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Compensation. Petitioner was only a party to the 11 franchise
agreements under which petitioner operated its stores and was
required to pay a 5.5-percent royalty fee. It is not clear that
the fact that Domino's, a third party, chose to treat petitioner
and Pizza Park as members of one "group"--the "Paul Group"--for
one purpose otherwise affected the rights and obligations of
petitioner (and its shareholders) and Pizza Park (and its
shareholder) for other purposes.
Petitioner was a separate corporate entity possessing a
different identity from Pizza Park and Mr. Paul. Petitioner was
not solely owned by Pizza Park or Mr. Paul but was also owned by
Mr. Brown, a 49 percent shareholder. There was no reason for
respondent to conclude that Mr. Brown would be willing to allow
petitioner to pay dividends to Mr. Paul without making
appropriate adjustments on its corporate books. Nor was there
any indication that petitioner's corporate identity was in any
manner ignored. Finally, petitioner appropriately filed Forms
1099 reporting the payments made to Mr. Paul. Therefore,
respondent has failed to establish that respondent reasonably
determined petitioner to be the implied assignee of the Area
Agreement.
Second, even if petitioner impliedly become an assignee of
the Area Agreement, the right to receive the Compensation was not
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Last modified: May 25, 2011