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Dunkin’ Donuts Facing Racial Discrimination Allegations

Despite Dunkin’s stance, other franchisees are taking note of the developing case.

"I don't like to jump to conclusions, but from what I've read and heard of this case, it's troubling," says Mark Dubinsky, president of Dunkin' Donuts Independent Franchise Owners (DDIFO), an advocacy group for more than 1,600 franchisees that is not currently recognized by the company. "We feel some solidarity for our brother franchisees that seem to be in a difficult position. We definitely believe all franchisees should be treated equally and fairly."

With regards to this specific case, we feel confident that the legal action taken against this particular franchisee is appropriate, and we are confident the Court will find in favor of Dunkin’ Donuts."

Dubinsky, a former franchisee whose family sold their stores earlier this year, says several franchisees within the ranks of the DDIFO have also been terminated by Dunkin' over the past few years.

"We've had similar problems here in the New England, where franchisees believed to have been in good standing were served with termination notices," he says.

Jerry Marks, a lawyer for the Patels, says he, too, has spoken with other franchisees who claim to have been treated unfairly by the brand, some of whom are Indian, Arab, Pakistani, and African American heritage. Details were not available on the number of non-minority franchisees who were terminated as this story was going to press.

A Franchise Times story from August 2007 revealed that between January 1, 2006, and June 30, 2007, Dunkin' Donuts was engaged as the plaintiff in 101 federal lawsuits, mostly against franchisees. The Patels' counterclaim alleges that "[s]uch aggressive litigation is part of a company strategy, policy and practice, the goal of which is to require franchisees facing a loss of their franchise rights to surrender their franchises so they may be re-sold or force franchisees to pay fines, running into hundreds of thousands of dollars, or take other action in order to avoid termination."

Dubinsky says he is wary of what he sees as Dunkin' Brands' excessive use of litigation against franchisees, questioning the lack of opportunities the chain provides to cure defaults.

"It's disappointing that there's as much litigation open as there is," he says. "There has to be a better way."

According to one franchise law expert, it's also highly unusual.

"Most franchisors try to avoid suing franchisees," says Mario L. Herman, a Washington D.C.-based franchisee lawyer. "Dunkin' Donuts does not seem to espouse this theory."

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