The Franchise Memorandum

In Dunkin’ Donuts Franchised Restaurants v. Agawam Donuts, Inc., 2008 WL 619399 (D. Mass. March 5, 2008), a case being handled by Gray Plant Mooty, Dunkin’ Donuts seeks to enforce its termination of 52 franchise agreements entered into with the defendants. As Dunkin’ Donuts stated in its notices of termination and complaint, the terminations were based on the defendants’ failure to comply with specific provisions of the franchise agreements, including those prohibiting them from: (1) violating federal labor, tax, and immigration laws, (2) engaging in activities injurious to Dunkin’ Donuts’ goodwill, (3) committing crimes, (4) allowing the franchises to be used for unlawful purposes, and (5) failing to keep accurate books and records. Dunkin’ relied upon each basis as independent grounds for terminating the franchise agreements.

Before producing any discovery, the defendants filed a motion for summary judgment. The defendants argued that Dunkin’ did not provide “proof” of the violation of the crimes committed provision at the time of the termination and that Dunkin’, according to the defendants, failed to provide a cure period for those violations. As the court explained, however, the plain language of the franchise agreements specifically stated that the defendants were not entitled to a cure period for the very conduct alleged. The court further held that the defendants’ assertion that Dunkin’ had not relied on this provision in terminating the franchise agreements was “patently false” and belied by both the complaint and notices of termination. Because Dunkin’ identified numerous bases for terminating the franchise agreements and complied with its contractual obligations in doing so, the court denied the defendants’ motion.