Parlour Enterprises, Inc. v. Kirin Group

A jury awarded plaintiffs Parlour Enterprises, Inc. (Parlour), Fun Foods 1 (Fun Foods 1), LP, and Fun Foods Block, LP (Fun Foods Block) approximately $6.6 million in damages based upon contract and tort causes of action. The award consisted of lost profits, lost franchise fees, and consequential expenses sustained by plaintiffs when defendants unilaterally terminated the franchise agreement between them to develop subfranchises. Defendants, Herman Chan and his corporation, The Kirin Group, Inc. (Kirin) appeal, contending the damages awarded were improper because the evidence was unreliable. We agree with respect to the award of lost profits and lost franchise fees, but disagree as to the over $200,000 in expenditures incurred by plaintiffs to develop the subfranchises. The matter is remanded to the trial court with directions to reduce the award of damages to plaintiffs to $202,929. As modified, the judgment is affirmed.

From 1963 to 1972, Bob Farrell opened 55 Farrell's Ice Cream Parlours (Farrell's) around the United States. In 1972, he sold all of them to Marriott Corporation, which opened an additional 85 restaurants. Around 1980, Marriott sold the ice cream…