Question

David ungar holds a dunkin' donuts franchise. The terms of his franchise agreement require him to use only those ingredients furnished by dunkin' donuts. He is also required to buy its napkins, cups, and so on, with the dunkin' donuts trademark on them. Is this an illegal tying arrangement? What if dunkin' donuts maintains that it needs these requirements to maintain its quality levels on a nationwide basis? [ungar v. Dunkin' donuts of america, inc., 429 u.S. 823]

Answer 1

In a franchise, the franchisor allows the franchisee to  trade under its name and see its products for a fee  The franchisee pays an original fee to franchisor and a percentage of its profit for the privilege.So,since, Dunkin' Doughnuts is sharing its' brand name and image with David Ungar(his franchisee) it would definately want to improve it...at the least maintain it...David too is right on the other hand as there can be a possibility that he wants to use ingredients of a much higher quality than that provided.But dunkin' doughnuts can't still allow to do that as it has other franchisees to look after.Imagine that=>all the franchisees of dunkin' doughnuts use different ingredients with different quality..wouldn't this affects the image of the franchisor...also all the food items they sell will have a different taste depending on the ingredients.And if one of the franchisee buys cheap ingredients... thereby producing low quality out put ..the customers will not be satisfied...this will not only affect that franchisee but also the Brand image of the whole business worldwide.

To conclude,David may not be wrong with his idea but since dunkin' doughnuts is a big business with a good brand image...it has its' terms and requirements.