Dunkin' sues Riese Org. in bid to end franchise

Nation's Restaurant News, June 2, 2003

NEW YORK -- Dunkin' Donuts USA Inc., the Allied Domecq subsidiary based in Randolph, Mass., is suing the Riese Organization of New York in an attempt to revoke the franchise rights of the multi-brand restaurant operator.

The lawsuit accuses Riese, which has about 20 Dunkin' Donuts shops and also franchises such brands as Pizza Hut, KFC and T.G.I. Friday's, of operating dirty doughnut outlets, selling doughnuts to competitors and withholding royalty payments from Allied Domecq.

According to president and chief executive Dennis Riese, the Riese Organization's doughnut shops in New York have passed municipal health inspections. He added, "Our health conditions are the same as they've always been." Riese acknowledged that his company has been selling wholesale products to Donut Connection stores but said the arrangement had been negotiated 20 years ago with Dunkin' Donuts' then-chief executive, Robert Rosenberg. However, Dunkin' Donuts does not "get royalties on wholesale transactions," Riese added.

Dunkin' Donuts, an arm of Allied Domecq Quick Service Restaurants, has filed lawsuits against nearly 350 franchisees since 2000 in an attempt to revoke their franchise rights or force them to conform to chain standards.