e o J
Independent
The Quarterly Magazine of DD Independent Franchise Owners August/September 2009 • Issue 2
East meets west
DD Franchise owners Kini Do It together!
also in this issue:
Tim HOrtons Has Arrived in NYC
Different cultures build Dunkin’ Donuts success
A committed franchise owner and true friend:
Honoring john henderson
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.
Together we kin’ do it! by Jim Coen
President, DDIFO, Inc.
As President of the DD Independent Franchise Owners (DDIFO) I am pleased to introduce to you our second issue of “Independent Joe.”
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Four times a year “Independent Joe” (IJ) celebrates owning a Dunkin’ Donuts franchise. IJ is full of articles and information regarding the proud ownership of one of the world’s great iconic brands. I’d like to thank all the people that helped put this publication together including Amy Levine, DDIFO Membership Director for coordinating our Associate Member Advertising program whose financial support is critical in making this publication possible. DDIFO has a fine team of writers that have worked diligently to produce quality journalism, and valuable content. Special thanks go to Matt Ellis, Stewart Lytle, Judy Rakowsky and Susan Minichiello. DDIFO is fortunate to have Sue Petersen as our graphic designer. Sue not only creates appealing graphics but she is a wonderful illustrator. Last but not least, thank you to the franchise owners for taking the time to communicate and share great stories with us all. This year, DDIFO is celebrating its 20th year of existence. Twenty years of independence while striving to protect and enhance the business interests of Dunkin’ Donuts franchise owners. On September 22nd, we will hold our Fall Members meeting at the DCU Center in Worcester and celebrate our 20th Anniversary with top quality content, and vendor exhibition. The mission of DDIFO is to unite Dunkin Donuts Franchise Owners, to protect and advance their independent business interests. DDIFO is committed to providing valuable information and dialogue to improve the day to day life of franchise owners. We educate our members, are involved in government affairs, support the Dunkin Brands Community Foundation, and produce quality publications on behalf of our members. I want to assure you that in conjunction with the DDIFO board of directors, we are
“No franchise owner is ever as strong as a group of united independent franchise owners.” all working very hard to provide valuable support and representation to our members. We trust you will find “Independent Joe” to be informative and entertaining. Please review the ads in this edition and support the vendors that are supporting us and bringing opportunities to the Dunkin’ Donuts franchise community. 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. We are all stronger together.
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Together We Kin’ Do It! Jim Coen, President
Why DDIFO Membership Matters to You Kevin McCarthy, Chairman
John Henderson Matt Ellis
Tim Hortons Move to NYC Stewart Lytle
DDIFO Associate Members Directory East Meets West Judy Rakowsky
Advancing DDIFO Legislative Affairs Matt Ellis
Index of Advertisers
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: Stewart Lytle, 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 DD Independent Franchise Owners, Inc. is an 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. AUGUST/SEPTEMBER 2009 • Independent Joe
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Independent Joe • AUGUST/SEPTEMBER
Why DDIFO Membership Matters to You
by Kevin McCarthy
DDIFO Chairman
Philosopher Jacques Rousseau once famously wrote: “As soon as any man says of the affairs of state, What does it matter to me? The state may be given up as lost.” A young Jack Kennedy was so impressed with Rousseau’s observation that he hand wrote it into his loose leaf notebook in 1945 and mulled over it for many years. By the time young Jack Kennedy became the 35th President of the United States Rousseau’s famous observation had morphed in his mind into newly elected President Kennedy’s now even more famous Inaugural proclamation: “ Ask not what your country and can for you – ask what you can do for your country”. We all belong to a nation, a state or some sort of larger organized system but no matter what the origin or source or size of that system the idea of active participation in something larger that one’s own immediate self-interest always holds forth as a universal truth. The desirability, if not necessity, of active interest and participation holds equally true for a Dunkin’ Brand franchisee. DDIFO membership matters because unity is strength and the more members who are unified then the more strength. Numbers matter and when Dunkin’ management or outside equity investors see a vibrant and growing DDIFO they will treat you as an individual franchisee much more respectfully and differently than if you stand alone. Management is always interested in how big and diverse DDIFO is and the Press, as well, always wants to know how many franchisees have joined DDIFO. DDIFO membership matters because no man or woman is an island. Membership in DDIFO gives you regular sources of guidance and information directly relevant to you as a franchisee. Whether it be “News You Can Use”, a paid detailed analysis of the franchise agreement, attendance at conferences like the upcoming one on September 22, 2009 at which special panels on important subjects such as “cost controls” will be provided the members, assistance in relevant legislative matters from the special DDIFO advocates we have retained, useful and talented legal analysis from Lisa and Sousa as well as other outside legal experts we use, a state of the art and industry leading website designed to give you both valuable information and provide a strong voice for you, a professional Board of Directors which draws on experience, expertise and leadership not available to any other franchisee
organization, a retained well known and excellent media specialist to ensure your voice is heard in the right places and at the right times, a highly successful membership growth executive who constantly focuses on membership outreach, and on and on…all of which are backed by the brightest and best franchise leaders in the industry. But just joining and paying your dues is not enough. Not for a franchise system that created the IFA, founded the first Advisory Council system and created and long managed the industry leading DCP – saving Dunkin’ franchisees uncounted millions of dollars since its inception. No - we want more from you that just your membership and your annual dues, we want your full interest and participation in the programs, projects and activities of the NEW DDIFO – the one now lead dynamically and creatively yet compassionately by Jim Coen, our now officially New DDIFO President. To say the least, I am confident you will
continue to be pleased with Jim’s leadership. DDIFO needs your hearts and your minds along with your active participation if for no other reason than to preserve and grow what for many of you is a lifelong devotion and investment. Throughout this issue of Independent Joe you will see opportunities and requests for your active participation in your DDIFO and, for your individual and collective sakes, I hope you all respond positively because through your active participation DDIFO will roar like a lion and not bleat like a lamb. Your choice. 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.
AUGUST/SEPTEMBER 2009 • Independent Joe
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Tributes and Memories to a by Giant in the Dunkin’ System Matt Ellis John Henderson’s contributions continue a year after his passing Some people are just larger than life. Across the board, people described John Henderson as a generous colleague, a committed franchise owner and a true friend; he was also a loving husband, father and grandfather. John passed away over a year ago but his impact on the close-knit community of Dunkin’ Donuts franchise owners and DCP employees continues to this day.
setts and Connecticut $1,000 towards their college education.
ing Facility at the new Special Olympics headquarters planned in Smithfield.
“John knew how hard it was for people to put there kids into college,” said Prazeres. “He had a huge heart. For him, it was all about giving back.” Prazeres credits John with pushing him to
Whether you were a franchise owner or an employee at Dunkin’ Brands—every one knew John. DDIFO Chairman Kevin McCarthy remembers John from the days when he worked with Dunkin’ Brands. “John was a unique treasure for the Dunkin’ Donuts system. When John got up in the morning and went to work, it was always with a mind toward what is going to benefit and grow the system.”
The street sign at DCP Headquarters in Bellingham says “Henderson Way” and a photo of John hangs behind glass in the lobby at Dunkin’ Brands in Canton. “What I remember most about John Henderson was his wonderful passion for Dunkin’ Donuts,” said Will Kussell, President and Chief Brand Officer of Dunkin’ Donuts Worldwide. “As a long-time DCP board member and Chairman, John made countless contributions to the brand. I particularly remember how he championed our Iced Coffee product in its early stages.” John bought his first Dunkin’ shop in the 70’s and, from the beginning, distinguished himself through his involvement with various committees. Mark Silverstein, a close friend and fellow DCP board member described his commitment to the Dunkin’ system as an obsession. “If you engaged John in conversation it would invariably come around to Dunkin’ Donuts. He was full of folklore and stories about people. He was always concerned with improving the system for franchisees. He was very talented. He was an amazing operator,” said Silverstein. “John was all about the brand and the franchisees. Dunkin’ Donuts was his life and his commitment spread to the charities in his community,” said fellow franchise owner Joe Prazeres who remembers how he and John started the Dunkin’ Donuts Scholarship in Rhode Island 14 years ago. The scholarship gives one hundred college students in Rhode Island, Southeastern Massachu6
Independent Joe • AUGUST/SEPTEMBER
Perhaps his greatest impact was on what franchise owner Bill Donovan called “the modern DCP”. In 1982, the owners of 250 Dunkin’ Donuts stores in the northeast region got together and founded the Northeast Distribution Center as an independent cooperative. John was one of them—and Donovan remembers how it all got started.
The inaugural John Henderson Invitational Golf Tournament will benefit the Special Olympics. get involved in charities and franchise committees. Kussell also noted John’s commitment to charitable causes, “He was a tremendous supporter of the Jimmy Fund and Special Olympics - and a role model for other franchisees as they looked to get involved with charitable endeavors.” In fact, as a result of his work on behalf of Special Olympics, the franchise community is stepping in to make sure future generations of Rhode Islanders remember his name. Proceeds from the inaugural John Henderson Invitational Golf Tournament, held August 31, 2009 at the Kirkbrae Country Club in Lincoln, RI will be used to construct the John Henderson Sports Education and Train-
“Instead of having guys picking up the flour themselves, John said ‘let’s hire guys to drive trucks and bring stuff to us.’ It was simple and started out without much of a budget. It was just a flicker of a shadow of what it is today. It went from having a small company to just deliver freight to a major logistical operation,” said Donovan. The National DCP is the model for distribution among large franchise networks. Its website notes that it is the exclusive supply chain partner for Dunkin’ Brands, servicing over 6,000 Dunkin’ Donuts and Baskin Robbins outlets nationwide. But, the DCP is more than trucks and pallets filled with supplies; it is people and that is also where John had tremendous impact. Just ask Janice Murray—an administrative services supervisor who has been with the DCP for 12 years. It is sadly ironic that Janice’s most powerful memories of John came when she was battling cancer. “John was one of the first people that contacted me after I was diagnosed Henderson continued on page 14
Tim Hortons Move into NYC by Stewart Lytle Tim Horton, a bruising hockey defenseman, who helped the Toronto Maple Leafs win four Stanley Cup trophies in the 1960s, was known for grabbing opposing players in crushing bear hugs. Boston Bruins star Derek Sanderson once bit Horton while caught in a Horton bear hug. Years later, Sanderson explained the bite: “I felt one rib go, and I felt another rib go, so I just had to, well, get out of there!” Thus, legends, particularly in hockey and in Canada, are built.
The chain took over 13 former Dunkin’ Donuts shops. In mid-July, Tim Hortons -- not the man himself who died in a car crash 35 years ago, but his Canada-based doughnuts and coffee chain -- put its arms around some of the highest profile real estate in New York City. The chain took over 13 former Dunkin’ Donuts shops, including space inside Penn Station and one next to the New York Stock Exchange. The Financial Post reported that Tim Hortons was also planning to open three additional stores in New York City, including one in Times Square, as part of a co-branding
effort with the American ice-cream chain, Cold Stone Creamery. There has been a long competitive history between Dunkin’ and Hortons, going back to Canada in the 1970s. The two companies also battled in Rhode Island, Massachusetts and Connecticut in 2004 over 42 Bess Eaton shops. Now they face off in Manhattan, although one Dunkin’ franchise owner called the invasion by Horton in New York City as “irrelevant.” In New York City, Dunkin’ has Horton vastly out-numbered with almost 400 shops in the five boroughs and neighboring New Jersey. But the Canadian import and its New York partner, the Riese Organization, have been pushing the public relations needle. After the changeover was announced, the New York newspapers posted stories and dispatched food critics to draft reviews comparing the fare of Dunkin’ Donuts with Tim Hortons. NBC’s “Today Show” also carried a national report. The reason for the attention to just 13 shops: many of the reporters, producers and anchors, as well as Wall Street executives, buy their coffee in these shops. The on-line blogs and reviews have
Tim Horton built his legendary status over 24 years as the Toronto Maple Leafs won four Stanley Cups. been humming with displaced Canadians salivating at being able to buy a “Timmie” in Manhattan. “This morning I was so excited!” Elizabeth Oberlin, a three-times-a-week Hortons’ fan from her days growing up in Buffalo, NY was quoted. “This is awesome. Their iced cappuccino is the best.” Kevin Gamble, a Vancouver native who moved to New York, waved a small Canadian flag on the end of his pencil at the store openings. “I was very excited to come down,” he said. Dunkin’ Brands’ CEO Nigel Travis told the Patriot Ledger newspaper that the arrival of a major competitor in one of the company’s key markets has its benefits. At a golf tournament with franchise owners a few weeks ago, Travis said he had never seen the owners so pumped up. The Dunkin’ Brands official statement on the Tim Hortons’ arrival in New York City promised business as usual. “Notwithstanding the disenfranchisement of the Riese organization (owners of the 13 initial Dunkin’ franchises that changed to Hortons); Dunkin’s presence in Manhattan and throughout New York City continues to expand. In the past five years, 244 new Dunkin’ Donuts shops have opened in New York City, and we intend to continue this patTim Horton continued on page 15
AUGUST/SEPTEMBER 2009 • Independent Joe
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Directory of Associate Members Air Ad Promotions, Inc.
Duro-Last
iTech Digital
Bedford Cost Segregation
Granite Telecommunications
JenCas Financial, Inc.
Century Products, LLC
Harbour Capital
Jera Concepts
Construction Art
IKMS Group Inc.
Lisa & Sousa Attorneys at Law
Jim Schriber 525 Morley Drive Saginaw, MI 48601 800-248-0280 jschribe@duro-last.com www.duro-last.com
Crystal Shiller P.O. Box 202066 Arlington, TX 76006 682-518-7692 crystalsikora@sbcglobal.net www.airadpromotions.com
Bill Cusato 60 State Street – Suite 700 Boston, MA 02109 978-263-5055 bcusato@bedfordcostseg.com www.bedfordcostseg.com
Liz Doherty 100 Newport Ave Ext. Quincy, MA 02171 781-884-5483 edoherty@granitenet.com www.granitenet.com
Scott Dillon 121 Shattuck Way Newington, NH 03801 866-224-9958 sdillon@harbourcapital.com www.harbourcapital.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
Cliff Pratt PO Box 6221 Manchester, NH 03108 603-644-4683 ctp@ikmsgroup.com www.ikmsgroup.com
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tr itrad tradiquintessentially American LIBERTY ISLAND — It’s a crown 11, 2001: to climb to the tion, suspended since Sept. view the nation’s greatest city and of the Statue of Liberty symbol. through the eyes of its greatest above its base since the rda the statue, closed rday, On Saturday, few, in to visitors — a relative ity securit security Is terror attacks, will reopen ed, carefully screened and esrt Island, rty Liberty ck cket ticket at action: For those visiting since the attr tacks. Star attraction: attack th 9/11 attacks. small groups, specially ticketed, dr atically dram er er. ha increased dramatically corted by a park ranger. rt skin checks have rty’s people under Liberty’s terally literally ely and lite ively ivel The decision to again allow urativel figuratively both figurat ol ng attitudes olvi evolvi two evolving proclaim to the world — al y is open to all.” and up to her crown reflects of liberty security, public — that the path to the light move on May 8, Salazar st /11 anti-terrorism st-9 post-9 toward post-9/11 suggest: specialists In officially announcing the opinion polls and security restoring confidence in the begin easing some anticalled it “a new beginning, government and in our uIt may be time to particularly costly, restricAmerican people, in their terrorism security that’s conplace in the world.” tive or intrusive. that day drew the obvious may not be mutually Visitors on Liberty Island uSecurity and public convenience page u exclusive. See COVER STORY next seemed to encourage these Interior Secretary Ken Salazar “would crown the said reopening ideas this year when he
Co Cover story
usatoday.com
Now at usatoday.com you USA TODAY’s website keeps for: current 24/7. Check now mAll through the holiday weekend, follow the latest news about Michael Jackson and the aftermath of his death at life.usatoday.com Jackson
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4th arrives amid shift in
driving habits
were hardest far-flung suburbs, which collapse and attrihit by both the housing The leisure travel organization in rural Traffic volume to uncerhigh gas prices, and those butes the projected decline“especially drops communities. tainty about the economy, personal for the John Crabtree, spokesman rising joblessness and sagginggas prices a non-profit in Center for Rural Affairs, incomes.” The recent spike says. develOverberg AAA rural advocacy and economic Neb., also might be a concern, Lyons, force beopment group based in Gas prices were the driving driving sword” for in says it’s “a double-edged hind the nation’s change Pisarski, authe Independence Day many rural communities. The nation heads into habits, says analyst Alan close to “When longest and steepest deMore people are shopping a boost. thor of Commuting in America.they saw holiday weekend amid the automothe merchants of invention home, giving local people saw $3 a gallon, when akin to cline in driving since the need to go the “But if you or your child $4 a gallon, it was somethingan effect bile. from the traveled by motor vedoctor, and you live 40 miles it makes It really did have Since the number of miles 2007, the sticker shock. provider, people care November says in He health peaked nearest on people’s behavior.” hicles in the USA is $2 a gallon has dropped by 123 billion started taking transit, carpooling, a difference whether gas nation’s 12-month total says. “People back on va4%. That’s a bigger deor $3 a gallon,” Crabtree miles, or slightly more than above 3% during the merging trips and cutting with alterchoices.” just are forced to make difficult signals a Many stayed travel. cation cline than the drop of in even afthat triggered a spike The driving drop-off also native modes of transportation 1979-80 Iranian revolution among Afyear. reversal in auto ownership gas prices retreated last gasoline prices in the USA. which engiof taking between ter rican Americans and Hispanics, PisarBernard Assaf, 36, a software The 4% drop is the equivalentoff the road. 1970, suburb, drivers had been increasing since neer from a northern Atlanta 8 million and 10 million access to jobs, his car for the the beginning of a fundaski says. “That will limit “We may be witnessing says he won’t get back in even if gas overall econdriving habits,” says Ed and will be a factor in the 40-mile round trip to work from The mental shift in American to work,” fellow at the Urban Land help omy in getting people back McMahon, senior research in- prices plummet. Withan Atlanta non- Fewer miles group that promotes he says. Clean Air Campaign, Institute, a non-profit shows alMcMahon says his research years at higher cost profit that promotes transportation novative development. three to a satelAdministration’s milesthat people over the past The Federal Highway ternatives, he now carpools transitthe most recent available, from home, then are trending toward compact,mix resitraveled report for April, out. While April’s total lite parking lot 7 miles that to his office. “For oriented developments suggests a slight flattening in takes public transit uses and en2008, continuing rises about the price of gas,” dential, retail and office was up 0.6% from April when the driving, me, it’s not just limit my Even to on day likely a walking. are miles prices 40 courage he says. “If I put joblessness and gas people won’t resume big difference. economy recovers, he says, car vs. 14 miles, that’s a McMahon says. celebrate the Fourth of doing things besides grip- driving at previous rates. As the USA prepares to I’ve gotten too used to here in terms of a choosing to watch fireto go back.” “We’ve crossed the Rubicon July, many Americans are projects that the num- ping the steering wheel the drop in miles travPisarski and McMahon say on people living in change,” he says. works close to home. AAA 50 miles or more this of impact ber of people taking a trip 1.9% from a year ago. eled has had a greater holiday weekend will drop
High unemployment, gas prices are taking their toll By Larry Copeland and Paul USA TODAY
Contact Juniper Korkie 703.854.5498 jkorkie@usatoday.com
Independent Joe • AUGUST/SEPTEMBER
Natalie Himmel 4287 W. 96th Street Indianapolis, IN 46268 317-704-0440 ext. 104 natalie@itechdigital.com www.itechdigital.com Eric Dyson 4 Country Club Circle - Suite 202 Maumelle, AR 72113 877-953-6227 ext. 114 eric@jencas.com www.jencas.com Wynne Barrett 17 Fruit Street Hopkinton, MA 01748 508-686-8786 wynne@jeraconcepts.com http://www.whole-business.com/Site/ Carl Lisa, Sr. 5 Benefit Street Providence, RI 02904 401-274-0600 clisa@lisasousa.com www.lisasousa.com
Directory of Associate Members MacDonald Restaurant Repair
Richard Brothers Electric
SureShot Dispensing Systems
NITCO Materials Handling Solutions
Royston, LLC
TDBanknorth
Secure Energy Solutions, LLC
T & K Asphalt
SnagAJob
Tetherball Mobile Advertising
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
Performance Business Solutions, LLC Jeff Hiatt 87 Lafayette Road - Suite 11 Hampton Falls, NH 03844 508-878-4846 jdh@revenuebanking.com www.revenuebanking.com
Projex Unlimited
Michael Thomas 4350 International Blvd., Suite J Norcosss, GA 30093 770-564-0074 ext. 323 mthomas@askprojex.com http://askprojex.com/dunkin/
Bill Richard 905 South Main Street Mansfield, MA 02048 800-507-9866 office@richardbroselectric.com www.richardbroselectric.com
Bonnie Padgett One Pickroy Road Jasper, GA 30143 770-735-3456 ext. 3164 bonnie.padgett@roystonllc.com www.roystonfordunkin.com Christopher Duby 146 Chestnut Street – Suite 400 Springfield, MA 01103 413-733-2571 ext. 11 cduby@sesenergy.org www.sesenergy.org 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
EXPENSES 09 06/30/ to From 01/01/09
Retail Control Solutions
Bob Schellenbach 460 Hillside Avenue Strategies for Improving Needham, MA 02494 Your Bottom Line 800-767-2212 DCU Center bobs@rcs-usa.com www.rcs-usa.com
Rheem Water Heating Sal Brunetto 4081 Expressway Drive Ronkonkoma, NY 11779 631-885-3252 sal.brunetto@rheem.com www.rheemtankless.com
Paul Lavallee 370 Main Street Worcester, MA 01608 508-424-7179 paul.lavallee@tdbanknorth.com www.tdbanknorth.com Todd Gorell 7 Industrial Way Whitman, MA 02382 781-858-2918 tgorell@tkasphalt.com www.tkasphalt.com
Richard Yancey 31 S. Rangeline Road Carmel, IN 46032 317-258-9767 rich@tetherball360.com www.tetherball360.com
3-D Lighting
Barry Magerman 235 Cottage Street Franklin, MA 02038 508-520-2757 barry@3-dlighting.com www.threedlighting.com
Tuck’s Trucks GMC
R.F. Technologies
Gary Gerst 542 South Prairie Street Cutting Costs Bethalto, IL 62010 618-377-4063 ext. 121 garyg@rftechno.com www.rftechno.com
Deanna MacKinnon 100 Dispensing Way Lower Sackville, NS Canada B4C 4H2 902-865-9602 ext. 144 dmackinnon@sureshotdispensing.com www.sureshotdispensing.com
SAVE THE DATE: September 22, 2009
Members Meeting
• Worcester, MA
DCU Center Worcester, MA For more information visit
www.ddifo.org
Rob Webster 244 Washington Street Hudson, MA 01749 978-562-3492 ext. 206 rwebster@tuckstrucks.com www.tuckstrucks.com
USA Today
Juniper Korkie PO Box 6221 McLean, VA 22108 703-854-5498 jkorkie@usatoday.com https://service.usatoday.com/retail
Wilbur Curtis
Dan Schneider 6913 Acco Street Montebello, CA 90640 815-923-2438 dschneider@wilburcurtis.com www.wilburcurtis.com
AUGUST/SEPTEMBER 2009 • Independent Joe
9
East Meets West
by Judy Rakowsky Different cultures build Dunkin’ Donuts success. You cannot buy a coolatta or a box of Munchkins on the island of Sao Miguel in the Azores where Manual S. Andrade came from or in Gujarat, in south India where Amrit Patel was born. Neither could you find a Dunkin’ store in Karachi, Pakistan during Siraj Virani’s early years there. But the roots of more than 50 percent of all Dunkin’ Donuts franchise owners in the United States run deep in those homelands and lend Old World sensibilities of hard work, integrity and loyalty to the successful entrepreneurs they have grown to be. In Chicago, about 90 percent of the Dunkin’ franchises are owned by South Asians, comprised of two distinct groups, Gujarati Indians and members of the Ismaili community, an ethnically and culturally diverse community of Shia Muslims who live in more than 25 countries. In the east, members of the Portuguese community own at least 60 percent of the Dunkin’ Donuts stores in New England and New York. “We’ve all been taught by our families to never forget where you came from and at the same time to know where you are and where you want to go,” said Vishal Shah, whose late father, Prabhulal Shah, was a good friend of Amrit Patel’s and bought the family’s first Chicago-area franchise in 1977. Globally from East to West, hardships ranging from war to barren economic landscapes often motivated future franchise owners to leave home to seek safety and better opportunities for themselves and their families. And the Dunkin’ Donuts franchise rewarded hard work and teamwork even as it offered extended families and immigrant networks a foothold in a new land and a launch pad for their American dreams. Each immigrant group points to a few pioneers who risked everything they had 10
Independent Joe • AUGUST/SEPTEMBER
as well as their family’s future when they bought that first franchise. Shah called it the Pied Piper model: “One or two respected members of the community finds a franchise, likes it and notices it is profitable and thinks it would make a good business.” In the Gujarati community around Chicago, Amrit Patel was leading the way. “People knew Amrit back in the day, and it kind of just grew,” said Shah. “It was a good way to create wealth while maintaining a family structure.”
started a cavalcade from the village of Vila Franco de Campo on the Azorean island of Sao Miguel, an agricultural atoll where many farmers grow pineapple. In 1971, John Batista left the village, and came to New England by way of Montreal, where he married his wife, from the same village. Batista’s older brother Joe was just starting in the business in Rhode Island with his brother -in-law Andrade. John Batista later bought his own shop in Worcester, MA.
Siraj Virani wasn’t the first member of his Ismaili community to buy a franchise, but he has become
The wedding this summer for Siraj Virani’s daughter was a 600-guest affair at the Schaumburg Convention Center outside Chicago.
one of the best known. His journey started in 1971, during the IndoPakistani war, when he traveled by boat, camel and on foot from what is now Bangladesh to join his mother and siblings in Pakistan. Then, armed with a scholarship, he made his way as a 19-year-old to America. In 1985, he succeeded in buying his first Dunkin’ Donuts franchise in the Chicago area. Virani’s determination paid off. He now has 13 stores and supplies baked goods for another 18 stores around Chicago, and recently he was honored with the American Dream award by the National Restaurant Association. When Manuel S. Andrade bought that first franchise in 1969 in Providence, he
“It was not the business that drew us here,” said John Batista. “There was a dictatorship there and the opportunities were not there. So for economic reasons at the time people immigrated.” Now hundreds of New England and upstate New York store owners are Andrades, Batistas or Salemas - or have relatives from some of all three families. But they all track back to Vila Franco de Campo, which one franchise-owner called “a cross between Hawaii and a little Italian village.” Several hundred if not a thousand Dunkin’ Donuts shops are owned by people who trace their origins to that vilEast/West continued on next page
East/West
gave them the opportunity to own their own businesses.”
lage. When they go back on vacation in the summer, franchise owners bump into each other all the time.
The family relationships running through the franchise owners are a dizzying quilt of in-laws, siblings and cousins. Now the franchises are being passed down to the next generation and younger relatives are buying their own stores and establishing networks of stores.
continued from previous page
The striking similarity among the franchise owners, whether Catholic, Hindu or Muslim, hailing from Western Europe or South Asia is an appreciation that borders on reverence for the Old World and those who carved the path. John Batista, 62, may have been the first in his family to become American, but he carries with him the example of his late father, a farmer raising pineapple. “Work was not a stranger to us,” he said. So when Batista had a store of his own he knew what to do: work. “We didn’t have machines. Everything was done by hand. That’s what we did,” he said. “We turned out OK.” Miquelina Senra Andrade, “the oldest franchise owner wife,” remembers those days in the 1960s in Providence when her husband was the day baker and his cousin Manny Pacheco Andrade was the night baker. “Manny’s family and my family all come from Sao Miguel. Everybody came here looking for the American dream,” she said. “Mr. Rosenberg (the late founder of Dunkin’ Donuts) believed in helping people and he believed in helping his franchise owners. He passed his dream on to a lot of immigrants. A lot of them didn’t have a lot of education, but he
“Dad had all the sweat; I have the tears,” said Michael Batista, the 32-year-old owner of 20 stores in central Connecticut. “He had to put a lot more muscle into it. These days it’s a different beast,” he said. But he said that he and his two sisters and 13 cousins - all in the business welcomed the opportunity to follow the footsteps of their parents. “I know my father literally uprooted himself from a little island to come to this county to do this for me,” Batista said. “We just have jelly in our blood. This is what we do,” “I stood on a milk crate at age 7 and filled Munchkins .” The change over time of selling more coffee than donuts also hits home in a second-generation household. “Growing up if I wanted this toy it would be, `Do you know how many donuts I have to sell for you to have that toy?’“ asked Michael Batista. Now he answers an appeal from his 3-year-old son Noah: “Do you know how many cups of coffee I have to sell for you to have these toys?”
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Not only is the brand in Batista’s blood, it’s in his wife’s as well. When he was attending a family wedding in Sao Miguel as a 13-year-old Batista met Nancy Andrade, the woman he wound up marrying after they reconnected in the late 1990s at the retirement party of Fred the Baker of “Time to Make the Donuts” fame. Family relationships are key in the South Asian communities as well, but kin is not necessarily limited to blood and in-law relations. For instance, Vishal Shah said his father and Amrit Patel went to college together and helped each other in the early days of franchise ownership. Patel’s family now has 30 stores around Chicago. And after college Shah, who immigrated at age 4, went into the business that his mother was running after his father passed away in 1988. “In Indian culture, if it’s a friend of your father you still call him uncle,” Shah said. “You are family through respect because your parents are friends; everybody’s family.” That makes a big difference on a daily basis in business. “We all help each other,” said Shah, whose family has six stores. “Whenever someone needs something no one ever said I don’t have the time. If your mixer goes down, it’s a matter of a couple of phone calls and you know you’re taken care of.” Likewise, he said, if half his crew gets sick, those same few calls will get him back in business. “They’ll do what they can.” Virani said the Dunkin’ Donuts franchises lend themselves to family-oriented ownership. “This is a business that needed a lot of family members.” The tight-knit Ismaili community is geared toward shared problems and responsibilities, not letting one fail if the community can find a way to solve a problem. “In my culture, we believe in unity,” said Virani. “Our ambitions are all the same and we make sure the return is also successful.” The South Asian and Portuguese communities place high values on education and improving knowledge and expertise with each generation. East/West continued on page 16 AUGUST/SEPTEMBER 2009 • Independent Joe
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Advancing DDIFO Legislative Affairs After a year of voluntarily leading the DDIFO’s government relations initiative, Robert Branca’s role has been formalized. In June, DDIFO President Jim Coen officially named Branca – a Dunkin’ Donuts franchise owner and operator in four states – as DDIFO Legislative Affairs Coordinator. It remains an unpaid position. “Being a franchise owner, Rob understands firsthand what impact government regulations have on the operations and management of the business. Rob’s passion is to make sure franchise owners have a say in directing government to effect more positive changes and minimize harmful regulations,” said Coen. “Our businesses impact tens of thousands of families, so there’s a lot to protect, and Rob has the capacity and dedication to do just that.”
Illustration by Susan S. Petersen
Branca says he and his partners were evaluating their membership in various organizations, including the DDIFO, a little more than a year ago. Considering the increasing government regulatory issues affecting their business, they determined there were specific things they wanted the DDIFO to focus primarily on matters
concerning government relations. They felt that legislators and regulators were not aware of the impact of their actions – including costs and other consequences of compliance – on Dunkin’ franchise owners. Indeed, Branca notes that, “Regulations are issued on a seemingly whimsical basis, often requiring a business owner to be in violation of one set of rules to comply with another.” Branca also points out that Dunkin’ Brands recognized the need to establish its own formal government relations team rather than relying on the International Franchise Association (IFA) lobby as it had for years, but he still believed franchisees needed their own independent input. “We felt that a strong voice and a more direct approach was necessary to put a face on the small business owner,” said Branca. “While Dunkin’ Brands has been highly effective, by virtue of its size it simply cannot be seen as the face of local shop owners. Franchise owners need to fill that role and distinguish our small businesses from the large corporate lobbying interests that are so negatively viewed by the public.” When Jim Coen became DDIFO president, Branca approached Coen and the DDIFO Board about placing a
by Susan Minichiello high priority on legislative affairs, and he volunteered to spearhead the initiative. The new leadership gave Branca the go-ahead to take up government relations and Branca began reporting to Coen and working with Joseph A. Giannino, of Government Relations Group, the firm retained by the DDIFO. Due to the myriad of complex legislative and regulatory issues now facing Dunkin’ franchisees, as well as the outstanding work Branca has been doing, Coen felt it was time to formalize Branca’s role, especially as he has no other function in the other initiatives or daily business of the DDIFO. “Essentially, we’ve created a powerful government relations team by combining Rob’s and Joe’s efforts and areas of expertise,” said Coen. “Rob was an attorney who worked with a lot of Dunkin franchise owners before becoming one himself, and worked on national banking legislation as a member of the Washington, D.C. bar, so he has a deep understanding of both the Dunkin’ system and the legislative process. He is a top-notch spokesperson for us because he can so eloquently speak to legislators and regulators about the real-life consequences of their actions.” Giannino echoes Coen’s assessment. “It’s been an exceptional experience working alongside Rob in an effort to promote our agenda,” said Giannino. “His instincts – both political and practical – are spot on, and the credibility he brings to meetings from the legal and ownership perspectives is very effective.” Galvanizing franchise owners to get involved and become more politically active is one of Branca’s most pressing tasks. “As small business owners, we already have power with legislators because – whether they are conservative, liberal or somewhere in between – they all want to be seen as champions of small business,” stated Branca. “As Dunkin’ franchisees, we have to take advantage of this power by engaging with our legislators. We need to make
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Independent Joe • AUGUST/SEPTEMBER
Legislative continued on next page
Legislative
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sure our representatives know who we are, the vital role we play in our communities and the issues of greatest concern to us. We need to make Dunkin’ Donuts a political presence in our respective districts by attending fundraisers, making political contribu-
Rob Branca is the DDIFO Legislative Affairs Coordinator. tions, and talking with and writing to our legislators.” Branca says if franchise owners aren’t comfortable with the political process or don’t have the time to engage
Franchise owners should make a point of reading the DDIFO Legal & Legislative Updates. personally, they can request that he find someone to speak with legislators on their behalf. They can also band together with other franchisees in their district and approach or support legislators as a group, or have one of their group deliver their message for all of them. In addition, they can use the CFA Votes tool to easily send letters about key issues to their elected officials. That website can automatically generate letters or emails to the proper federal representatives when a user simply types in his or her address. “You have to remember the truth in the saying, ‘the squeaky wheel gets the grease,’ and there is a proven way to make your voice heard as a business owner: be engaged in the process and support the officials that support us. Franchise owners should make a point of reading the DDIFO Legal & Legislative Updates and not hesitate to contact me or Jim Coen with any questions they might have about legislative issues,” said Branca. “If you care about the future of your business and preserving something for your children, you
need to be actively engaged in the political process. If you do not speak out about an issue, your legislators assume that you don’t care or support what is being done, and you can and will safely be ignored.” Branca calls attention to the following legislative/regulatory issues facing franchisees:
• State Nutrition Labeling/Calorie Content Regulations
Officials from the Massachusetts Department of Public Health (MA DPH) wanted to require chain restaurants to prominently display the calorie content of their food offerings on menu boards. In a late spring meeting with these officials, Branca and Giannino successfully demonstrated the negative implications of such regulations for Dunkin’ franchisees, highlighting the costs for new signage – including costs to the state if shops had to close for installations, requiring permits, new inspections, etc. – as well as the real possibility that these state regulations could be suLegislative continued on page 18
AUGUST/SEPTEMBER 2009 • Independent Joe
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Henderson continued from page 6 with stage three breast cancer,” she said. “I can’t say enough about it; he was so supportive. One thing he did that really meant a lot when I was out of work and recovering from treatment, he would send me a joke every day in my email just to give me a little smile in the morning. He was such a busy guy but he took 5 minutes a day to send me a joke. John meant an awful lot to me.” Years later, when John himself was diagnosed with a rare form of gastro intestinal cancer, Janice recalls how he kept his sense of humor and joked around the best he could in his hospital room. John’s death came quickly and, as Mark Silverstein remembers, no one could believe it. John had been larger than life and his death—especially because it came from cancer—seemed beyond belief. After all, here was a man who devoted countless hours raising money in the name of another dear friend and Dunkin’ franchise owner, George Mandell, who was felled by cancer 10 years earlier.
Now, a little more than one year after his death, friends in the Dunkin’ franchise community are keeping his memory alive. Aside from the inaugural John Henderson Invitational to benefit Special Olympics of Rhode Island, there is also a new tournament in John’s name to benefit Dana Farber Cancer Center. All that in addition to the annual Mandell tournament which,
It’s hard to imagine another franchise owner having the kind of impact John has had on so many of his peers. last year, raised over $800,000 for the Jimmy Fund’s Rising Stars Program at Dana Farber.
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Independent Joe • AUGUST/SEPTEMBER
John Henderson rose to prominence in the early days of Dunkin’ Donuts. He was a close friend of Bill Rosenberg and believed deeply in the potential of this coffee and donut business. It’s hard to imagine another franchise owner having the kind of impact John has had on such a large group of his peers—as a mentor, an organizer and a friend. But because so many of today’s franchise owners have family links to yesterday, his contributions will be remembered for years to come.
I
Tim Hortons continued from page 7 tern of growth as opportunities arise,” said Michelle King, Director of Global Public Relations for Dunkin’ Brands. Travis said the company is taking the Canadian rival seriously, but noted Dunkin’
restaurants near the Tim Hortons’ new locations have already seen an increase in business. And he said his chain’s coffee, breakfast sandwiches and serving speeds are superior to Tim Hortons. A New York City franchise owner, who dismissed the competition from Tim
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Hortons as largely “irrelevant,” said Hortons’ arrival in Manhattan is mostly the outcome of the long-standing battle between Dunkin’ and the Riese Organization. “Riese really needed Hortons to replace the Dunkin’ shops it was losing,” the franchise owner said. According to Dunkin’s Michelle King, the New York invasion ended the legal battle that began in 2002 between Dunkin’ Donuts and the Riese Organization. Dunkin’ did not like the quality of the Manhattan Dunkin’s operations, particularly the stores’ cleanliness. A midtown Manhattan Dunkin’ location at 46th and Fifth Avenue, run by Riese, was the target of jokes by late-night comedians in 1998 after The New York Post ran a photo of a mouse chewing on a doughnut in the store window. The mouse made Dave Letterman’s “Top Ten List”. Dunkin’ Donuts was not happy. At the time, Dennis Riese, president and chief executive of the Riese organization, protested, “It got really heavy-handed -they acted as if no other Dunkin’ Donuts ever had a mouse run through it.” Tim Hortons continued on page 17
AUGUST/SEPTEMBER 2009 • Independent Joe
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East/West continued from page 11 Virani, who has a Master’s in business administration, started out studying accounting while he was waiting tables before he had a franchise. Now his daughter’s accounting and his son-in-law’s computer degrees bring valuable knowledge into their day-to-day management. But generally, as Shah put it, “The first generation was more of a worker bee running their stores in mom and pop fashion while the second generation is more computer-literate and savvy and created a corporate culture, tiers of management, and a more businesslike approach.” Like many Indian franchise owners, Shah’s father did not seek a career in the profession for which he was educated. “An industrial engineer by trade, he found the lure of being your own boss more compelling,” Shah said.
at the Schaumburg Convention Center outside Chicago. “The whole world came,” Virani said. “They all gave advice. This is our way.” Just as modern business and the 24/7 world sometimes challenges franchise owners to find ways to honor their culture of origin, so too does such an important life cycle event. In the case of the Virani wedding it was a challenge to figure out how to keep the tradition of the groom arriving to the wedding ceremony on a horse. “You cannot bring a horse in a convention center,” Virani said. In keeping with the tradition with an American twist, 15 of his friends carried him on a chaise. “He stood like a king.”
The rare show stopper for even the busiest South Asian and Portuguese franchise owners is the family wedding.
It is not easy to keep business from intruding. When Michael Batista married Nancy Andrade in 2000 there were 400 guests, but so many of them were franchise owners that the November Northeast DCP meeting had to be rescheduled.
Spanning cultures and geography the common thread of the weddings are their importance and sheer proportions. For instance, the wedding this summer for Virani’s daughter was a 600-guest affair
And last summer, nearly an entire plane of guests for a big family wedding in Vila Franco de Campo was filled with a veritable Who’s Who of Dunkin’ Donuts East Coast franchise owners.
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Independent Joe • AUGUST/SEPTEMBER
But the shared experience is not just the weddings themselves. From the south Indians to the Ismailis to the Portuguese at these nuptial parties it is easy to find people in huddles talking business. From the Schaumburg Center to the sands of Sao Miguel, there are heads bent in intense conversation as serious business is debated above finely decorated tables. “At all family functions, we talk shop,” said Batista. “That’s what we do at Easter at my house, Thanksgiving at my in-laws, every holiday; every time we get together it’s like an internal district meeting.” While the graying generation passes down advice based on experience, the younger set tries to keep from checking their cell phones and Blackberries incessantly. Whether the third generation follows this wave remains to be seen. Shah said he doesn’t know if his 7-year-old daughter will follow him. “My blood has jelly in it,” said Shah. “It’s camaraderie and it’s a way of course to make a living and create wealth for future generations.” “But as the Gujarati and Ismaili cultures go we will support them to be more successful then we were.”
Tim Hortons continued from page 15 “We were always at each others’ throats,” Riese said. King said Riese agreed to leave the Dunkin chain by the end of July, as part of a settlement reached in 2004. Last April, Riese asked to keep the franchise, but Dunkin’ said no.
One former Dunkin’ franchise owner familiar with the Riese operations in New York, said, “Tim Hortons can have it (the Riese locations).” He said Dunkin’ Donuts partnered with the powerful real estate company in Manhattan to help it gain a foothold in an important market. Ironically,
Illustration by Susan S. Petersen
The Riese organization operates about 100 restaurants in New York City, including T. G. I. Friday’s, Houlihan’s, Pizza Hut and KFC brands in New York. And it has invested in several high-end New York restaurants. Both sides eventually wanted out. Riese claims that its Dunkin’ stores were no longer as profitable because Dunkin’ Donuts kept raising the bar on its franchisees. Along the way, however, Mr. Riese insisted that Dunkin’ Donuts lost an important battle. The franchisor waived a non-compete agreement that would have prevented Riese Organization from opening a similar restaurant in the former Dunkin’ locations.
requested anonymity in exchange for his comments, said. Dunkin’ helped draw in people all day to the benefit of other Riese restaurants. Hortons won’t do that immediately, he said. “Dunkin’ needs to recognize that Hortons is a weak sister in the market and pull all the franchisees together and put it out of business,” according to this former franchise owner. He said the remaining shops should focus on quality of service, but not lower prices. Hortons has good coffee, but so does Dunkin’, he said. And Dunkin’s donuts are better than Hortons. Hortons has long offered more than donuts. Its sandwiches and soups are very popular. But it is unclear yet if Hortons will bring its full menu to the Manhattan stores, he said.
it appears that Hortons is using the same strategy 25 years later. Dunkin’ Donuts is far better known than Hortons, the former franchise owner, who
Hortons is no newcomer to the U.S. Of its 3,400 stores, more than 525 are in the states. Since opening its first U.S. store in 1984 in Tonawanda, NY—near Buffalo— Tim Hortons are operating in 10 states -- Michigan, Ohio, Kentucky, Indiana, West Virginia, Pennsylvania, Maine, Rhode Island, Connecticut and Massachusetts. Tim Hortons continued on page 19
AUGUST/SEPTEMBER 2009 • Independent Joe
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Legislative continued from page 13 perceded by federal regulations within a year’s time, resulting in even more expense for franchisees and the state. Branca and Giannino persuaded the MA DPH to delay the implementation of state regulations at least until a there is a clearer picture of the federal regulations.
have no discretion in such lawsuits. Branca and Giannino are working with important state legislators to amend the statute to repair the inherent inequities, and Branca is working alongside the Brand and DDIFO legal counsel, Carl Lisa, with the Massachusetts Attorney
• Massachusetts Tip Pooling Statute
While intended to prevent business owners and managers who don’t work in direct service operations from skimming employees’ tips, the statute is so ambiguously written that “literally construed, the statute can be read to deny tips to nearly everyone in the team service environment that we have in our shops,” said Branca. “Because the statute says that no one with “managerial authority” can collect tips, there are countless scenarios in Dunkin’ shops in which someone who is not a true manager would be denied tips despite doing precisely the same work as everyone else on the shift.” Further, the statute has been spurring class action lawsuits, including at least one against a Dunkin’ franchisee and was recently revised to make triple damages plus 12% interest and attorney fees mandatory; judges
which were not in protecting Dunkin’ franchise owner interests.
• Credit Card Legislation
A host of credit card-related legislation is pending on the federal level, including the Credit Card Fair Fee Act. Some of the proposed laws would require credit card companies to negotiate directly with merchants in setting and disclosing interchange fees, some deal with issues of PCI compliance, some with ability to charge different prices for cash transactions versus credit/debit card transactions and the liability and costs incurred by merchants in holding identifying data as required by credit card companies.
• Healthy Families Act
Put simply, this legislation would require business owners to maintain any paid vacation/leave programs they already offer employees while additionally mandating several weeks of paid sick leave, and be a potentially source of litigation and costs.
General’s office regarding the AG’s role in matter. DDIFO members will be notified which legislators were helpful and
Branca and Giannino are keeping a close eye on developments with the credit card legislation, the Healthy Families Act, and other laws and regulations with potentially devastating effects on franchise owners. What’s more, they are proactively meeting with decision makers to make the case for amendments or repeals that would best benefit Dunkin’ franchisees. Another priority for Branca is working toward Dunkin’ franchise owners forming their own Dunkin’ Donuts Franchisee Political Action Committee (PAC). Branca and John Paul Motta, a Dunkin’ franchise owner, are working together on this with the support of the Brand. They are trying to establish the PAC through the national DCP Board because of the shared issues and concerns among all Dunkin’ and BaskinRobbins franchisees. “If we can speak together through our own PAC, we can perhaps influence some of the more harmful legislation that is coming our way and even introduce legislation that would be helpful to all of us. John and I feel strongly that this is a necessary tool for franchisees.” DDIFO members should feel free to contact Branca at robertbranca@hotmail.com with legislative concerns and questions or for advice on effectively stepping up political involvement.
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Independent Joe • AUGUST/SEPTEMBER
Tim Hortons continued from page 17 “In Canada, owning a Tim Hortons is like owning a license to print money,” said one Canadian newspaper reviewer. At home, Hortons sells 76 percent of all pastries and makes 62 percent of all coffee sales. But compared to Dunkin’ Donuts, Hortons is still relatively unknown among U.S. consumers. Dennis Riese concurred. “You take down one sign and put up another,” he said. “The biggest challenge will be to get New Yorkers to know what Tim Hortons is.” Dunkin’ Donuts had a great run in Canada for several years. But when it faced tough competition from the upstart Tim Hortons, it failed. According to franchise owners who were watching that competition closely, Dunkin’ had the wrong marketing strategy, the shops were built primarily for morning traffic. Dunkin’ did not understand that Canadians eat out in the afternoons and evenings more than the mornings. The Dunkin’ Donut shops in Canada did not do well in the morning, but today Dunkin’ Donuts is built less on the morning traffic. Its menu sells all day. The Dunkin’ locations also were in some bad sites, and they had limited funds to remodel and improve. “It was a recipe for short-lived success,” the former franchise owner said. The Canadian experience was a good lesson. Horton’s menu was much more diverse than Dunkin’s at the time. Hortons, featuring soups and sandwiches and de-emphasizing donuts, “waltzed in with an optimized, relevant menu for the appropriate day-parts and killed the Dunkin’ Donuts shops dead in their tracks,” the former franchisee said. Other challenges in Canada were that the supply chain was underdeveloped. The Canadian shops nearly always paid more for their products than the New England shops did. There were few economies of scale because the market was relatively small. But the biggest challenge was that Tim Horton was a Canadian super star hockey player, going up against an American company. Canadians love their own, said one franchise owner. They don’t dislike American companies, but if they have a chance, they will buy Canadian over American. Born in 1930 in Cochrance, Ontario, Horton grew up playing hockey in mining
communities around Sudbury, Ontario. He was acquired by the Maple Leafs organization and moved to Toronto when he was 17 years old. He built his legendary status over the next 24 years as the Leafs won four Stanley Cups.
It was the “old Dunkin’ Donuts” that competed with Hortons in Canada. So when he and partner Ron Joyce, a former police constable, opened a coffee and doughnut shop in Hamilton, Ontario in 1964, it was an almost inevitable success. It did not take long to expand operations in a large chain across Canada. Joyce bought control of the company after Horton died. Estimates are that Hortons sells more than 22 percent of all fast-food in Canada. “Tim Hortons beating Dunkin’ on its own turf was like stealing candy from a baby,” the former franchise owner said. But a restaurant consultant familiar with the fast-food industry said the Dunkin’ Donuts that competed with Hortons in Canada “was the old Dunkin’. The brand now has a far better handle on the consumer.” Hortons’ move into Providence proved to be less successful, according to various accounts. Dunkin’ Donuts and Hortons fought over the bankrupt Bess Eatons shops, which had been a staple of Rhode Island for 50 years. Hortons, then part of the Wendy’s International Corporation, bid more for the retail shops – reportedly $35 million. But Dunkin’ Donuts “is the 60-pound gorilla in Rhode Island,” one franchisee said. “Chalk up Horton’s experience in Rhode Island as a failure.” Hortons, which entered New England in 1997 with shops in Maine, has not found the Yankee soil overly profitable. It closed 11 shops in the region in recent years and converted most of the remaining locations to franchise ownership. It has grown over the last five years in New England despite the closings, and now has 54 shops in southern New England and 28 in Maine. With Tim Hortons now in Manhattan, Derek Sanderson, the Turk as Bruin fans called him on the ice, can take a bite out of a Timmie without sacrificing a couple of ribs.
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