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These agreements contained substantially similar requirements
except for provisions dealing with franchise fees, royalties,3
development schedules, and the length of the agreement.4 As of
January 31, 1989, petitioner did not have franchise agreements in
any of the other countries in which it had registered trademarks;
i.e., Australia, Hong Kong, Malaysia, New Zealand, the People's
Republic of China, Singapore, and South Korea (the nonoperating
countries).
Mister Donut had perfected a system that utilized
franchisees to prepare and merchandise distinctive quality
doughnuts, pastries, and other food products. The franchise
agreements refer to this system as the "Mister Donut System",
which is described as:
3The agreements provided for the payment of royalties equal
to the following percentages of the franchisees' gross sales:
Agreement Royalty Percentage
Indonesia 3.90
The Philippines 3.50
Taiwan (as amended) 3.50
Thailand (as amended) 3.35
4The franchise agreements for the Philippines and Thailand
had 20-year terms, while the agreement for Indonesia had an
initial term of 20 years with an option for the franchisee to
extend the agreement for additional 20-year periods. The
agreement for Taiwan, as amended, provided for a term of 20 years
with an option for the franchisee to extend the agreement for one
additional 20-year period.
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Last modified: May 25, 2011