International Multifoods Corporation and Affiliated Companies - Page 10

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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,                 

          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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