Paul Grimaldi reports in the Providence Journal that a Vermont businessman hopes to ring up perhaps the most important sale of his career in late 2009 when he tries to get a jury to side with him in a prolonged dispute with Dunkin’ Donuts.
Irwin Barkan, of Waitsfield, Vt., will return here Dec. 2 as the dispute goes to trial in federal court –– four years after the coffee shop chain and its former franchisee became embroiled in the legal battle.
“I’m a firm believer in the jury system,” Barkan said. “I am anxious to tell the jury my story.”
If he convinces a jury he’s right, he could reap more than $13 million, plus interest.
In an e-mail to The Journal, Dunkin’ Donuts spokesman Andrew Mastrangelo wrote: “Dunkin’ Brands has made every attempt and given Mr. Barkan every opportunity to settle this matter amicably. We have, in good faith, worked to reach a fair and equitable agreement for all parties.
“We believe the facts and law support our position and that the courts will agree.”
Back in 2005, when the battle began, it was one of a relatively small number of disputes between the chain, then owned by Allied Domecq, and its franchisees.
Now the chain is enmeshed in more than 350 lawsuits with its franchisees and has engendered more ill will by pressuring some franchisees to install monitoring systems intended to curb employee theft.
A private consortium that includes Bain Capital Partners LLC, The Carlyle Group and Thomas H. Lee Partners LLP bought the chain in 2005. In 2006, the chain announced it wanted to have 15,000 stores in the United States during the next decade operated by franchisees that have the wherewithal to run 10 to 20 units each.
Franchisees claim the chain is going after them for minor transgressions as a way to terminate their contracts and to resell their outlets at a profit to large multi-unit operators.
“Dunkin’ Brands continues to pursue litigation against franchisees and shows no signs of changing their seemingly harsh and predatory practices,” wrote Jim Coen, president of the Dunkin’ Donuts Independent Franchise Owners, in a letter posted on the group’s Web site.
The turmoil may have played a part in the recent management shakeup at Dunkin’ Brands Inc., parent of Dunkin’ Donuts and Baskin Robbins. The company announced Oct. 1 that William Kussell, Dunkin’s president and chief brand officer, has decided to leave the company at the end of 2009. A few days later, Dunkin’ CEO Nigel Travis announced that the company’s chief legal counsel, Stephen Horn, was leaving to pursue new opportunities.
But those changes were a long way off in 2002, when Barkan bought the rights to run Dunkin’s coffee shops in downtown Providence.
With 30 years in the retail real-estate business, Barkan entered Providence after Dunkin’ won the naming rights to the city’s sports arena –– which it renamed the Dunkin’ Donuts Center. The company wanted to improve its downtown presence. It created a new license area in the heart of the city –– the one Barkan got.
Three years later, the two sides were arguing over franchise fees, loan payments and rent bills. The chain wanted nearly $2 million from him and tried to revoke his operating permits.
The case landed in U.S. District Court for a time before making a stop in U.S. Bankruptcy Court, where three Rhode Islanders ended up with Barkan’s stores after a contentious process that saw one sale nullified by a judge amid allegations of bid rigging.
Barkan has been trying to recoup his investment from Dunkin’ Donuts ever since.
The case returns to U.S. District Court in December, where Senior U.S. District Judge Ronald R. Lagueux will preside over the trial.