Contracts Keyed to Burton
Burger King Corp. v. Family Dining, Inc.
Burger King Corp., Plaintiff, and Family Dining, Defendant, began an exclusive territorial agreement relationship, which provided that in the event that Defendant opened one Burger King restaurant each year for the next ten years and agreed to manage the restaurants in accordance with the Burger King franchise agreement, Defendant would enjoy exclusivity of management in Bucks and Montgomery Counties in Pennsylvania for 90 years. Defendant opened its first three restaurants in time and complied with the agreement. Thereafter, Defendant began to experience problems with its next two restaurants. Defendant contacted James McLamore, Burger King’s founder, the problems. McLamore still believed Defendant had “substantially met” its obligations under the territorial agreement, even though Defendant was delayed nineteen month, pursuant to the agreement. Further, McLamore stated that the development schedule state in the agreement was mainly to encourage development by Defendant, which would result in a profit for both Plaintiff and Defendant, rather than setting a requirement for development each year. Similarly, McLamore gave Defendant the same response when it experience problems developing its sixth restaurant. Further, Defendant opened its seventh and eighth stores faster than scheduled. At that time, Plaintiff had significantly expanded in its size and operations, and Defendant stopped working directly with McLamore in regards to the terms of the agreement. When Defendant did not open the eighth restaurant on time, Defendant received a letter from Plaintiff. The letter stated Defendant breached the territorial agreement with Plaintiff, and Plaintiff was revoking its exclusive territorial agreement. Plaintiff and Defendant unsuccessful negotiated to resolve this issue. Also, during this time, Plaintiff established and opened its ninth and tenth restaurants. Plaintiff filed an action seeking a declaratory judgment requesting that the court determine whether the territorial agreement with Defendant had been terminated when Defendant failed to satisfy with the development schedule. Defendant motioned to dismissed the complain alleging the agreement would result in a forfeiture by Defendant.
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