Blue MauMau:
When Irwin Barkan began his business relationship with Dunkin’ Donuts and Baskin-Robbins in 2001, he had no idea he would be dumped into a quagmire of litigation costing him millions. But not only has it been a costly proposition, it has also caused him to lose six stores,
his store development agreements (SDAs)—contracts allowing him to open new shops—and forced him into bankruptcy, through what he says was Dunkin’s intentional effort to eliminate him from the system while restructuring his debt in developing new shops.
Now, seven years later, Barkan and his attorneys, Gelb & Gelb, are awaiting a court decision on Dunkin’s motion for summary judgment, hoping it will be favorable in allowing their case to go forward with a jury trial. In opposition, Dunkin’ anticipates the court will grant its motion and quickly dismiss the case.
According to the first amended complaint filed in Rhode Island federal court in 2006, Barkan and his company, D&D Barkan LLC, entered into franchise agreements with Dunkin’ in early 2002 for five shops— four underperforming stores and one to be developed. He also acquired the rights to develop other shops in Rhode Island pursuant to the SDAs he entered into with Dunkin’ in 2002 and 2003. The purchase price was financed through a loan provided by CIT, a lender associated with Dunkin’. Not only did Dunkin’ help arrange for his loan, but also guaranteed it.
Following the development requirements of his SDAs, Barkan identified three new sitesfor additional donut shops, with the thought that the economies of scale from the additional stores would increase profits.
In September 2003, he presented his plan to Dunkin’ to restructure debt for developing his stores in order to bring them to a positive cash flow. When he presented four others during the next six months, Dunkin’ rejected all refinancing proposals, citing disputes with Barkan, including the amount owed to CIT under the loans guaranteed by Dunkin’. The company also threatened to terminate his franchise and SDA agreements.
Photo by smedero.