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Duskin appeared the logical buyer for petitioner's franchisor's
interest in Mister Donut in Asia and the Pacific.
On January 31, 1989, following 2 years of negotiations,
petitioner and Duskin entered into an agreement for the sale of
petitioner's entire interest in Mister Donut in designated Asian
and Pacific nations for $2,050,000. Pursuant to the agreement,
petitioner sold its existing franchise agreements, trademarks,
Mister Donut System, and goodwill for each of the operating
countries, and its trademarks9 and Mister Donut System in the
nonoperating countries. Joseph Dubanoski, formerly a division
vice president with petitioner whose primary responsibilities
involved the development and implementation of international
franchises, determined petitioner's sale price. In arriving at
this amount, Mr. Dubanoski considered: (1) The royalty income
generated in the operating countries; (2) the growth potential in
the operating countries; (3) the development potential in the
nonoperating countries; and (4) the value of the trademarks in
the operating and nonoperating countries.
Although nothing in the franchise agreements required
petitioner to obtain the consent of the franchisees before
assigning its rights as franchisor, Duskin expressed concern that
franchisees might be unwilling to work with a Japanese company.
9Included within the transfer of the Mister Donut trademarks
were trademark applications which petitioner had filed and which
presumably were pending as of the date of the purchase agreement.
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