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AFA Enews 11 Vol. 1, No. 1 |
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October 6, 2003 |
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Dunkin’
Donuts, Inc. Learns It Cannot After a three week jury trial in the U.S. District Court for the District of Massachusetts, on September 20, 2003, a jury comprised of seven individuals returned a verdict in favor of several Dunkin’ Donuts franchisees who were charged with criminal tax fraud and tax evasion for allegedly underreporting gross sales as well as deducting personal expenses on the businesses’ tax returns. Alone, this decision would not warrant particular attention, except for the fact that these franchisees were not being prosecuted by any federal or state governmental authority and had never before been investigated, charged, or convicted of any crime. Instead, these franchisees were being “prosecuted” by their franchisor, Dunkin’ Donuts, Inc., for having been vocal spokespersons advocating the rights of franchisees within the Dunkin’ Donuts system. Until sometime in 1999, Manoochi Fallah Moghaddam was a recognized leader and poster-boy within the Dunkin’ Donuts system, having been appointed by Dunkin’ Donuts, Inc. to several regional and national franchise committees. Mr. Fallah currently operates seven Dunkin’ Donuts shops in South Florida, is a board member of the Dunkin’ Donuts Southeast Distribution Center, and is the President of the DDFA of South Florida, Inc., an independent association of Dunkin’ Donuts franchisees. In 1999, Mr. Fallah filed a lawsuit in Florida that included allegations that Dunkin’ Donuts, Inc. interfered with several elections in which the South Florida franchisees were called upon to decide whether to contribute an additional 1% of their gross sales for local advertising. Clearly unhappy with the filing of the Florida action and the creation of the independent franchisee association, Dunkin’ Donuts, Inc. then “selected” Mr. Fallah for removal from the Dunkin’ Donuts system. According to an e-mail delivered by Phil Bennett of Dunkin’ Donuts, Inc. that was introduced at trial, Dunkin’ Donuts, Inc., through its General Counsel and its Assistant General Counsel, devised a “long term” strategy in which Dunkin’ Donuts, Inc. “committed [itself] to removing Mr. Fallah from the Dunkin’ Donuts system,” which “objective” it was “actively working on.” To further its long term objective, Dunkin’ Donuts, Inc. first delivered a notice of termination to Mr. Fallah, claiming that Mr. Fallah interfered with Dunkin’ Donuts, Inc.’s goodwill by interrupting franchise meetings being conducted in South Florida. Several months later, Dunkin’ Donuts, Inc. sent a second supplemental notice of termination, this time claiming that Mr. Fallah unlawfully transferred his franchise agreements to other corporations that were owned by him. Dunkin’ Donuts, Inc. thereafter delivered a third notice of |
AFA Affiliate Member Robert Zarco wins big against Dunkin’ Donuts |
