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to meet. The agreements also required that franchisees operate
their shops in accordance with petitioner's standards of quality,
preparation, appearance, cleanliness, and service.
Petitioner's Sale of Its Asian and Pacific Mister Donut
Operations to Duskin
Duskin is a Japanese corporation which markets a variety of
goods and services, primarily through franchise operations. On
November 19, 1983, petitioner and Duskin entered into an
agreement for the sale of petitioner's assets, rights, and
interests in Mister Donut in Japan (the Japan Agreement). The
Japan Agreement also included a covenant by petitioner not to
compete in the donut business in Japan for a period of 20 years,
as well as a covenant by Duskin not to conduct any business
similar to the Mister Donut business anywhere outside Japan for a
period of 10 years.
By the end of 1986, petitioner had decided to sell its food
distribution and franchise business. Petitioner was having
difficulty providing adequate service to its Mister Donut
operations in Asia and the Pacific. Duskin was seeking to expand
into new territories as it had nearly saturated the Japanese
market. Given its organization, financing, and experience,
8(...continued)
Mister Donut products to anyone other than Mister Donut
franchisees or subfranchisees, and imposed strict confidentiality
requirements on the suppliers to prevent the disclosure of
petitioner's formulas and trade secrets.
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