International Multifoods Corporation and Affiliated Companies - Page 9

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          programs, which consisted of a basic 4-week class plus a 2-week             
          supplemental class for international franchisees.7                          
               In addition, when franchisees opened their initial Mister              
          Donut shops, petitioner provided them with the assistance of two            
          Mister Donut employees for a 3-week period to work with the                 
          shop's manager and to assist in the training of the bakers and              
          sales personnel.  Petitioner also provided its franchisees with             
          manuals, which covered all aspects of managing and operating a              
          Mister Donut franchise, such as operating and production                    
          procedures, baked goods, training, equipment, advertising, repair           
          and maintenance, sanitation, and special programs.  The franchise           
          agreements contained strict confidentiality provisions and                  
          provided that the Mister Donut manuals remained the property of             
          petitioner and were to be returned to it upon termination of the            
          franchise agreement.                                                        
               In order to ensure that the distinguishing characteristics             
          of the Mister Donut System were uniformly maintained, petitioner            
          established standards for furnishings, equipment, finished                  
          product mixes, and supplies,8 which the franchisees were required           

               7International franchisees could send additional employees             
          for training each year.                                                     
               8Petitioner had entered into supplier agreements with                  
          manufacturers outside the United States, licensing them to                  
          produce bakery mixes, fillings, and other products to its                   
          specifications for sale to Mister Donut franchisees and                     
          subfranchisees.  These agreements obligated suppliers to meet               
          petitioner's quality standards, prohibited suppliers from selling           

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Last modified: May 25, 2011