WHAT’S
BREWING
JOINT-EMPLOYER RULES
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OVERTIME RULES
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SHIFT SCHEDULING REGS
June/July 2017
Award-Winning Magazine
for D D Independent Franchise Owners
ENDANGERED SPECIES? How Dunkin’s kitchen deal may spell the end of CPLs
Firehouse Subs CEO to highlight hot topics FEATURE
Dunkin’ Foundation Brings Joy
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COMMUNITY CORNER
BY LISA IANNUCCI
Steve Gabellieri
HONORING FAILURE AND PUNISHING SUCCESS
A Valuable Partnership Benefits Community School and Local Franchisee
F
or students at the Meeting Street Early Learning Center in Providence, Rhode Island, a trip to the local Dunkin' Donuts is about more than just coffee and treats. While many Dunkin’ Donuts franchisees are generous and share their resources with charitable organizations, there is a unique part of this particular relationship between the school and the DD store. “I have been taking my community traveling students to the Dunkin' Donuts on Eddy St. in Providence since Meeting Street opened at this location about 10 years ago,” says Brendan Foley, who teaches students with visual impairments. “Our trips are designed to teach my students how to travel within their community as safely and as independently as possible. These community trips are very motivating for my students because they interact directly with the public and get a treat when they return to school.” The Eddy Street location is one of four Dunkin’ Donuts stores owned by The S&D Companies, which was founded in October 2009 by Steve Gabellieri and his business partner Greg Tetrault Jr. It’s at this store that Meeting Street teachers are able to take their students beyond the classroom and into the real world. “Our Dunkin’ Donuts location is used as a living classroom where students are taught things like how to read a menu, how to place an order in a restaurant, understand the value of money, count change, communicate and interact with people you may not know, and about behavior in public places,” Gabellieri says. The students use an augmentative communication device, such as an iPad, to communicate with the staff. “This is an uncommon experience for most people, and the employees at Dunkin’ Donuts continuously take this opportunity to treat my students with respect, patience and genuine kindness,” says Foley. “Some
of the employees make it a point to greet my students by name when they come in, or to ask the name of new students. For all the effort that it takes for my students to get their donut and return to school, the staff at Dunkin’ Donuts do a great job of making every trip successful.” But the Providence Dunkin’ goes even further to support Meeting Street School. During the year, Meeting Street holds a number of fundraising events, including a telethon in January, staff appreciation day, pajama day celebration and walk through the community. “Steve’s store provides all the goodies, including coffee, hot chocolate and donuts for hundreds of people,” says Ashley M. DeSimone, the manager of Special Events. “Over the course of the year, they also send refreshments for smaller events, such as meetings. Steve’s whole team is just so reliable, willing to help out and incredibly supportive.”
the relationship first by being our valued customers and now we have the privilege of giving something back.” Steve didn’t start out as a franchisee. His first Dunkin’ job was behind the counter—gaining experience he would file away for later. Like his father, he chose work with the Brand, climbing the ladder as a District Sales Manager (DSM) in Providence to a VP of Operations along the eastern seaboard. But, where Ralph Gabellieri never owned a Dunkin’ franchise, Steve wanted to work that side of the business. He purchased the four shops in the City of Providence, which employ about 80 people and are active in the community.
The Gabellieri family has a long history in the City of Providence. Ralph Gabellieri, Steve’s dad, was one of the pioneers who helped Dunkin’ Donuts founder Bill Rosenberg build the company back in 1956. He led the effort to bring the successful Mister Donut chain under the Dunkin’ flag. Steve learned from his dad how to run a local business. “Take care of your guests and take care of your people,” he says. “This fosters a culture of respect and caring toward one another and gets the organization thinking more broadly about what they can do to help others less fortunate.”
“The essence of what our Eddy St. [location] does for the school is to offset their costs and assist with raising funds by being their food and beverage provider of choice,” Gabellieri says. “Essentially we donate these items to them free of charge so that they can reduce their costs and raise money to help support the students at their very special school.”
Gabellieri says that he is inspired to support the Meeting Street School because of what they do for the community and because they are his restaurant’s community. “There are 400 students and 200 faculty that are our neighbors. We sincerely appreciate what they do for us every day as guests in our Eddy St. Dunkin’ Donuts,” he says. “We truly feel that they started
At the end of the day, Gabellieri says his collaboration with Meeting Street has a direct benefit on his employees. \“They know the students and know why they are there,” he says. “Our crew members are compassionate, understanding, patient, and helpful. It is a great partnership where everyone learns and benefits. We feel honored to be part of the process.”
34 INDEPENDENT JOE • JUNE/JULY 2017
For those of you not old enough to remember the old Dean Martin Celebrity Roasts, they enjoyed unparalleled television popularity back in the 1970s and 80s. The show would “roast” a different celebrity each week, featuring a roster of well-known comedians. One of the staples of those shows was the former vaudevillian star Red Buttons, who would routinely question why a particular celeb was getting honored when some of the greatest members of his nationality (Jews, Irishmen, African-Americans and others) were never feted. It was a different time back then and the routine was a hilarious highlight of the celebrity roasts. I thought of that Red Buttons routine this past week when I read that the late, former Washington D.C. Mayor Marion Barry, Jr. was to be honored with an eight foot statue in the nation’s capital. Barry, who died in 2014, served three terms before he was convicted of drug possession during his mayoral tenure after smoking crack cocaine in a D.C. hotel with a former lover and sent to jail. He was elected again to a fourth term after his release. It led me to question how we view, define and recognize success. This country was founded on the ideal that citizens are free to pursue their dreams and thrive based on their own merit. Our government was structured in such a way as to minimize the obstacles preventing us (individually and collectively) from accomplishing the goals we set for ourselves. In the context of business, that success was heralded and the financial rewards were admired. The business acumen, the foresight, the innovation and the entrepreneurial spirit, were what all Americans aspired to achieve. And most set out to do so by their own merits and in their own way. Sadly, it now
feels as if we are facing more obstacles to success than ever before. While many still aspire to the pinnacle of the American dream, those without the drive, the know-how or the spirit look to punish those who succeed. One example is the proposed “millionaire’s tax,” a plan to raise the income taxes paid by people who earn over $1 million. I view this as a vehicle for the ultimate division of America – the haves versus the have-nots. The rationale is that if you’ve been successful in business, then you should have to pay more to the government than others. You pay more not because the services you receive are better or more valuable, but because you’ve been more successful, and so you probably have the money. Where you demonstrated your incentive and became more successful and enjoyed the fruits of your labor, you are now going to be forced to take those rewards and give them to those who haven’t harnessed their own incentive or hard work. That kind of social welfare punishes people who work hard, take risks and create jobs for others. It’s a view popularized by U.S. Senator Elizabeth Warren of Massachusetts, who said this about successful entrepreneurs: “You built a factory out there, good for you. But I want to be clear. You moved your goods to market on the roads that the rest of us paid for. You hired workers that the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for.” It doesn’t exactly sound like a resounding “thank you” for taking risks, investing your capital and providing employment, does it? Instead it sounds
like government wants to punish you—using Robin Hood’s theory of taking from those who are successful and giving to those who don’t even try. Raising the minimum wage to $15 per hour, because it “feels” like a good wage for low-skill workers, is another prime example. All of a sudden, we are not rewarding people based on the quality of the work they do, or the value of the job they perform. Instead, we give everyone the same thing because that is what some decide feels fair. It is the government equivalent of giving everyone in Little League a participation trophy rather than reserving recognition only for those who deserve it (the best hitter, best pitcher or league champions). In Red Buttons’ day, people at the bottom of the ladder were encouraged to get an education or learn a trade so they didn’t have to toil in a minimum wage job. Today, people working in those jobs hold onto the hope that they will be rewarded for doing nothing. They are celebrated in political slogans as rallying cries for the next protest march, not because they are working to improve themselves and climb the ladder. Buttons would have had a field day roasting Marion Barry for serving as mayor of the nation’s capital, disgracing himself and his supporters, serving time in prison and then getting recognized as a hero. He would question why someone, who should be viewed as a failure, gets a larger-than-life statue at taxpayer expense. Ed Shanahan DDIFO Executive Director
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INDEPENDENT JOE • JUNE/JULY 2017
3
CONTENTS
PLEASE VISIT THE DDIFO BUSINESS MEMBER DIRECTORY ONLINE AT WWW.DDIFO.ORG
From the Executive Director Honoring failure and punishing success • • • • •3 What’s Brewing: A Look at State Issues Around the Footprint • • • • • 7 Photo Story: Maine Franchisee Community Gathers for a Good Cause • • • • • • • • • • • • •10 Dunkin’ Foundation Brings Joy to Children and Franchisees • • • • • • • • • • • • • • • • • • • • • •12 Direct from NDCP: NDCP Expands to Better Serve Members • • • • • • • • • • • • • • •16 Putting Franchisee Associations on the Same Page • • • • • • • • • • • • • • • • • • • • • • •18 Legal: Protecting Franchisee Equity in California – and Beyond • • • • • • • • • • • • •21 2017 DDIFO National Conference: Firehouse Subs CEO to highlight hot topics • • • •22
LEGAL Constangy, Brooks, Smith & Prophete, LLP Jeffery Rosin 617-849-7882 • jrosin@constangy.com 535 Boylston St., Ste. 902, Boston, MA 02116 www.constangy.com
Lisa & Sousa Attorneys at Law Ltd. Carl Lisa, Sr. 401-274-0600 • clisa@lisasousa.com 5 Benefit Street, Providence, RI 02904 www.lisasousa.com
Marks & Klein LLP
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INDEPENDENT JOE • JUNE/JULY 2017
Paris Ackerman & Schmierer LLP David Paris 973-228-6667 • david@paslawfirm.com 103 Eisenhower Parkway, Roseland, NJ 07068 www.paslawfirm.com
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OPERATIONS 3M Company Bill Muenkel 952-484-4875 • wemuenkel@mmm.com 3M Center, 220-12E-04, St. Paul, MN 55144 www.3M.com/communications
Armor SafeTechnologies, LLC Patrick Moore 214-636-8409 • prmoore@armorsafe.com 5916 Stone Creek Dr., The Colony, TX 75006 www.armorsafe.com
Bunn-O-Matic Corporation
Endangered Species?: How Dunkin’s kitchen deal may spell the end of CPLs • • • • 24 Franchisee Profile: Rebuilding the Brand in Rochester• • • • • • • •28 Directory of Sponsors • • • • • • • • • • • • • •31 Community Corner: Steve Gabellieri • • • • 34
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Justin Klein 732-747-7100 • justin@marksklein.com 63 Riverside Avenue, Red Bank, NJ 07701 www.marksklein.com
SKAL East, Inc
Ray Picard 603-809-3584 • ray.picard@cranepi.com 1 Executive Pk. Dr. #202, Bedford, NH 03110 www.CranePI.com
Kevin Huerth 781-806-3139 • kevin@skaleast.com PO Box 303, 31 Eastman Street, Easton, MA 02334 www.skaleast.com/index.cfm?keyword=dunkin
DTT
Solink
Mira Diza 800-933-8388 • mdiza@dttusa.com 1755 North Main Street, Los Angeles, CA 90031 www.dttusa.com
Christopher Beaudoin 884-463-5730 • cbeaudoin@solinkcorp.com 390 March Road, Ste, 110, Ottawa, Ontario k2k 0g7 www.solinkcorp.com
Ecolab
Squadle
Michael Quate 215-287-6953 • michael.quate@ecolab.com 8300 Capital Drive, Greensboro, NC 27409 www.ecolab.com/Businesses
HME Drive-Thru Headsets
Staples Advantage Joe Shea 508-238-0106 • joseph.shea@staples.com 31 Commercial St. Sharon, MA 02067 www.staplesadvantage.com
Jarrett Services ATM, Inc. Alexander Pezzolla 732-572.0706 ex 202 • alex@jarrettforcash.com 1315 Stelton Road, Piscataway, NJ 08832
Kronos
SuzoHapp Tom Orton 847-660-4289 • Tom.Orton@suzohapp.com 1743 Linneman, Mt. Prospect, IL 60056 www.suzohapp.com
Loree Miller 704-968-1582 • loree.miller@kronos.com 2005 Millbridge Parkway, Waxhaw, NC 28173 www.kronos.com
Torrco
New England Drive-Thru Communications
Wind River Environmental
301-775-5046 • tej.guthalagowda@workpulse.com 2 Eastwick Dr., Suite 200, Gibbsborro, NJ 08026 www.workpulse.com
Angela Bechard 603-475-2046 • angela@nedrivethru.com 999 Candia Rd. Ste. 7, Manchester, NH 03032 www.nedrivethru.com
Samantha Kelley 978-344-0926 • skelley@wrenvironmental.com 46 Lizotte Dr., Ste. 1000, Marlborough, MA 01752 www.wrenvironmental.com
Prince Castle/Silver King
Cardtronics
R.F. Technologies, Inc.
Bob Eckweiler 973-222-6742 • Bob.Eckweiler@carrier.utc.com 3 Hollyhock Way, Newton, NJ 07860 www.carrier.com
Brendan Bencharit 818-590-4483 • brendan@squadle.com One Broadway, Floor 14, Cambridge, MA 02142 www.squadle.com
Brady Campbell 858-535-6034 • bcampbell@hme.com 14110 Stowe Drive, Poway, CA 92064 www.hme.com
Zachary Waas 630-873-0088 • waaz@princecastle.com 355 East Kehoe Blvd., Carol Stream, IL 60188 www.princecastle.com
Carrier Corp
BUSINESS MEMBER
Crane Payment Innovations
Todd Rouse 800-637-8606 • Todd.Rouse@bunn.com 1400 Stevenson Drive, Springfield, IL 62703 www.bunn.com Tom Spooner 973-452-4131 • tspooner@Cardtronics.com 628 Route 10 - Ste. 8, Whippany, NJ 07981 www.cardtronics.com
2017
SUB HEADLINE
Workpulse, LLC Tej Guthalagowda 301-775-5046 • tej.guthalagowda@workpulse.com 2 Eastwick Dr., Suite 200, Gibbsborro, NJ 08026 www.workpulse.com
Michael Murdock 847-495-7350 • michaelm@rftechno.com 330 Lexington Drive, Buffalo Grove, IL 60089 www.rftechno.com
safeTstep by Payless Shoesource Kyle Clendennen 785-295-6664 • kyle.clendennen@safetstep.com 3231 Southeast Sixth Ave, Topeka, KS 66607 www.payless.com/safetstep-1/
Thank You to Our Business Members!
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INDEPENDENT JOE • JUNE/JULY 2017 33
2017
BUSINESS MEMBER
Directory Business Members Directory ofof Business Members
Bridge Funding Group, Inc.
Pacific Premier Franchise Capital
Rick Riecker 800-928-8537 • Franchise@BankUnited.com 215 Schilling Circle, Suite 100, Hunt Valley, MD 21031 www.bridgefundinggroupinc.com
Sharon Soltero 402-562-1801 • ssoltero@ppbifranchise.com 3154 18th Avenue, Ste. 3, Columbus, NE 68601 www.ppbifranchise.com
CIT
Pinncale Commercial Capital
Douglas Solomon 603-433-9413 • DSolomon@cit.com 155 Commerce Way, Portsmouth, NH 03823 www.cit.com
Mylan Dawson 317-472-2828 • dawson@pincomcap.com 101 W. Ohio St., Suite 2000, Indianapolis, IN 46204 www.pincomcap.com
Eastern Bank
Santander Bank
Deborah Blondin 603-606-4724 • D.Blondin@Easternbank.com 11 Trafalgar Square, Ste. 105, Nashua, NH 03063 www.easternbank.com
Paul Sousa 401-276-1954 • Psousa1@santander.us 95 Amaral St., East Providence, RI 02915 www.santanderbank.com
Fidelity Bank
Signature Financial
Sally Buffum 508-762-3604 • sbuffum@fidelitybankonline.com 465 Shrewsbury Street, Worcester, MA 01604 www.fidelitybankonline.com
Trey Grimm 410-419-7107 • tgrimm@signatureny.com 502 Club Ln., Towson, MD 21286 www.signatureny.com
Joyal Capital Management Franchise Development
Sterling National Bank
Daniel Connelly 508-747-2237 • dconnelly@joycapmgt.com 50 Resnik Road, Plymouth, MA 02360 www.jcmfranchise.com
Lindy Baldwin 402-312-2542 • lbaldwin@snb.com 500 7th Ave., 3rd Floor, New York, NY 10018 www.snb.com
LCR Franchise Finance
TCF Franchise Finance
Robert Obolewicz 203-644-8481 • robolewicz@lcrcapital.com 315 Post Road West, Suite 200, Westport, CT 06880 www.lcrfinance.com
Bill Johnson 952-656-3268 • wjohnson@tcfef.com 11100 Wayzata Blvd., Ste. 801, Minnetonka, MN 55305 www.tcfef.com/franchise
Marlin Franchise Finance Group
TD Bank
Chris Holland 856-505-4206 • cholland@marlinfinance.com 300 Fellowship Rd, Mount Laurel, NJ 08054 www.marlinfinance.com
Peter J. DiFilippo 401-525-6771 • Peter.DiFilippo@td.com 180 Westminster Street, Providence, RI 02903 www.tdbank.com
The MINT National Bank
United Bank
Samir Ruparel 732-485-3331 • samir.ruparel@themintbank.com 1585 Oak Tree Rd., Ste. 205, Iselin, NJ 08830 www.themint.bank
Northern Bank & Trust Company Kelley Munsell 781-569-1584 • kmunsell@nbtc.com 275 Mishawum Road, Woburn, MA 01801 www.nbtc.com
Mark McGwin 508-793-8342 • mmcgwin@bankatunited.com One Mercantile St., 7th Flr, Ste. 760, Worcester, MA 01608 www.bankatunited.com
Wells Fargo Bank Julianna Fritz 203-225-5894 • Julianna.M.Fritz@wellsfargo.com 4 Corporate Dr. Suite 495, Shelton, CT 06484 www.wellsfargo.com
HUMAN RESOURCES Employers Reference Source Sandra Fabrizio 888-512-2525 • sandraf@employersreference.com 1587 Hamilton Avenue, Waterbury, CT 06706 www.employersreference.com
HigherMe Shannon Cassidy 617-890-6476 • shannon@higherme.com 77 Franklin St., Suite 510, Boston, MA 02110 www.higherme.com
Paychex Ryan Birtles 843-576-9337 • rbirtles1@paychex.com 7204 Copperfield Ct, Wilmington, NC 28411 www.paychex.com
FINANCIAL STRATEG IE S FOR
Paycor Inc. Jim Ferreira (203) 530-3512 • jferreira@paycor.com 12 Dale Dr., Greenwich, CT 06831 www.paycor.com
DUNKIN’ DONUTS FRANCHISEES
TalentReef Cassie Altbrandt 303-667-2328 • caltbrandt@talentreef.com 210 University Ste. 300, Denver, CO 80206 www.talentreef.com
INSURANCE American Family Insurance Todd L Laczynski 219-406-8633 • tlaczyns@amfam.com 2502 Beech St Ste 70, Valparaiso, IN 46383 www.ToddLaczynski.com
Intrepid Direct Insurance Chad Lee 913-217-4262 • clee@intrepidinsurance.com 10851 Mastin Blvd, Ste. 200, Overland Park, KS 66210 www.intrepidinsurance.com
Starkweather & Shepley Insurance Brokerage, Inc. Sabrina San Martino 800-854-4625 ext. 1121 • ssanmartino@starshep.com 60 Catamore Boulevard, East Providence, RI 02914 www.starkweathershepley.com
Helping Owners Improve Profitability and Stimulate Growth
DDIFO® does not endorse or recommend commercial products, processes, or services. A DDIFO® Business Member is paying to advertise, and it is not to be considered a product or service endorsement by DDIFO®. Furthermore DDIFO® does not control or guarantee the currency, accuracy, relevance or completeness of information provided by sponsors in their advertising.
W W W. M FA - C PA . C O M 1 Highwood Drive
32 INDEPENDENT JOE • JUNE/JULY 2017
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INDEPENDENT JOE • JUNE/JULY 2017
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The Magazine for DD Independent Franchise Owners
•
June/July 2017 Issue #44 Independent Joe® is published by DD Independent Franchise Owners, Inc.
ACCOUNTING Adrian A. Gaspar & Company, LLP, CPAs Robert Costello 617-621-0500 • cpas@gasparco.com 1035 Cambridge Street, Ste. 14, Cambridge, MA 02141 www.gasparco.com
Brendon Pierson
Editors: Edwin Shanahan, Matt Ellis Contributors: Cathy Cassata, Michael Hoban Lisa Iannucci, Debbie Swanson, Scott Van Voorhis Business Member Coordinator: Joan Gould Creative Director: Caroline Cohen Direct all inquiries to: DDIFO, Inc. 2 First Avenue, Ste. 127 – 3, Peabody, MA 01960 978-587-2581 • info@ddifo.org • www.ddifo.org DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners. INDEPENDENT JOE®, INDY JOE®, and DDIFO® are registered trademarks of DD Independent Franchise Owners, Inc. 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 © 2017 Printed in the U.S.A.
Peggy Pierson 732-681-4800 • peggy@brendonpierson.com PO Box 1750, Wall, New Jersey 07719 www.brendonpierson.com
Employers Unity LLC
Mike Grammel 303-895-4514 • mgrammel@employersunity.com PO Box 173836, Denver, CO 80217 www.employersunity.com
Marcovich, Mansour & Assoc. Inc. Joseph Mansour 401-334-9099 • jmansour@mm-cps.net 640 George Washington Hwy., Lincoln, RI 02865
MFA - Moody, Famiglietti & Andronico, LLP Joanna Davidian 978-557-5325 • jdavidian@mfa-cpa.com 1 Highwood Dr., Tewksbury, MA 01876 www.mfa-cpa.com
Neovision Consulting Inc. Nish Parekh 609-531-4444 • info@neovisioncpa.com 1246 South River Road, Ste. 101 Cranbury, NJ 08512 www.neovisioncpa.com
Sansiveri, Kimball & Co., LLP
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Granite Telecommunications Daryl Chelo 401-334-3176 • dchelo@granitenet.com 1 Albion Rd., Lincoln, RI 02865 www.granitenet.com
BUILDING
COST RECOVERY
BUSINESS MEMBER
Duro-Last Roofing
EF Cost Recovery
Samantha Pickelman 525 Morley Dr., Saginaw, Mi 48601 (989) 758-1048 • spickelm@duro-last.com www.duro-last.com
Ed Craig 774-263-7388 • ecraig3@efcostrecovery.com 32 William St., New Bedford, MA 02740 www.efcostrecovery.com
Persona Signs, Lighting, Image Susan Koelzer 700 21st Street SW, Watertown, SD 57201 800-843-9888 x390 • skoelzer@personasigns.com www.personasigns.com
Poyant Signs Jackie Linhares 125 Samuel Barnet Blvd, New Bedford, MA 02745 508-207-1273 • jlinhares@poyantsigns.com www.poyantsigns.com
Trane Commercial Systems Jonathan Ralys 978-737-3814 • Jonathan.Ralys@Trane.com 181 Ballardvale St., Wilmington, Ma 01887 www.Trane.com
Performance Business Solutions, LLC Jeff Hiatt 508-878-4846 • jdh@revenuebanking.com 87 Lafayette Road, Ste. 11, Hampton Falls, NH 03844 www.revenuebanking.com
ENERGY Secure Energy Jodi Maurer 413-733-2571 x218 • jmaurer@sesenergy.org 12-14 Somers Rd., East Longmeadow, MA 01028 www.sesenergy.org
FINANCE Bank of America/Merrill Lynch
Watchfi re Signs David Watson 205-542-7881 • David.Watson@watchfiresigns.com 1015 Maple Street, Danville, IL www.watchfiresigns.com
COMMUNICATIONS
BACK OFFICE
Chris Lawrence 207-632-0562 • Chris.Lawrence1@charter.com 477 Congress St. Portland, ME 04102 www.charter.com
David Fionda 781-610-1206 • dfionda@blumshapiro.com 2 Battermarch Pk.;1 Pine Hill Dr Ste. 301, Quincy, MA 02169 consulting.blumshapiro.com
No room to grow with
Jera Concepts Wynne Barrett 508-686-8786 • wynne@jeraconcepts.com 17 Fruit Street, Hopkinton, MA 01748 www.jeraconcepts.com
Michael A. DeCataldo 401-331-0500 • mdeca@sansiveri.com 55 Dorrance Street, Providence, RI 02903 www.sansiveri.com
BlumShapiro Consulting
2017
Independent
Directory of Business Members
Earl Meyers 585-546-9162 • earl.w.meyers@baml.com 1 East Ave., Rochester, NY 14450 www.bankofamerica.com
Bank RI
Charter Business
Tom Fitzgerald 401-574-1119 • tfitzgerald@bankri.com One Turks Head, Providence, RI 02903 www.bankri.com
BMO Harris Bank N.A. Angelo Maragos 949-293-0152 • angelo.maragos@bmo.com 7700 Irvine Center Drive, Ste. 510, Irvine, CA 92618 www.bmoharris.com/franchisefinance
Dunkin Donuts in your local market Looking to expand in the New England area? Take a look at Mr. Mac’s the first gourmet macaroni and cheese
franchise that hails from northern New England. Our raving fans have granted us award-winning status year over year over year!* Combine that with our affiliate store’s annual total gross revenues amounting to $2,189,808 and its costs of goods sold of 26.1%** For Information Contact David Stein at: Dave@mr-macs.com Tel: (718) 490-2218
Mr. Mac’s Franchising LLC, 497 Hooksett Road, Manchester, New Hampshire
**The annual total gross revenues and cost of goods sold figures provided above can be found in Item 19 of Mr. Mac’s Franchising LLC’s 2017 Franchise Disclosure Document, which includes information for the 2016 year. Your results as a new franchisee may differ. This advertisement is not an offer to buy a franchise. An offer to buy a franchise can be made by prospectus only and such prospectus must be filed first with the Department of Law of the State of New York for sales involving New York. Such filing does not constitute approval by the Department of Law.
Now open:
Manchester, NH Portsmouth, NH Tyngsboro, MA
Coming soon: Saugus, MA
* See our website, mr-macs.com,
for a list of awards.
Thank You to Our Business Members!
For more information visit www.mrmacsfranchise.com
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INDEPENDENT JOE • JUNE/JULY 2017
INDEPENDENT JOE • JUNE/JULY 2017 31
FRANCHISEE PROFILE: RIBEIRO According to Batista, those special touches made a big difference with local customers. “The focus on creating a welcoming, upscale environment helped to turn the brand around in the area.� As they began opening more stores, Ribeiro learned more about the real estate development side of the business. He’s become adept at spotting prime locations and exploring co-development opportunities to reduce operating expenses. Currently, Ribeiro has shops at gas stations, Wal-Mart, and the Greater Rochester International Airport. “As much as you know about properties, there are always surprises. A store you think will do really well won’t, and a store you expect to do poorly does well,� he says. Today, Ribeiro and his team are proud to say that customers who visit Dunkin’ Donuts restaurants throughout Rochester can count on a quality experience, If a scan of online reviews is any indication, he’s right. One visitor wrote on Trip Advisor, “Wonderful staff ! The venue is clean
WHAT’S
and the latte is great! They are attentive and the bathrooms are clean!� Such reviews reinforce what Ribeiro and his partners already know: They have rebuilt the relationship with their customers and now those customers demonstrate their loyalty through their repeat visits. The business is well established and ready for the next generation of Ribeiros and Vieras. Ribeiro’s nephew Jonathan - has been involved with the stores from a young age and is now studying business at St. John
As far as continuing to add new stores, they plan to tread lightly going forward. “It becomes a slippery slope from here,� Ribeiro says. “We don’t want to cannibalize sales from any of our existing stores to open a new store.� But he’s up for new opportunities. “Maybe that means taking the experience and knowledge from this and duplicating it in another market, who knows?�
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BREWING A LOOK AT STATE ISSUES
Fisher College.
PERFORMANCE BUSINESS SOLUTIONS, LLC
AROUND THE FOOTPRINT By Scott Van Voorhis In with the new and out with the old. This summer small business owners are getting a clearer picture of where the Trump Administration stands on some key issues. The Trump Administration is taking aim at a pair of controversial, Obama-era policies that critics say could be damaging to the franchising business while also driving up costs. The first involves the 2015 joint-employer ruling by the National Labor Relations Board that held some franchisors legally responsible for pay and working conditions at the franchise level. The second centers on new rules that would reclassify many managers at quick service restaurants as hourly workers— making them eligible for overtime. But even as the Trump Administration starts to put its imprint on federal labor policies and regulations, it is facing pushback from Democrat-controlled states like New York and California.
National Labor Relations Board’s joint-employer rule, which has been slammed by some critics for undermining the nation’s multibillion-dollar franchising sector. The new Secretary of Labor, Alexander Acosta, recently announced the withdrawal of informal guidelines on the hotly contested NLRB decision. The NLRB’s ruling, which has been widely criticized by business industry groups, found that some franchisors could be held liable for workplace issues and problems at the franchise level “even if it had only indirect or unexercised control over hiring,� the Nation’s Restaurant News reported. The many critics of the joint-employer ruling argued it threatened to hollow out the foundation of independence on which the franchising sector has been built. While the initial ruling involved BrowningFerris Industries and a staffing agency, a later, separate ruling against McDonald’s struck even closer to home for the quick service sector.
Joint-employer rules under scrutiny The days may be numbered for the
“The labor rules at issue amounted to
The new secretary of Labor, Alexander Acosta, recently announced the withdrawal of informal guidelines on the hotly contested NLRB decision.
informal regulatory 'dark matter' that made it harder for people who want to be in business for themselves and punished large companies for contracting with smaller ones,� noted Trey Kovacs, labor expert at the conservative Competitive Enterprise Institute, of the move by the new labor secretary, in a press statement. Kovacs went on to argue that the decision to rescind the informal joint employer guidelines established by the Obama Administration is a good. “Labor Secretary Acosta's decision to rescind regulator guidance on independent contractor and joint employer rules is a
INDEPENDENT JOE • JUNE/JULY 2017
7
WHAT’S
BREWING positive sign this administration will reverse federal rules that needlessly hamstring worker and employer flexibility in the modern workplace,” according to Kovacs.
Overtime rules spark tug-of-war between feds, states The Obama Administration made waves when it rolled out plans to roughly double the salary threshold to $47,476 for determining whether someone should be classified as an hourly worker who must be paid overtime, or rather as a manager who is exempt from overtime. The move had obvious implications for franchise owners, who would face the choice of boosting the pay of their managers above that $47,476 mark or shelling out time-and-a-half for overtime. A federal court last November put the overtime rules on hold, with the Trump Administration opting not to continue a legal appeal started in the waning days of the Obama Administration. Acosta recently announced plans to seek new comments from the public on the
proposed overtime rules changes. While Acosta noted at his confirmation hearing that the old income marker of $23,360 for determining whether someone should be paid a salary or paid hourly probably needed to be updated, he said doubling the threshold to $47,446 was a “shock to the system,” according to Bloomberg BNA. Bucking the new administration, California and a number of other states are pushing ahead to adopt the $47,446 threshold to determine whether an employee should get overtime, according to the Orange County Register. The California Assembly recently passed a bill that would raise the overtime threshold starting Jan. 1, 2018. It now goes to the Senate, where it has a decent chance of passing, the paper reports.
Shift scheduling regs start to spread New York is the latest city to jump on the fair scheduling bandwagon. Mayor Bill
de Blasio recently signed a bill aimed at quick service and other chain restaurants in the Big Apple. It follows in the footsteps of new regulations passed by San Francisco, Seattle and a handful of other cities. Business groups have attacked the move, arguing it will come down hardest on small business people like many quick service franchise owners in the city. “The strict scheduling requirements will challenge New York City’s retail employers to develop new means of managing their businesses impacted by the unpredictability posed by seasonal demand, customer fluctuation, weather, holidays, employee turnover issues, and other variations in day-to-day retail operations,” John O’Connor of law firm Epstein Becker Green wrote on the Lexology website. As reported by Reuters, the new bill which goes go into effect in less than six months, requires: work schedules be drawn up 14
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so I stayed on and became a store manager. By the time I was around 25, I was running a few stores, and Batista encouraged me to open a store,” says Ribeiro. He began looking for opportunities, planning to partner with Batista. Locations in Mass. proved scarce so instead, they obtained the territory of rights in Rochester, signing an eight store, five year development agreement. Ribeiro’s sister, Paula Viera, became another partner, planning to relocate from Canada to New York with her husband, Dom. Batista remained in Mass., making trips to New York as needed.
An uphill journey A month after opening their first store in August, the 9/11 terror attacks occurred, ushering in a sense of uncertainty and wavering consumer confidence.
“Failure wasn’t an option,” Batista says of those early days. “I’m a firm believer in the power of the Dunkin’ brand. If you work hard, keep persisting, and do it right, you will succeed.”
“9/11 hit and shocked all of us. Those first few days there was impact [on business], but then it returned somewhat back to normal after a few weeks,” he says.
Gradually, customers began noticing the improvements the team made to operations and quality. Word spread, and profits and loyalty steadily increased. Soon after, the number of stores grew as well.
The brand’s lack of a solid legacy in the region was their biggest challenge. For a business that stakes its claim on customer convenience and satisfaction, establishing these two factors became Ribeiro's long-term goal.
Also key to the turnaround was recognizing what wasn’t working; in this case it was three Baskin Robbins combo stores that were holding them back.
“The product is the product, but what helps is convenience and marketing,” says Ribeiro. “We didn’t have enough stores at the time to really hit the convenience factor, and we didn't have a lot of money for radio and TV marketing.” But the team did have determination, which they poured into 70- or 80-hour work weeks, hitting a stretch of 1000+ days without a day off. Many times the coowners questioned whether to continue their efforts. “In Massachusetts, we would make more in one weekend than we did in a whole week in [that first] store,” Ribeiro recalls. “Most money, 70 percent, came from donut sales, and it’s tough to make money primarily on donut sales.” So, the team turned to Batista, whose experience and reassurance kept them going.
the overnight baking,” Batista says. “Once we started getting some good employees, they referred their friends and family, and that helped.” Maintaining employee satisfaction remains an integral factor to success. The team has hired many workers who have moved into managerial positions. “We have a lot of pride in our employee pool, we try to keep them happy and create a family atmosphere,” Ribeiro reports. “Our first hire is still with us. We hired her when she was 15, part time, and today she works in the office as a manager.”
Attention to detail
“Baskin Robbins is a good brand, but it just didn’t work in this area. Once we were allowed to close that side [of three stores], employees did much better focusing on one brand, and Dunkin’ sales shot up,” Batista recalls.
Successful Dunkin’ franchisees know if they can offer the consumer a great guest experience, they can beat the competition. In Rochester, that meant putting the customer first in a way the brand hadn’t before.
After three years in business, with five stores operating smoothly, things began to turn around.
“A lot of time and money went into improving the brand’s perception,” Batista recalls. “Cleanliness, maintenance was always important; nothing was put off, the stores were always kept clean and looking good.”
“We began to see the light at the end of the tunnel,” Ribeiro says.
Strength of Good Employees From the beginning, the franchisee team recognized the importance of hiring great employees and managers, knowing that a well-run shop and consistent product would naturally lead to customer satisfaction and loyalty. Finding those great people, however, was a challenge. “It was difficult, at first, to find people who would reliably come in early, or do
They also looked for ways to stand apart from the competition, an effort which earned Ribeiro Dunkin’ Donuts’ Innovator of the Year award for new store design in 2005. He still recalls the experience of receiving the award at the brand convention in Las Vegas. “We had a store near Starbucks, and I wanted to make it a little upscale, so I got approval to introduce some features, like marble and granite,” Ribeiro explains.
INDEPENDENT JOE • JUNE/JULY 2017 29
FRANCHISEE PROFILE
I
n 2001, Dunkin’ Donut’s barely dotted the landscape of Rochester, New York, with only a few stores in operation. That was the year Luis Ribeiro moved to Rochester with the goal of rejuvenating the brand’s waning presence in the area. “Some stores had closed,” Ribeiro describes of the time. “There was one drive thru in the area, which was literally a handwritten note on the menu board, telling customers to pull up to the window and ring the bell to place their order.” That bell, he recalls, was an everyday doorbell, wired to a window. The brand also faced stiff competition from established Canadian coffee chain, Tim Hortons. “They seemed to add more stores every day,” Ribeiro recalls. Fast forward 16 years, and Dunkin’ Donuts has a strong presence throughout the region – 34 stores, at last count, with construction in the works for two more. Drive thrus are both modern and commonplace. Customer loyalty is booming, and while Hortons is still around, it’s no longer the threat it used to be. But, Ribeiro is the first to say: The turnaround did not come easily.
days in advance, with penalties of $10 to $75 paid to the worker for changes within that two-week period; and a requirement that employees get at least 11-hours off between shifts. Restaurant owners that schedule back to back shifts would have to pay the employee an extra $100. In addition, current workers will have to be offered additional shifts before new workers can be hired to take those shifts.
The road ahead As with most things in Washington D.C., the pace of change can be slow. While observers believe we should expect more moves from the new Trump Administration in the months ahead as it pushes ahead with plans to scale back onerous regulations on business, it is unlikely the NLRB’s joint-labor decision will be reversed overnight. Then again, no one expects the Trump Administration to be scrambling to enforce the rule either. It’s all part of the “out with the old and in with the new” process taking place in the halls of government.
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Mayor Bill de Blasio recently signed a bill aimed at quick service and other chain restaurants in the Big Apple.
An Unexpected Career Shift
Rebuilding the Brand in Rochester
Originally from Canada, Ribeiro moved to Worcester, Massachusetts after high school to attend flight school, with aspirations of becoming a commercial airline pilot. He took a job working as a night baker at a local Dunkin’ Donuts as a way to offset the tuition bill. There, he fell under the wing of franchisee John Batista, one of the earliest established Dunkin’ franchisees, who built a network in Worcester, about 40 miles west of Boston. “Batista was like a father to me, he taught me everything,” Ribeiro recalls. Batista remembers that Ribeiro stood out as a hard worker. “He was a top performer, a natural choice for promotions,” says Batista. Soon Ribeiro was moving up the ladder, and paving the way for a shift in career direction.
By Debbie Swanson “When I finished flight school in 1992, the airline industry was having some trouble,
28 INDEPENDENT JOE • JUNE/JULY 2017
INDEPENDENT JOE • JUNE/JULY 2017 9
Photos by Caroline Cohen
Photo by Steve Lipofsky
PHOTO STORY
Maine Franchisee Community Gathers for a Good Cause This June, Dunkin' franchisees in Maine gathered for their annual fundraiser by the sea. This is the 6th year franchisees have hosted the Maine Lobster Bake as a way to raise money for the Joy In Childhood Foundation. On a delightful late spring evening, 130 guests came together at the Black Point Inn in Scarborough, Maine to enjoy fresh Maine lobster and all the fixin's. The evening also featured musicians, a comedian, a silent auction and a live auction. Planners say it was a huge success, raising $46,900 and bringing franchisees closer to their community.
According to Lisa, this language appears to be an attempt by Dunkin’ to create the ability to direct franchisees to purchase their products from an alternative supplier, such as a third-party delivery system, which would render CPLs idle. He says CPLs anticipated being able to renew their CPL Franchise Agreement upon terms similar to those found in their original CPL Franchise Agreement, but that is not what happened. Carvalho believes Dunkin’ may have taken an existing Third-Party Agreement
10 INDEPENDENT JOE • JUNE/JULY 2017
and amended it for CPLs without looking too closely at the language—or recognizing the difference between a third party provider and a franchisee-owned and operated cooperative. As an example, he points to the proposed language dictating what manufacturers may charge franchisees for their products. It should be a moot point for co-ops, since they are memberowned and any profits are returned to the owners, who agree on the costs they will pay for donut deliveries. “If there is a third party making products
for Dunkin’ Donuts shops, then that is a different story,” says Carvalho. “Then, I could see why there would be a pricing structure in there.” That might explain why the BAC wasn’t afforded the chance to comment and offer suggestions on the Renewal Agreement. Or, it is a sign of things to come with regard to whom Dunkin’ Brands allows to make the donuts, which leads Lisa to characterize it as an indication of “Dunkin’s system of non-negotiation and one-sided changes.”
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INDEPENDENT JOE • JUNE/JULY 2017 27
DUNKIN’S KITCHEN DEAL
of directors, says he was completely stunned when he read the term offer in the agreement. “I haven’t seen anything so unworkable, since Steve Horn was head of the legal department,” he says, in reference to Dunkin’s former general counsel at a time when Dunkin’ Donuts led the QSR sector in the number of lawsuits filed against its franchise owners. “The way I read it, it looks as if Dunkin’ is really down on CPL’s and they want to get them out of the system.” Over the last 10 years, Dubinsky upgraded Methuen CPL from Level 3 to Level 4, a step that required a seven-figure investment. Dubinsky points out the loan was based on the plant’s prior financial performance and the amount of term left on its franchise agreement. “A bank wouldn’t have loaned us the money with a five-year term. Reinvesting in the plant would have been very difficult with such a short-term agreement,” he says. One possible explanation for the vastly different CPL Renewal Agreement, according to Lisa, is that it gives the brand the opportunity to expand the use of just-baked-on-demand, or JBOD donuts. According to Lisa, Dunkin’ Brands adopted a frozen donut platform as it
expanded into emerging markets with small development areas. “They couldn’t wait for the kitchens to develop and there wasn’t enough density in a development area to invest in a facility,” he says. While industry observers say a partially cooked donut, warmed and finished on-site gives franchisees greater control over their inventory, they point out that Tim Hortons franchise owners saw their cost-per-donut triple when they transitioned from donuts they baked themselves to unfinished donuts they would heat up in their restaurants. Dubinsky says he understands the value of a pre-cooked donut, “There are places where [CPLs] don’t make sense, like new and emerging markets, remote markets, where you can’t get the product to its destination and keep it fresh. JBOD makes sense there, but in developed markets like New England the [CPL] is the best solution.”
New definition of default Another dramatic change to the language of the agreement can be found in the section covering defaults. It says that Dunkin’ Brands may “withdraw your approval and terminate this Agreement at any time upon written notice to you that you are in default under this Agreement, or any
26 INDEPENDENT JOE • JUNE/JULY 2017
other Agreement between Franchisor and Manufacturer or Franchisor and any member or shareholder of Manufacturer, beyond any applicable cure period, if any.” In Lisa’s words, “It appears that the franchisor has attempted to reserve the right to terminate or not renew the CPL agreement if there is an uncured default by a CPL member shop under such shop’s franchise agreement.” Dubinsky says he is troubled by the changes Dunkin’ Brands is proposing to the default language. “If we have 95 stores in our co-op and one shop is unfortunately substandard and has an uncured default, why would 94 other, compliant stores suffer for one rogue store, especially when other stores have no ownership or management interest in the one store with the uncured default? It’s crazy.”
No commitment Language in the proposed CPL Renewal Agreement spells out what some consider Dunkin’ Brands’ short-term horizon for using CPLs to supply shops with baked goods. It says the franchisor makes “… no commitment on its own behalf or on behalf of its franchisees to purchase, distribute, or to cause to be purchased or distributed any minimum amount of Products….”
INDEPENDENT JOE • JUNE/JULY 2017 11
FEATURE
Dunkin’ Foundation Brings Joy to Children and Franchisees
“I haven’t seen anything so unworkable, since Steve Horn was head of the legal department. The way I read it, it looks as if Dunkin’ is really down on CPL’s and they want to get them out of the system.”
An analysis of the CPL agreement provided to Independent Joe highlights four issues Lisa says reflect the one-sided nature of the terms: Term, Default, Protections for the brand and Franchisee involvement.
Short term horizon
T
he Merriam-Webster dictionary defines joy as “a source or cause of delight.”
There is no doubt that the Joy In Childhood Foundation is just such a fountain of delight for youngsters across America and around the world who benefit from the generosity of Dunkin’ Donuts franchise owners. Formerly known as The Dunkin’ Donuts and Baskin-Robbins Community Foundation (DDBRCF), the Foundation re-branded last year in an effort to bring focus to its mission of supporting local and national charities dedicated to making children’s lives happier and fuller. In 2016, the Foundation raised over $4.3 million.
Franchisees reading the agreement will immediately notice a change in the way Dunkin’ Brands designates the CPL. Instead of classifying the kitchen as a franchise—with its co-op as the franchisee entity—the brand now refers to them as manufacturers. According to the memo prepared by Lisa & Sousa for DDIFO, “The current renewal agreement grants an ‘approval’ ‘to supply baked goods and other products…’ and refers to the kitchen entity as ‘Manufacturer.’” But, more important than what they are called, is the very threat of not being able to operate for a period of time even close to what they are accustomed to. The current CPL Renewal Agreement calls for a term of five years, with one five-year option to renew. Mark Dubinsky, who is president of a CPL in Methuen, Mass. and is a former member of the DDIFO board
“The Foundation was created in response
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INDEPENDENT JOE • JUNE/JULY 2017 25
COVER STORY
ENDANGERED SPECIES? How Dunkin’s kitchen deal may spell the end of CPLs By Matt Ellis
O
n National Donut Day, the first Friday in June, customers streamed into Dunkin’ Donuts locations across the country for a free and tasty treat. Dunkin’, which says it sells 2.7 billion donuts and Munchkins each year, is the number one retailer of donuts in America. And, long before people were lining up for their favorite chocolate-glazed or jelly-fi lled, central production locations were running at full capacity to bake fresh donuts for the give-away. One operator estimates his kitchen prepared three times its normal output in advance of National Donut Day. But central kitchens, which for 20 years have operated as franchiseeowned cooperatives supplying Dunkin’ shops in predetermined territories across major U.S. markets, now may be going the way of the old dunking donut with a handle—as their futures are threatened by changes to the agreement they must sign with Dunkin’ Brands. One of the first kitchens was established by franchisees in Medford, Mass. The Medford CPL signed a franchise agreement with Dunkin’ Brands in 1997, according to one its directors, David Carvalho. (Some kitchens are identified as a central
24 INDEPENDENT JOE • JUNE/JULY 2017
production location or CPL, while others are identified as a CML, or central manufacturing location.) With its 20-year term expiring, Medford was expecting a renewal with terms similar to its current deal. But, according to Carvalho, many of the terms in the renewal agreement presented to Medford CPL were significantly different. “We read this and we said this doesn’t apply to us. And [Dunkin’] said, ‘No this is the agreement.’” Carvalho sent the agreement to the law firm of Lisa & Sousa, DDIFO’s General Counsel. Attorney Carl Lisa Sr. immediately recognized major changes to the language and wrote a memo for review by the association. Lisa says many of the CPL Renewal Agreement’s terms are “far reaching and onerous,” much like the terms of the March 2016 Franchise Agreement. That document was ultimately pulled off the table after significant franchisee pushback. The CPL Renewal agreement went directly to Carvalho before it was presented for review to the Brand Advisory Council, according to a BAC member who requested to remain anonymous.
to Hurricane Katrina, to serve those who serve others, especially in a time of crisis” says Alex Fernandez, who operates a network of Dunkin’ Donuts shops in central Florida and sits on the Joy In Childhood Foundation’s board of directors. “Last year, the new name was launched, to give more emphasis on what the Foundation does, [to] bring the joy of childhood to sick and hungry kids.” “We often think that childhood is defined by joyful, carefree moments and innocence,” says Dunkin’ Donuts franchisee Alex Smilgelski, who is Co-Chair of the Foundation board. “However, children facing health and hunger issues experience a very different reality. It’s difficult to feel joy when you’re sick or hungry. That’s why when we thought about how we wanted to focus on bringing the simple joys of childhood to sick and hungry kids, the name – the Joy in Childhood Foundation – was organic and fit our mission and what we hope for.” In addition to supporting two main national charities – the Starlight Children’s Foundation and Feeding America – Joy In Childhood also empowers franchisees to raise money for charities that impact their local communities. Among those who have been so empowered is Monica Lordelo MacFarlane, who got her start in the Dunkin’ system at age 10 helping finish donuts at her mother’s Dunkin’ Donuts in Holbrook, Massachusetts. Today she, her sister and their mother run four shops and MacFarlane admits that “coffee is running through my veins.” Several years ago, MacFarlane started hosting local blood drives to benefit her community. Later, as she got involved with the Foundation, the fundraisers became bigger and better coordinated. This year, through the efforts of MacFarlane and other area franchise owners, the Northeast Chapter raised $250 thousand for Boston Children’s Hospital. “It started out small. Every year, it keeps growing. I think our guests appreciate when we’re raising and spending money for something that they also believe in. It’s a win-win,” and MacFarlane says she plans on continuing the annual effort going
INDEPENDENT JOE • JUNE/JULY 2017 13
DUNKIN’ FOUNDATION forward. “We love doing it, and the guests love that we do it.” For the 2017 fundraiser, MacFarlane and other participating franchises distributed stickers for a $1 dollar donation. The decals were hung in shop windows. Customers who donated received a hand-made thank you note, drawn by a nine-year-old artist named Tyler, who is a long-time patient at Boston Children’s Hospital. “We got to spend some time with the kids at Children’s,” MacFarlane says. “Doing decorations in the hospital and packing up some Munchkin boxes. It’s nice for Children’s to have these kinds of [fun] programs for the kids. It’s good for the parents too. They have nice family rooms where everyone can unwind and have fun. That’s what we hope for – to make them happier.” The Starlight Children’s Foundation provides support and assistance to chronically and terminally ill or injured children in the US, Canada, Australia and the UK. The charity focuses on making children’s hospitals brighter and happier places with “fun centers,” which include art, music and recreational activities. The “Starlight Brave Gowns” program provides children with comfortable and colorful sterile gowns to wear during hospital visits. The growth in funding and support has been remarkable. In 2008, the DDBRCF raised $29,000 in just one event, according to Fernandez. In 2016, that amount grew to $4.3 million nationwide. On March 30, 2017, Joy In Childhood announced a three-year, $3 million annual commitment to the Starlight Children’s Foundation and Feeding America at an event in Chicago.
it and we love getting involved in the community.” As a member of the Northeast Chapter, Pithis works with a committee to decide how their group will allot its local funds. Owners reach out to charity groups in their area and take proposals for worthy causes. Among the chapter’s recipients are the Acord Food Pantry, in Hamilton, Mass., the Maine, Massachusetts and Rhode Island Make-A-Wish Foundations and the Hole In the Wall Gang Camp in New Haven, CT.
October 30 & 31
According to Pithis, her chapter distributed $241,000 during its spring grant cycle. “Just raising money and giving it to where it’s needed,” she says. “It makes you more aware of your surroundings, more aware of finding the people who need it. Sometimes, we can be in our own little bubble, with your list of all the things you need to do. This makes you think about what is happening around you.” Fernandez’s Southeast Chapter works closely with St. Joseph’s Children’s Hospital in Tampa. In 2012 alone, that chapter donated $162,000 to St. Joseph’s, which has been recognized for its outstanding pediatric heart and cancer care. In addition to treating more children than any other hospital in the area, they also feature a 24-hour Emergency/Trauma Center for Children. A big focus for the Foundation is keeping the cost of fundraising down, so a greater share of the money raised goes directly to the charities.
“The Joy in Childhood Foundation is bringing joy and comfort to hospitalized kids and their families,” Starlight Children’s Foundation CEO Chris Helfrich said in a press release.
“93 percent of the money raised was given back, very little expenses. That’s very important,” says Fernandez. “Last year in Tampa, we had a dinner and golf event that raised $150 thousand,” Fernandez says. “And an event at a private home in Naples that raised $36 thousand in just one night.”
“We’re not just in the business to make money, we’re also in business to give back,” says Olga Pithis, who runs three Dunkin’ Donuts franchises in Boston with her husband Steven. “We love doing
Fundraising events come in all shapes and sizes. One of the Northeast Chapter’s biggest annual events is its Gala Dinner (and auction) in January, but they also host a Lobsterbake in Maine. The Central East
14 INDEPENDENT JOE • JUNE/JULY 2017
and offer them the chance to meet and mingle with other Dunkin’ operators; learn from experts in franchising and small business; and receive the latest updates on pending issues like Dunkin’s proposed Franchise Agreement and Manufacturer’s Agreement for central kitchens (see our article on page 24). DDIFO General Counsel Carl Lisa is already scheduled to address the conference with the latest updates on the status of those agreements. DDIFO is also assembling a panel of franchisees to discuss the changing face of the QSR business and how younger generations of franchisees are tackling issues like technology, sustainability, real estate and investing. With a new administration in Washington, franchisees have a greater need for information about legislative debates over healthcare, wage laws and other regulatory issues than ever before. DDIFO will offer presentations on regulatory policy and government affairs at the conference as well, with an eye on how the Trump Administration is changing the playing field. Attendees at the National Conference will have an opportunity to hear the
insights of DDIFO Restaurant Analyst John Gordon. Wall Street’s perception of Dunkin’ keeps changing amid persistent rumors that the brand is for sale, and the hyper-competitive nature of the marketplace, which was highlighted recently by comments from Dunkin’ Brands CEO Nigel Travis that McDonald’s and Burger King have eaten into the brand’s afternoon sales. For the past five years, DDIFO Executive Director Ed Shanahan has extended an invitation to Travis to speak at the National Conference. Once again this year, he has declined the offer. According to an email from Karen Raskopf, Dunkin’ Brands’ chief communications officer, “[Nigel] is unavailable on those days, but thank you for the invitation.” One of the true highlights of the National Conference is the opportunity to celebrate the success of individual franchise owners nominated by the DDIFO Hall of Fame Committee and inducted into the Franchise Owners Hall of Fame. At this writing, the committee is narrowing down its list of finalists and preparing an announcement of the 2017 inductees. (DDIFO will alert the franchisee community in an email
announcement later this summer.) The Hall of Fame celebration will occur over lunch on Tuesday October 31, instead of a traditional dinner, in order to accommodate franchisees who want to get home in time for Halloween festivities in their local communities. Registration is already open for franchisees and DDIFO business members through the DDIFO.org website; you can click on the Events button to get started. Business Member Coordinator Joan Gould says many companies have already signed up for what is fast becoming a limited amount of space in the Franchise Solutions Marketplace. When asked why they value the time they spend at the DDIFO National Conference, franchisees typically say they enjoy the chance to get away from the day-to-day operations of their shops to convene in an environment safe from the scrutiny of their brand, to share knowledge and camaraderie. This year, as new questions swirl about the status of franchise agreements, future ownership and management of the Dunkin’ Donuts brand and uncertainty in Washington, franchisees have more reasons than ever to plan a trip to the Connecticut woods this October.
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INDEPENDENT JOE • JUNE/JULY 2017 23
Firehouse Subs CEO to highlight hot topics at DDIFO National Conference
A
s the chief executive of a growing QSR brand, Don Fox has seen his share of wins and losses. He has overseen the expansion of Firehouse Subs as a successful franchise concept, and stepped up its marketing and advertising as well as its public safety foundation—donating millions to provide life-saving equipment to local public safety organizations. During the same period, he withstood a firestorm of criticism and sinking sales when the company temporarily stopped collecting ad fees, instead pressing individual franchise owners to purchase their own local advertising. On October 30, Fox will share his experiences with Dunkin’ Donuts franchise owners when he delivers the opening keynote address at the 2017 DDIFO National Conference at Foxwoods Resort and Casino in Connecticut. “We are tremendously excited to have Don delivering our opening keynote,” says Ed Shanahan, DDIFO’s executive director. “He is a smart restaurant operator who understands the dynamic that exists between franchisees and their franchisor. I think our members will learn a lot from his address.” The 2017 National Conference – which kicks off on October 30 and wraps up in time for trick-or-treating on October 31 – will draw franchisees from across the Dunkin’ footprint
22 INDEPENDENT JOE • JUNE/JULY 2017
Chapter hosts a big annual WhirlyBall Tournament in Illinois in which players drive around in electric bumper cars, scooping up a whiffle ball and trying to work it up the court until they can shoot it into a goal. “You put all these events together and that’s how you get to $4.3 million nationwide,” Fernandez says. But it’s not all fun and games. The mission is absolutely serious and focused. One of the biggest and most important events the Joy In Childhood Foundation supports is a donation of time and work. In connection with Feeding America, franchises are asked to work to assist food pantries across the nation. “One week a year, we ask franchises and their employees to participate in assisting food banks across the country,” Fernandez says. “Last year there were over 70 different volunteer events at food banks that we partnered with.” The volunteers work locally to aide food banks in organizing and distributing their donated food products. They sort donated goods by date and help getting the food out the door and into the pantries of those who need it most. “The amount of food that comes in from all over is amazing,” Pithis says. “We spent all day one day just working on organizing the bread.” “I went last year with some of our managers, some of our employees,” Fernandez says. “Just donating our time so that they can store and distribute the food properly. To me, it was mind-boggling, the amount of food that was donated. From restaurants, grocery stores . . . Entire warehouses of food. By us going out there, it is a good way to get that food out into the community.” It is one way Feeding America provides food to more than 46 million people through 60,000 food pantries and meal programs across the country. And it is another way Dunkin’ Donuts franchise owners derive joy from giving back and supporting those in need.
•
INDEPENDENT JOE • JUNE/JULY 2017 15
Protecting Franchisee Equity in California – and Beyond Editor’s note: This month, Independent Joe offers an updated look at the legal impact from California’s Franchsie Relations Act, which has been covered extensively in this magazine. Franchise attorney Peter Lagarias provides this review of the statutory changes and how they affect Dunkin’ Donuts franchise owners.
T
he landmark California Franchise Relations Act (CFRA), which went into effect in 1981, gave franchise owners in that state important new protections for the equity they have in their businesses. Last year new amendments were added to the law, providing franchisees with additional new protections when their agreements are transferred, terminated, or not renewed. The amendments are not retroactive, and therefore apply to franchise agreements signed in California after 2015.
By Emily McDougald
W
hen it comes to operating a Dunkin’ Donuts franchise, a primary concern is serving your customers what they want when they want it. At National DCP (NDCP), the supply chain management cooperative created to serve the franchisees of Dunkin’ Donuts, job number one is providing products at the lowest sustainable costs, ensuring that orders arrive on time and in full, so operators can serve their customers. That means that our network needs to be strategically located in geographic areas that can conveniently reach each and every Dunkin’ restaurant, and our distribution centers need to be stocked with all of the ingredients and equipment a franchise might need. As the number of restaurants NDCP serves has grown in new markets, we have looked at our network of distribution centers and carefully selected placement
of new facilities in locations that will yield more efficient routes. Over the past nine months, NDCP has opened two new distribution centers, with the goal of optimizing our network and allowing us to more efficiently serve members. "Expanding our distribution network helps support the continuous growth of Dunkin' Donuts franchisees," says NDCP CEO Scott Carter. "We chose Twinsburg, Ohio and McDonough, Georgia for our new distribution centers based on their geographic proximity within rapidly expanding markets and access to strong, talented workforces." As Dunkin’ Brands expanded its footprint around the country, many NDCP distribution centers were operating at or near capacity. NDCP had to expand in order to relieve pressure on facilities and staff, and make way for future growth.
16 INDEPENDENT JOE • JUNE/JULY 2017
Get to Know NDCP’s New Distribution Centers NDCP’s Twinsburg Distribution Center began making deliveries on October 31, 2016. This facility, located near Cleveland, Ohio, served more than 300 PCs at opening. Led by Tom Ormsby, NDCP director of Operations, the Twinsburg DC is an 81,000 square-foot facility that allowed us to more easily access Dunkin’ restaurants in Ohio and its surrounding areas. Sixtyfive employees use 19 dock doors to load deliveries each week. On June 12, 2017, we began serving members from our ninth distribution center in McDonough, Georgia. Located just south of Atlanta, this latest facility delivers to almost 500 Dunkin’ restaurants in the Southeastern United States with routes reaching as far west as Texas. Jay Elliot, NDCP VP of Operations, moved from the Greensboro Distribution Center to lead the 110,000 square-foot, 24 dock-door McDonough facility.
Hailed as a game changer in franchising, the CFRA gave Dunkin’ Donuts franchisees across the nation hope that other states would follow California’s lead. Without statutory protections, franchise transfers, terminations and renewals would be solely governed by the one-sided provisions of Dunkin’ Donuts Franchise Agreement. Under typical franchise agreements, franchisees have no right to renew under the same terms, have only a limited ability to sell or transfer their franchises, and can be terminated for many, often trivial, reasons. Under the amended CFRA, there are significant new protections for California franchisees’ equity. While franchisors will always be able to terminate franchisees for certain egregious misconduct, the statute now stipulates that a franchisee can only be terminated for substantial non-compliance with the overall lawful requirements of the franchise agreement.
In contrast, the old version of the statute permitted termination for breach of any single lawful requirement. The amended CFRA also provides both procedural and substantive protections of a franchisee’s right to transfer his or her franchise agreement. Procedurally, a franchisor must respond to a franchisee’s request to approve a transfer within 60 days of receiving specified information about the transfer, or the transfer will be deemed approved by statute. Substantively, the franchisor must approve the transfer if the proposed buyer meets the franchisor’s then-existing standards for new franchisees and the terms of transfer comply with the provisions of the franchise agreement. Regarding renewal, a franchisor must give 180 days notice of its decision not to renew the franchise agreement, and allow the franchisee to sell the franchise business. The sale would be subject to the new standards for approval of transfers.
The amended CFRA recognizes that franchisees create and own equity in their businesses. The statute requires the franchisor, with certain exceptions, to compensate the franchisee by purchasing from the franchisee, for the price paid less depreciation, all inventory, supplies, equipment, fi xtures and furnishings purchased from the franchisor or its approved suppliers in the event of certain non-renewals or lawful terminations. Dunkin’ Donuts franchisees in California now have these statutory rights. But the existence of the California statute can help franchisees in other states in negotiations with Dunkin’ Donuts for better terms in their future franchise agreements. In addition, if changes to the franchise agreements cannot be achieved, franchisees now have a model of a statute to provide improved protection for their substantial investments.
•
Peter C. Lagarias, Esq., is the founding partner of Lagarias & Napell, LLP, a franchise law firm in San Rafael, California.
INDEPENDENT JOE • JUNE/JULY 2017 21
A LOOK ON THE LAW
DIRECT FROM
NDCP EXPANDS TO BETTER SERVE MEMBERS
BY PETER C. LAGARIAS
CFA BOARD ADDRESSES ISSUES measure that in nine out of ten cases is beneficial.”
Drive-by Lawsuits Chally also discussed the increase in ADA Title III cases, also known as “drive-by lawsuits.” These occur when attorneys sue small business owners for minor or nonexistent infractions with the hope of achieving a quick settlement. Instances of these have more than doubled since 2013, and jumped by 37 percent from 2015 to 2016. Representative Ted Poe, Republican of California, has introduced a bill that would require plaintiffs to put the actual violation into the complaint so that it
“We figured that this is going to happen, so instead of saying ‘no, no, no’ all the time, we actually drafted [a legislative proposal]”
is clearly articulated, and allow small business owners an opportunity to fi x the issue before being subjected to a lawsuit. The bill is receiving support on both sides of the aisle. Chally also said this will be a priority legislative agenda item at the October CFA board meeting in Washington, DC.
Restrictive Scheduling The panel delved into the nightmarish but very real prospect of predictive scheduling, which in some cases requires businesses to schedule 2-3 weeks in advance, with “penalty pay” awarded to employees for schedule changes, and also seeks to curtail the practice of “clopenings” by mandating a designated number of hours off before an employee resumes work the following day. John Motta, a Dunkin’ operator who serves on the CFA board as well as the Dunkin’ Donuts Brand Advisory Council, told the gathering that franchisees in Massachusetts have taken a proactive approach to the pending legislation. “We figured that this is going to happen, so instead of saying ‘no, no, no’ all the
time, we actually drafted [a legislative proposal],” said Motta. “We put things in there that they wanted and that we wanted so that it would be fair and balanced for our franchisees, and took it to the State House and presented it, and I think we’re okay with that. Instead of fighting them all the time, let’s show them that we want to be a part of the process.” The bill is still being studied. Since its inception over a decade ago, the CFA has convened franchisee association representatives from some of the largest and most reputable brands in the nation. While issues the CFA addresses have changed, the organization’s mission to leverage the strengths of franchisee associations for the benefit of the franchisee community has not. Protecting swipe fee reform from repeal is just one of the fruits of this group’s labor. As Chally noted, the CFA’s grassroots approach to communicating with legislators – at both the state and federal level – is critically important to ensuring misguided laws and regulations don’t interfere with the ability of small business owners to thrive in the face of mounting challenges.
•
In addition to collectively providing capacity relief to our existing distribution centers in Westampton, Mokena, Greensboro and Groveland, these new DCs have allowed us to further optimize routes to get products to their final destination in a more efficient manner. With the addition of Twinsburg and McDonough, NDCP is able to re-engineer existing routes and institute routing that is more direct than ever before—saving time and fuel. These savings result in lower operating costs, which help NDCP keep membership costs down. Our team is committed to continuously improving NDCP operations to help members operate as profitably and effectively as possible. We look forward to keeping members informed about future enhancements throughout our business.
•
Emily McDougald is manager of Corporate Communications at National DCP.
20 INDEPENDENT JOE • JUNE/JULY 2017
NDCP’S NATIONAL FOOTPRINT Some people have noted if America runs on Dunkin’, then Dunkin’ runs on NDCP. We are proud to provide strategic sourcing, procurement and distribution services to more than 8,900 Dunkin’ restaurants and licensees in 51 countries. In the United States, we now operate nine distribution centers and 30 transportation hubs. Curious about where are we located? Take a look at NDCP’s distribution centers below. Bellingham, Massachusetts: 244,700 square-foot facility with 54 dock doors Colonie, New York: 57,540 square-foot facility with 14 dock doors Greensboro, North Carolina: 80,464 square-foot facility with 19 dock doors Groveland, Florida: 126,500 square-foot facility with 19 dock doors Mokena, Illinois: 125,000 square-foot facility with 24 dock doors Phoenix, Arizona: 60,831 square-foot facility with 13 dock doors Westampton, New Jersey: 301,872 square-foot facility with 134 dock doors Twinsburg, Ohio: 81,000 square-foot facility with 19 dock doors McDonough, Georgia: 110,000 square foot facility with 24 dock doors
INDEPENDENT JOE • JUNE/JULY 2017 17
FEATURE
Putting Franchisee Associations on the Same Page CFA Board Addresses Key Issues Facing Franchise Owners
there.’ And you’ve got to give a disclosure to all of your prospective franchisees that we have a franchisee association. It’s an imprint of legitimacy.” Haff also discussed the state of the covenant of faith and fair dealing that should exist between franchisors and franchisees, noting that “today it is all over the place.” For instance, the states of Texas and Indiana do not recognize territorial protections for franchisees. “It doesn’t exist [in those states] and in the other 48 states it varies wildly,” he said.
By Mike Hoban
T
he Coalition of Franchisee Associations (CFA) recently held its quarterly board meeting in Boston, and while some of the more compelling issues of interest to franchisees (the repeal and replacement of Obamacare and tax reform) remain mired in political struggles, there was much insight to be gained on an assortment of topics impacting franchise owners. CFA executive director Misty Chally updated members on recent legislative actions involving menu labeling, credit card swipe fees and regulatory reforms, but the program was also enhanced by an in-depth presentation of a subject that directly affects DDIFO members as well as all members of franchisee groups.
Freedom of Association Noted franchise attorney Jeff Haff of the firm Dady & Gardner presented a primer on what freedom of association means for franchise owners. He began by emphasizing the importance of the work being done by the individuals in the room. “As people who are investing your time, hard work, and blood sweat and tears to be involved in [the CFA], I think you probably would like to know if you have a right to associate. Is there such a thing?” he asked rhetorically. While there is nothing in the First Amendment that guarantees the right of association, Haff said the 1958 landmark U.S. Supreme Court case, Alabama vs. the NAACP, established that right, essentially saying that if you have the right to speak on a subject, you also have the right to gather together with similarly situated
people and make the same point. “And that’s the whole point of our franchisee associations, as one person or business owner, we are weak, but together, our voices are stronger,” he said. Unfortunately, freedom of association is treated by franchisors with varying degrees of acceptance, and only nine states offer specific franchisee protections – Franchise Acts – including Arkansas, California, Hawaii, Illinois, Iowa, Michigan, Minnesota, Nebraska, New Jersey, Rhode Island and Washington. The statutes essentially state that a franchisor may not – directly or indirectly – inhibit the right of free association of its franchisees. Haff urged independent franchisee associations to ensure that they will be recognized by the franchisors by being included in Item 20 of the Franchise Disclosure Documents of their franchisors. “If you can write a letter every year to the franchisor, and the franchisor has to put you in a federally required document, I’m going to state in the position of your lawyer that you have a federal right to be a franchisee association. If the Federal Trade Commission (FTC) says, ‘You must put them in Item 20,’ how can the franchisor then say that they don’t exist or they won’t recognize them?” Haff, who has practiced franchise law since 1994, can remember at least 20 franchisors telling him that they do not recognize their franchisee associations. “And I don’t know how they can square that with the FTC, which states that ‘If I write you a letter, you’ve got to put me in
18 INDEPENDENT JOE • JUNE/JULY 2017
Fortunately, there have been some landmark cases that have served to protect those rights. Haff cited Scheck v. Burger King Corp., in which a franchisee (whose agreement did not include territorial rights protections), successfully sued BK because they put another franchise within two miles of his location. The U.S. District Court for the Southern District of Florida ruled that “while Scheck is not entitled to an exclusive territory, he is entitled to expect that Burger King will not act to destroy the right of the franchisee to enjoy the fruits of the contract.” In another case, Dunafon v. Taco Bell Corp., it was alleged that Taco Bell was denying franchise expansion opportunities to members of IATBF – the International Association of Taco Bell Franchisees – including the association president. The case was settled in favor of the franchisees.
replacement of the Affordable Care Act, and tax reform is unlikely to be taken up for debate until the fall, Chally focused the board’s attention on other regulatory matters, highlighting a win for franchisees regarding the high cost of swipe fees. The House of Representatives recently passed its Financial Choice Act which preserves the Durbin Amendment—the post-recession deal that keeps a cap on swipe/interchange fees, reducing them from approximately 40 cents to 21 cents per transaction. Chally said that the provision was saved thanks to the active lobbying of merchants, who flooded the offices of Congress with phone calls, urging representatives to vote against the bill unless the Durbin provision is protected. “CFA sent out a national alert and that’s exactly what happened. They whipped the votes, they didn’t have enough with that repeal still in it – and that specific provision was pulled from the bill. That’s a great example of grass roots activism, and it’s a huge win for merchants.”
"They whipped the votes, they didn't have enough with that repeal still in it...it's a huge win for merchants." The bill is now in the hands of the Senate.
Menu Labeling Chally also discussed the FDA’s latest delay implementing menu labeling, with a new plan to make the rule effective on May 7, 2018. The House is considering H.R. 772, a bill called the Common Sense Nutrition Disclosure Act of 2017, sponsored by Representatives Cathy McMorris Rodgers, Republican of Washington and Tony Cárdenas, Democrat of California. In the Senate, a companion bill, S. 261, “allows franchisees to choose one format
in which they can provide calorie (counts for items),” according to Chally, who had encouraged franchisees from across different restaurant systems to provide comments during the open public comment period the government held until July 3, 2017. As it relates to DDIFO members, Shanahan said that the menu labeling is “almost a problem because it was put off – because the menu boards are already installed. But was it good thing in the overall scheme of things, because it’s a pro-business
Haff ’s takeaway for the CFA: Work for better laws to protect franchise owners and their associations. “In my experience – from a legal standpoint – 90 percent of the time franchisors will either treat you the same, or a little better for being in a leadership position of a franchisee association.” Following the board meeting, DDIFO Executive Director Edwin Shanahan told Independent Joe, “I think the whole freedom of association is very important. It’s an issue that continues to ripple in the franchisee community, even though it has not been a significant problem for Dunkin’ owners since Nigel [Travis] took over.”
Government Relations Update While franchisees must await the outcome of a proposed repeal and
INDEPENDENT JOE • JUNE/JULY 2017 19
FEATURE
Putting Franchisee Associations on the Same Page CFA Board Addresses Key Issues Facing Franchise Owners
there.’ And you’ve got to give a disclosure to all of your prospective franchisees that we have a franchisee association. It’s an imprint of legitimacy.” Haff also discussed the state of the covenant of faith and fair dealing that should exist between franchisors and franchisees, noting that “today it is all over the place.” For instance, the states of Texas and Indiana do not recognize territorial protections for franchisees. “It doesn’t exist [in those states] and in the other 48 states it varies wildly,” he said.
By Mike Hoban
T
he Coalition of Franchisee Associations (CFA) recently held its quarterly board meeting in Boston, and while some of the more compelling issues of interest to franchisees (the repeal and replacement of Obamacare and tax reform) remain mired in political struggles, there was much insight to be gained on an assortment of topics impacting franchise owners. CFA executive director Misty Chally updated members on recent legislative actions involving menu labeling, credit card swipe fees and regulatory reforms, but the program was also enhanced by an in-depth presentation of a subject that directly affects DDIFO members as well as all members of franchisee groups.
Freedom of Association Noted franchise attorney Jeff Haff of the firm Dady & Gardner presented a primer on what freedom of association means for franchise owners. He began by emphasizing the importance of the work being done by the individuals in the room. “As people who are investing your time, hard work, and blood sweat and tears to be involved in [the CFA], I think you probably would like to know if you have a right to associate. Is there such a thing?” he asked rhetorically. While there is nothing in the First Amendment that guarantees the right of association, Haff said the 1958 landmark U.S. Supreme Court case, Alabama vs. the NAACP, established that right, essentially saying that if you have the right to speak on a subject, you also have the right to gather together with similarly situated
people and make the same point. “And that’s the whole point of our franchisee associations, as one person or business owner, we are weak, but together, our voices are stronger,” he said. Unfortunately, freedom of association is treated by franchisors with varying degrees of acceptance, and only nine states offer specific franchisee protections – Franchise Acts – including Arkansas, California, Hawaii, Illinois, Iowa, Michigan, Minnesota, Nebraska, New Jersey, Rhode Island and Washington. The statutes essentially state that a franchisor may not – directly or indirectly – inhibit the right of free association of its franchisees. Haff urged independent franchisee associations to ensure that they will be recognized by the franchisors by being included in Item 20 of the Franchise Disclosure Documents of their franchisors. “If you can write a letter every year to the franchisor, and the franchisor has to put you in a federally required document, I’m going to state in the position of your lawyer that you have a federal right to be a franchisee association. If the Federal Trade Commission (FTC) says, ‘You must put them in Item 20,’ how can the franchisor then say that they don’t exist or they won’t recognize them?” Haff, who has practiced franchise law since 1994, can remember at least 20 franchisors telling him that they do not recognize their franchisee associations. “And I don’t know how they can square that with the FTC, which states that ‘If I write you a letter, you’ve got to put me in
18 INDEPENDENT JOE • JUNE/JULY 2017
Fortunately, there have been some landmark cases that have served to protect those rights. Haff cited Scheck v. Burger King Corp., in which a franchisee (whose agreement did not include territorial rights protections), successfully sued BK because they put another franchise within two miles of his location. The U.S. District Court for the Southern District of Florida ruled that “while Scheck is not entitled to an exclusive territory, he is entitled to expect that Burger King will not act to destroy the right of the franchisee to enjoy the fruits of the contract.” In another case, Dunafon v. Taco Bell Corp., it was alleged that Taco Bell was denying franchise expansion opportunities to members of IATBF – the International Association of Taco Bell Franchisees – including the association president. The case was settled in favor of the franchisees.
replacement of the Affordable Care Act, and tax reform is unlikely to be taken up for debate until the fall, Chally focused the board’s attention on other regulatory matters, highlighting a win for franchisees regarding the high cost of swipe fees. The House of Representatives recently passed its Financial Choice Act which preserves the Durbin Amendment—the post-recession deal that keeps a cap on swipe/interchange fees, reducing them from approximately 40 cents to 21 cents per transaction. Chally said that the provision was saved thanks to the active lobbying of merchants, who flooded the offices of Congress with phone calls, urging representatives to vote against the bill unless the Durbin provision is protected. “CFA sent out a national alert and that’s exactly what happened. They whipped the votes, they didn’t have enough with that repeal still in it – and that specific provision was pulled from the bill. That’s a great example of grass roots activism, and it’s a huge win for merchants.”
"They whipped the votes, they didn't have enough with that repeal still in it...it's a huge win for merchants." The bill is now in the hands of the Senate.
Menu Labeling Chally also discussed the FDA’s latest delay implementing menu labeling, with a new plan to make the rule effective on May 7, 2018. The House is considering H.R. 772, a bill called the Common Sense Nutrition Disclosure Act of 2017, sponsored by Representatives Cathy McMorris Rodgers, Republican of Washington and Tony Cárdenas, Democrat of California. In the Senate, a companion bill, S. 261, “allows franchisees to choose one format
in which they can provide calorie (counts for items),” according to Chally, who had encouraged franchisees from across different restaurant systems to provide comments during the open public comment period the government held until July 3, 2017. As it relates to DDIFO members, Shanahan said that the menu labeling is “almost a problem because it was put off – because the menu boards are already installed. But was it good thing in the overall scheme of things, because it’s a pro-business
Haff ’s takeaway for the CFA: Work for better laws to protect franchise owners and their associations. “In my experience – from a legal standpoint – 90 percent of the time franchisors will either treat you the same, or a little better for being in a leadership position of a franchisee association.” Following the board meeting, DDIFO Executive Director Edwin Shanahan told Independent Joe, “I think the whole freedom of association is very important. It’s an issue that continues to ripple in the franchisee community, even though it has not been a significant problem for Dunkin’ owners since Nigel [Travis] took over.”
Government Relations Update While franchisees must await the outcome of a proposed repeal and
INDEPENDENT JOE • JUNE/JULY 2017 19
CFA BOARD ADDRESSES ISSUES measure that in nine out of ten cases is beneficial.”
Drive-by Lawsuits Chally also discussed the increase in ADA Title III cases, also known as “drive-by lawsuits.” These occur when attorneys sue small business owners for minor or nonexistent infractions with the hope of achieving a quick settlement. Instances of these have more than doubled since 2013, and jumped by 37 percent from 2015 to 2016. Representative Ted Poe, Republican of California, has introduced a bill that would require plaintiffs to put the actual violation into the complaint so that it
“We figured that this is going to happen, so instead of saying ‘no, no, no’ all the time, we actually drafted [a legislative proposal]”
is clearly articulated, and allow small business owners an opportunity to fi x the issue before being subjected to a lawsuit. The bill is receiving support on both sides of the aisle. Chally also said this will be a priority legislative agenda item at the October CFA board meeting in Washington, DC.
Restrictive Scheduling The panel delved into the nightmarish but very real prospect of predictive scheduling, which in some cases requires businesses to schedule 2-3 weeks in advance, with “penalty pay” awarded to employees for schedule changes, and also seeks to curtail the practice of “clopenings” by mandating a designated number of hours off before an employee resumes work the following day. John Motta, a Dunkin’ operator who serves on the CFA board as well as the Dunkin’ Donuts Brand Advisory Council, told the gathering that franchisees in Massachusetts have taken a proactive approach to the pending legislation. “We figured that this is going to happen, so instead of saying ‘no, no, no’ all the
time, we actually drafted [a legislative proposal],” said Motta. “We put things in there that they wanted and that we wanted so that it would be fair and balanced for our franchisees, and took it to the State House and presented it, and I think we’re okay with that. Instead of fighting them all the time, let’s show them that we want to be a part of the process.” The bill is still being studied. Since its inception over a decade ago, the CFA has convened franchisee association representatives from some of the largest and most reputable brands in the nation. While issues the CFA addresses have changed, the organization’s mission to leverage the strengths of franchisee associations for the benefit of the franchisee community has not. Protecting swipe fee reform from repeal is just one of the fruits of this group’s labor. As Chally noted, the CFA’s grassroots approach to communicating with legislators – at both the state and federal level – is critically important to ensuring misguided laws and regulations don’t interfere with the ability of small business owners to thrive in the face of mounting challenges.
•
In addition to collectively providing capacity relief to our existing distribution centers in Westampton, Mokena, Greensboro and Groveland, these new DCs have allowed us to further optimize routes to get products to their final destination in a more efficient manner. With the addition of Twinsburg and McDonough, NDCP is able to re-engineer existing routes and institute routing that is more direct than ever before—saving time and fuel. These savings result in lower operating costs, which help NDCP keep membership costs down. Our team is committed to continuously improving NDCP operations to help members operate as profitably and effectively as possible. We look forward to keeping members informed about future enhancements throughout our business.
•
Emily McDougald is manager of Corporate Communications at National DCP.
20 INDEPENDENT JOE • JUNE/JULY 2017
NDCP’S NATIONAL FOOTPRINT Some people have noted if America runs on Dunkin’, then Dunkin’ runs on NDCP. We are proud to provide strategic sourcing, procurement and distribution services to more than 8,900 Dunkin’ restaurants and licensees in 51 countries. In the United States, we now operate nine distribution centers and 30 transportation hubs. Curious about where are we located? Take a look at NDCP’s distribution centers below. Bellingham, Massachusetts: 244,700 square-foot facility with 54 dock doors Colonie, New York: 57,540 square-foot facility with 14 dock doors Greensboro, North Carolina: 80,464 square-foot facility with 19 dock doors Groveland, Florida: 126,500 square-foot facility with 19 dock doors Mokena, Illinois: 125,000 square-foot facility with 24 dock doors Phoenix, Arizona: 60,831 square-foot facility with 13 dock doors Westampton, New Jersey: 301,872 square-foot facility with 134 dock doors Twinsburg, Ohio: 81,000 square-foot facility with 19 dock doors McDonough, Georgia: 110,000 square foot facility with 24 dock doors
INDEPENDENT JOE • JUNE/JULY 2017 17
Protecting Franchisee Equity in California – and Beyond Editor’s note: This month, Independent Joe offers an updated look at the legal impact from California’s Franchsie Relations Act, which has been covered extensively in this magazine. Franchise attorney Peter Lagarias provides this review of the statutory changes and how they affect Dunkin’ Donuts franchise owners.
T
he landmark California Franchise Relations Act (CFRA), which went into effect in 1981, gave franchise owners in that state important new protections for the equity they have in their businesses. Last year new amendments were added to the law, providing franchisees with additional new protections when their agreements are transferred, terminated, or not renewed. The amendments are not retroactive, and therefore apply to franchise agreements signed in California after 2015.
By Emily McDougald
W
hen it comes to operating a Dunkin’ Donuts franchise, a primary concern is serving your customers what they want when they want it. At National DCP (NDCP), the supply chain management cooperative created to serve the franchisees of Dunkin’ Donuts, job number one is providing products at the lowest sustainable costs, ensuring that orders arrive on time and in full, so operators can serve their customers. That means that our network needs to be strategically located in geographic areas that can conveniently reach each and every Dunkin’ restaurant, and our distribution centers need to be stocked with all of the ingredients and equipment a franchise might need. As the number of restaurants NDCP serves has grown in new markets, we have looked at our network of distribution centers and carefully selected placement
of new facilities in locations that will yield more efficient routes. Over the past nine months, NDCP has opened two new distribution centers, with the goal of optimizing our network and allowing us to more efficiently serve members. "Expanding our distribution network helps support the continuous growth of Dunkin' Donuts franchisees," says NDCP CEO Scott Carter. "We chose Twinsburg, Ohio and McDonough, Georgia for our new distribution centers based on their geographic proximity within rapidly expanding markets and access to strong, talented workforces." As Dunkin’ Brands expanded its footprint around the country, many NDCP distribution centers were operating at or near capacity. NDCP had to expand in order to relieve pressure on facilities and staff, and make way for future growth.
16 INDEPENDENT JOE • JUNE/JULY 2017
Get to Know NDCP’s New Distribution Centers NDCP’s Twinsburg Distribution Center began making deliveries on October 31, 2016. This facility, located near Cleveland, Ohio, served more than 300 PCs at opening. Led by Tom Ormsby, NDCP director of Operations, the Twinsburg DC is an 81,000 square-foot facility that allowed us to more easily access Dunkin’ restaurants in Ohio and its surrounding areas. Sixtyfive employees use 19 dock doors to load deliveries each week. On June 12, 2017, we began serving members from our ninth distribution center in McDonough, Georgia. Located just south of Atlanta, this latest facility delivers to almost 500 Dunkin’ restaurants in the Southeastern United States with routes reaching as far west as Texas. Jay Elliot, NDCP VP of Operations, moved from the Greensboro Distribution Center to lead the 110,000 square-foot, 24 dock-door McDonough facility.
Hailed as a game changer in franchising, the CFRA gave Dunkin’ Donuts franchisees across the nation hope that other states would follow California’s lead. Without statutory protections, franchise transfers, terminations and renewals would be solely governed by the one-sided provisions of Dunkin’ Donuts Franchise Agreement. Under typical franchise agreements, franchisees have no right to renew under the same terms, have only a limited ability to sell or transfer their franchises, and can be terminated for many, often trivial, reasons. Under the amended CFRA, there are significant new protections for California franchisees’ equity. While franchisors will always be able to terminate franchisees for certain egregious misconduct, the statute now stipulates that a franchisee can only be terminated for substantial non-compliance with the overall lawful requirements of the franchise agreement.
In contrast, the old version of the statute permitted termination for breach of any single lawful requirement. The amended CFRA also provides both procedural and substantive protections of a franchisee’s right to transfer his or her franchise agreement. Procedurally, a franchisor must respond to a franchisee’s request to approve a transfer within 60 days of receiving specified information about the transfer, or the transfer will be deemed approved by statute. Substantively, the franchisor must approve the transfer if the proposed buyer meets the franchisor’s then-existing standards for new franchisees and the terms of transfer comply with the provisions of the franchise agreement. Regarding renewal, a franchisor must give 180 days notice of its decision not to renew the franchise agreement, and allow the franchisee to sell the franchise business. The sale would be subject to the new standards for approval of transfers.
The amended CFRA recognizes that franchisees create and own equity in their businesses. The statute requires the franchisor, with certain exceptions, to compensate the franchisee by purchasing from the franchisee, for the price paid less depreciation, all inventory, supplies, equipment, fi xtures and furnishings purchased from the franchisor or its approved suppliers in the event of certain non-renewals or lawful terminations. Dunkin’ Donuts franchisees in California now have these statutory rights. But the existence of the California statute can help franchisees in other states in negotiations with Dunkin’ Donuts for better terms in their future franchise agreements. In addition, if changes to the franchise agreements cannot be achieved, franchisees now have a model of a statute to provide improved protection for their substantial investments.
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Peter C. Lagarias, Esq., is the founding partner of Lagarias & Napell, LLP, a franchise law firm in San Rafael, California.
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A LOOK ON THE LAW
DIRECT FROM
NDCP EXPANDS TO BETTER SERVE MEMBERS
BY PETER C. LAGARIAS
Firehouse Subs CEO to highlight hot topics at DDIFO National Conference
A
s the chief executive of a growing QSR brand, Don Fox has seen his share of wins and losses. He has overseen the expansion of Firehouse Subs as a successful franchise concept, and stepped up its marketing and advertising as well as its public safety foundation—donating millions to provide life-saving equipment to local public safety organizations. During the same period, he withstood a firestorm of criticism and sinking sales when the company temporarily stopped collecting ad fees, instead pressing individual franchise owners to purchase their own local advertising. On October 30, Fox will share his experiences with Dunkin’ Donuts franchise owners when he delivers the opening keynote address at the 2017 DDIFO National Conference at Foxwoods Resort and Casino in Connecticut. “We are tremendously excited to have Don delivering our opening keynote,” says Ed Shanahan, DDIFO’s executive director. “He is a smart restaurant operator who understands the dynamic that exists between franchisees and their franchisor. I think our members will learn a lot from his address.” The 2017 National Conference – which kicks off on October 30 and wraps up in time for trick-or-treating on October 31 – will draw franchisees from across the Dunkin’ footprint
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Chapter hosts a big annual WhirlyBall Tournament in Illinois in which players drive around in electric bumper cars, scooping up a whiffle ball and trying to work it up the court until they can shoot it into a goal. “You put all these events together and that’s how you get to $4.3 million nationwide,” Fernandez says. But it’s not all fun and games. The mission is absolutely serious and focused. One of the biggest and most important events the Joy In Childhood Foundation supports is a donation of time and work. In connection with Feeding America, franchises are asked to work to assist food pantries across the nation. “One week a year, we ask franchises and their employees to participate in assisting food banks across the country,” Fernandez says. “Last year there were over 70 different volunteer events at food banks that we partnered with.” The volunteers work locally to aide food banks in organizing and distributing their donated food products. They sort donated goods by date and help getting the food out the door and into the pantries of those who need it most. “The amount of food that comes in from all over is amazing,” Pithis says. “We spent all day one day just working on organizing the bread.” “I went last year with some of our managers, some of our employees,” Fernandez says. “Just donating our time so that they can store and distribute the food properly. To me, it was mind-boggling, the amount of food that was donated. From restaurants, grocery stores . . . Entire warehouses of food. By us going out there, it is a good way to get that food out into the community.” It is one way Feeding America provides food to more than 46 million people through 60,000 food pantries and meal programs across the country. And it is another way Dunkin’ Donuts franchise owners derive joy from giving back and supporting those in need.
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DUNKIN’ FOUNDATION forward. “We love doing it, and the guests love that we do it.” For the 2017 fundraiser, MacFarlane and other participating franchises distributed stickers for a $1 dollar donation. The decals were hung in shop windows. Customers who donated received a hand-made thank you note, drawn by a nine-year-old artist named Tyler, who is a long-time patient at Boston Children’s Hospital. “We got to spend some time with the kids at Children’s,” MacFarlane says. “Doing decorations in the hospital and packing up some Munchkin boxes. It’s nice for Children’s to have these kinds of [fun] programs for the kids. It’s good for the parents too. They have nice family rooms where everyone can unwind and have fun. That’s what we hope for – to make them happier.” The Starlight Children’s Foundation provides support and assistance to chronically and terminally ill or injured children in the US, Canada, Australia and the UK. The charity focuses on making children’s hospitals brighter and happier places with “fun centers,” which include art, music and recreational activities. The “Starlight Brave Gowns” program provides children with comfortable and colorful sterile gowns to wear during hospital visits. The growth in funding and support has been remarkable. In 2008, the DDBRCF raised $29,000 in just one event, according to Fernandez. In 2016, that amount grew to $4.3 million nationwide. On March 30, 2017, Joy In Childhood announced a three-year, $3 million annual commitment to the Starlight Children’s Foundation and Feeding America at an event in Chicago.
it and we love getting involved in the community.” As a member of the Northeast Chapter, Pithis works with a committee to decide how their group will allot its local funds. Owners reach out to charity groups in their area and take proposals for worthy causes. Among the chapter’s recipients are the Acord Food Pantry, in Hamilton, Mass., the Maine, Massachusetts and Rhode Island Make-A-Wish Foundations and the Hole In the Wall Gang Camp in New Haven, CT.
October 30 & 31
According to Pithis, her chapter distributed $241,000 during its spring grant cycle. “Just raising money and giving it to where it’s needed,” she says. “It makes you more aware of your surroundings, more aware of finding the people who need it. Sometimes, we can be in our own little bubble, with your list of all the things you need to do. This makes you think about what is happening around you.” Fernandez’s Southeast Chapter works closely with St. Joseph’s Children’s Hospital in Tampa. In 2012 alone, that chapter donated $162,000 to St. Joseph’s, which has been recognized for its outstanding pediatric heart and cancer care. In addition to treating more children than any other hospital in the area, they also feature a 24-hour Emergency/Trauma Center for Children. A big focus for the Foundation is keeping the cost of fundraising down, so a greater share of the money raised goes directly to the charities.
“The Joy in Childhood Foundation is bringing joy and comfort to hospitalized kids and their families,” Starlight Children’s Foundation CEO Chris Helfrich said in a press release.
“93 percent of the money raised was given back, very little expenses. That’s very important,” says Fernandez. “Last year in Tampa, we had a dinner and golf event that raised $150 thousand,” Fernandez says. “And an event at a private home in Naples that raised $36 thousand in just one night.”
“We’re not just in the business to make money, we’re also in business to give back,” says Olga Pithis, who runs three Dunkin’ Donuts franchises in Boston with her husband Steven. “We love doing
Fundraising events come in all shapes and sizes. One of the Northeast Chapter’s biggest annual events is its Gala Dinner (and auction) in January, but they also host a Lobsterbake in Maine. The Central East
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and offer them the chance to meet and mingle with other Dunkin’ operators; learn from experts in franchising and small business; and receive the latest updates on pending issues like Dunkin’s proposed Franchise Agreement and Manufacturer’s Agreement for central kitchens (see our article on page 24). DDIFO General Counsel Carl Lisa is already scheduled to address the conference with the latest updates on the status of those agreements. DDIFO is also assembling a panel of franchisees to discuss the changing face of the QSR business and how younger generations of franchisees are tackling issues like technology, sustainability, real estate and investing. With a new administration in Washington, franchisees have a greater need for information about legislative debates over healthcare, wage laws and other regulatory issues than ever before. DDIFO will offer presentations on regulatory policy and government affairs at the conference as well, with an eye on how the Trump Administration is changing the playing field. Attendees at the National Conference will have an opportunity to hear the
insights of DDIFO Restaurant Analyst John Gordon. Wall Street’s perception of Dunkin’ keeps changing amid persistent rumors that the brand is for sale, and the hyper-competitive nature of the marketplace, which was highlighted recently by comments from Dunkin’ Brands CEO Nigel Travis that McDonald’s and Burger King have eaten into the brand’s afternoon sales. For the past five years, DDIFO Executive Director Ed Shanahan has extended an invitation to Travis to speak at the National Conference. Once again this year, he has declined the offer. According to an email from Karen Raskopf, Dunkin’ Brands’ chief communications officer, “[Nigel] is unavailable on those days, but thank you for the invitation.” One of the true highlights of the National Conference is the opportunity to celebrate the success of individual franchise owners nominated by the DDIFO Hall of Fame Committee and inducted into the Franchise Owners Hall of Fame. At this writing, the committee is narrowing down its list of finalists and preparing an announcement of the 2017 inductees. (DDIFO will alert the franchisee community in an email
announcement later this summer.) The Hall of Fame celebration will occur over lunch on Tuesday October 31, instead of a traditional dinner, in order to accommodate franchisees who want to get home in time for Halloween festivities in their local communities. Registration is already open for franchisees and DDIFO business members through the DDIFO.org website; you can click on the Events button to get started. Business Member Coordinator Joan Gould says many companies have already signed up for what is fast becoming a limited amount of space in the Franchise Solutions Marketplace. When asked why they value the time they spend at the DDIFO National Conference, franchisees typically say they enjoy the chance to get away from the day-to-day operations of their shops to convene in an environment safe from the scrutiny of their brand, to share knowledge and camaraderie. This year, as new questions swirl about the status of franchise agreements, future ownership and management of the Dunkin’ Donuts brand and uncertainty in Washington, franchisees have more reasons than ever to plan a trip to the Connecticut woods this October.
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INDEPENDENT JOE • JUNE/JULY 2017 23
COVER STORY
ENDANGERED SPECIES? How Dunkin’s kitchen deal may spell the end of CPLs By Matt Ellis
O
n National Donut Day, the first Friday in June, customers streamed into Dunkin’ Donuts locations across the country for a free and tasty treat. Dunkin’, which says it sells 2.7 billion donuts and Munchkins each year, is the number one retailer of donuts in America. And, long before people were lining up for their favorite chocolate-glazed or jelly-fi lled, central production locations were running at full capacity to bake fresh donuts for the give-away. One operator estimates his kitchen prepared three times its normal output in advance of National Donut Day. But central kitchens, which for 20 years have operated as franchiseeowned cooperatives supplying Dunkin’ shops in predetermined territories across major U.S. markets, now may be going the way of the old dunking donut with a handle—as their futures are threatened by changes to the agreement they must sign with Dunkin’ Brands. One of the first kitchens was established by franchisees in Medford, Mass. The Medford CPL signed a franchise agreement with Dunkin’ Brands in 1997, according to one its directors, David Carvalho. (Some kitchens are identified as a central
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production location or CPL, while others are identified as a CML, or central manufacturing location.) With its 20-year term expiring, Medford was expecting a renewal with terms similar to its current deal. But, according to Carvalho, many of the terms in the renewal agreement presented to Medford CPL were significantly different. “We read this and we said this doesn’t apply to us. And [Dunkin’] said, ‘No this is the agreement.’” Carvalho sent the agreement to the law firm of Lisa & Sousa, DDIFO’s General Counsel. Attorney Carl Lisa Sr. immediately recognized major changes to the language and wrote a memo for review by the association. Lisa says many of the CPL Renewal Agreement’s terms are “far reaching and onerous,” much like the terms of the March 2016 Franchise Agreement. That document was ultimately pulled off the table after significant franchisee pushback. The CPL Renewal agreement went directly to Carvalho before it was presented for review to the Brand Advisory Council, according to a BAC member who requested to remain anonymous.
to Hurricane Katrina, to serve those who serve others, especially in a time of crisis” says Alex Fernandez, who operates a network of Dunkin’ Donuts shops in central Florida and sits on the Joy In Childhood Foundation’s board of directors. “Last year, the new name was launched, to give more emphasis on what the Foundation does, [to] bring the joy of childhood to sick and hungry kids.” “We often think that childhood is defined by joyful, carefree moments and innocence,” says Dunkin’ Donuts franchisee Alex Smilgelski, who is Co-Chair of the Foundation board. “However, children facing health and hunger issues experience a very different reality. It’s difficult to feel joy when you’re sick or hungry. That’s why when we thought about how we wanted to focus on bringing the simple joys of childhood to sick and hungry kids, the name – the Joy in Childhood Foundation – was organic and fit our mission and what we hope for.” In addition to supporting two main national charities – the Starlight Children’s Foundation and Feeding America – Joy In Childhood also empowers franchisees to raise money for charities that impact their local communities. Among those who have been so empowered is Monica Lordelo MacFarlane, who got her start in the Dunkin’ system at age 10 helping finish donuts at her mother’s Dunkin’ Donuts in Holbrook, Massachusetts. Today she, her sister and their mother run four shops and MacFarlane admits that “coffee is running through my veins.” Several years ago, MacFarlane started hosting local blood drives to benefit her community. Later, as she got involved with the Foundation, the fundraisers became bigger and better coordinated. This year, through the efforts of MacFarlane and other area franchise owners, the Northeast Chapter raised $250 thousand for Boston Children’s Hospital. “It started out small. Every year, it keeps growing. I think our guests appreciate when we’re raising and spending money for something that they also believe in. It’s a win-win,” and MacFarlane says she plans on continuing the annual effort going
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FEATURE
Dunkin’ Foundation Brings Joy to Children and Franchisees
“I haven’t seen anything so unworkable, since Steve Horn was head of the legal department. The way I read it, it looks as if Dunkin’ is really down on CPL’s and they want to get them out of the system.”
An analysis of the CPL agreement provided to Independent Joe highlights four issues Lisa says reflect the one-sided nature of the terms: Term, Default, Protections for the brand and Franchisee involvement.
Short term horizon
T
he Merriam-Webster dictionary defines joy as “a source or cause of delight.”
There is no doubt that the Joy In Childhood Foundation is just such a fountain of delight for youngsters across America and around the world who benefit from the generosity of Dunkin’ Donuts franchise owners. Formerly known as The Dunkin’ Donuts and Baskin-Robbins Community Foundation (DDBRCF), the Foundation re-branded last year in an effort to bring focus to its mission of supporting local and national charities dedicated to making children’s lives happier and fuller. In 2016, the Foundation raised over $4.3 million.
Franchisees reading the agreement will immediately notice a change in the way Dunkin’ Brands designates the CPL. Instead of classifying the kitchen as a franchise—with its co-op as the franchisee entity—the brand now refers to them as manufacturers. According to the memo prepared by Lisa & Sousa for DDIFO, “The current renewal agreement grants an ‘approval’ ‘to supply baked goods and other products…’ and refers to the kitchen entity as ‘Manufacturer.’” But, more important than what they are called, is the very threat of not being able to operate for a period of time even close to what they are accustomed to. The current CPL Renewal Agreement calls for a term of five years, with one five-year option to renew. Mark Dubinsky, who is president of a CPL in Methuen, Mass. and is a former member of the DDIFO board
“The Foundation was created in response
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DUNKIN’S KITCHEN DEAL
of directors, says he was completely stunned when he read the term offer in the agreement. “I haven’t seen anything so unworkable, since Steve Horn was head of the legal department,” he says, in reference to Dunkin’s former general counsel at a time when Dunkin’ Donuts led the QSR sector in the number of lawsuits filed against its franchise owners. “The way I read it, it looks as if Dunkin’ is really down on CPL’s and they want to get them out of the system.” Over the last 10 years, Dubinsky upgraded Methuen CPL from Level 3 to Level 4, a step that required a seven-figure investment. Dubinsky points out the loan was based on the plant’s prior financial performance and the amount of term left on its franchise agreement. “A bank wouldn’t have loaned us the money with a five-year term. Reinvesting in the plant would have been very difficult with such a short-term agreement,” he says. One possible explanation for the vastly different CPL Renewal Agreement, according to Lisa, is that it gives the brand the opportunity to expand the use of just-baked-on-demand, or JBOD donuts. According to Lisa, Dunkin’ Brands adopted a frozen donut platform as it
expanded into emerging markets with small development areas. “They couldn’t wait for the kitchens to develop and there wasn’t enough density in a development area to invest in a facility,” he says. While industry observers say a partially cooked donut, warmed and finished on-site gives franchisees greater control over their inventory, they point out that Tim Hortons franchise owners saw their cost-per-donut triple when they transitioned from donuts they baked themselves to unfinished donuts they would heat up in their restaurants. Dubinsky says he understands the value of a pre-cooked donut, “There are places where [CPLs] don’t make sense, like new and emerging markets, remote markets, where you can’t get the product to its destination and keep it fresh. JBOD makes sense there, but in developed markets like New England the [CPL] is the best solution.”
New definition of default Another dramatic change to the language of the agreement can be found in the section covering defaults. It says that Dunkin’ Brands may “withdraw your approval and terminate this Agreement at any time upon written notice to you that you are in default under this Agreement, or any
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other Agreement between Franchisor and Manufacturer or Franchisor and any member or shareholder of Manufacturer, beyond any applicable cure period, if any.” In Lisa’s words, “It appears that the franchisor has attempted to reserve the right to terminate or not renew the CPL agreement if there is an uncured default by a CPL member shop under such shop’s franchise agreement.” Dubinsky says he is troubled by the changes Dunkin’ Brands is proposing to the default language. “If we have 95 stores in our co-op and one shop is unfortunately substandard and has an uncured default, why would 94 other, compliant stores suffer for one rogue store, especially when other stores have no ownership or management interest in the one store with the uncured default? It’s crazy.”
No commitment Language in the proposed CPL Renewal Agreement spells out what some consider Dunkin’ Brands’ short-term horizon for using CPLs to supply shops with baked goods. It says the franchisor makes “… no commitment on its own behalf or on behalf of its franchisees to purchase, distribute, or to cause to be purchased or distributed any minimum amount of Products….”
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Photos by Caroline Cohen
Photo by Steve Lipofsky
PHOTO STORY
Maine Franchisee Community Gathers for a Good Cause This June, Dunkin' franchisees in Maine gathered for their annual fundraiser by the sea. This is the 6th year franchisees have hosted the Maine Lobster Bake as a way to raise money for the Joy In Childhood Foundation. On a delightful late spring evening, 130 guests came together at the Black Point Inn in Scarborough, Maine to enjoy fresh Maine lobster and all the fixin's. The evening also featured musicians, a comedian, a silent auction and a live auction. Planners say it was a huge success, raising $46,900 and bringing franchisees closer to their community.
According to Lisa, this language appears to be an attempt by Dunkin’ to create the ability to direct franchisees to purchase their products from an alternative supplier, such as a third-party delivery system, which would render CPLs idle. He says CPLs anticipated being able to renew their CPL Franchise Agreement upon terms similar to those found in their original CPL Franchise Agreement, but that is not what happened. Carvalho believes Dunkin’ may have taken an existing Third-Party Agreement
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and amended it for CPLs without looking too closely at the language—or recognizing the difference between a third party provider and a franchisee-owned and operated cooperative. As an example, he points to the proposed language dictating what manufacturers may charge franchisees for their products. It should be a moot point for co-ops, since they are memberowned and any profits are returned to the owners, who agree on the costs they will pay for donut deliveries. “If there is a third party making products
for Dunkin’ Donuts shops, then that is a different story,” says Carvalho. “Then, I could see why there would be a pricing structure in there.” That might explain why the BAC wasn’t afforded the chance to comment and offer suggestions on the Renewal Agreement. Or, it is a sign of things to come with regard to whom Dunkin’ Brands allows to make the donuts, which leads Lisa to characterize it as an indication of “Dunkin’s system of non-negotiation and one-sided changes.”
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FRANCHISEE PROFILE
I
n 2001, Dunkin’ Donut’s barely dotted the landscape of Rochester, New York, with only a few stores in operation. That was the year Luis Ribeiro moved to Rochester with the goal of rejuvenating the brand’s waning presence in the area. “Some stores had closed,” Ribeiro describes of the time. “There was one drive thru in the area, which was literally a handwritten note on the menu board, telling customers to pull up to the window and ring the bell to place their order.” That bell, he recalls, was an everyday doorbell, wired to a window. The brand also faced stiff competition from established Canadian coffee chain, Tim Hortons. “They seemed to add more stores every day,” Ribeiro recalls. Fast forward 16 years, and Dunkin’ Donuts has a strong presence throughout the region – 34 stores, at last count, with construction in the works for two more. Drive thrus are both modern and commonplace. Customer loyalty is booming, and while Hortons is still around, it’s no longer the threat it used to be. But, Ribeiro is the first to say: The turnaround did not come easily.
days in advance, with penalties of $10 to $75 paid to the worker for changes within that two-week period; and a requirement that employees get at least 11-hours off between shifts. Restaurant owners that schedule back to back shifts would have to pay the employee an extra $100. In addition, current workers will have to be offered additional shifts before new workers can be hired to take those shifts.
The road ahead As with most things in Washington D.C., the pace of change can be slow. While observers believe we should expect more moves from the new Trump Administration in the months ahead as it pushes ahead with plans to scale back onerous regulations on business, it is unlikely the NLRB’s joint-labor decision will be reversed overnight. Then again, no one expects the Trump Administration to be scrambling to enforce the rule either. It’s all part of the “out with the old and in with the new” process taking place in the halls of government.
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Mayor Bill de Blasio recently signed a bill aimed at quick service and other chain restaurants in the Big Apple.
An Unexpected Career Shift
Rebuilding the Brand in Rochester
Originally from Canada, Ribeiro moved to Worcester, Massachusetts after high school to attend flight school, with aspirations of becoming a commercial airline pilot. He took a job working as a night baker at a local Dunkin’ Donuts as a way to offset the tuition bill. There, he fell under the wing of franchisee John Batista, one of the earliest established Dunkin’ franchisees, who built a network in Worcester, about 40 miles west of Boston. “Batista was like a father to me, he taught me everything,” Ribeiro recalls. Batista remembers that Ribeiro stood out as a hard worker. “He was a top performer, a natural choice for promotions,” says Batista. Soon Ribeiro was moving up the ladder, and paving the way for a shift in career direction.
By Debbie Swanson “When I finished flight school in 1992, the airline industry was having some trouble,
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WHAT’S
BREWING positive sign this administration will reverse federal rules that needlessly hamstring worker and employer flexibility in the modern workplace,” according to Kovacs.
Overtime rules spark tug-of-war between feds, states The Obama Administration made waves when it rolled out plans to roughly double the salary threshold to $47,476 for determining whether someone should be classified as an hourly worker who must be paid overtime, or rather as a manager who is exempt from overtime. The move had obvious implications for franchise owners, who would face the choice of boosting the pay of their managers above that $47,476 mark or shelling out time-and-a-half for overtime. A federal court last November put the overtime rules on hold, with the Trump Administration opting not to continue a legal appeal started in the waning days of the Obama Administration. Acosta recently announced plans to seek new comments from the public on the
proposed overtime rules changes. While Acosta noted at his confirmation hearing that the old income marker of $23,360 for determining whether someone should be paid a salary or paid hourly probably needed to be updated, he said doubling the threshold to $47,446 was a “shock to the system,” according to Bloomberg BNA. Bucking the new administration, California and a number of other states are pushing ahead to adopt the $47,446 threshold to determine whether an employee should get overtime, according to the Orange County Register. The California Assembly recently passed a bill that would raise the overtime threshold starting Jan. 1, 2018. It now goes to the Senate, where it has a decent chance of passing, the paper reports.
Shift scheduling regs start to spread New York is the latest city to jump on the fair scheduling bandwagon. Mayor Bill
de Blasio recently signed a bill aimed at quick service and other chain restaurants in the Big Apple. It follows in the footsteps of new regulations passed by San Francisco, Seattle and a handful of other cities. Business groups have attacked the move, arguing it will come down hardest on small business people like many quick service franchise owners in the city. “The strict scheduling requirements will challenge New York City’s retail employers to develop new means of managing their businesses impacted by the unpredictability posed by seasonal demand, customer fluctuation, weather, holidays, employee turnover issues, and other variations in day-to-day retail operations,” John O’Connor of law firm Epstein Becker Green wrote on the Lexology website. As reported by Reuters, the new bill which goes go into effect in less than six months, requires: work schedules be drawn up 14
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so I stayed on and became a store manager. By the time I was around 25, I was running a few stores, and Batista encouraged me to open a store,” says Ribeiro. He began looking for opportunities, planning to partner with Batista. Locations in Mass. proved scarce so instead, they obtained the territory of rights in Rochester, signing an eight store, five year development agreement. Ribeiro’s sister, Paula Viera, became another partner, planning to relocate from Canada to New York with her husband, Dom. Batista remained in Mass., making trips to New York as needed.
An uphill journey A month after opening their first store in August, the 9/11 terror attacks occurred, ushering in a sense of uncertainty and wavering consumer confidence.
“Failure wasn’t an option,” Batista says of those early days. “I’m a firm believer in the power of the Dunkin’ brand. If you work hard, keep persisting, and do it right, you will succeed.”
“9/11 hit and shocked all of us. Those first few days there was impact [on business], but then it returned somewhat back to normal after a few weeks,” he says.
Gradually, customers began noticing the improvements the team made to operations and quality. Word spread, and profits and loyalty steadily increased. Soon after, the number of stores grew as well.
The brand’s lack of a solid legacy in the region was their biggest challenge. For a business that stakes its claim on customer convenience and satisfaction, establishing these two factors became Ribeiro's long-term goal.
Also key to the turnaround was recognizing what wasn’t working; in this case it was three Baskin Robbins combo stores that were holding them back.
“The product is the product, but what helps is convenience and marketing,” says Ribeiro. “We didn’t have enough stores at the time to really hit the convenience factor, and we didn't have a lot of money for radio and TV marketing.” But the team did have determination, which they poured into 70- or 80-hour work weeks, hitting a stretch of 1000+ days without a day off. Many times the coowners questioned whether to continue their efforts. “In Massachusetts, we would make more in one weekend than we did in a whole week in [that first] store,” Ribeiro recalls. “Most money, 70 percent, came from donut sales, and it’s tough to make money primarily on donut sales.” So, the team turned to Batista, whose experience and reassurance kept them going.
the overnight baking,” Batista says. “Once we started getting some good employees, they referred their friends and family, and that helped.” Maintaining employee satisfaction remains an integral factor to success. The team has hired many workers who have moved into managerial positions. “We have a lot of pride in our employee pool, we try to keep them happy and create a family atmosphere,” Ribeiro reports. “Our first hire is still with us. We hired her when she was 15, part time, and today she works in the office as a manager.”
Attention to detail
“Baskin Robbins is a good brand, but it just didn’t work in this area. Once we were allowed to close that side [of three stores], employees did much better focusing on one brand, and Dunkin’ sales shot up,” Batista recalls.
Successful Dunkin’ franchisees know if they can offer the consumer a great guest experience, they can beat the competition. In Rochester, that meant putting the customer first in a way the brand hadn’t before.
After three years in business, with five stores operating smoothly, things began to turn around.
“A lot of time and money went into improving the brand’s perception,” Batista recalls. “Cleanliness, maintenance was always important; nothing was put off, the stores were always kept clean and looking good.”
“We began to see the light at the end of the tunnel,” Ribeiro says.
Strength of Good Employees From the beginning, the franchisee team recognized the importance of hiring great employees and managers, knowing that a well-run shop and consistent product would naturally lead to customer satisfaction and loyalty. Finding those great people, however, was a challenge. “It was difficult, at first, to find people who would reliably come in early, or do
They also looked for ways to stand apart from the competition, an effort which earned Ribeiro Dunkin’ Donuts’ Innovator of the Year award for new store design in 2005. He still recalls the experience of receiving the award at the brand convention in Las Vegas. “We had a store near Starbucks, and I wanted to make it a little upscale, so I got approval to introduce some features, like marble and granite,” Ribeiro explains.
INDEPENDENT JOE • JUNE/JULY 2017 29
FRANCHISEE PROFILE: RIBEIRO According to Batista, those special touches made a big difference with local customers. “The focus on creating a welcoming, upscale environment helped to turn the brand around in the area.� As they began opening more stores, Ribeiro learned more about the real estate development side of the business. He’s become adept at spotting prime locations and exploring co-development opportunities to reduce operating expenses. Currently, Ribeiro has shops at gas stations, Wal-Mart, and the Greater Rochester International Airport. “As much as you know about properties, there are always surprises. A store you think will do really well won’t, and a store you expect to do poorly does well,� he says. Today, Ribeiro and his team are proud to say that customers who visit Dunkin’ Donuts restaurants throughout Rochester can count on a quality experience, If a scan of online reviews is any indication, he’s right. One visitor wrote on Trip Advisor, “Wonderful staff ! The venue is clean
WHAT’S
and the latte is great! They are attentive and the bathrooms are clean!� Such reviews reinforce what Ribeiro and his partners already know: They have rebuilt the relationship with their customers and now those customers demonstrate their loyalty through their repeat visits. The business is well established and ready for the next generation of Ribeiros and Vieras. Ribeiro’s nephew Jonathan - has been involved with the stores from a young age and is now studying business at St. John
As far as continuing to add new stores, they plan to tread lightly going forward. “It becomes a slippery slope from here,� Ribeiro says. “We don’t want to cannibalize sales from any of our existing stores to open a new store.� But he’s up for new opportunities. “Maybe that means taking the experience and knowledge from this and duplicating it in another market, who knows?�
•
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ZZZ UHYHQXHEDQNLQJ FRP 30 INDEPENDENT JOE • JUNE/JULY 2017
BREWING A LOOK AT STATE ISSUES
Fisher College.
PERFORMANCE BUSINESS SOLUTIONS, LLC
AROUND THE FOOTPRINT By Scott Van Voorhis In with the new and out with the old. This summer small business owners are getting a clearer picture of where the Trump Administration stands on some key issues. The Trump Administration is taking aim at a pair of controversial, Obama-era policies that critics say could be damaging to the franchising business while also driving up costs. The first involves the 2015 joint-employer ruling by the National Labor Relations Board that held some franchisors legally responsible for pay and working conditions at the franchise level. The second centers on new rules that would reclassify many managers at quick service restaurants as hourly workers— making them eligible for overtime. But even as the Trump Administration starts to put its imprint on federal labor policies and regulations, it is facing pushback from Democrat-controlled states like New York and California.
National Labor Relations Board’s joint-employer rule, which has been slammed by some critics for undermining the nation’s multibillion-dollar franchising sector. The new Secretary of Labor, Alexander Acosta, recently announced the withdrawal of informal guidelines on the hotly contested NLRB decision. The NLRB’s ruling, which has been widely criticized by business industry groups, found that some franchisors could be held liable for workplace issues and problems at the franchise level “even if it had only indirect or unexercised control over hiring,� the Nation’s Restaurant News reported. The many critics of the joint-employer ruling argued it threatened to hollow out the foundation of independence on which the franchising sector has been built. While the initial ruling involved BrowningFerris Industries and a staffing agency, a later, separate ruling against McDonald’s struck even closer to home for the quick service sector.
Joint-employer rules under scrutiny The days may be numbered for the
“The labor rules at issue amounted to
The new secretary of Labor, Alexander Acosta, recently announced the withdrawal of informal guidelines on the hotly contested NLRB decision.
informal regulatory 'dark matter' that made it harder for people who want to be in business for themselves and punished large companies for contracting with smaller ones,� noted Trey Kovacs, labor expert at the conservative Competitive Enterprise Institute, of the move by the new labor secretary, in a press statement. Kovacs went on to argue that the decision to rescind the informal joint employer guidelines established by the Obama Administration is a good. “Labor Secretary Acosta's decision to rescind regulator guidance on independent contractor and joint employer rules is a
INDEPENDENT JOE • JUNE/JULY 2017
7
The Magazine for DD Independent Franchise Owners
•
June/July 2017 Issue #44 Independent Joe® is published by DD Independent Franchise Owners, Inc.
ACCOUNTING Adrian A. Gaspar & Company, LLP, CPAs Robert Costello 617-621-0500 • cpas@gasparco.com 1035 Cambridge Street, Ste. 14, Cambridge, MA 02141 www.gasparco.com
Brendon Pierson
Editors: Edwin Shanahan, Matt Ellis Contributors: Cathy Cassata, Michael Hoban Lisa Iannucci, Debbie Swanson, Scott Van Voorhis Business Member Coordinator: Joan Gould Creative Director: Caroline Cohen Direct all inquiries to: DDIFO, Inc. 2 First Avenue, Ste. 127 – 3, Peabody, MA 01960 978-587-2581 • info@ddifo.org • www.ddifo.org DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners. INDEPENDENT JOE®, INDY JOE®, and DDIFO® are registered trademarks of DD Independent Franchise Owners, Inc. 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 © 2017 Printed in the U.S.A.
Peggy Pierson 732-681-4800 • peggy@brendonpierson.com PO Box 1750, Wall, New Jersey 07719 www.brendonpierson.com
Employers Unity LLC
Mike Grammel 303-895-4514 • mgrammel@employersunity.com PO Box 173836, Denver, CO 80217 www.employersunity.com
Marcovich, Mansour & Assoc. Inc. Joseph Mansour 401-334-9099 • jmansour@mm-cps.net 640 George Washington Hwy., Lincoln, RI 02865
MFA - Moody, Famiglietti & Andronico, LLP Joanna Davidian 978-557-5325 • jdavidian@mfa-cpa.com 1 Highwood Dr., Tewksbury, MA 01876 www.mfa-cpa.com
Neovision Consulting Inc. Nish Parekh 609-531-4444 • info@neovisioncpa.com 1246 South River Road, Ste. 101 Cranbury, NJ 08512 www.neovisioncpa.com
Sansiveri, Kimball & Co., LLP
?
Granite Telecommunications Daryl Chelo 401-334-3176 • dchelo@granitenet.com 1 Albion Rd., Lincoln, RI 02865 www.granitenet.com
BUILDING
COST RECOVERY
BUSINESS MEMBER
Duro-Last Roofing
EF Cost Recovery
Samantha Pickelman 525 Morley Dr., Saginaw, Mi 48601 (989) 758-1048 • spickelm@duro-last.com www.duro-last.com
Ed Craig 774-263-7388 • ecraig3@efcostrecovery.com 32 William St., New Bedford, MA 02740 www.efcostrecovery.com
Persona Signs, Lighting, Image Susan Koelzer 700 21st Street SW, Watertown, SD 57201 800-843-9888 x390 • skoelzer@personasigns.com www.personasigns.com
Poyant Signs Jackie Linhares 125 Samuel Barnet Blvd, New Bedford, MA 02745 508-207-1273 • jlinhares@poyantsigns.com www.poyantsigns.com
Trane Commercial Systems Jonathan Ralys 978-737-3814 • Jonathan.Ralys@Trane.com 181 Ballardvale St., Wilmington, Ma 01887 www.Trane.com
Performance Business Solutions, LLC Jeff Hiatt 508-878-4846 • jdh@revenuebanking.com 87 Lafayette Road, Ste. 11, Hampton Falls, NH 03844 www.revenuebanking.com
ENERGY Secure Energy Jodi Maurer 413-733-2571 x218 • jmaurer@sesenergy.org 12-14 Somers Rd., East Longmeadow, MA 01028 www.sesenergy.org
FINANCE Bank of America/Merrill Lynch
Watchfi re Signs David Watson 205-542-7881 • David.Watson@watchfiresigns.com 1015 Maple Street, Danville, IL www.watchfiresigns.com
COMMUNICATIONS
BACK OFFICE
Chris Lawrence 207-632-0562 • Chris.Lawrence1@charter.com 477 Congress St. Portland, ME 04102 www.charter.com
David Fionda 781-610-1206 • dfionda@blumshapiro.com 2 Battermarch Pk.;1 Pine Hill Dr Ste. 301, Quincy, MA 02169 consulting.blumshapiro.com
No room to grow with
Jera Concepts Wynne Barrett 508-686-8786 • wynne@jeraconcepts.com 17 Fruit Street, Hopkinton, MA 01748 www.jeraconcepts.com
Michael A. DeCataldo 401-331-0500 • mdeca@sansiveri.com 55 Dorrance Street, Providence, RI 02903 www.sansiveri.com
BlumShapiro Consulting
2017
Independent
Directory of Business Members
Earl Meyers 585-546-9162 • earl.w.meyers@baml.com 1 East Ave., Rochester, NY 14450 www.bankofamerica.com
Bank RI
Charter Business
Tom Fitzgerald 401-574-1119 • tfitzgerald@bankri.com One Turks Head, Providence, RI 02903 www.bankri.com
BMO Harris Bank N.A. Angelo Maragos 949-293-0152 • angelo.maragos@bmo.com 7700 Irvine Center Drive, Ste. 510, Irvine, CA 92618 www.bmoharris.com/franchisefinance
Dunkin Donuts in your local market Looking to expand in the New England area? Take a look at Mr. Mac’s the first gourmet macaroni and cheese
franchise that hails from northern New England. Our raving fans have granted us award-winning status year over year over year!* Combine that with our affiliate store’s annual total gross revenues amounting to $2,189,808 and its costs of goods sold of 26.1%** For Information Contact David Stein at: Dave@mr-macs.com Tel: (718) 490-2218
Mr. Mac’s Franchising LLC, 497 Hooksett Road, Manchester, New Hampshire
**The annual total gross revenues and cost of goods sold figures provided above can be found in Item 19 of Mr. Mac’s Franchising LLC’s 2017 Franchise Disclosure Document, which includes information for the 2016 year. Your results as a new franchisee may differ. This advertisement is not an offer to buy a franchise. An offer to buy a franchise can be made by prospectus only and such prospectus must be filed first with the Department of Law of the State of New York for sales involving New York. Such filing does not constitute approval by the Department of Law.
Now open:
Manchester, NH Portsmouth, NH Tyngsboro, MA
Coming soon: Saugus, MA
* See our website, mr-macs.com,
for a list of awards.
Thank You to Our Business Members!
For more information visit www.mrmacsfranchise.com
6
INDEPENDENT JOE • JUNE/JULY 2017
INDEPENDENT JOE • JUNE/JULY 2017 31
2017
BUSINESS MEMBER
Directory Business Members Directory ofof Business Members
Bridge Funding Group, Inc.
Pacific Premier Franchise Capital
Rick Riecker 800-928-8537 • Franchise@BankUnited.com 215 Schilling Circle, Suite 100, Hunt Valley, MD 21031 www.bridgefundinggroupinc.com
Sharon Soltero 402-562-1801 • ssoltero@ppbifranchise.com 3154 18th Avenue, Ste. 3, Columbus, NE 68601 www.ppbifranchise.com
CIT
Pinncale Commercial Capital
Douglas Solomon 603-433-9413 • DSolomon@cit.com 155 Commerce Way, Portsmouth, NH 03823 www.cit.com
Mylan Dawson 317-472-2828 • dawson@pincomcap.com 101 W. Ohio St., Suite 2000, Indianapolis, IN 46204 www.pincomcap.com
Eastern Bank
Santander Bank
Deborah Blondin 603-606-4724 • D.Blondin@Easternbank.com 11 Trafalgar Square, Ste. 105, Nashua, NH 03063 www.easternbank.com
Paul Sousa 401-276-1954 • Psousa1@santander.us 95 Amaral St., East Providence, RI 02915 www.santanderbank.com
Fidelity Bank
Signature Financial
Sally Buffum 508-762-3604 • sbuffum@fidelitybankonline.com 465 Shrewsbury Street, Worcester, MA 01604 www.fidelitybankonline.com
Trey Grimm 410-419-7107 • tgrimm@signatureny.com 502 Club Ln., Towson, MD 21286 www.signatureny.com
Joyal Capital Management Franchise Development
Sterling National Bank
Daniel Connelly 508-747-2237 • dconnelly@joycapmgt.com 50 Resnik Road, Plymouth, MA 02360 www.jcmfranchise.com
Lindy Baldwin 402-312-2542 • lbaldwin@snb.com 500 7th Ave., 3rd Floor, New York, NY 10018 www.snb.com
LCR Franchise Finance
TCF Franchise Finance
Robert Obolewicz 203-644-8481 • robolewicz@lcrcapital.com 315 Post Road West, Suite 200, Westport, CT 06880 www.lcrfinance.com
Bill Johnson 952-656-3268 • wjohnson@tcfef.com 11100 Wayzata Blvd., Ste. 801, Minnetonka, MN 55305 www.tcfef.com/franchise
Marlin Franchise Finance Group
TD Bank
Chris Holland 856-505-4206 • cholland@marlinfinance.com 300 Fellowship Rd, Mount Laurel, NJ 08054 www.marlinfinance.com
Peter J. DiFilippo 401-525-6771 • Peter.DiFilippo@td.com 180 Westminster Street, Providence, RI 02903 www.tdbank.com
The MINT National Bank
United Bank
Samir Ruparel 732-485-3331 • samir.ruparel@themintbank.com 1585 Oak Tree Rd., Ste. 205, Iselin, NJ 08830 www.themint.bank
Northern Bank & Trust Company Kelley Munsell 781-569-1584 • kmunsell@nbtc.com 275 Mishawum Road, Woburn, MA 01801 www.nbtc.com
Mark McGwin 508-793-8342 • mmcgwin@bankatunited.com One Mercantile St., 7th Flr, Ste. 760, Worcester, MA 01608 www.bankatunited.com
Wells Fargo Bank Julianna Fritz 203-225-5894 • Julianna.M.Fritz@wellsfargo.com 4 Corporate Dr. Suite 495, Shelton, CT 06484 www.wellsfargo.com
HUMAN RESOURCES Employers Reference Source Sandra Fabrizio 888-512-2525 • sandraf@employersreference.com 1587 Hamilton Avenue, Waterbury, CT 06706 www.employersreference.com
HigherMe Shannon Cassidy 617-890-6476 • shannon@higherme.com 77 Franklin St., Suite 510, Boston, MA 02110 www.higherme.com
Paychex Ryan Birtles 843-576-9337 • rbirtles1@paychex.com 7204 Copperfield Ct, Wilmington, NC 28411 www.paychex.com
FINANCIAL STRATEG IE S FOR
Paycor Inc. Jim Ferreira (203) 530-3512 • jferreira@paycor.com 12 Dale Dr., Greenwich, CT 06831 www.paycor.com
DUNKIN’ DONUTS FRANCHISEES
TalentReef Cassie Altbrandt 303-667-2328 • caltbrandt@talentreef.com 210 University Ste. 300, Denver, CO 80206 www.talentreef.com
INSURANCE American Family Insurance Todd L Laczynski 219-406-8633 • tlaczyns@amfam.com 2502 Beech St Ste 70, Valparaiso, IN 46383 www.ToddLaczynski.com
Intrepid Direct Insurance Chad Lee 913-217-4262 • clee@intrepidinsurance.com 10851 Mastin Blvd, Ste. 200, Overland Park, KS 66210 www.intrepidinsurance.com
Starkweather & Shepley Insurance Brokerage, Inc. Sabrina San Martino 800-854-4625 ext. 1121 • ssanmartino@starshep.com 60 Catamore Boulevard, East Providence, RI 02914 www.starkweathershepley.com
Helping Owners Improve Profitability and Stimulate Growth
DDIFO® does not endorse or recommend commercial products, processes, or services. A DDIFO® Business Member is paying to advertise, and it is not to be considered a product or service endorsement by DDIFO®. Furthermore DDIFO® does not control or guarantee the currency, accuracy, relevance or completeness of information provided by sponsors in their advertising.
W W W. M FA - C PA . C O M 1 Highwood Drive
32 INDEPENDENT JOE • JUNE/JULY 2017
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Tewksbury, MA 01876
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(978) 557-5325
INDEPENDENT JOE • JUNE/JULY 2017
5
CONTENTS
PLEASE VISIT THE DDIFO BUSINESS MEMBER DIRECTORY ONLINE AT WWW.DDIFO.ORG
From the Executive Director Honoring failure and punishing success • • • • •3 What’s Brewing: A Look at State Issues Around the Footprint • • • • • 7 Photo Story: Maine Franchisee Community Gathers for a Good Cause • • • • • • • • • • • • •10 Dunkin’ Foundation Brings Joy to Children and Franchisees • • • • • • • • • • • • • • • • • • • • • •12 Direct from NDCP: NDCP Expands to Better Serve Members • • • • • • • • • • • • • • •16 Putting Franchisee Associations on the Same Page • • • • • • • • • • • • • • • • • • • • • • •18 Legal: Protecting Franchisee Equity in California – and Beyond • • • • • • • • • • • • •21 2017 DDIFO National Conference: Firehouse Subs CEO to highlight hot topics • • • •22
LEGAL Constangy, Brooks, Smith & Prophete, LLP Jeffery Rosin 617-849-7882 • jrosin@constangy.com 535 Boylston St., Ste. 902, Boston, MA 02116 www.constangy.com
Lisa & Sousa Attorneys at Law Ltd. Carl Lisa, Sr. 401-274-0600 • clisa@lisasousa.com 5 Benefit Street, Providence, RI 02904 www.lisasousa.com
Marks & Klein LLP
7
4
INDEPENDENT JOE • JUNE/JULY 2017
Paris Ackerman & Schmierer LLP David Paris 973-228-6667 • david@paslawfirm.com 103 Eisenhower Parkway, Roseland, NJ 07068 www.paslawfirm.com
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OPERATIONS 3M Company Bill Muenkel 952-484-4875 • wemuenkel@mmm.com 3M Center, 220-12E-04, St. Paul, MN 55144 www.3M.com/communications
Armor SafeTechnologies, LLC Patrick Moore 214-636-8409 • prmoore@armorsafe.com 5916 Stone Creek Dr., The Colony, TX 75006 www.armorsafe.com
Bunn-O-Matic Corporation
Endangered Species?: How Dunkin’s kitchen deal may spell the end of CPLs • • • • 24 Franchisee Profile: Rebuilding the Brand in Rochester• • • • • • • •28 Directory of Sponsors • • • • • • • • • • • • • •31 Community Corner: Steve Gabellieri • • • • 34
16
Justin Klein 732-747-7100 • justin@marksklein.com 63 Riverside Avenue, Red Bank, NJ 07701 www.marksklein.com
SKAL East, Inc
Ray Picard 603-809-3584 • ray.picard@cranepi.com 1 Executive Pk. Dr. #202, Bedford, NH 03110 www.CranePI.com
Kevin Huerth 781-806-3139 • kevin@skaleast.com PO Box 303, 31 Eastman Street, Easton, MA 02334 www.skaleast.com/index.cfm?keyword=dunkin
DTT
Solink
Mira Diza 800-933-8388 • mdiza@dttusa.com 1755 North Main Street, Los Angeles, CA 90031 www.dttusa.com
Christopher Beaudoin 884-463-5730 • cbeaudoin@solinkcorp.com 390 March Road, Ste, 110, Ottawa, Ontario k2k 0g7 www.solinkcorp.com
Ecolab
Squadle
Michael Quate 215-287-6953 • michael.quate@ecolab.com 8300 Capital Drive, Greensboro, NC 27409 www.ecolab.com/Businesses
HME Drive-Thru Headsets
Staples Advantage Joe Shea 508-238-0106 • joseph.shea@staples.com 31 Commercial St. Sharon, MA 02067 www.staplesadvantage.com
Jarrett Services ATM, Inc. Alexander Pezzolla 732-572.0706 ex 202 • alex@jarrettforcash.com 1315 Stelton Road, Piscataway, NJ 08832
Kronos
SuzoHapp Tom Orton 847-660-4289 • Tom.Orton@suzohapp.com 1743 Linneman, Mt. Prospect, IL 60056 www.suzohapp.com
Loree Miller 704-968-1582 • loree.miller@kronos.com 2005 Millbridge Parkway, Waxhaw, NC 28173 www.kronos.com
Torrco
New England Drive-Thru Communications
Wind River Environmental
301-775-5046 • tej.guthalagowda@workpulse.com 2 Eastwick Dr., Suite 200, Gibbsborro, NJ 08026 www.workpulse.com
Angela Bechard 603-475-2046 • angela@nedrivethru.com 999 Candia Rd. Ste. 7, Manchester, NH 03032 www.nedrivethru.com
Samantha Kelley 978-344-0926 • skelley@wrenvironmental.com 46 Lizotte Dr., Ste. 1000, Marlborough, MA 01752 www.wrenvironmental.com
Prince Castle/Silver King
Cardtronics
R.F. Technologies, Inc.
Bob Eckweiler 973-222-6742 • Bob.Eckweiler@carrier.utc.com 3 Hollyhock Way, Newton, NJ 07860 www.carrier.com
Brendan Bencharit 818-590-4483 • brendan@squadle.com One Broadway, Floor 14, Cambridge, MA 02142 www.squadle.com
Brady Campbell 858-535-6034 • bcampbell@hme.com 14110 Stowe Drive, Poway, CA 92064 www.hme.com
Zachary Waas 630-873-0088 • waaz@princecastle.com 355 East Kehoe Blvd., Carol Stream, IL 60188 www.princecastle.com
Carrier Corp
BUSINESS MEMBER
Crane Payment Innovations
Todd Rouse 800-637-8606 • Todd.Rouse@bunn.com 1400 Stevenson Drive, Springfield, IL 62703 www.bunn.com Tom Spooner 973-452-4131 • tspooner@Cardtronics.com 628 Route 10 - Ste. 8, Whippany, NJ 07981 www.cardtronics.com
2017
SUB HEADLINE
Workpulse, LLC Tej Guthalagowda 301-775-5046 • tej.guthalagowda@workpulse.com 2 Eastwick Dr., Suite 200, Gibbsborro, NJ 08026 www.workpulse.com
Michael Murdock 847-495-7350 • michaelm@rftechno.com 330 Lexington Drive, Buffalo Grove, IL 60089 www.rftechno.com
safeTstep by Payless Shoesource Kyle Clendennen 785-295-6664 • kyle.clendennen@safetstep.com 3231 Southeast Sixth Ave, Topeka, KS 66607 www.payless.com/safetstep-1/
Thank You to Our Business Members!
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INDEPENDENT JOE • JUNE/JULY 2017 33
COMMUNITY CORNER
BY LISA IANNUCCI
Steve Gabellieri
HONORING FAILURE AND PUNISHING SUCCESS
A Valuable Partnership Benefits Community School and Local Franchisee
F
or students at the Meeting Street Early Learning Center in Providence, Rhode Island, a trip to the local Dunkin' Donuts is about more than just coffee and treats. While many Dunkin’ Donuts franchisees are generous and share their resources with charitable organizations, there is a unique part of this particular relationship between the school and the DD store. “I have been taking my community traveling students to the Dunkin' Donuts on Eddy St. in Providence since Meeting Street opened at this location about 10 years ago,” says Brendan Foley, who teaches students with visual impairments. “Our trips are designed to teach my students how to travel within their community as safely and as independently as possible. These community trips are very motivating for my students because they interact directly with the public and get a treat when they return to school.” The Eddy Street location is one of four Dunkin’ Donuts stores owned by The S&D Companies, which was founded in October 2009 by Steve Gabellieri and his business partner Greg Tetrault Jr. It’s at this store that Meeting Street teachers are able to take their students beyond the classroom and into the real world. “Our Dunkin’ Donuts location is used as a living classroom where students are taught things like how to read a menu, how to place an order in a restaurant, understand the value of money, count change, communicate and interact with people you may not know, and about behavior in public places,” Gabellieri says. The students use an augmentative communication device, such as an iPad, to communicate with the staff. “This is an uncommon experience for most people, and the employees at Dunkin’ Donuts continuously take this opportunity to treat my students with respect, patience and genuine kindness,” says Foley. “Some
of the employees make it a point to greet my students by name when they come in, or to ask the name of new students. For all the effort that it takes for my students to get their donut and return to school, the staff at Dunkin’ Donuts do a great job of making every trip successful.” But the Providence Dunkin’ goes even further to support Meeting Street School. During the year, Meeting Street holds a number of fundraising events, including a telethon in January, staff appreciation day, pajama day celebration and walk through the community. “Steve’s store provides all the goodies, including coffee, hot chocolate and donuts for hundreds of people,” says Ashley M. DeSimone, the manager of Special Events. “Over the course of the year, they also send refreshments for smaller events, such as meetings. Steve’s whole team is just so reliable, willing to help out and incredibly supportive.”
the relationship first by being our valued customers and now we have the privilege of giving something back.” Steve didn’t start out as a franchisee. His first Dunkin’ job was behind the counter—gaining experience he would file away for later. Like his father, he chose work with the Brand, climbing the ladder as a District Sales Manager (DSM) in Providence to a VP of Operations along the eastern seaboard. But, where Ralph Gabellieri never owned a Dunkin’ franchise, Steve wanted to work that side of the business. He purchased the four shops in the City of Providence, which employ about 80 people and are active in the community.
The Gabellieri family has a long history in the City of Providence. Ralph Gabellieri, Steve’s dad, was one of the pioneers who helped Dunkin’ Donuts founder Bill Rosenberg build the company back in 1956. He led the effort to bring the successful Mister Donut chain under the Dunkin’ flag. Steve learned from his dad how to run a local business. “Take care of your guests and take care of your people,” he says. “This fosters a culture of respect and caring toward one another and gets the organization thinking more broadly about what they can do to help others less fortunate.”
“The essence of what our Eddy St. [location] does for the school is to offset their costs and assist with raising funds by being their food and beverage provider of choice,” Gabellieri says. “Essentially we donate these items to them free of charge so that they can reduce their costs and raise money to help support the students at their very special school.”
Gabellieri says that he is inspired to support the Meeting Street School because of what they do for the community and because they are his restaurant’s community. “There are 400 students and 200 faculty that are our neighbors. We sincerely appreciate what they do for us every day as guests in our Eddy St. Dunkin’ Donuts,” he says. “We truly feel that they started
At the end of the day, Gabellieri says his collaboration with Meeting Street has a direct benefit on his employees. \“They know the students and know why they are there,” he says. “Our crew members are compassionate, understanding, patient, and helpful. It is a great partnership where everyone learns and benefits. We feel honored to be part of the process.”
34 INDEPENDENT JOE • JUNE/JULY 2017
For those of you not old enough to remember the old Dean Martin Celebrity Roasts, they enjoyed unparalleled television popularity back in the 1970s and 80s. The show would “roast” a different celebrity each week, featuring a roster of well-known comedians. One of the staples of those shows was the former vaudevillian star Red Buttons, who would routinely question why a particular celeb was getting honored when some of the greatest members of his nationality (Jews, Irishmen, African-Americans and others) were never feted. It was a different time back then and the routine was a hilarious highlight of the celebrity roasts. I thought of that Red Buttons routine this past week when I read that the late, former Washington D.C. Mayor Marion Barry, Jr. was to be honored with an eight foot statue in the nation’s capital. Barry, who died in 2014, served three terms before he was convicted of drug possession during his mayoral tenure after smoking crack cocaine in a D.C. hotel with a former lover and sent to jail. He was elected again to a fourth term after his release. It led me to question how we view, define and recognize success. This country was founded on the ideal that citizens are free to pursue their dreams and thrive based on their own merit. Our government was structured in such a way as to minimize the obstacles preventing us (individually and collectively) from accomplishing the goals we set for ourselves. In the context of business, that success was heralded and the financial rewards were admired. The business acumen, the foresight, the innovation and the entrepreneurial spirit, were what all Americans aspired to achieve. And most set out to do so by their own merits and in their own way. Sadly, it now
feels as if we are facing more obstacles to success than ever before. While many still aspire to the pinnacle of the American dream, those without the drive, the know-how or the spirit look to punish those who succeed. One example is the proposed “millionaire’s tax,” a plan to raise the income taxes paid by people who earn over $1 million. I view this as a vehicle for the ultimate division of America – the haves versus the have-nots. The rationale is that if you’ve been successful in business, then you should have to pay more to the government than others. You pay more not because the services you receive are better or more valuable, but because you’ve been more successful, and so you probably have the money. Where you demonstrated your incentive and became more successful and enjoyed the fruits of your labor, you are now going to be forced to take those rewards and give them to those who haven’t harnessed their own incentive or hard work. That kind of social welfare punishes people who work hard, take risks and create jobs for others. It’s a view popularized by U.S. Senator Elizabeth Warren of Massachusetts, who said this about successful entrepreneurs: “You built a factory out there, good for you. But I want to be clear. You moved your goods to market on the roads that the rest of us paid for. You hired workers that the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for.” It doesn’t exactly sound like a resounding “thank you” for taking risks, investing your capital and providing employment, does it? Instead it sounds
like government wants to punish you—using Robin Hood’s theory of taking from those who are successful and giving to those who don’t even try. Raising the minimum wage to $15 per hour, because it “feels” like a good wage for low-skill workers, is another prime example. All of a sudden, we are not rewarding people based on the quality of the work they do, or the value of the job they perform. Instead, we give everyone the same thing because that is what some decide feels fair. It is the government equivalent of giving everyone in Little League a participation trophy rather than reserving recognition only for those who deserve it (the best hitter, best pitcher or league champions). In Red Buttons’ day, people at the bottom of the ladder were encouraged to get an education or learn a trade so they didn’t have to toil in a minimum wage job. Today, people working in those jobs hold onto the hope that they will be rewarded for doing nothing. They are celebrated in political slogans as rallying cries for the next protest march, not because they are working to improve themselves and climb the ladder. Buttons would have had a field day roasting Marion Barry for serving as mayor of the nation’s capital, disgracing himself and his supporters, serving time in prison and then getting recognized as a hero. He would question why someone, who should be viewed as a failure, gets a larger-than-life statue at taxpayer expense. Ed Shanahan DDIFO Executive Director
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INDEPENDENT JOE • JUNE/JULY 2017
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