CANTON, Mass. — Two Dunkin' Donuts franchisees of Indian origin are alleging that the Massachusetts-based Dunkin' franchising company discriminates against them because they are not white. Dunkin' denies the claims.

Gujurati-immigrant Nilesh Nehta, 39, who owns two franchises in Greensburg, Pa., said that Dunkin' sent him termination notices without valid cause, trying to force him to sell his store at below market value. In one case, he said, the Dunkin' company demanded that Nehta, who has less than five years left on his lease, invest $650,000 in remodeling his store — a demand that he alleges the company is not forcing on white owners.

He also said that representatives of the Dunkin' company have humiliated him in front of his customers, and on one occasion took issue with a water glass that someone left in the restroom of Nehta's store. Dunkin's team assumed that restaurant workers used water instead of toilet paper to clean themselves after going to the bathroom, Nehta said.

"I'm not doing anything wrong," he said. "Somebody put the glass in my restroom and someone is trying to blame me."

Nehta, who said he is the only Indian  Dunkin' franchise owner in the Pittsburgh area, also said Dunkin' personnel talk to white franchise owners differently.

"If someone is a white person, he [a Dunkin' reassessment employee] goes and helps them," he said. Nehta is considering suing Dunkin' Donuts.

In an unrelated case in New York, Mahendra and Nita Patel, who own four Dunkin' Donuts restaurants, recently filed a lawsuit against Dunkin', also claiming that the company discriminates against people of color and immigrant small business owners. Dunkin' threatened to terminate their franchises after accusing the Patels of employing undocumented immigrants and failing to pay overtime to their employees. 

But the Patels maintain that the store never employed undocumented immigrants and always compensated all workers appropriately. The lawsuit also compares inspections from Dunkin' to Gestapo raids, and claims that Dunkin' personnel scared restaurant employees by impersonating FBI and immigration officials.

What it comes down to, alleges the Patels' attorney Gerald Marks, is that Dunkin' tries to find reasons to force the smaller, immigrant franchisees out of business so that larger, white franchise owners who own numerous restaurants can take over.

"Dunkin' manufactures pretextual, false, and baseless reasons upon which to terminate primarily brown skin first generation American entrepreneurs-franchisees or force them to sell the franchises back to Dunkin' • for a price less than the fair market value of the franchise," the lawsuit alleges. "Dunkin', in turn, resells the franchises to a favored Caucasian multi-unit franchisee who is awaiting additional store locations."

The lawsuit goes on to explain that new franchise owners are often required to pay a higher royalty rate and that "Dunkin specifically targets the first generation American, brown-skinned franchisees [for these below market sales] because by and large they are unsophisticated with the American legal system."

But the Dunkin' Donuts company —although its spokesman would not comment on ongoing litigation — denies that it discriminates against franchisees based on race.

"Our system follows the rule of law, and we would never pursue legal action against a franchisee without clear cause. It is not about who the franchisee is; it is all about what the franchisee does," wrote Dunkin' Brands spokesman Stephen Caldeira, in a statement that was e-mailed to INDIA New England. "With regard to the recent discrimination charge, we can state with absolute certainty that the claim is false, and we are confident that the court will find in our favor."

In fact, the Dunkin' Donuts Web site for prospective franchisees (www.dunkinfranchising.com) features a smiling photo of a South Asian girl holding a Styrofoam coffee cup and a quote from a Baltimore franchisee of Indian origin, Ram Javia.

"Coffee is the second largest commodity in the world next to oil," Javia states in a testimonial on the site. "The industry is not just another fad."

Dunkin' Donuts has more than 7,200 franchised stores in 31 countries worldwide, the company's Web site states.

According to Jennifer Talwar, a sociology professor from Pennsylvania State University at Lehigh Valley, who has interviewed 30 Dunkin' Donuts store owners around the country, immigrant franchisees — particularly Indians from Gujarat — dominate Dunkin' Donuts restaurants in the New York City metropolitan area, while Punjabis own the majority of Dunkin' Donuts stores on the West Coast.

Indian immigrants moved into the franchise market because the initial start up costs for a Dunkin' Donuts restaurant can be as low as $15,000, she said, while other franchises — such as McDonald's  — require hundreds of thousands in down payment.

However, Talwar said that franchisees in the United States now face increasing demands from parent companies — including having to stay open 24 hours a day and having to pay more in royalty fees — all while facing the risk that the parent company can terminate the contract at any time and for any reason. 

"The owners of corporations in this country have the upper hand," she said. "Franchisees are squeezed and on the legal level they have very little power, so the potential for abuse is there."

Talwar acknowledged that it's hard to make the claim that Dunkin' Donuts discriminates against Indians when so many franchisees are Indian, but hypothesized that perhaps Dunkin' is growing concerned that the "ethnic group could begin to leverage some power" against the company.