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ability to assume the cost of such expenses, and that petitioners
continued to do so even after they were informed by respondent’s
agents that the method of determining such costs was arbitrary.”
That explanation, at least the first clause, is not a model of
clarity. We deduce that respondent’s principal complaint is that
petitioners were negligent in allocating the BKK fees on a basis
that did not reflect the relative usage of BKK services by the
purchasing members.
Ms. Moore was of the opinion that petitioners' method of
allocating the management cost share fee did not satisfy a value
added standard. Ms. Moore opined that each restaurant showed
profitability consistent with industry averages before the
management cost share fee allocation, but not after, concluding
that petitioners' allocation distorted the individual store
performances and did not clearly reflect the economic income of
those locations.
Petitioners claim: “The representations of hours spent by
the owner/managers is highly reliable and was neither rebutted
nor impeached at trial.” We assume that petitioners’ claim is
that the representation of hours spent by the owner-managers is
reliable in the sense that it accurately reflects the hours spent
with respect to each purchasing member. Petitioners state:
“[T]he time allocation was based on historical experience; was
evaluated on a regular, on-going (almost daily) basis by the
owner/managers; was evaluated and adjusted at midyear based on
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Last modified: May 25, 2011