Burger King Corp. v. Family Dining, Inc.

The Plaintiff, Burger King Corp. (the "Plaintiff") franchises their Burger King Restaurants. The Defendant, Family Dining, Inc. (the "Defendant"), operated ten Burger King Restaurants in Bucks and Montgomery Counties, in Pennsylvania. The parties entered into the "Burger King Territorial Agreement" (the "Territorial Agreement") on May 10, 1963. In the Territorial agreement, the Defendant was made the Plaintiff's sole licensee and granted an "exclusive territory" in Bucks and Montgomery Counties. The Defendant was required to open one restaurant a year for ten years and throughout the next 80 years maintain ten restaurants. There was a set schedule in the agreement specifying when the ten restaurants had to be opened. If they did so, the Defendant would keep its "exclusive territory", but if they did not Burger King could open restaurants in the "exclusive territory". The Defendant opened the first restaurant on August 16, 1963, 9 months early, but the next two on July 2, 1965 and October 19, 1966, respectively two and four months late. The fourth restaurant was over a year late. As a result of the failure to abide by the schedule, the parties entered into a Modification of the Territorial Agreement (the "Modification"). The Plaintiff, in the Modification, agreed to waive the Defendant's compliance with the original building schedule. There is no indication the Plaintiff received anything of value for entering into the Modification. The fourth restaurant was finally opened on July 1, 1968, 14 months late. The sixth restaurant was opened a month late, but the seventh ahead of schedule. The Plaintiff began to grow at a fast rate and realized that the Defendant's territory could sustain more than ten restaurants. On October 7, 1970, the eighth restaurant was opened ahead of schedule and the Plaintiff had approved the sites for the last two locations. However, construction of the ninth and tenth restaurants was way behind schedule. Due to this tardiness the Plaintiff sent the Defendant a letter informing them they were in default. The Defendant learned that the Plaintiff thought it was in default on November 6, 1973. Nonetheless, the Defendant informed the Plaintiff on or about May 15, 1975 that it was going to open the ninth location. In response, the Plaintiff sued seeking a preliminary injunction enjoining the use of Burger King's trademarks. Additionally, the Plaintiff sought declaratory relief that the exclusivity provision was no longer valid. The Defendant moved for involuntary dis¬missal.