Judge in Baskin-Robbins suit rules against operator

Nation's Restaurant News,  Dec 22, 2003  

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LOS ANGELES -- A U.S. District Court judge here ruled for Baskin-Robbins Inc. against franchisee Taj California, finding it intentionally underreported sales, underpaid fees and percentage rents, and violated an "obey all laws" contract stipulation by not complying with income tax laws.

Judge Ronald S.W. Lew also denied all the defendant's counterclaims against Baskin-Robbins, an arm of Randolph, Mass.-based Allied Domecq Quick Service Restaurants and sister chain of Dunkin' Donuts. The court effectively stripped Taj California of its five franchises in Ventura County, Calif., and ordered it to pay damages to the plaintiff and legal costs. The ruling marked another in a string of contract enforcement victories in recent years by Allied Domecq chains.

However, the win followed Dunkin' Donuts' recent loss of a similar lawsuit in Boston involving a franchisee's alleged "obey all laws" infractions. That case, involving some four dozen counts of purported tax fraud and tax evasion, was said to be the first jury trial on record in which a private company attempted to invoke federal tax laws in a civil matter.

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