Independent Joe Magazine Isue #1

Premier Issue of the DDIFO Magazine

e o J

Independent

The Quarterly Magazine of DD Independent Franchise Owners Spring 2009 • Issue 1

DD Franchise owners Kini Do It together!

profit

from

Mediation

In the News:

Skip the courtroom save face & money

also in this issue:

many faces of

“Regular Joe” Brad Pitt keeps runnin’ with a DD Joe.

DD Franchise Owners Diversity benefits all

NC Franchise Owner returns to

“old style” lawyering

www.lisasousa.com

Lisa & Sousa Ltd. is a firm with over 50 years of collective experience representing multi generational Dunkin Donuts franchisees in the acquisition, financing, development, structuring, transitions and transfer of franchised and other businesses.

Specific examples include: transfer of ownership of 100 franchise locations in Northeast, Southeast and other parts of the United States; sale of 48 locations in NY; purchase of 15 stores in the Northeast; acquisition of multi-shop networks in Florida (18), Vermont (20) and Cape Cod, MA (20); Store Development Agreements (SDA’s) throughout the country; and formation of cooperative Central Production Locations (CPL’s).

Lisa & Sousa Ltd. is general counsel for the Dunkin Donuts Independent Franchise Organization (DDIFO) with a membership of approximately 1500 Dunkin Donuts franchise units nationwide.

Our clients have chosen to have an on-going relationship with Lisa & Sousa Ltd. because of experience, proficiency, determination and attention to detail.

Welcome!

Jim Coen

President, DDIFO, Inc.

On behalf of DD Independent Franchise Owners (DDIFO), I am pleased to welcome you to our new magazine, “Independent Joe”.

Independent Joe’s Advertisers

Four times a year “Independent Joe” will celebrate Dunkin’ Donuts franchise owners with articles and information regarding the ownership of one of the world’s great iconic brands.

I’d like to thank all of the Associate Member Advertisers for their financial support in making this publication possible.

The Dunkin’ Donuts brand is expanding across America and evolving its business. Now is a critical time for franchise owners, and DDIFO is committed to providing support, sharing knowledge and advocating for the best interest of all franchise owners. Our goal is your goal: to keep the Dunkin’ Donuts brand strong and grow the business.

All Dunkin Donuts shops are all independently owned and operated by franchise owners; “Independent Joes” if you will. Franchise owners have invested time and money in developing their business and building the brand. Dunkin’ Franchise owners are some of the most sophisticated and skilled operators in all of franchising.

Dunkin’ franchise owners have billions invested in locations, distribution infrastructure, and production.

We hope you will find the magazine informative and entertaining. We

index

also hope you will take the time to look closely at the advertisements provided by our Associate Members.

Without their financial support this endeavor would not be possible.

News that affects Dunkin’ Donuts franchise owners is breaking and changing all the time. For regular updates on issues that affect your business, we invite you to visit our website, www.ddifo.org.

We also invite you to have your voice heard through our online forums and regular member meetings. The strength of DDIFO lies in the organization’s independence and its membership. Together we create a synergy where one plus one equals three.

Let us all make sure that Dunkin Donuts of tomorrow is something we can all be proud to be a part of.

Joe

Independent

The Quarterly Magazine of DD Independent Franchise Owners

Independent Joe is published quarterly by DD Independent Franchise Owners Editors: Jim Coen, Matt Ellis • Contributors: Susan Minichiello, Judy Rakowsky Advertising: Amy Levine • Graphic Design/Production: Susan Petersen

Direct all inquiries to:

DDIFO, Inc. • 150 Depot Street • Bellingham, MA 02019 508-422-1160 • 800-732-2706 • www.ddifo.org

07 08 04 15 02 11 07 14 04 06 15 12 04 06 16 14

Century Products Construction Art Duro-Last IKMS Group Lisa & Sousa, Ltd. Attorneys at Law MacDonald Restaurant Repair Service, Inc. NITCO Materials Handling Solutions Paychex RF Technologies Rheem Richard Brothers Electric Secure Energy Solutions Starkweather & Shepley Tetherball Tuck’s Trucks GMC USA Today

DD Independent Franchise Owners, Inc. is an Independently Owned and Operated Association of Member Dunkin’ Donuts Franchise Owners.

Any reproduction, in whole or in part, of the contents of this publication is prohibited without prior written consent of DD Independent Franchise Owners, Inc. All Rights Reserved. Copyright © 2009 • Printed in the U.S.A. Spring 2009 • Independent Joe

3

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4/23/09 9:46:42 AM

Keeping Our Eyes on the Donut and Not the Hole…

by Kevin McCarthy

DDIFO Chairman

Ray Esposito, the long-time and much beloved Master Instructor at Dunkin’ Donuts University (DDU), once advised me as he did all his departing students from DDU that I would always be a success at Dunkin’ Donuts as long as I “kept my eye on the donut and not on the hole”.

It took many years and too much experience before I finally realized how important, useful and correct the old Master Baker’s words of wisdom were. Paying careful attention to the relevant matters at hand and not allowing yourself to get distracted from the key elements of running a donut shop or supervising a network of retail units sounds simple and easy in concept but it is much harder in practice.

Time showed me that paying attention to the needs of customers was more important than filling out administrative forms or believing that if you got a great score on a business inspection or an audit then you were a great retail operator. Experience taught me that listening to employees and my fellow associates, whether in shops in Florida or at the executive offices in Massachusetts, made me more effective that simply pushing my own agenda or talking at people and not communicating with them. Yes, Ray was right and time has proved his point.

Upon joining the DDIFO Board a year ago, I remembered Ray and his words of wisdom. Keeping our eye at DDIFO on what’s important, useful and relevant to franchisees is essential to successfully serving the modern day Dunkin’ Brands community. And that’s just what we are trying very hard to do at DDIFO. Through our new and dynamic website, www.ddifo.org, we strive to bring the Dunkin’ community all the important and new information needed to maximize franchisee success. Our

03 05

06 08 10

Welcome!

Jim Coen, President

Keeping Our Eyes on the Donut

Kevin McCarthy, Chairman

DDIFO Associate Members Directory Mediation Creates Winners on Both Sides Judy Rakowsky

Dunkin’ Donuts Franchises Reflect Neighborhood Diversity Matt Ellis

11 14 leadership team is headed by President Jim Coen, who brings unparalleled executive skills, unbounded energy and creativity to our focus on unrelenting franchisee support. Jim’s supporting cast includes Matt Ellis, an extraordinarily talented media expert and Amy Levine, who has already made a major positive impact on increasing associate memberships which means new financial revenues and industry connections for DDIFO. As well, our DDIFO Board consists of highly experienced and accomplished professionals ranging from a major university professor to experts in franchising law, franchise accounting and finance. All of the above are supported by the finest franchisee leaders in the food service industry. It is the vision, intelligence and courage of our franchisee leaders that have made all that the New DDIFO has to offer Dunkin’ franchisees possible.

Atty. Marzella Returns to Assist DDIFO Susan Minichiello

Dunkin’ Donuts & Baskin-Robbins Community Foundation Susan Minichiello

By drawing on our deep and rich past combined with new and creative modern leadership, and technology we at DDIFO remain committed to further supporting our franchisee members in a superior manner while always keeping our eyes on the truly unique and core elements of DDIFO and Dunkin’ Brand success. Thank you Ray! Kevin is the Chairman of the

DDIFO Board of Directors and a past Vice-President of Dunkin’ Brands. Kevin is also a franchise lawyer with Dunkin’ Brand clients throughout New England and the Mid-Atlantic.

Spring 2009 • Independent Joe

5

Directory of Associate Members Bedford Cost Segregation

Granite Telecommunications

Lisa & Sousa Attorneys at Law

Century Products

Harbour Capital

MacDonald Restaurant Repair

Construction Art

IKMS Group Inc.

NITCO Materials Handling Solutions

Bill Cusato 60 State Street – Suite 700 Boston, MA 02109 978-263-5055 bcusato@bedfordcostseg.com www.bedfordcostseg.com Robin Rock 404 Edwardia Drive Greensboro, NC 27409 336-292-8090 rcr@centuryproductsllc.com www.centuryproductsllc.com

Art Krebs 3 Stone Hill Drive Westborough, MA 01580 888-930-2255 constructionart@constructionart.us www.constructionart.us

Duro-Last

Jim Schriber 525 Morley Drive Saginaw, MI 48601 800-248-0280 jschribe@duro-last.com www.duro-last.com

6

Independent Joe • Spring 2009

Liz Doherty 100 Newport Ave Ext. Quincy, MA 02171 781-884-5483 edoherty@granitenet.com www.granitenet.com

Jay Taylor 121 Shattuck Way Newington, NH 03801 603-610-6532 jtaylor@harbourcapital.com www.harbourcapital.com Cliff Pratt PO Box 6221 Manchester, NH 03108 603-644-4683 ctp@ikmsgroup.com www.ikmsgroup.com

JenCas Financial, Inc.

Eric Dyson 4 Country Club Circle - Suite 202 Maumelle, AR 72113 877-953-6227 ext. 114 eric@jencas.com www.jencas.com

Carl Lisa, Sr. 5 Benefit Street Providence, RI 02904 401-274-0600 clisa@lisasousa.com www.lisasousa.com

Mark & Debi MacDonald Po Box 61/ 83 Pond St Norfolk, MA 02056 508-384-9361 debi@macdonaldcompany.com www.macdonaldcompany.com

Brenden Flagg 6 Jonspin Road Wilmington, MA 01887 978-375-8280 Brenden.flagg@nitco-lift.com www.nitco-lift.com

Paychex

Jim Munro 100 River Park Drive North Reading, MA 01864 617-645-7655 jmunro@paychex.com http://premier.paychex.com/ largebusiness.com/index.aspx

Directory of Associate Members R.F. Technologies

Gary Gerst 542 South Prairie Street Bethalto, IL 62010 618-377-4063 ext. 121 garyg@rftechno.com www.rftechno.com

Rheem Water Heating Sal Brunetto 4081 Expressway Drive Ronkonkoma, NY 11779 631-885-3252 sal.brunetto@rheem.com www.rheemtankless.com

Richard Brothers Electric

Tetherball Mobile Advertising

Richard Yancey 31 S. Rangeline Road Carmel, IN 46032 317-258-9767 rich@tetherball360.com www.tetherball360.com

USA Today

Juniper Korkie PO Box 6221 McLean, VA 22108 703-854-5498 jkorkie@usatoday.com https://service.usatoday.com/retail

Tuck’s Trucks GMC

Rob Webster 244 Washington Street Hudson, MA 01749 978-562-3492 ext. 206 rwebster@tuckstrucks.com www.tuckstrucks.com

Bill Richard 905 South Main Street Mansfield, MA 02048 800-507-9866 office@richardbrotherselectric.com www.richardbrotherselectric.com

Secure Energy Solutions, LLC Christopher Duby 146 Chestnut Street – Suite 400 Springfield, MA 01103 413-733-2571 ext. 11 cduby@sesenergy.org www.sesenergy.org

Snagajob

Erin Powell 4880 Cox Road Glen Allen, VA 23060 804-822-4604 epowell@snagajob.com www.snagajob.com

Starkweather & Shepley Insurance Brokerage, Inc. Sabrina San Martino 60 Catamore Blvd.

East Providence, RI 02914 800-854-4625 ext. 1121 ssanmartino@starshep.com www.starkweathershepley.com

TDBanknorth

Paul Lavallee 370 Main Street Worcester, MA 01608 508-424-7179 paul.lavallee@tdbanknorth.com www.tdbanknorth.com

T & K Asphalt

Todd Gorell 7 Industrial Way Whitman, MA 02382 781-858-2918 tgorell@tkasphalt.com www.tkasphalt.com

Spring 2009 • Independent Joe

7

Mediation Creates Winners on Both Sides

by Judy Rakowsky

Guest Journalist

Franchise relationships profit from skipping litigation.

In 1995 when many major brands were turning away from courtroom battles to resolve problems between franchisors and franchise owners, Dunkin’ Brands’ legal counsel spoke to the firm’s embrace of mediation.

the courthouse. Dunkin’ Brands does not mention mediation as an option in franchising agreements and, lately, has resorted with gusto to the arena of lawyers and long delays through litigation.

“Anything that keeps people out of the courtroom is a good idea,” said Jack Laudermilk, Dunkin’ Brand’s legal counsel, as he hailed mediation in remarks to Nation’s Restaurant News. “It’s a great program,” Laudermilk said. It’s fast, inexpensive and nonbinding.”

Between 2000 and 2002, Dunkin’ Brands filed 350 lawsuits against franchise owners compared to 12 similar suits filed by the far larger McDonald’s in the same span, according to Nation’s Restaurant News and the Boston Business Journal. Dunkin’ Brands filed 157 lawsuits against franchise owners between January 2006 and June 2007 compared to 5 by Subway, according to those publications. And in 2008, Dunkin’ Brands filed 50 new lawsuits, bucking a national trend and its previously stated interest in alternatives.

Indeed, Dunkin’ Donuts was one of the founding members of the National Franchise Mediation program along with Burger King, McDonalds, Pizza Hut, Taco Bell and Hardee’s.

The program was trumpeted in “Settling Disputes” a 1994 book by Linda R. Singer, which chronicled the rise of mediation as a way to resolve business conflicts with far less acrimony and expense than going to court.

At the recent annual meeting of the American Association of Franchisees and Dealers, DDIFO Chairman Kevin McCarthy said several panelists men-

tioned the proliferation of litigation by Dunkin’ Brands.

“I was saddened to hear several references to the fact that Dunkin’ Donuts had become known for being overly litigious with its franchise owners,” McCarthy said. “It appears to have become a more common opinion in the franchisee community that things had been deteriorating over the last several years.”

One panelist noted, “In the days of Bill Rosenberg cooperation between the franchisor and franchise owners was much better.”

“Litigation creates an environment of lack of trust, of intimidation, and fear,” said Jim Coen, DDIFO President. “It’s not conducive to a strong franchiseefranchisor relationship.”

Coen, also the executive director of the New England Franchise AssociaMediation continued on next page

“Because of its flexibility, mediation is adaptable to business disputes of all sizes and complexity,” Singer wrote.

“The process emphasizes solving problems rather than establishing who did what to whom in the past.”

Mediation has become such a widely accepted alternative to litigation that it is credited with helping to drive a trend away from jury trials. In fact, the American Bar Association set up a “Vanishing Trials Project” because contract cases, among others, are so unlikely to wind up being decided at trial. As cases settled through mediation increased, the rate of civil jury trials decreased by two thirds from 1976 to 2002 in federal and state courts, according to the National Center for State Courts.

But Dunkin’ Brands has turned its back on the trend of steering clear of

8

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Mediation continued from previous page tion (NEFA), said Dunkin’ Brand’s strategy is costly on many levels. It also undermines the shared goals with franchise owners of avoiding bad publicity and the corrosive effects of airing conflicts in public. Litigation keeps control in the hands of lawyers and judges, who are not the business experts. “We need to find a way to resolve these disputes more efficiently and in a way that is less costly and involves less intimidation and fear than the current way Dunkin’ Brands does,” Coen said.

In the 1995 Nation’s Restaurant News article, Laudermilk said that one of the nine cases that the brand considered for mediation was not “ripe,” so officials decided to assume a “wait and see” posture. But the brand has made no other public comments to reveal what it may view as shortcomings of the mediation process.

Dunkin’ Brands officials were asked to comment on Laudermilk’s 1995 statements lauding mediation.

Stephen J. Caldeira, communications chief for Dunkin’ Brands, did not address the company’s view of mediation, but said in a prepared statement, “At Dunkin’ Donuts, we value the partnership we have built over nearly 60 years with our more than 1,000 franchisees and recognize that our viability as a franchisor depends entirely on their success. Our goal is, and always has been, to protect the health of the entire system for the benefit of all. This includes ensuring that every franchisee upholds the same standards, which is the backbone of both a consistently outstanding guest experience and a strong brand reputation. “ Bob Purvin, chairman of the American Association of Franchisees and Dealers, said that mediation is widely seen by the 50,000 franchisees and over 100 independent franchisee groups in his organization as the way to go.

“Through mediation you can often add value,” said Purvin. “A lawsuit or arbitration is about winning. Mediation is about getting along; resolving, compromising, building.”

Purvin said that often by the time the AAFD hears from a franchise owner involved in a dispute with a franchisor the franchisee is looking to recover damages for a perceived loss. But, Purvin said, when asked his ultimate goal, the franchisee “almost invariably would opt to fix the problem so the relationship can continue as originally envisioned.”

It is time, Coen said, to talk about mediation and to use it.

“I believe mediation is a much better way to resolve conflicts,” Coen said.

“Franchising is all about relationships that continue and that’s where mediation has real benefits.”

Mediation: the choice of auto makers and dealers Twenty years ago, a major U.S. automaker started mediating disputes with dealers rather than go to court or even arbitration. A few years later, a high-end foreign automaker followed the same path. Neither has ever looked back.

Mediation has long been the mainstay of the automobile sales industry, which recognized it as the fastest and least expensive way to resolve disputes and preserve long term business relationships. Companies and dealers came to appreciate the way it avoids all-out war and all the frayed relationships that come with the time and expense of litigation and arbitration, said Nancy Connelly of Mediation Works Inc., a Boston agency whose mediators handle disputes between dealers and the automakers.

What motivates both the companies and the dealers and propels them toward mediation is the understanding that neither side will make money unless vehicles are sold. Their common interest and mutual disinterest in bad publicity has made a beautiful marriage between mediation and the automobile industry, Connelly said.

“First of all, if you go to court, you let everyone know there’s a problem,” she said.

Connelly cannot share the details of the remarkable mediations that have

gone on in the auto industry, but she has had a bird’s eye view on how seemingly intractable disputes get worked out. Long-term contracts are the norm in the world of franchising– the smallest is 5 years, and Dunkin’ Donuts is 20. “What is the value of dragging somebody into court?”

Connelly asked. “You might stumble 20 times – do you want to litigate all that?

Michael Webster, a Toronto attorney who deals with franchise relationships, said that many contracts are written to react to the past.

“Franchise contracts are drafted by franchise counsel to worry about the last franchisee legal win and try to draft around that,” Webster said. “But that may have nothing to do with the business problem; in fact it’s likely that it has nothing to do with the business problem.”

Most franchise contracts did not contemplate what would happen if the Dow fell in half and banking became frozen, he said. But such stark changes make negotiating skills essential.

And they highlight the fact that traditional methods of resolving them are not the best.

“If you want to maintain a relationship between the franchisor and the franchisee you simply do not have the luxury of litigation or arbitration,” he said. “Those are relationship-ending moves. If you are going to use them it means you are going to terminate this relationship.”

Legal and business experts often liken franchise relationships to marriages. And everyone knows that messy divorces that drag on in the courts often lead to bankruptcy and lasting acrimony. “With litigation and arbitration, communication is disrupted or markedly changed between the two sides, creating problems for the ongoing business relationship,” said Webster.

All that litigation does is create a winner and a loser and assign a dollar value to the outcome, he said.

Mediation continued on page 13 Spring 2009 • Independent Joe

9

Dunkin’ Donuts Franchises Reflect Diverse Nature of

by Matt Ellis Their Neighborhoods

DDIFO Communications

In 1981 Rod Valencia left his home in the Philippines for a vacation in New York City. At the time his cousin told him he was going to open a Dunkin’ Donuts shop and could use some help.

He said getting involved in the coffee and donut business could be the opportunity of a lifetime. It was.

Rod never moved back to the Philippines. Instead he worked with his cousin until he eventually wound up opening up his own stores. Today he has 16 franchise locations in New York and Florida.

and here we are. We are in a much better place for it.”

Dunkin’ Donuts has a long history of welcoming a diverse group of franchise owners, according to Cirabel Lardizábal, Senior Director for Corporate Social Responsibility and Multicultural Initiatives at Dunkin’ Brands. She said that’s because Dunkin’ Donuts products appeal to nearly every one.

home,” he said. As a student he got a job working the counter at a Dunkin’ Donuts and fell in love with the business. After receiving his Master’s he went to work full-time for Jim Cain, a Connecticut-based franchise owner and learned the business.

“People thought I was crazy to have a Master’s and go back to work for Dunkin’ Donuts but Jim gave the opportunity to manage a store. Eventually I was managing his whole network and putting systems in place. Jim was like a mentor to me,” he said.

“It was a very exciting time building all those stores,” he said. In his 25 years as a Dunkin’ Donuts and Baskin Robbins franchise owner he has bought and sold a number of stores and continues to develop new locations.

Eventually Arun went back to school and got a business degree; a few years later he was buying his own network of stores. Today he has 19 Dunkin’ Donuts shops in New Jersey and is eyeing further expansion.

Rod’s story is not unlike that of many long-time Dunkin’ Donuts franchise owners. As immigrants to the United States, many saw the opportunity to get involved with a growing business.

It required hard work and dedication but that was one thing they all had in common—that and a goal to succeed in a new world.

“I never felt being an Indian was a disadvantage with Dunkin’ Donuts,” he said. “This business has always been very diverse. If I had chosen another system it probably would have been more difficult for me to succeed.”

Chris Prazeres is a second generation Dunkin’ Donuts franchise owner.

College educated and computer literate, Chris approaches the business a bit differently from his dad, Joe, who came to Massachusetts in the 1960s and got connected with the brand through other immigrants who had journeyed from Portugal, ultimately opening his first store in Raynham, Massachusetts in 1989.

“Years ago they needed strong backs,” said Chris. “They did work hard, which was a common denominator for all the people that came over here and were successful, and Dad was willing to do that. He was fortunate enough to get involved when he did. He worked hard 10

Independent Joe • Spring 2009

Chris Prazeres is a second generation Dunkin’ Donuts franchise owner.

“The brand and its products are relevant to a diverse consumer base.

Thus, franchisees can relate to the brand and the customers regardless of their background, gender or ethnic origin. In addition, the Dunkin’ Donuts business model rewards hard work and great customer service. Many of these immigrants did exactly that, worked hard to build their business and grew slowly with the brand. They grew and realized that they could be rewarded for their hard work.”

When Arun Mandi decided to move to the U.S. it was with the aim of getting a doctorate in computer engineering and teaching college one day.

“At the time, I had two thousand dollars in my pocket and no return ticket

With his extensive educational background and years working for other franchise owners, Arun believes Dunkin’ Donuts offers him tremendous opportunity.

“I love this brand and have a great passion for it,” he said. “Even though it is not something I ever planned to do.”

Walk into any Dunkin’ Donuts shop and you’ll notice the faces of the workers tend to reflect the ethnic makeup of the neighborhoods where the stores are located. Kathy Anczerewicz said that’s not by accident. She and her husband Wally own two stores in suburban Chicago. Each has a different employee base, in keeping with the neighborhoods.

Diversity continued on page 12

Independent Joe: Carmen Marzella

by Susan Minichiello

DD Franchise Owner Returns to Career as Attorney, Offers Franchise Owners Unbeatable Service After working as a partner in the New Jersey law firm Horn Marzella, LLC for 12 years, Carmen Marzella ventured out as a Dunkin’ Donuts franchise owner. In 2003, Marzella formed a business partnership with Mario Russo and established a Dunkin’ Donuts franchise in Raleigh, North Carolina. Marzella and Russo opened another location in 2005 and one more in 2007, both near Research Triangle Park in the western suburbs of Raleigh, which provides a combined business and residential customer base. While Marzella continues to be an owner and partner in all three locations, his career path has taken a new turn, one that is sure to be of interest and service to Dunkin’ Donuts franchise owners nationwide.

On April 1, Marzella joined the prominent Raleigh law firm, Ragsdale Liggett, PLLC. In his role, Marzella will focus on representing franchisees

In addition to being a Dunkin’ Donuts franchise owner, Marzella served two terms on the Dunkin’ Regional Advisory Council (RAC). His initial term was for the mid-west region (which included Raleigh) and the subsequent term was for the southeast region (into which Raleigh was reorganized).

Marzella also served a term on the Baskin-Robbins RAC. In 2008, shortly after Marzella stepped down from the

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in the growth and development of their businesses, going beyond basic document drafting tasks. His approach is to provide franchise owners with a well-rounded, total package of services. “I’m looking at it from the perspective of what I would like as a franchise owner,” says Marzella. “It would be reassuring for franchisees to know they can have an attorney who knows their business because he has been in the business himself and understands all facets of the business.”

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Atty. Carmen Marzella also served two terms on the Dunkin’ Regional Advisory Council. southeast Dunkin’ RAC, he was appointed to the Baskin Robbins Brand Advisory Council (BAC) as a combo BAC member. Marzella is one of only two such members representing combination Dunkin’/Baskin stores.

Marzella has extensive experience in franchising and law, as well as invaluable industry contacts and relationships with senior leadership. He has a solution-based, non-adversarial reputation. With this breadth of experience, knowledge and contacts developed as a franchise owner, along with that gained through membership in Dunkin’ and Baskin advisory councils, Marzella can offer franchise owners unparalleled service and expertise. While he is based in Raleigh, his services are available to franchise owners across the country.

The services Marzella can provide include legal and business advice that touch upon all phases of franchise ownership: purchasing and establishing a franchise, day-to-day franchise operations, and finance and lending, as well as succession and estate planning. Ragsdale Liggett has authorized Marzella to create a flat fee program of services that will enable franchise owners to better budget legal fees, adding value to the package and resulting in fees that will be significantly lower than what other firms charge.

Marzella aims to be available as an ongoing resource franchisees can reach out to for advice when they Marzella continued on page 15 Spring 2009 • Independent Joe

11

Diversity

continued from page 10

“Our Summit (Illinois) store has many more Spanish speaking customers, so we have more Spanish speaking employees. They have to be able to relate to the customers. That’s just good business,” she said.

Lardizábal of Dunkin’ Brands agreed, “People working the counter are the ones dealing directly with consumer and they are incredibly diverse. It helps understand customers and helps franchisees provide better service to customers.”

In New York, Rod Valencia said he works closely with neighborhood representatives to ensure his crew members represent the people who live near the shops.

“We do job fairs and work with local community groups to find the best local workers. Here in New York there are neighborhood cooperatives and they recommend people they know are the

12

Independent Joe • Spring 2009

best employees in a neighborhood.

We do this because we always want to be part of the community because that’s the only way they will embrace us as part of their lives.”

As Dunkin’ Donuts expands into new geographic regions the company is actively recruiting a diverse group of new franchise owners and employees.

“Without question, diversity and inclusion is the fuel that stokes successful and growth and innovation. We (Dunkin’ Brands) don’t always claim to have a monopoly on the best ideas; the best ideas come from having a diverse and inclusive system-meaning both franchisees and employees,” said Steve Caldeira, Chief Global Communications & Public Affairs Officer for Dunkin’ Brands.

Kathy Anczerewicz and her husband Wally own two stores in Chicago.

Rod Valencia said he sees diversity within the system as a sign of Dunkin’ Donuts long-term success.

“I think it’s a sign of the health of the system. The company recognizes the benefit of welcoming different ethnic groups is critical for its ability to grow, develop and excel in the marketplace.”

Mediation

continued from page 9

Mediation, in contrast, is an airing of the viewpoints of the business parties and a negotiation that is managed by a third disinterested party.

No matter how smart a judge or an arbitrator is, “They have no interest in making sure you have the best deal possible,” he said. “They are interested in getting the case off and moved,” said Webster.”

With the auto dealers, the business relationships improved as soon as mandatory arbitration was off the table, said Connelly and Webster. According to Webster, the best part was removing attorneys from the driver’s seat. The role change is more conducive to improving the business relationship. No longer are the attorneys running the show, they are involved only to assist the business people.

The beauty of mediation is that it allows the parties to deal with issues beyond money damages, the only kind that courts and arbitrators decide, Connelly said.

Nothing but mutual With mediation, anyone can walk away from the table at any time, said Connelly, whose Boston-based firm keeps 15 mediators busy and only uses mediators who are highly trained and experienced in franchising. That voluntary nature is freeing for the participants. Nothing happens without their agreement.

In fact it is not the mediator that makes a decision. The mediator is the person who assists in the negotiation but does not make a judgment.

“You can craft something that a judge could never address,” she said.

The benefits of mediation, aside from the savings in time and legal fees, are that each side learns something they didn’t know before. The process brings together top people on each side because mediation by nature is a process conducted between peers.

A lot of good is done when one side gets to hear the other say something out loud, Connelly said.

“Often times what they learn makes them go back and re-evaluate,” she said.

are embroiled in a dispute you aren’t thinking outside your own interests.

You get caught in the labyrinth.”

Connelly asks businesses that are considering mediation, “Do you want to win or do you want to get it resolved? There is a huge difference.”

The auto industry mediations have been very successful, she said, because sometimes the dispute is not what it appears to be on the surface. In one case, a dispute that seemed to be about money was aired in a mediation which drew a highranking executive to the table. After the issues were thoroughly aired, the manufacturer offered the dealer an apology, which is what he was really looking for. And no one had a gun to anyone’s head - either side could walk out at any time with no record of the meeting that could come back to haunt them in court or arbitration.

Mediation lets the parties vent. It is a safe forum where no one is taking notes that could come back to haunt either side and no one loses or makes money without the other side agreeing.

“Nothing is printed ever,” she said.

Confidentiality and sharp elbows That confidentiality has cut both ways with Dunkin’ Donuts. Dunkin’ Brands apparently welcomed the confidentiality of the mediation process in an age discrimination claim that Warren DeLuca brought in New York and which was unsuccessfully mediated before the federal Equal Employment Opportunity Commission. During settlement negotiations, in which DeLuca said he would drop his complaint in exchange for a franchise, Laudermilk said “We’re not in the process of giving out franchises to people that are suing us or made complaints.”

DeLuca tried to use the remark in a 2003 lawsuit as evidence of retaliation, and Laudermilk acknowledged making the remark to the judge. But the judge refused to consider the remark as evidence because mediation proceedings are by definition confidential.

The confidentiality is, however, a fundamental part of mediation that allows all parties to be on equal footing, and which often leads to a more honest and productive exchange, Connelly said.

“Some franchise systems are not ready to give up the kind of control that has been relinquished for mediation,” Connelly said. But once they realize how satisfying the process can be, they like it.

”With mediation, there’s no downside; no risks,” said Connelly. “It’s wonderful.”

Purvin said that the only thing stopping many brands and franchise owners from embracing mediation in earnest is a lack of education and understanding.

“I have heard many criticisms of mediation aired by attorneys, ranging from a belief that mediation is a waste of time, to a fear that mediation is a show of weakness, or that the process of mediation exposes ‘secrets’ of the case,” Purvin said in a posting on the AAFD website. That’s why AAFD is focused on educating attorneys on the merits of mediation.

Mediation demonstrates that the animosity that litigation creates and the enemies it makes are just not necessary, Coen said.

“Franchising is not only about the money, it’s about brand-building,” said Coen. “Mediation is about mutual respect and we can use mediation as bridge to foster better relationships.”

As Coen said, “When you have mutual respect between the franchise owners and the brand, the potential is limitless.”

“They control the outcome because they control the substance of the jigsaw puzzle,” she said. “When you Spring 2009 • Independent Joe

13

Dunkin’ Donuts & Baskin-Robbins Community Foundation by Susan Minichiello Since its inception more than three years ago, The Dunkin’ Brands Community Foundation (DBCF) has awarded nearly two million dollars “to serve those who serve others in time of crisis”. Now, the Foundation is undergoing a change — in name and mission. According to Dunkin’ Brands, it will now be known as the Dunkin’ Donuts & Baskin-Robbins Community Foundation (DDBRCF).

Stephen Caldeira, the Foundation co-chair, said one primary goal of the name change and mission shift is to increase franchisee and corporate engagement while providing support for charities which assist children and families.

“Children and families are suffering in the current economy,” said Caldeira who is also Chief Global Communications & Public Affairs Officer for Dunkin’ Brands.

“The DDBRCF wants to work more closely with franchisees,” he said. “With the new mission, we’ll enhance the opportunity to get more franchises involved in our core

markets,” which will help leverage fundraising and public relations opportunities.

As part of their local community involvement, Dunkin’ Donuts franchise owners already support a wide variety of local

charities, such as Little League groups, Special Olympics and Boys & Girls Clubs.

According to Caldeira, the DDBRCF does not preclude franchise owners from continuing their support of local charities. But, under the new structure, franchise owners would funnel their contributions through the DDBRCF to the local organizations they wish to support.

The DDIFO contributes 5% of all Associate Member revenues (i.e., dues, sponsor-

ships, advertising) to the Dunkin’ Brands Community Foundation and will now shift these donations to the DDBRCF. “DDIFO Associate Members are interested in gaining access to the franchise owners we are privileged to represent,” said DDIFO President Jim Coen. “Our donation model provides a perfect opportunity to offer Associate Members this access while also generating funds to support the Dunkin’ Donuts & Baskin-Robbins Community Foundation and the worthy organizations it benefits.”

The end goal is to better understand those issues and causes that are most important to franchise owners where they work and live. The DDBRCF is operated by a 15 member board which includes representatives from Dunkin’ and Baskin as well as seven franchise owners.

For more information about the Foundation and board members, you can contact Leslie Klein, leslie.klein@dunkinbrands.com

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Independent Joe • Spring 2009

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Marzella

continued from page 11

encounter operational problems and challenges. He wants franchise owners to feel comfortable calling for advice without the added pressure of feeling the clock is running in terms of fees. He will work with clients to set and agree in advance to a budget for services that fits each client’s needs. For example, the freedom to contact Marzella whenever issues arise can be part of a flat fee for monthly services.

“It is my hope that by making fees more affordable, I will build longer term relationships with these developing groups, instead of just handling a transaction for them,” says Marzella. “It is a return to the old style of ‘lawyering’ through which clients consider me a trusted business adviser.”

Marzella can be reached at Ragsdale Liggett PLLC, 2840 Plaza Place, Suite 400, Raleigh, North Carolina, 919-881-2210 or cmarzella@rl-law.com.

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