International Multifoods Corporation and Affiliated Companies - Page 11

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          Duskin appeared the logical buyer for petitioner's franchisor's             
          interest in Mister Donut in Asia and the Pacific.                           
               On January 31, 1989, following 2 years of negotiations,                
          petitioner and Duskin entered into an agreement for the sale of             
          petitioner's entire interest in Mister Donut in designated Asian            
          and Pacific nations for $2,050,000.  Pursuant to the agreement,             
          petitioner sold its existing franchise agreements, trademarks,              
          Mister Donut System, and goodwill for each of the operating                 
          countries, and its trademarks9 and Mister Donut System in the               
          nonoperating countries.  Joseph Dubanoski, formerly a division              
          vice president with petitioner whose primary responsibilities               
          involved the development and implementation of international                
          franchises, determined petitioner's sale price.  In arriving at             
          this amount, Mr. Dubanoski considered:  (1) The royalty income              
          generated in the operating countries; (2) the growth potential in           
          the operating countries; (3) the development potential in the               
          nonoperating countries; and (4) the value of the trademarks in              
          the operating and nonoperating countries.                                   
               Although nothing in the franchise agreements required                  
          petitioner to obtain the consent of the franchisees before                  
          assigning its rights as franchisor, Duskin expressed concern that           
          franchisees might be unwilling to work with a Japanese company.             


               9Included within the transfer of the Mister Donut trademarks           
          were trademark applications which petitioner had filed and which            
          presumably were pending as of the date of the purchase agreement.           




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