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franchisee's country until the franchise agreement expired, or
was terminated, or unless the franchisee did not meet its
development schedule by failing to open the requisite number of
Mister Donut shops.
Mister Donut's success resulted from the Mister Donut System
and the high standards for quality and service, which the
franchisees were required to meet. See supra p. 9. Although
these characteristics produced goodwill in the operating
countries, that goodwill was embodied in the franchises and
trademarks conveyed to Duskin.
Petitioner also transferred its Mister Donut System and
trademarks for each of the nonoperating countries. Duskin
received the right to exploit--either by entering franchise
agreements in these territories or by opening shops itself--the
Mister Donut System along with the accompanying trademarks,
formulas, and other intangible assets. In the nonoperating
countries, there were no Mister Donut shops for customers to
patronize at the time the purchase agreement was executed.
Goodwill is founded upon a continuous course of dealing that can
be expected to continue indefinitely. Canterbury v.
Commissioner, 99 T.C. at 247; see also Computing & Software, Inc.
v. Commissioner, 64 T.C. at 233. Goodwill is the expectancy of
continued patronage. Houston Chronicle Publishing Co. v. United
States, 481 F.2d at 1247. Petitioner concedes on brief that
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