Why Is Dunkin' Suing Its Franchise Owners?

Dunkin’ Donuts Franchising LLC (DNKN) has filed a series of lawsuits against its store owners that have allegedly hired undocumented immigrants to work in its franchise locations. The doughnut retailer has reportedly filed complaints against more than 30 stores that have failed to provide proof that their employees are authorized to work in the U.S.

For Dunkin’, the infractions are violations of the federal immigration laws and its franchise agreements. As a result, the company is looking to close several store locations that have allegedly failed to comply with its company requirements, the The New Food Economy reports.

A franchise owner in Delaware, where one of the lawsuits is taking place, has countersued Dunkin’, claiming it did not have the opportunity to “correct the violations,” while also contending that the company is looking to resell their stores “without providing the operator with compensation, Restaurant Business reports.

Dunkin’ has reportedly sent termination letters to stores in Delaware, New Jersey, and Virginia, suing the franchise owners after they failed to close their door or supply I-9 forms for their employees. The company also requires the use of an E-Verify system, which is managed by the Department of Homeland Security, to determine if a worker is an undocumented immigrant.

This is not the first time that Dunkin’ has sued its franchise owners for allegedly hiring illegal immigrants as the company has filed 100 lawsuits in 2006 and 2007, according to The New Food Economy.

Shares of Dunkin’ stock were down 0.47 percent as of 1:09 p.m. ET on Thursday.