JUST DESSERTS?

HAAGEN-DAZS GOES TO COURT AFTER TAKING A LICKING IN VAIL.

Over the years, Haagen-Dazs, the luxury ice-cream maker, has earned a reputation for trying to put the chill on its competitors. In 1980 the company sued the owners of Frusen Gladje for allegedly using a copy-cat umlaut (and lost). Four years later Haagen-Dazs tried to freeze out an upstart Vermont company by blocking distributors from carrying Ben and Jerry's Homemade ice cream. (The strategy backfired when Ben and Jerry's ran a successful ad campaign that taunted, "What's the doughboy afraid of?" referring to Haagen-Dazs's parent company, Pillsbury.)

Haagen-Dazs still is not shy about fighting off its high-calorie challengers. Two months ago Vail's Haagen-Dazs franchiser, Richard Morton, decided to jump ship. He calculated that residents of the tony mountain town would be just as happy licking Breyers ice cream as they would the European-sounding but New Jersey-made Haagen-Dazs. "I don't think it would've mattered one bit what kind of ice cream it was," recalls Morton.

Haagen-Dazs disagreed and took him to court. And with the possible exception of undiscriminating Vail snackers, the upshot has been unsatisfying to nearly everyone involved. Thanks to the lawsuit, Morton is under a not-so-sweet court order to cease and desist from selling ice cream for two years within a two-mile radius of his old store. Haagen-Dazs didn't fare much better: Despite the legal maneuvering, as of four weeks ago its former Vail store stills sells only Breyers ice cream.

For many people visiting Vail on a summer day, Haagen-Dazs has been a fixture. The scoops tell the tale. In 1993 and 1994, the store, which opened in 1984, sold an average of $300,000 worth of Triple Brownie Overload, Cookie Dough Dynamo and other flavors, according to Haagen-Dazs (Morton asserts the real figures are about half that). It also sells about $100,000 worth of coffee drinks each year.

The reason--apart from a national hunger for rich, dense, fat- and chunk-filled cones of premium frozen dessert--is location. The store sits dead center in the bustling mountain community.

In court documents, Morton described the shop as being in "the best location in town," an assessment that Haagen-Dazs does not dispute. Which is why, when Morton casually told Haagen-Dazs's district manager in an October phone conversation that he was switching to Breyers, the country's number-one superpremium ice-creamer ordered its legal machinery out of the deep freeze.

Morton had owned the franchise since 1991, when he'd had it assigned to him by the original owners. Since then, he says, he'd built it into one of Haagen-Dazs's more profitable ventures.

Last April The Haagen-Dazs Shoppe Company Inc. informed Morton that the site's ten-year franchise contract would expire at the end of 1994, and it invited him to re-up. A week later Morton sent a letter to the company indicating he was interested. The company responded by agreeing to waive the traditional $25,500 franchise fee if Morton paid to bring the ten-year-old store up to Haagen-Dazs's corporate snuff.

Morton says that was hardly a bargain. He estimates the required renovations would have cost $80,000 to $200,000. Besides which, he'd been having difficulties with the company's local distributor.

"They never brought what I ordered," he says. "I'd ask for 75 or 80 tubs of ice cream, and I would only get 50." On October 3 Morton told a company rep that he was interpreting the franchise lease as expired and that he'd decided to switch to Breyers. (Morton says he chose Breyers, made in Green Bay, Wisconsin, not because of enhanced smoothness or bigger chunks but because it has a more reliable distributor.)

The move got a rise out of the company, which Morton says had ignored him for the past four years. On October 28 Haagen-Dazs sued Morton in U.S. District Court in Denver. The company claimed he'd broken its lease agreement, which gave it a right to install a new Haagen-Dazs hawker if Morton left the corporate fold.

According to Jeffrey Carpenter, president of The Haagen-Dazs Shoppe Company, having the Vail site suddenly coning, sundaeing and frappeing a competing ice cream would cause a Cappuccino Commotion throughout Haagen-Dazs, which enjoys just over 40 percent of the country's $277 million gourmet-ice-cream market.

"The loss of the Vail Shoppe site would result in a break in the continued sale of Haagen-Dazs from a location which has become known for selling Haagen-Dazs ice cream for over ten years," Carpenter claimed in an affidavit filed two months ago. "This would not only result in the loss of sales from this site, but also the major element of exposure of the Haagen-Dazs brand to customers resulting from the signage at the location and the high volume of customer visits."

Carpenter contended that "the brand exposure and experience with the product at the Vail Shoppe benefits Haagen-Dazs throughout the country and elsewhere. All of this would be lost if the shoppe were converted to a competitor."

Last month federal judge Daniel Sparr agreed that the company would suffer a financial meltdown and issued a preliminary injunction. Among other things, the judge's decision enforced a noncompetition clause in Morton's agreement with Haagen-Dazs, which stated that Morton "shall not directly or indirectly engage in... the production, distribution or sale of ice cream or other frozen desserts" within two miles of the Vail shop.

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