Burger King Corp. v. Family Dining, Inc.

Facts

Burger King Corporation (“Burger King” – Plaintiff) entered into an exclusive territorial agreement with Family Dining, Inc. (Defendant). The agreement provided that if defendant opened one Burger King restaurant per year for the next ten years and agreed to operate those restaurants according to the requirements of Burger King’s franchise agreement, defendant would enjoy exclusivity of operations within Bucks and Montgomery Counties in Pennsylvania for a period of 90 years. Defendant opened its first 3 restaurants in compliance with the terms of the agreement. Defendant was delayed by 19 months when opening its fourth and fifth restaurants. Defendant’s found, James McLamore, spoke with plaintiff about this issue, and stated that although plaintiff failed to conform to the contract, plaintiff still “substantially met” its obligations under the agreement. Plaintiff then continued to open restaurants, however, when it failed to open its eighth restaurant on time, it received a letter dated May 23, 1973 which stated that Burger King considered defendant to have breached the territorial agreement and was revoking the exclusivity guarantee. Burger King had evolved into a complex corporate entity and defendant no longer communicated with James McLamore on this matter. From November 1973 to early 1975, defendant and plaintiff engaged in unsuccessful negotiations to resolve their differences. During this time, defendant also opened its ninth and tenth restaurants.