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owner-managers' service hours) is reasonable, they have not
directed any of their argument to proving that respondent's
method produces an arbitrary, capricious, or unreasonable result,
to wit, that gross sales is not indicative of management and
administrative services provided. Petitioners do, however, make
a collateral argument assaulting respondent's method, alleging
that Ms. Camper did not take into account certain unusual events
that occurred during the years at issue, which required BKK to
provide unusual types and amounts of services to the affected
purchasing members.3 Ms. Camper testified that she considered
allocation methodologies based on both hours and gross sales.
Although she admitted that the "top" method would have been based
on hours or time spent, she was limited by the information
available to her. The owner-manager’s failure to maintain time
logs or other documentation recording the allocation of their
time spent among the purchasing members, along with their failure
to separately account for the time spent by support staff (whose
activities gave rise to 15 percent of payroll-related costs),
made it impossible for her to determine the impact of the unusual
events on the services provided using an hour-based allocation
3 The unusual events include: (1) A fire at one of Kenco's
restaurants that burned the restaurant to the ground on Dec. 7,
1989, and the subsequent construction of a new, larger
restaurant, (2) the owners razed Tiffin Realty's only restaurant
and rebuilt a new facility in 1990, (3) the owners remodeled
Bowling Green's only restaurant and expanded the dining room of
K-K's restaurant located on Trenton Ave. in 1991, and (4) Bryan
was incorporated on June 3, 1992, and Bryan's restaurant opened
in Oct. 1992.
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