Two minority franchisees have alleged racial discrimination in a counterclaim filed in response to Dunkin' Donuts' attempts to terminate their franchise agreements. The counterclaim alleges that the actions of Dunkin' Donuts are based upon the color of the franchisees' skin.
Last year Dunkin' served Mahendra and Nita Patel, husband and wife owners of four Dunkin' Donuts shops in Goshen, Harriman, and Chester, New York, with a notice of termination stemming from alleged violations of the franchise agreements, labor laws, and tax laws.
The Patels, who are first-generation Americans of Indian descent, answered by filing a counterclaim in White Plains Federal Court October 15. It that Dunkin' Donuts unfairly terminates minority franchisees or forces them to sell their stores at less than fair market value to Caucasian multi-unit operators.
"Counterclaim Plaintiffs Mahendra Patel and Nita Patel are typical of the 'mom and pop' immigrant franchisee owners who, because of the exceptional service they have provided to their customers, have formed the backbone of, and are responsible for, the success of the Dunkin' system within the last fifteen to twenty years," reads the counterclaim, which was prepared by law firm Marks & Klein, LLP. "Their reward for years of exceptional service, however, is to now find themselves as the target of Dunkin's discriminatory policies that seek to divest brown-skinned franchisees like them of the equity and value they have worked so hard to build up in their stores."
One of those discriminatory policies, according to the Patels', involves Dunkin' Donuts allegedly sending representatives on "Gestapo-like raids" to intimidate franchisees. At least one field service manager is alleged in the filing to have impersonated an FBI agent in one such visit to a restaurant owned by the Patels.
These actions by Dunkin', the counterclaim alleges, are spurred by the chain's aggressive growth goal of tripling in size to 15,000 units by 2020.
Dunkin' Donuts denies the Patels' claims, and in response to inquiries from QSR released the following statement:
"Dunkin' Donuts restaurants are owned and operated by more than 1,200 independent business men and women, who represent a variety of racial, religious, and ethnic backgrounds. Dunkin Donuts only pursues legal action with respect to franchisees who do not adhere to Federal and state laws or fail to meet the obligations as required by their franchise contract. With regards to this specific case, we feel confident that the legal action taken against this particular franchisee is appropriate, and we are confident the Court will find in favor of Dunkin'' Donuts."