Sunday, October 25, 2009

Starbucks Gives Dunkin' a Taste of Its Own Brew

Starbucks sued an ex-Senior Vice President over his employment with Dunkin' Brands. MarketWatch reported on the case:

Terms of the accord with Paul Twohig, a former Southeast-region senior vice president at Starbucks, call for him to complete his initial training but not to begin work at his new employer, Dunkin' Donuts, until Jan. 15.

Twohig "reconfirmed his commitments not to share Starbucks trade secrets and other confidential information with Dunkin' at any time."

In a statement Saturday, Starbucks also said it would be paid $500,000; it did not say whether the executive or Dunkin' would pay the funds.

Is turnabout fair play? Since the Carlyle Group took an ownership chunk of Dunkin', the franchiser kept liberated lawyers busy with lawsuits.

Between Jan. 1, 2006, and Aug. 21, 2009, Dunkin' was involved in 356 cases against its franchisees, the vast majority of which were filed by the company. At the end of 2008, the company had 2,250 US franchisees.

A CSPAN author noted Cornelius Vanderbilt's propensity to sue, to use courts to his advantage. His first known lawsuit came at the age of 22. Did modern day Robber Barons learn from Mr. Vanderbilt? Who will win, the big money boys or their opponents, little franchisees or doctors with a message?

Lawsuits are but one strategy in a "win at all costs" brew, the modus operandi of PEU's (private equity underwriters). It might come back to haunt them.