Question

Katherine Apostoleres owned the rights to Dunkin Donuts franchises in Brandon and Temple Terrace, Florida. The franchisor offered all its franchisees the right to renew their existing franchise agreements if they agreed to abide by advertising decisions favored by two-thirds of the local franchise owners in a given television market. Apostoleres refused the offer because she did not want to be bound by the two-thirds clause. Soon thereafter, Dunkin Donuts audited her two stores, and using a "yield and usage" analysis, it concluded that gross sales were being underreported. Based on these audits and a subsequent audit, Dunkin Donuts gave notice of immediate termination of Apostoleres's franchises, contending that the franchise agreement had been violated. Apostoleres stated that an implied obligation of good faith exists by operation of law in every contract, and she asserted that the audits were in retaliation for her refusal to accept the renewal agreement. The yield and usage test used in the audit was not specified in the franchise agreement as a measure to be used to enforce the franchisor's rights, and certain accounting experts testified as to the unreliability of this test. Was Dunkin Donuts liable for breach of its implied obligation of good faith in this case?
[Dunkin Donuts of America v. Minerva, Inc., 956 F.2d 1566 (11th Cir.)]



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  • CreatedJune 06, 2014
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