Dunkin’ Donuts Files Suit Against Franchisee for Alleged Violation Settlement

A suit and a motion for preliminary injunction was filed on Thursday in the District of New Jersey by plaintiffs Dunkin’ Donuts Franchising LLC, and related entities against defendants Vicky and Bonny Coffee Express LLC and a group of individual defendants. The complaint for injunctive relief seeks for the court to enforce a settlement agreement reached between the plaintiffs and the defendants.

The settlement agreement, the complaint says, was reached between the respective parties in early February. The agreement specified that the defendants would identify a buyer and close on the sale for their identified franchises and provide Dunkin’ with an executed Asset Purchase Agreement. These were the conditions that Dunkin’ agreed to in order to release the claims that it had brought against the defendants.

The defendants also agreed that in the event they failed to provide Dunkin’ with an Asset Purchase Agreement and failed to close on the sale of their franchises by the outlined deadlines, they would consent to the complete termination of the franchise agreements.

The settlement agreement that Dunkin’ is seeking to enforce was intended to resolve a prior lawsuit filed against the defendants by Dunkin’. The initial suit alleged, among other claims, that the defendants had breached the terms of their franchise agreement. Specifically, the defendants were allegedly “failing to verify whether employees at the restaurants were authorized to work in the United States, failing to complete and retain required records relating to work authorization, and providing false information to the U.S. government.” The complaint explains that in trying to cover up these violations, the defendants committed fraud.

When Dunkin’ discovered the aforementioned violations that the defendants had committed, they terminated their franchise agreement with the defendants and filed suit against them, resulting in a settlement. Despite reaching a settlement, the present suit contends that the defendants failed to comply with their obligations under the settlement. As a result of the defendant’s violations, Dunkin’ maintains that they have been harmed and are seeking immediate and permanent injunctive relief.

The motion for preliminary injunction contends that the plaintiffs are likely to succeed on the merits of their claims, that the defendant’s continued use of Dunkin’s marks are causing irreparable harm to Dunkin’, that the balance of equities weighs in Dunkin’s favor, and that public interest favors the granting of the preliminary injunction.

The complaint cites breach of contract and trademark infringement. The plaintiffs are seeking an order requiring the defendants to comply with their obligations under the settlement and provide Dunkin’ with a report detailing their compliance, an injunction preventing them from further operating the franchises, prejudgment interest, litigation fees, and any other relief deemed just by the Court.

The plaintiffs are represented by Connell Foley LLP and Lathrop GPM LLP.