Dunkin' Caught in Scheme to Entrap Franchisee

CANTON, Mass. –  According to a transcript of a hearing held in November 2007, an operations manager of Dunkin’ Donuts admitted to entrapping a franchisee who was then sued by the franchisor in Florida federal court for breach of the franchise agreement and trademark infringement. Al Parra testified that franchisee Karim Ladhani bribed him by offering to install shutters at his home through his hurricane shutter company, which he owned with other family members, alleging that Ladhani told him “he would take care of it" or “would take care of him,” regarding the price of the shutters.  Parra, who was responsible for evaluating franchisees’ operations, food safety, sanitation and adherence to brand image for Dunkin’, claimed the franchisee was offering him free or discounted shutter installation in return for a favorable evaluation of his stores.

Ladhani adamantly denied that there was any offer to bribe Parra and pointed to the fact there was never any statement made that the shutters would be offered for free or at a substantial discounted price.

The transcript reads:

Court:  You were trying to set Mr. Ladhani up to make sure that he was entrapped into being considered to have bribed you? 

Mr. Para:  Correct 

Court: After you were convinced on March the seventh he had proposed a bribe with regard to the shutters you said you wanted to see what he was going to say and you were in the process of trying to contact the legal department at Dunkin. 

Para:  Yes. 

Court:  Mr. Zarco said something to the effect, so you were trying to set Mr. Ladhani up or trying to entrap him with regard to this bribery, what you thought was a bribery.

Parra answered that he wanted to affirm what Ladhani was offering him. He explained that he “didn’t know whether to either just say you know, hey, this is a bribe and end the conversation or to keep proceeding on.” He said he had never had this happen before. “I didn’t know if Legal [department] needed more information or documentation, so I led the conversation on to see what he would say,” Parra testified.

After evaluating the evidence, including witness testimonies, contracts and other exhibits, the judge stated, “Seems to me it’s at least as reasonable to infer there was a contrary inference that there was not a bribe offered. It is my view plaintiffs [Dunkin’] have failed to carry their burden proving by a preponderance of the evidence that Mr. Ladhani intended to offer a bribe.”

The judge stressed how this evidence showed Dunkin’ Donuts had been trying to entrap a franchisee: 

Court:  “I was particularly impressed by Mr. Parra’s testimony at one point he was trying to set up Mr. Ladhani on the March ninth conversation after having considered what was required to meet the standard for breach of the obey all laws provision in the contract.  In the follow up conversation on March ninth he indicated up to part of the time he thought about setting up and was attempting to entrap Mr. Ladhani with regard to having him make commitments to show he was attempting to bribe him.”

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• Boston Globe Reports Dunkin' Donuts Finds Suing Franchisees a Profitable Biz