Posted on: Friday, June 17, 2005

Two eatery chains sue O'ahu franchisee

By Curtis Lum
Advertiser Staff Writer

Legal woes continued this week for the president of a company that holds the franchise rights to the Dunkin' Donuts outlets here as well as two Baskin-Robbins stores.

A civil complaint was filed this week by Dunkin' Donuts and Baskin-Robbins against Kenneth Iong, claiming Iong has defaulted on franchise agreements and owes the two firms nearly $1 million. The Massachusetts-based companies also said that because Iong has failed to make the required payments, the franchise agreements were terminated on May 27, and that Iong is engaging in trademark infringement by continuing to operate the franchises.

The lawsuit was filed in U.S. District Court Monday by lawyer W. Gregory Chuck on behalf of Dunkin' Donuts and Baskin-Robbins. Named as defendants were Iong, ABD Group LLC, ICH Group Inc. and ICH Group LLC, all headed by Iong.

Iong could not be reached for comment.

The lawsuit accuses Iong of violating franchise agreements and owing the two companies $425,000 for ice cream, goods and supplies, as well as advertising and franchise fee payments. Iong also owes $188,010 on a $197,137 promissory note, and $140,267 on a store development agreement, according to the lawsuit.

In addition to the damages, the plaintiffs are seeking an injunction that would prohibit Iong and his companies from operating under the Dunkin' Donuts and Baskin-Robbins names. Iong, through his two companies, at one time operated six Dunkin' Donuts and two Baskin-Robbins outlets on O'ahu.

Iong also is president of Sushi Chef, a prepared-foods wholesale business.

The lawsuit is the latest setback for Iong, who established ICH in 1988 and brought the Dunkin' Donuts franchise back to Hawai'i after a five-year absence.

In March, a federal grand jury indicted Iong on felony charges of evading more than $243,000 in taxes for 1997, 1998 and 1999. Iong also is accused of making false statements to financial institutions by using fictitious invoices to get money for alleged purchases or leases of equipment and services, prosecutors said.

Reach Curtis Lum at culum@honoluluadvertiser.com or 525-8025.