise and some of the challenges it has faced as it experienced a period of rapid growth followed by a contraction in the number of franchises under its umbrella. A common point of contention in franchise litigation is that the stores themselves have to serve two masters, both the franchisee and the franchisor.

One of the strengths of franchises, such as Dunkin Donuts, is that they are easily recognizable by customers across the county. The uniformity among the stores allows customers to have confidence in the product they are purchasing even though they may have never entered that particular store before. This strength can also be an obstacle for individual franchisors as they are generalyl required by the franchise agreement to maintain their store in a specific way, regardless of the position of their individual business.

This conflict seems to be the basis for a lawsuit between Dunkin Donuts and three of its stores. The chain filed a lawsuit claiming that the stores violated their franchise agreement by failing to meet timelines for store renovations. Dunkin Donuts says that it had given the stores extensions beyond the deadlines in the agreement, but last week when the store had still not been remodeled it terminated the franchise agreements for the three stores.

A news article about the pending litigation did not include any statements from the individual franchisors, but given the current state of the economy it may simply be a matter of individual shop owners having limited revenue streams.

Source: Patriot Ledger "Dunkin' Donuts sues three franchisees," Jon Chesto, Nov. 10, 2011