Allied Domecq PLC, which owns Baskin-Robbins, Dunkin’ Donuts and Togo's brands, has agreed to a friendly $14.2 billion takeover offer from Pernod Ricard SA and Fortune Brands, Inc. Allied Domecq has accepted the broad outline of the offer, but has not provided any details of the agreement. French beverage group Pernod has brands including Martell cognac and Jacob’s Creek wine, while Fortune Brands holds interest in and/or distributes U.S.-based liquor (Absolut Vodka and Jim Beam whiskey), sports equipment (e.g., Titleist, Cobra and Footjoy) and household products (Moen and Master Lock). News of the takeover by the liquor manufacturer has prompted rumors that a further sale of the franchise companies may lie ahead because the acquisition appears to be focused on improving Pernod's position in the liquor industry, particularly against British-based Diageo PLC (former owner of Burger King Corporation).
As reported in the Miami Herald, an Australian investment company has purchased 6.5 percent of Krispy Kreme stock. Combined with the investment of a Tennessee investment company that recently increased its Krispy Kreme holdings, the boost in share purchases is said to be designed to ease Krispy Kreme's financial straits.
The Detroit Free Press reports that U.S. antitrust enforcers have been asked by Federal Trade Commission lawyers to intervene in Blockbuster's $833 million bid for rival Hollywood Entertainment Corp. The FTC believes that a merged Blockbuster/Hollywood would increase movie rental fees.
Blockbuster's bid, although higher than the recent $13.25 cash per share bid on the company placed by Movie Gallery, Inc., has been rejected by Hollywood.
Despite the rejection, Blockbuster has planned to formally place its bid on the company on March 24 unless the the bid is challenged in court.
Joining the league of plaintiffs with claims against Krispy Kreme are some of the North Carolina doughnut maker's own employees. In a class action suit filed last week, employees that owned stock in the company after January 1, 2003 claimed that Krispy Kreme padded sales figures and issued "false and misleading statements" until May 2004, when it reported its first-ever quarterly loss.
Ending the three-year boycott over the low wages of tomato pickers, Taco Bell agreed to assist the indigent immigrant workers of the Florida tomato fields in getting better wages and working conditions. Neither Taco Bell nor its parent company, Yum! Brands, employs the workers, but the Mexican franchise company entered into an unprecedented agreement with the Coalition of Immokalee Workers to pay a penny more per pound of tomatoes with the increase to go directly to the workers. The Coalition has urged boycotts of Taco Bell because it claimed that Yum pressured tomato growers to give volume discounts that resulted in severe depression of the farmworkers' salaries. According to this article in the Washington Post, before the accord was reached, a farmworker earned 40 cents for each 32-pound bucket of tomatoes. Under this wage calculation, a worker would need to pick 2 tons of tomatoes to earn $50. The agreement between Yum! and the coalition gives the workers hope that other companies will follow suit.
On March 1, 2005, the obesity lawsuit filed by two New York teenagers was reopened in the Southern District of New York by mandate of the U.S. Court of Appeals for the Second Circuit. McDonald's has been working since the filing of the case in 2002 to include healthy eating options on its menu and refocus advertising on those offerings. The recently launched Healthy Living Campaign, with spokespersons like Wayne Gretsky, Venus Williams and Bonnie Blair, is part of the overall strategy to change public perception of fast food as unhealthy.
Until last year, Sten Corp. from Minnesota only operated a medical device company. Last year, the company purchased the assets of a burger franchise, Burger Time out of North Dakota. It then sold off one of its medical device maufacturing units. Today, the company announced that it will purchase another burger franchise company called "Hot 'n' Now" out of a bankruptcy proceeding in Michigan. The terms were not announced. There are currently 15 Hot 'n' Now franchises all operating in Michigan. In addition to the burger division, Sten still operates a company that provides emergency oxygen services and equipment.
On Entrepreneur.com, Mark Siebert lends his support to the franchise model by debunking the myth that franchising opens a company up to more lawsuits. While Mark is correct that franchising provides a less risky method of expansion because the franchisee (and its insurance company) are usually contractually required to provide the first line of liability defense in a typical slip-and-fall case, the franchise model certainly does not prevent a franchisor from being sued. Moreover, these types of claims are not ordinarily disclosed in a franchisor's UFOC because they aren't viewed as material claims.
Franchisors get sued for injuries at a franchisee's location. By and large, franchisors are successful in getting out of these cases, but sometimes a franchisor must litigate a case into summary judgment before a court can determine whether the franchisor can be held vicariously liable. This is an unfortunate by-product of a well-known trademark. It shouldn't be, however, the reason for abandoning franchising. As Mark says, the benefits of franchising usually outweigh the risks.