The combination Dunkin’ Donuts/Baskin-Robbins store at 11 S. Nansemond St. in Carytown.
A squabble between local doughnut shop owners and their franchisors is getting messier.
Owners of 10 Central Virginia Dunkin’ Donuts and Baskin-Robbins stores, including seven around Richmond, are fighting a federal lawsuit filed in February after they allegedly fell behind on rent and fees.
The dozen LLC owners of the locations, which include three in Fredericksburg, demanded in their recent response that the case be tossed out and took a jab of their own with counterclaims of alleged breached agreements and a breach of good faith.
The shops were founded by CDG Virginia LLC, which was initially made up of Richard Contessa, Minesh Patel and Alpesh Patel, partners from local gasoline supplier Rams of Virginia. The group spent more than $9 million developing the franchises, according to the suit.
The shop owners also allege that various Dunkin’ Donuts and Baskin-Robbins affiliates violated a settlement the two sides entered in 2010, hurt their chances for a profit and impeded deals the owners were working to sell their franchises.
The franchisor had a “plan and scheme to terminate all of the CDG Virginia, LLC franchise agreements, repossess all of the franchised locations, pay CDG Virginia, LLC nothing in return for its $9 million investment and then operate or resell the locations to other franchisees,” the suit alleges.
The initial suit was filed Feb. 7 in federal court in Richmond by Dunkin’ Donuts Franchising, LLC, Baskin-Robbins Franchising, LLC and DB Real Estate Assets I, LLC.
The Canton, Mass.-based sweets brands claim the franchise owners defaulted on the terms of their franchise agreements when they began to miss fee and lease payments on some of the locations, the initial suit claims.
The Richmond Dunkin’ Donuts stores involved in the suit are at 4417 W. Hundred Road in Chester, 15740 Woods Edge Road in Colonial Heights, 3990 E. Williamsburg Road in Sandston, 5400 Jefferson Davis Highway, 11556 Busy St. just off Midlothian Turnpike, 9225 Atlee Road in Mechanicsville and a combination Dunkin’ Donuts/Baskin-Robbins store at 11 S. Nansemond St. in Carytown.
All 10 stores remain open. That’s despite the suits filed by Dunkin’ and Baskin-Robbins that claimed trademark infringement and demanded the locations cease use of all branded items and signage.
The store owners claim any damages suffered by the Dunkin’ and Baskin “resulted from their own wrongful actions and wrongful conduct.”
The relationship between the two sides has shown signs of strain for some time.
In 2010, they entered into a settlement after it was found that the leases being charged on some of the stores were above fair market and had overstated square footage, both of which hurt the shops’ profitability.
The franchisor agreed to pay $750,000 and help take steps to allow the franchises to become more financially stable.
In their response to the federal suit, the store owners claim parts of that agreement were breached.
Dunkin and Baskin-Robbins also delayed the opening of new locations across Central Virginia, which hurt CDG’s bottom line.
The Carytown location, according to the suit, has not yet reached a profit, in part because its opening was allegedly delayed.
CDG this year was working a deal to sell seven of its franchises for $1 million.
A message left at the Rams of Virginia office was not returned by press time.
Sandy Tucker, a Richmond attorney with the law firm Williams Mullen, is representing Dunkin’ Donuts and Baskin-Robbins. He did not return calls for comment. The companies have asked to court to dismiss the counter claims against them.
Pavan Ishwar Khoobchandani, an attorney in Washington with Akerman Senterfitt, declined to comment on the case.
Update: Richard Contessa, Minesh Patel and Alpesh Patel are no longer part of CDG. It is held by an investor in New York, according to Minesh Patel.
The combination Dunkin’ Donuts/Baskin-Robbins store at 11 S. Nansemond St. in Carytown.
A squabble between local doughnut shop owners and their franchisors is getting messier.
Owners of 10 Central Virginia Dunkin’ Donuts and Baskin-Robbins stores, including seven around Richmond, are fighting a federal lawsuit filed in February after they allegedly fell behind on rent and fees.
The dozen LLC owners of the locations, which include three in Fredericksburg, demanded in their recent response that the case be tossed out and took a jab of their own with counterclaims of alleged breached agreements and a breach of good faith.
The shops were founded by CDG Virginia LLC, which was initially made up of Richard Contessa, Minesh Patel and Alpesh Patel, partners from local gasoline supplier Rams of Virginia. The group spent more than $9 million developing the franchises, according to the suit.
The shop owners also allege that various Dunkin’ Donuts and Baskin-Robbins affiliates violated a settlement the two sides entered in 2010, hurt their chances for a profit and impeded deals the owners were working to sell their franchises.
The franchisor had a “plan and scheme to terminate all of the CDG Virginia, LLC franchise agreements, repossess all of the franchised locations, pay CDG Virginia, LLC nothing in return for its $9 million investment and then operate or resell the locations to other franchisees,” the suit alleges.
The initial suit was filed Feb. 7 in federal court in Richmond by Dunkin’ Donuts Franchising, LLC, Baskin-Robbins Franchising, LLC and DB Real Estate Assets I, LLC.
The Canton, Mass.-based sweets brands claim the franchise owners defaulted on the terms of their franchise agreements when they began to miss fee and lease payments on some of the locations, the initial suit claims.
The Richmond Dunkin’ Donuts stores involved in the suit are at 4417 W. Hundred Road in Chester, 15740 Woods Edge Road in Colonial Heights, 3990 E. Williamsburg Road in Sandston, 5400 Jefferson Davis Highway, 11556 Busy St. just off Midlothian Turnpike, 9225 Atlee Road in Mechanicsville and a combination Dunkin’ Donuts/Baskin-Robbins store at 11 S. Nansemond St. in Carytown.
All 10 stores remain open. That’s despite the suits filed by Dunkin’ and Baskin-Robbins that claimed trademark infringement and demanded the locations cease use of all branded items and signage.
The store owners claim any damages suffered by the Dunkin’ and Baskin “resulted from their own wrongful actions and wrongful conduct.”
The relationship between the two sides has shown signs of strain for some time.
In 2010, they entered into a settlement after it was found that the leases being charged on some of the stores were above fair market and had overstated square footage, both of which hurt the shops’ profitability.
The franchisor agreed to pay $750,000 and help take steps to allow the franchises to become more financially stable.
In their response to the federal suit, the store owners claim parts of that agreement were breached.
Dunkin and Baskin-Robbins also delayed the opening of new locations across Central Virginia, which hurt CDG’s bottom line.
The Carytown location, according to the suit, has not yet reached a profit, in part because its opening was allegedly delayed.
CDG this year was working a deal to sell seven of its franchises for $1 million.
A message left at the Rams of Virginia office was not returned by press time.
Sandy Tucker, a Richmond attorney with the law firm Williams Mullen, is representing Dunkin’ Donuts and Baskin-Robbins. He did not return calls for comment. The companies have asked to court to dismiss the counter claims against them.
Pavan Ishwar Khoobchandani, an attorney in Washington with Akerman Senterfitt, declined to comment on the case.
Update: Richard Contessa, Minesh Patel and Alpesh Patel are no longer part of CDG. It is held by an investor in New York, according to Minesh Patel.
The Carytown branch hasn’t reached a profit because it was a terrible idea to put a corporate franchise with stale product in a city that thrives on local. Get a clue CDG.
The reason the Carytown location isn’t making a profit is not because of “not being local;” it’s because it has the WORST and SLOWEST service ever. There are plenty of Northerners who love DD coffee and were excited by it opening in Carytown. The service here is horrible!
It says “All 10 stores remain open.” The Sandston store closed on March 25, 2013, according to a sign on the drive-thru window that now has disappeared. I hope the store reopens. I have even considered purchasing the franchise, if at all possible.
The carytown location is underperforming because it is understaffed (with decent staff), under supplied, and overall underwhelming. I’m not a fan of one donut brand over the other, but when it takes 20 minutes to get 2 dozen donuts on the way to school, you can bet I’m not giving them another chance. It has nothing to do with local vs franchise, but quality of service.