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BURGER KING CORP. v. FAMILY DINING

February 7, 1977

BURGER KING CORPORATION
v.
FAMILY DINING, INC.



The opinion of the court was delivered by: HANNUM

 HANNUM, District Judge.

 Presently before the Court is defendant's motion for an involuntary dismissal in accordance with Rule 41(b), Federal Rules of Civil Procedure, advanced at the close of plaintiff's case. The trial is before the Court sitting without a jury.

 In bringing the suit plaintiff seeks a determination under the Declaratory Judgment Act, Title 28, United States Code § 2201, that a contract between the parties, by its own terms, is no longer of any force and effect. A request for declaratory relief is appropriate in a case such as this where the primary question is whether such a termination has occurred. See: Wright and Miller, Federal Practice and Procedure : Civil § 2765, n. 35.

 Jurisdiction of the parties is based on diversity of citizenship in accordance with Title 28, United States Code § 1332(a).

 FACTS ESTABLISHED IN PLAINTIFF'S CASE

 Plaintiff Burger King Corporation (hereinafter "Burger King") is a Florida corporation engaged in franchising the well-known Burger King Restaurants. In 1954, James W. McLamore, founder of Burger King Restaurants, Inc. (the corporate predecessor of Burger King) built the first Burger King Restaurant in Miami, Florida. In 1961 the franchise system was still relatively modest size having only about 60 or 70 restaurants in operation outside of Florida. By 1963, however, Burger King began to experience significant growth and was building and operating, principally through franchisees, 24 restaurants per year. It was also at this time that Burger King's relationship with defendant Family Dining, Inc., (hereinafter "Family Dining") was created.

 Family Dining is a Pennsylvania corporation which at the present time operates ten Burger King Restaurants (hereinafter "Restaurant") in Bucks and Montgomery Counties in Pennsylvania. Family Dining was founded and is currently operated by Carl Ferris who had been a close personal friend of McLamore's for a number of years prior to 1963. In fact they had attended Cornell University together in the late 1940's. It would seem that this friendship eventually led to the business relationship between Burger King and Family Dining which was conceived in the "Burger King Territorial Agreement" (hereinafter "Territorial Agreement") entered on May 10, 1963.

 In accordance with the Territorial Agreement Burger King agreed that Family Dining would be its sole licensee, and thus have an "exclusive territory," in Bucks and Montgomery Counties provided Family Dining operated each Restaurant pursuant to Burger King license agreements *fn1" and maintained a specified rate of development. Articles I and II of the Territorial Agreement (Plaintiff's Exhibit P-2) are pertinent to this dispute. They provide as follows:

 
I.
 
For a period of one year, beginning on the date hereof, Company will not operate or license others for the operation of any BURGER KING restaurant within the following described territory hereinafter referred to as "exclusive territory," to-wit:
 
The counties of Bucks and Montgomery, all in the State of Pennsylvania
 
as long as licensee operates each BURGER KING restaurant pursuant to BURGER KING restaurant licenses with Company and faithfully performs each of the covenants contained.
 
This agreement shall remain in effect and Licensee shall retain the exclusive territory for a period of ninety (90) years from the date hereof, provided that at the end of one, two, three, four, five, six, seven, eight, nine and ten years from the date hereof, and continuously thereafter during the next eighty years, Licensee has the following requisite number of BURGER KING restaurants in operation or under active construction, pursuant to Licenses with Company:
 
One (1) restaurant at the end of one year;
 
Two (2) restaurants at the end of two years;
 
Three (3) restaurants at the end of three years;
 
Four (4) restaurants at the end of four years;
 
Five (5) restaurants at the end of five years;
 
Six (6) restaurants at the end of six years;
 
Seven (7) restaurants at the end of ...

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