Independent Joe Magazine June 2013 #20 by Dunkin' Donuts Independent Franchise Owners

Independent June 2013

The Magazine for D D

Independent Franchise Owners

Issue 20

Dunkin’ Strengthens Boston During Tragedy Two DD Franchise Owners share their experiences from that fateful day.

Jo e

What’s Brewing?

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FROM THE EXECUTIVE DIRECTOR

s we enter into the summer months, we look forward with anticipation to barbeques, sun-filled days, beaches, vacations – and plans to attend the DDIFO National Conference.

For the last few years, the conference was held at the Mohegan Sun Casino and Resort in Uncasville, Connecticut and the speaking outline for the conference was kept under wraps until Labor Day. That all changes this year. First off, the location is new. While Mohegan Sun was a great venue for DDIFO, there are now two additional factors we had to consider when choosing this year’s conference location. First, DDIFO is a national organization, one that represents a membership throughout the entire footprint. As a national organization, it is imperative that we venture out of our home base, from time to time —to bring DDIFO to its members, if you will. Second, and more importantly, we recognized the opportunity to use the conference as a way to support the economy in a region badly damaged by Hurricane Sandy. The Jersey Shore relies heavily on tourism and our conference helps create an economic bounce, which can definitely help support franchisees who live and work in the region. So, when we considered the options, the impact and the voices of several key franchisees, we opted to hold the 2013 National Conference and Hall of Fame Awards Gala at Caesar’s Atlantic City. With regard to the program content, we’re already busy lining up speakers and presenters who have specific and valuable information that directly impacts your business, no matter where your shops are located. Here is a look at how the conference is shaping up:

SEPTEMBER 16 • Opening General Session – We have officially invited New Jersey Governor Chris Christie to kick off the conference on Monday afternoon and are anxiously awaiting response from his office. • Welcome Reception – After the opening session, we’ll relax and reconnect with other franchisees from around the Dunkin’ footprint over cocktails and hors d’oeuvres at the elegant Mia Restaurant off the Caesar’s Atlantic City main lobby. • Monday Dinner – We want to allow conference attendees the opportunity to sample some of the outstanding restaurants that Atlantic City boasts, so we are not scheduling a group dinner on Monday.

Hurricane Sandy crippled the Atlantic City economy. DDIFO is holding its 2013 National Conference at Caesar’s Atlantic City to help revive the region.

SEPTEMBER 17 Tuesday will be packed with information, conversation and exhibits of products and services designed to help you better succeed with your business. It all kicks off with a delicious continental breakfast with our sponsor exhibitors. Then we’ll jump right into our program with a full agenda of presentations and additional breaks with our exhibitors. Our specific panels are being planned at this time and will be finalized over the next several weeks, but at this point, we expect them to include: • “ A Conversation with Dunkin’ Franchise Stars” – This will be an opportunity for attendees to “listen in” on a conversation with some of the Dunkin’ community’s most successful franchisees. • “ The National DCP – Next Steps from Here” – National DCP leadership will discuss the state of the supply network and its next steps to maximize service and savings for franchisees. • “ Fighting Big Brother” – This panel discussion on legislative strategies will feature the expertise of DDIFO lobbyists from three states within the footprint. • “ A Penny Saved . . . Insights into improving your energy efficiency” – This presentation will offer new information on groundbreaking products and services that can significantly reduce energy costs at many Dunkin’ Donuts franchises. • “ A Snapshot from the Street” – DDIFO Restaurant Analyst John Gordon will present the latest information on the general state of the QSR industry as well as some specific talking points on Dunkin’ Donuts from the investor perspective. • “ Affordable Care Act” – We are finalizing an additional presentation on the Affordable Care Act, which is moving closer to complete implementation. The focus here is how you can minimize your costs and manage the process. •H all of Fame Dinner and Awards Gala – Tuesday evening kicks off with a cocktail reception for our guests, sponsors and honorees and concludes with the big event. By the way, it’s not too early to begin submitting names for consideration for this Hall of Fame class.

SEPTEMBER 18 •C onclusion and Board of Directors Meeting – The 2013 National Conference will conclude on Wednesday morning with a closing general session keynote address and the quarterly meeting of the DDIFO Board of Directors and Roundtable – and the meeting is open to all Dunkin’ franchisees. There is still much to be done before we welcome our members to Caesar’s Atlantic City this fall, but we want to keep you informed every step of the way and we know you’re going to enjoy it. The 2013 Conference is shaping up as DDIFO’s best ever. We welcome your suggestions and comments and look forward to providing you with three days packed with fun, education and excitement. Ed Shanahan DDIFO Executive Director

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CONTENTS From the Executive Director: DDIFO National Conference• • • • • • • • • • • • • • 1 What’s Brewing: A Look at State Issues Around the Footprint• • • • • 5 Hall of Fame Committee to Select 2013 Inductees • • • • • • • • • • • • • 10 Dunkin’ Strengthens Boston During Marathon Tragedy• • • • • • • • • • • 12 Chris Prazeres’ Story • • • • • • • • • • • • • • • • • 13 Franchisee Alepedis’ Shop Rebounds Quickly • • • • 15 The Analyst’s View: Dunkin’ Team Sells A Sweet Story • • • • • • • • • • 18 Lisa on the Law: Class Actions and Sales Tax Cases • • • • • • • • • • 20

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Directory of Sponsors • • • • • • • • • • • • • 22 My Perspective: Remodels • • • • • • • • • • • • • • • • • • • • • • • 26

Joe

Independent

The Magazine for DD Independent Franchise Owners

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June 2013 Issue #20 Independent Joe® is published by DD Independent Franchise Owners, Inc.

The experTs OTher experTs Turn TO

Editors: Edwin Shanahan, Matt Ellis Contributors: Cindy Atoji, Cathy Cassata, Adam Goldman, John A. Gordon, Carl B. Lisa, Esq. Advertising: Joan Gould

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Graphic Design: Caroline Cohen Direct all inquiries to: DDIFO, Inc. 150 Depot Street • Bellingham, MA 02019 508-422-1160 • 800-732-2706 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 © 2013 Printed in the U.S.A.

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WHAT’S BREWING A LOOK AT STATE ISSUES

AROUND THE FOOTPRINT By Cathy Cassata

he ins and outs of keeping your Dunkin’ Donuts afloat are enough to fill your days and maybe even your nights, but the government likes to add to your challenges. With laws and regulations involving paid sick leave, higher payroll taxes and added meals taxes, Uncle Sam is putting his two cents into your business.

the employee’s sake, as well as the health of coworkers and customers. But paying employees when they are out of work due to illness is a costly expense to employers. An expense some cities across the country believe is worth it.

Informing you about important issues is exactly what we’re here for. Read on to get in the know.

Cities such as San Francisco, Seattle and Portland, Ore., as well as the entire state of Connecticut, have mandated that employers provide paid sick leave. New York City is poised to follow suit since the City Council agreed to enact legislation requiring businesses with 20 or more employees to offer five paid sick days a year. Similar proposals are under consideration in Vermont, New Jersey and Massachusetts, which is reconsidering a sick-pay bill that was first filed in 2005, but shot down repeatedly due to strong opposition from businesses. The bill is now before the Joint Committee on Labor and Workforce Development and has its biggest backing ever with 90 House and Senate sponsors.

Sick leave issue still lingers Everyone gets sick now and then, and no one wants an ill employee around, for

“Just like minimum wage laws and healthcare laws, sick pay laws make it harder for

“We’re living in a society where the government wants to protect individual and worker rights. Of course that’s good to some degree, but many times the good intentions don’t translate well in reality and can actually cause harm to businesses,” said Robert Winsor, Professor of Marketing at Loyola Marymount University in Los Angeles. “Staying in tune with organizations like DDIFO can help you keep informed about issues that might affect your franchise.”

employers to make part-time jobs accessible to people. Employers can hire a student or people who have flexible home schedules to work on a part-time basis, but then all these laws make it more sensible for the employer to hire full-time people, leaving those who can’t work a full day stuck without work,” said Winsor. “I’m not defending low-wage retailing, but there’s a need for jobs that are flexible where people don’t have to work a full day.”

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DDIFO SPONSOR ADVERTORIAL Some states around the country agree with Winsor. In Florida, a bill that would forbid local governments from requiring businesses to offer paid or unpaid family and medical leave cleared a Senate panel. The goal is to prevent a patchwork of laws across the state. For nearly 14 years, Performance Business Solutions (PBS) has helped franchise owners reduce expenses and increase profits. Through Cost Segregation studies, PBS works with franchisees to accelerate depreciation and reduce taxes on new and existing buildings. PBS has completed close to 1,000 studies on Dunkin’ properties. PBS also helps franchisees reduce energy expenses. By installing more efficient HVAC systems, many shops have seen 25-30% drops in related costs. Energy Auctions enable franchisees to pool energy supply needs with other businesses to gain buying power through greater volume purchases. The average Dunkin’ shop could see an electricity rate reduction of 12-22%. Ongoing access to energy data allows owners to easily measure savings. “Our best testimonial is when franchisees call us back for a Cost Segregation upon a remodel. It shows they trust us to deliver those tax savings,” said PBS owner Jeff Hiatt. “When it comes to Energy Auctions, the best is when clients renew year after year because the results have proven better than ‘stand alone’ pricing.” For more information, visit www.revenuebanking.com or contact Jeff Hiatt at jdh@revenuebanking.com or 508-878-4846.

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In Michigan, a Senate committee has approved a bill to ban local governments from requiring employers to provide paid or unpaid leave not required by state or federal law. A similar bill was earlier approved by a House committee, and each will now be considered by the full Senate and House. For the second time in three years, Philadelphia Mayor Michael Nutter vetoed a bill calling for mandatory sick leave. Under the proposal, workers would have earned one hour of sick leave for every 40 hours worked. Companies with between six and twenty workers would have offered up to four sick days per year while larger employers would have given up to seven earned sick days per year. Businesses with fewer than six employees would have been exempt. Massachusetts meals tax spreading fast In 2009, the Massachusetts Legislature allowed communities to approve a local meals tax as an addition to the 6.25 percent the state already tacks on restaurant bills. Since then, 163 communities around the state have added a .75 percent tax to meals sold in local restaurants. The town of Weymouth might be the 164th. After resisting the tax for several years, Weymouth Mayor Sue Kay has asked the Town Council to approve a local meals tax in hopes to collect an estimated $525,000 annually to be used for maintaining and improving the town’s parks. “People are sick of paying taxes in general and don’t always trust government putting tax revenue where it says it will, so I can’t imagine that they’d be too thrilled to hear more taxes are coming,” said Lynne McLaughlin, Weymouth franchise owner. When asked if the tax would affect her store, McLaughlin said she isn’t sure. “If people can drive to the next town’s Dunkin’ Donuts to avoid the tax, some might. On the other

“I understand the effort to make people healthier, but it’s pretty hard to outsmart consumers with these laws. People make choices and find ways around them like buying two smaller cups that equal more than 16 ounces.” hand, if you’re adding .75 percent on a $4 dollar purchase, customers might not even notice it as much as they would at a sit down restaurant where the bill is higher. After all, many times, my customers are on the go and don’t even want a receipt,” she adds. New York City appeals soda ban In response to Manhattan Supreme Court Judge Milton Tingling’s decision that a ban on sugar-sweetened beverages larger than 16 ounces in size was “unlawful, arbitrary and capricious,” the city of New York will appeal his decision in appellate court this month. To help fight obesity in New York City, the Department of Health & Mental Hygiene approved the ban in 2012. It caused quite a stir because it would have prohibited restaurants, delis, stadiums and arenas, concession stands and food carts from selling sugar-sweetened beverages in containers 16 ounces or greater. “I understand the effort to make people healthier, but it’s pretty hard to outsmart consumers with these laws. People make choices and find ways around them like buying two smaller cups that equal more than 16 ounces. Plus, if this law only focuses on restaurants, consumers will find their sugary beverage at grocery stores or other places,” said Winsor. “Really all this would do is make restaurants suffer.” Payroll tax increase takes toll When the 2 percent payroll tax holiday expired at the end of 2012, workers

WHAT’S Photo by Kenneth Parry

BREWING

immediately saw less money in their paychecks. An average private-sector worker who makes $820 a week and is paid every other week experienced $32.75 less per check. This higher payroll tax may have taken its toll on restaurants, according to a poll by Nation’s Restaurant News, which surveyed 49 operators across the

country that represent the quick-service, casual-dining, fine-dining and fast-casual segments regarding February sales, profit trends, performance and outlook. The survey showed that eateries experienced a 1.8 percent decline in sales during February, the worst same-store sales decline in three years.

“The bottom line is the bottom line, and any type of tax increase like this is going to affect it,” said Shailesh Shah, franchise owner in Orland Park, Ill. “In this particular case, it’s my employees who are really feeling the impact because it means less money for them. I have to remind them that there’s nothing I can

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WHAT’S BREWING DDIFO SPONSOR ADVERTORIAL

WHAT’S BREWING

do to change it, unfortunately.”

Joyal Capital Management, LLC Since 1990, Joyal Capital Management (JCM) and its subsidiary companies have been strategic advisors to Dunkin Donuts franchisees. JCM Franchise Development provides advice on the full range of strategic transactions—from mergers and leveraged buy-outs to refinancing, divestitures and more. The company helps its clients buy and sell more Dunkin’ Donuts locations than anyone else in the country. JCM Advisory Services provides valuations, consulting and accounting services. The company completed over $150 million of valuations in Q4 2012 for such purposes as partnership buyouts, mergers and acquisitions, and estate planning. JCM Mortgage Company arranged over $70 million of new commercial loans for clients in 2012 and is on pace to exceed that amount in the first half of 2013 alone. “JCM has assembled a team of subject matter experts who truly understand the ins and outs of the Dunkin’ Donuts business,” said JCM Managing Director Daniel P. Connelly. “Our franchisee clients are often long-term as we continue to provide non-transactional, value-added benefits to their organizations.” For more information, visit www.joycapmgt.com or www.jcmfranchise.com, or contact Dan Connelly at dconnelly@joycapmgt.com or 508-747-2237.

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What’s it to you? Whether these issues affect you now or could possibly in the future, DDIFO is always looking out for legislation that could impact your business.

don’t vote. Small business owners and their employees are the constituents of our elected officials and they’re the ones who cast the votes that make a difference. But that only happens when they’re aware, involved and engaged. That’s where our efforts will pay off.”

“We’re working hard to better focus DDIFO and our members on political and governmental advocacy with these types of issues. We have a bona fide army of small business owners – franchisees – out there. To the extent we can alert them and mobilize them to respond to government intrusion and encroachment into their businesses, we can make a significant impact,” said DDIFO Executive Director Ed Shanahan. “Corporate America can certainly impact government initiatives, but companies

Although DDIFO works with legislators to make changes before laws are final, you can help as well, by keeping informed about changes on the rise. Shanahan suggests staying in contact with state representatives, community leaders, lobbyists and others who can help make an impact. And, if you hear of a local issue that threatens your business, share the information with DDIFO. After all, it’s always better to have another set of eyes watching your back.

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Time to renovate or remodel your shop?

Depending on where you are in your renovation/ remodel cycle, now might be the time to remodel. Senators Bob Casey (D-Pa.) and John Cornyn (R-Texas) have introduced a bill to make permanent a 15-year tax depreciation schedule for restaurant improvements and new construction, leasehold improvements and retail improvements. The bill would allow restaurateurs, landlords and other owners of commercial property to continue to write off property improvements and the cost of new restaurant construction over 15 years. “By lowering overhead costs, this depreciation benefit may also help minimize the impact of rising labor and food costs that seem to be affecting restaurants more and more,” said Robert Winsor, Professor of Marketing at Loyola Marymount University in Los Angeles. Without congressional action, the current 15-year depreciation schedule will expire and revert to a 39-year schedule at the end of the year.

Learn about how one Franchisee planned and coordinated a remodel to reduce downtime, meet contractual obligations and be cost effective

PAGE 26

SUB HEADLINE DDIFO SPONSOR ADVERTORIAL

Hall of Fame Committee to Select 2013 Inductees By Matt Ellis

T For more than 15 years, Jarrett for Cash has delivered customized ATM solutions that boost franchisee revenue and increase foot traffic of guests with ready-tospend cash in hand. Dunkin’-branded ATM terminals are available for placement or purchase. With placement, Jarrett loads the cash and franchisees receive a percentage of the surcharges/transaction fees. When purchasing or leasing, franchisees load the cash and receive 100% of the surcharges. In either case, Jarrett offers free promotional window clings and monthly commission statements. New terminals come with a one-year warranty. Jarrett supplies paper and – depending on the contract – replacement parts and 24-hour technical support. Wireless modems provide a reliable, secure connectivity with easy installation at a fraction of landline costs. Modems come standard with placed ATM terminals. For purchased or leased terminals, modems cost $19.95 per month. “With terminals in over 500 Dunkin’ Donuts locations throughout North America, our programs add convenience and a higher level of service for on-the-go Dunkin’ customers while increasing profits for franchisees,” said Jarrett President Eric Johnston. For more information, visit www.jarrettforcash.com, email sales@jarrettforcash.com or call 1-800-935-0107.

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his year, DDIFO will again recognize the pioneers and visionaries who helped build Dunkin’ Donuts into the powerhouse brand it is today. The 2013 Hall of Fame Dinner and Awards Gala will be held on September 17 in conjunction with the DDIFO National Conference at Caesar’s Atlantic City. “It’s so important that we recognize the accomplishments of these franchise owners,” said John Motta, chairman of the Hall of Fame Selection Committee. “Their commitment helped bring us to where we are today.” Started in 2011, the DDIFO Franchise Owners Hall of Fame honors franchisees and others who made important contributions to the Dunkin’ Donuts system. The inductees include, from 2011: John Boujoukos, Antonio Couto, Jose Couto, Ralph Gabellieri, John Henderson, George Mandell and Dunkin’ Donuts founder William Rosenberg; and from 2012: Manuel Andrade, Brooks Barrett, Jason Dubinsky, John

Rader, Robert Rosenberg and actor, Michael Vale famously known as “Fred the Baker.” As his committee prepares to begin the careful task of reviewing nominations for the next class of inductees, Motta says there are certain criteria that must be met. “We look at their accomplishments over time so a person in the system for 35 years has a better chance of being selected than someone who’s been in for only five years. But, it’s not about the size of someone’s network or their revenue; it’s what you contributed to grow this brand. You could have only one store but if you’re active in the system, serving on committees and supporting local activities in the community, we would strongly consider you.” Motta says it’s important that franchisees from around the footprint participate in the nomination process so any outstanding candidate, no matter what region they are in, can be presented to the committee.

“It’s so important that we recognize the accomplishments of these franchise owners. Their commitment helped bring us to where we are today.”

“It’s important we make the right selection and we count on recommendations from other franchisees.” Motta says you can email him at soccerjpm@aol.com to discuss the nomination process. “The process went extremely well last year. We analyzed the candidates and came up with an excellent group of inductees,” he said. From Boston, to Baltimore to Boca Raton and from Pittsburgh to Palatine to Papillion, Nebraska, Dunkin’ Donuts franchisees are a group of well respected, successful business owners. Yet, without exception, when franchisees or their surviving family members are informed that they have been selected to the DDIFO Franchise Owners Hall of Fame, they are humbled. Jason (Jay) Dubinsky was one of those franchisees. His induction in September 2012 was just a few months before he passed away. At the gala, he told everyone how much the night meant to him. And, after his death, his wife, Vicki, recalled how being honored by his peers for contributing to the success of a system dear to his heart, meant more to Jay than all the other accolades he received in his professional life. “Knowing Jay and what a man he was, that was a tremendous moment last year,” said Motta. So much of what makes Dunkin’ Donuts a great brand is its history and its people. The DDIFO Hall of Fame is where much of that rich history is celebrated and where the visionaries who are shaping tomorrow’s successes will be honored.

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Dunkin Strengthens Boston During Marathon Tragedy While most of greater Boston was locked down during a massive manhunt for one of the Boston Marathon bombing suspects, authorities allowed at least one business to remain open to feed first responders: Dunkin’ Donuts. Adjacent to the Watertown Police Department, the town’s Dunkin’ Donuts voluntarily provided free coffee and snacks to state and local police and others. It’s fitting that just 20 miles from Dunkin’ Brands home base in Canton, Mass, the familiar “DD” was a banner of support as the city grappled with the heartbreaking aftermath of the marathon bombing. And in Boston, Dunkin’ Donuts shops along the now infamous marathon route coped with the aftershock and uncertainty of business closures – when would they reopen? How would it affect business afterwards? And Dunkin’ Donuts employees and runners who completed the run or had to turn back were thankful for their safety but troubled by the horrific events. Independent Joe talked with two people in the Dunkin’ family who faced different obstacles on that fateful Marathon Day: the franchise owner of the shop just steps away from where the bombs went off and a franchise owner who was running his first ever marathon. 12 INDEPENDENT JOE

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By Cindy Atoji

A Different Finish Line for One Determined Runner:

Christopher Prazeres’ story

f all the scenarios that Christopher Prazeres imagined as he toed the starting line for the legendary marathon course, he never dreamed that the world’s oldest annual 26.2-mile race would be tragically interrupted by terrorism. It was a sunny April 15 morning, and Prazeres, a second-generation owner of a network which includes seven stores in Rhode Island’s East Bay, was ready to run. He wore bib number 23069 out of over 27,000 registered runners, and after five months of intense training, 20 pounds shed, and carbo-loading, Prazeres was raring to run. “I’m not sure if it was nerves or anxiety, but I was very excited. The Boston Marathon was the most important thing I’ve ever done in my life,” said Prazeres, 37, chairman of the Dunkin’ Donuts Independent Franchise Owners (DDIFO) Roundtable. He was running to raise money for Dana-Farber Cancer Institute in Boston, a world leader in adult and pediatric cancer treatment and research. Dunkin’ Donuts has long been a proud sponsor of the charity, said Prazeres, who gathered donations from friends and family to run in the memory of his grandfather, Jose Martins, and uncle, Antonio Prazeres, who bravely fought cancer before succumbing to the

disease. “Also foremost in my heart and mind were memories of John Henderson, a dear family friend to me and the Dunkin’ Donuts community, who died from a rare gastro-intestinal cancer five years ago.” said Prazeres referring to the beloved former chairman of the Dunkin’ Donuts Northeast DCP and long-time owner of several Rhode Island shops.

Chris Prazeres with friends and family at mile 25 of the Boston Marathon. Because of the bombings Chris and thousands of other runners never made it to the finish line 1.2 miles away.

But that was a finish line that Prazeres would never see. After passing his family and friends, and the “1 mile to go” painted on the pavement, and before making the turn onto Boylston Street, the stream of runners suddenly started slowing down and then drew to a halt. “What’s going on?” wondered Prazeres, reluctant to slack his pace so close to the finish line. “Runners were turning around, waving, some upset saying, ‘I’m not going to stop – I’m close to my personal best.’” The time was 2:50 pm, and Prazeres was 4 hours and 50 minutes into the race when he heard someone say, “There are explosions at the finish line.”

After passing through the tough, grinding stretch of Heartbreak Hill in Newton at miles16 and 17, Prazeres was beginning to tire. His blistered feet aching from the miles of pounding, his body overheated and nearing exhaustion. But his wife, Lori, and two kids, Andrew, 5, and Brady, 7, and many others awaited him at mile 25 along the overpass atop the Massachusetts Turnpike, near Fenway Park. Also in this support crew was his brother Cliff and father Joe Prazeres, fellow franchise partners, and Rob Batista, another Rhode Island franchisee. “And perhaps most importantly my five-year-old patient-partner, Jackson Souza was watching for me, an awesome little guy who has been diagnosed with a rare form of lymphoma. His journey gave me inspiration and pushed me to cross the finish line.”

The rest is a blur – hobbling back to his family at mile 25, jumping into the car, hurrying back to his home in Seekonk to rest his tired legs and turn on the news. “I couldn’t believe what I was seeing,” said Prazeres, “such a terrible and terrifying tragedy. I ached for those who lost their lives and limbs.” Will he run again? “I don’t have the answer to that question just yet,” said Prazeres who said that meeting his family and friends at mile 25 was his “finish line.” But one thing he is sure of: “Next year’s Boston Marathon will be bigger and better than ever.”

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Near the Finish Line:

Franchisee Efharis Alepedis’ Shop Rebounds Quickly Photos by George Simopoulos

Efharis Alepedis’ shop in Copley Square is steps from the Boston Marathon Finish Line. Crowds begin lining the streets early to get a good view of the historic race.

or Efharis Alepedis, there was no indication that the illustrious 117th running of the Boston Marathon was going to be any different this year for her family’s bustling Copley Square store. It’s the busiest day of the year for the shop, which is just a few hundred feet from the famed blue-and-yellow painted finish line. Nestled in a row of businesses along one of Boston’s most popular streets, the store at 715 Boylston is one of three that the Alepedis family owns; the other two are less than a mile away at the Back Bay train station. Runners, tourists and spectators stream into and out of the entrance, often so crowded that the door never shuts and lines form onto the street. On Marathon Monday, over 1,500 customers are served, with Alepedis typically ordering 90 dozen donuts, and doubling up on other DCP orders.

never experienced anything like this before,” said Alepedis. The windows shook; glass blew out in adjacent buildings, and scared customers came running into the store to get off the street. Outside, the marathon was abruptly halted, and people dropped bags as they fled, knocking down barriers and running in all directions. Bystanders rushed to help the wounded. The shift leader ran to lock the shop doors. Soon after, police arrived at the shop and told the crew to evacuate immediately. Ovens were still going; coffee was still warming. Upon hearing this, Alepedis had a new concern – she was relieved to hear that all were safe and her shop was structurally sound, but now she had a new fear: fire. “I thought, ‘Oh boy, we made it through the blast, but now we could have a fire over there,’” Alepedis said.

But this balmy April 15 was oddly quiet with less foot traffic, so much so that Alepedis left to go home, riding her bike back to the South End. It was 2:50 pm, the time that two bombs blasted through the crowd near the finish line, killing three people and injuring hundreds. Unaware of the tragedy and not hearing any explosions, Alepedis rode south down Arlington Street and crossed over Boylston Street without any idea that something was amiss. Then, moments later, she walked in her house and got the first phone call of dozens that would later come. It was from her store manager, who had also left early. “The shift leader called me. There’s a problem; something serious has happened. Turn on the news.”

Emergency responders talk about a “disaster management cycle” that allows for preparing for an unexpected calamity such as the marathon bombing as well as recovering once a horrible event like this occurs. For Alepedis, after Homeland Security officials allowed her to briefly re-enter the building the next day and to shut-off appliances and throwaway spoiled goods, she and the other Boylston area businesses began a long waiting game that made a swift response difficult. “We had no idea what was happening next. It was frustrating and difficult,” said Alepedis. Her crew kept calling and asking, “When will the store reopen? I told them, I have no idea. We had to take it day-by-day.”

Back at the shop, it was panicked chaos. “An experienced top crew was working – most knew the marathon day drill, having worked there for a decade or longer. But the team had

Finally, about four days later, the city of Boston set up a hotline and began sending out bulletins advising businesses on procedures and distributing information on insurance and

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JUNE 2013 15

BOSTON STRONG NEAR THE FINISH LINE Two photos, taken from outside the Alepedis’ shop, show how the bombings interrupted the normal flow of cars and pedestrians along this busy Boston thoroughfare.

emergency funding. For Alepedis, she was not just losing thousands of dollars in revenue from the shuttered Copley Street shop – having two other businesses in the impacted area created production and supply glitches. “The CML supplies donuts for all three stores, but the Boylston Street shop was the baking location for muffins, bagels, and other baked goods, so we had to quickly reconfigure our supply distribution,” said Alepedis. “Our goal was to keep the other stores working as much as possible, even though the MBTA [public transit system] closure on Friday affected business for several days.” A week after the bombing, businesses and residents were allowed to return, but no one knew when Boylston Street would re-open to the public. “Much to my surprise, later that

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evening we were then told that the street was going to open the very next morning at 3 am,” said Alepedis. “After being shuttered for nine days while law enforcement investigated the terror bombing sites, we had less than 24 hours to get the shop back open.” It was a mad scramble to notify staff, and procure enough products. It was too late to place an order for the donuts, but the CML did what they could do help out, said Alepedis. Although the shop was a little low on supplies, the shop opened for business bright and early at 6 am, supported by a campaign called “Boylston Strong,” which included free parking along Boylston Street and throughout the Back Bay neighborhood. The street immediately seemed to bounce back. Business and

The Alepedis’ shop was closed for nine days after the Boston Marathon bombings, causing a loss of over $30,000 in revenue.

pedestrian traffic began to trickle onto the thoroughfare and MBTA trolleys rumbled to a stop at the Copley Station for the first time since the bombing. “It was busy almost immediately, and that weekend, there seemed to be even more people than there was during the marathon,” said Alepedis. But there are many lessons learned. Alepedis has met with the insurance brokers to see how much of the more than $30,000 in lost revenue can be covered. She is still working on the numbers and how the financial disaster will affect all three Back Bay stores. She’s also preparing a checklist for emergency procedures and studying what could have been done differently. “Obviously employee safety is number one, and keeping good communication between the franchises,

drive thru

manager and their crew is important.” Appliances need to be turned off; distribution chains need to be ready for last minute supply ordering. The debris and chaos of the marathon aftermath are gone and the glaring, yellow police tape has disappeared. It’s hard to believe that busy Boylston Street was so devastated just a few weeks ago. “I almost still feel like I’m in a daze, like all of this was a terrible nightmare that I will wake up from,” said Alepedis. She believes that next year, the marathon will be stronger and even more vibrant. “We are going to prepare for the 2014 marathon day to be the busiest ever.” She points to the pink and orange sign that she carefully hand-drew, hanging in the window. It says: “We are Boston Strong.

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1/7/13 1:25 PM

The Analyst’s View

By John Gordon

Dunkin’ Team Sells A Sweet Story L

ike the baker who decorates his pastry with confectioner’s sugar, Dunkin’ Brands CEO Nigel Travis and his executive team use numbers to sweeten the story of success they present to Wall Street. Since Dunkin’ Brands (DBI) went public in 2011, the stock has performed well—perhaps even better than many expected. It’s more than doubled since the July 2011 IPO.

25-30% cash on cash return in year one for the emerging and west markets but, that calculation ignores future year’s CAPEX and maintenance CAPEX. My opinion, based on studying several prior Dunkin’ presentations and working with franchisees, is that franchisees generally need more than the 25% cash on cash return metric, and should say so the next time DBI asks their opinion.

But that’s the Wall Street story. The franchisee story—attaining proper shop economics, shop expansion, profits, return on investment—is a longer, more complicated game.

Wall Street anticipated DBI raising the number of targeted US openings this year. Instead DBI retained its 2013 guidance at plus 330 to 360 domestic Dunkin’ shop openings for this year—including the opening of the first Denver store in Q4 2013. Going forward, however, Travis indicated the company will increase the US DD new store opens outlook for 2014, implying it would be 6% versus the previous guidance of up to 5%.

I monitored the two-day Annual Investor Session last month in Canton where the focus was, understandably, on the Dunkin’ investor story. And, while there are some clear differences between the way the franchisor, its franchisees and the investment community view the world, overall Travis and his team did a fine job of presenting a sweet story which Wall Street believes, at least for now. The Numbers Tell the Story, But Whose Numbers matter? Investors like Dunkin’ stock (symbol: DNKN) largely because of its expansion potential, low capital needs and predictable and growing franchisor cash flow. But that franchisor cash flow comes from franchisees investing, operating and expanding. Perhaps that is why Travis revealed more about domestic, new store economics than any franchisor has done in recent memory. He indicated the annual sales average for new stores opened in 2012 was $936,000 with a $420,000 buildout investment and a 13-15% earnings before interest, taxes, depreciation and amortization (EBITDA) margin—resulting in a 25-30% cash on cash return. It must be noted, however, that the EBITDA calculation above ignores franchisee capital expenditures (CAPEX), overhead and debt service requirements. Chief Financial Officer Paul Carbone noted the

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Dunkin’ continues to promote the themes that the company is asset light and sees lots of white space available for US expansion. Travis makes the point that new stores opening within the expansion zone continue to improve their all-important first-year numbers.

COMPELLING UNIT ECONOMICS DRIVING ACCELERATED GROWTH 2012 Cohort Store-Level Economics Traditional Stores Average Initial Capex

$420,000 Average Unit Volumes $936,000 Cash-on-Cash Returns 25-30%

As of 4/1/2013 Traditional Dunkin Donuts Restaurants only 2012 data is projected based on partial year results.

Getting Products to Market Now that Dunkin’s western distribution center is up and running, DBI has a better story to tell with regard to its supply chain. At the investor session, Chief Supply Officer Scott Murphy noted the average national pricing cost of goods sold for a typical Dunkin’ located in the southwest section of the US unit—most likely the Phoenix market, generated savings of 300 basis points or 3 percentage points. Murphy says that is right on target. And, while he did not specify savings in other regions, it is anticipated that improvements to the supply chain as a result of the new National DCP Agreement will yield savings from the elimination of fuel surcharges, reduction in distribution markup and new sourcing. One point of interest to franchisees in established markets involves the use of frozen products—JBOD—and fresh-baked products. According to Murphy, DBI’s product distribution goal is a combination of products baked in central kitchens (CML) for morning and early afternoon hours and JBOD products in the evening. He also suggested that older CMLs, those at the end of their economic life cycle, would likely close and merge. When questioned about the development of CMLs in new markets, Murphy said, “Once 40 to 50 shops were gained, that capital would be injected and a CML built.” He did not address from where the capital funds would come or how a CML would service its debt and maintain its economics over time. Franchisee and Franchisor Differences The entire presentation theme typifies the difference in perspective between DBI and its franchise owners, what Travis calls a “pluralistic notion” defining the interests of franchisees versus the interests of the franchisor. He admitted there are—and should be—differences in philosophy, driven by profit differences. Franchisor profitability and growth can conflict with franchisee profitability and growth. And,

there is the way franchisor and franchisee view time. Dunkin’ Brands—and Wall Street—emphasize short term metrics, which fundamentally differ from franchisees’ long-term perspective. The franchise owner looks at the return on investment over the entire term of a contract that can span economic peaks and valleys. Still, Travis and his team believe in recognizing these differences and being flexible enough to build bridges to success. At one point the CEO was specifically asked about issues Dunkin’ Donuts has with its franchisees. He said, “It was tough to think about major disagreements. We redid the franchise agreement; we tackled the supply chain…” It was the CFO, Paul Carbone, who noted the primary issue of contention was where to build new units and which franchisee(s) should be allowed to proceed first. Chief Operating Officer, Paul Twohig addressed new store development and, the sensitive topic of cannibalization. He said DBI used market site intercepts and market surveys. But, at the end, determining how many new units to build and how close those should be situated to existing locations came down to both art and science. The Future On Wall Street, every quarter tells a new story. For Dunkin’ Brands, key factors that will foster brand visibility and sales growth in emerging markets include robust national cable television advertising and the presence of Dunkin’ Donuts products in the grocery channel. DBI, like many successful companies, sees the value in collecting data on its customers through its customer relationship management (CRM) program which helps drive new marketing initiatives, like the DD Perks program and the DD mobile phone app.

“Our late-night business has grown from 0.4% to 4% of sales. It’s a HUGE increase.”

These initiatives can assist new and existing franchisees increase customer counts and unit level economics—which translate into profits for both the franchisee and the franchisor.

Travis’s philosophy and DNKN’s performance are fundamental to the Wall Street story. But, the Dunkin’ franchisee story is more complicated. What remains to be seen is whether long-term returns on franchisee investments, and the collaborative spirit with Dunkin’ Brands will hold up in the face of increased pressure to close the white space and keep the profits—and the coffee—flowing.

•

John A. Gordon, a chain restaurant analyst and restaurant industry veteran, is the principal of Pacific Management Consulting Group.

Dunkin’ Donuts® is a registered trademark of Dunkin’ Brands Group, Inc.

Wall Street has learned that Dunkin’s asset light story really puts the pressure on franchisees to invest capital, time and effort into building new locations and expanding existing ones. So far, the investor community likes what it sees and hears. As I write this, Dunkin’ stock is peaking and Travis is proudly pointing out how the company culture has changed since 2008, becoming a more operations focused and franchisee-friendly culture.

– Matthew Tenore, Dunkin’ Donuts® Brockton, MA

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JUNE 2013 19

SUB HEADLINE DDIFO SPONSOR ADVERTORIAL

Lisa on the Law

GA G ASPA P R dedicated partners

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20 INDEPENDENT JOE

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JUNE 2013

By Carl B. Lisa, Esq., DDIFO General Counsel

Class Actions and Sales Tax cases

s we comb the courts for examples of cases involving franchising, restaurants and labor law, we try to home in on those that could impact Dunkin’ Donuts franchise owners. In this issue of Independent Joe, we want to bring you up to date on a series of cases argued before the U.S. Supreme Court which indicate it will be more difficult for lawyers to file certain class action lawsuits in Federal Courts. Three cases: Wal-Mart Stores, Inc. vs. Dukes; Comcast vs. Behrend; Genesis Health Care vs. Corp. et al vs. Symczyk, all held for the employer in collective or class action wage and hour cases. Genesis, the most recent case, involved a nurse who sued her employer for unpaid meal breaks under the Fair Labor Standards Act 29 U.S.C. §216(b). Even before her lawyers were granted certification under Rule 68 of the Federal Rules of Procedure to file the case as a class action, the employer (Genesis Health Care) offered to pay her $7,500 to compensate for her lost wages, costs of litigation and counsel fees. When she failed to respond to the offer, the District Court dismissed the case. The case was heard in the 3rd Circuit Court of Appeals which reversed the ruling and held for the Plaintiff. It was then appealed to the U.S. Supreme Court. Justices, citing different views of Circuit Courts, upheld the District Court’s initial holding that the case be dismissed for mootness where no other person had joined in her suit which was filed individually and “on behalf of others”. The Court held that she had no personal or continuing interest in representing others in the action, once her case was dismissed. The case was dismissed for mootness. The 5-4 decision was written by Justice Clarence Thomas. Most State Fair Labor Standards Acts do not require the collective members of an action to affirmatively opt into a class action, but the opposite is true of the Federal Fair Labor

Standard Act, where collective members are required to opt into the case or are excluded. This case shows us that class action attorneys will continue turning to state courts when filing class action suits because they tend to follow friendlier rules and statutes toward employees in work related class actions. Another case we have been watching involves Dunkin’ Donuts franchise owners in New Jersey. Attorney Ross Schmierer of the firm, Paris Ackerman & Schmierer LLP (sponsor members of DDIFO) successfully defended six DD franchisees in a case brought by a customer who noted that he was charged different rates of sales tax at different Dunkin’ shops in the state.

The Buck Stops with the Franchisee By Ross H. Schmierer, Esq., Paris Ackerman & Schmierer LLP

The case was featured in Franchise Times under the headline “Dunkin’ kerfuffle centers on New Jersey’s ‘convoluted’ Tax,” which gives you an idea this was no ordinary lawsuit. It involved six New Jersey Dunkin’ Donuts franchise owners sued for the way they charged sales tax on varying combinations of items sold at their restaurants. Although the case was ultimately dismissed with prejudice, it serves as a cautionary tale that any franchisee can be held at fault if sales taxes are not properly collected. In this case, the plaintiff claimed that the franchisees were wrongfully overcharging sales tax on certain items because he was charged sales tax on differing quantities of donuts and Munchkins. For instance, he was not charged sales tax when buying 6 or 12 donuts but he was charged sales tax on other combinations of donuts and Munchkins. Even assuming that he was correct, which he wasn’t, his total out of pocket loss for the

5 Benefit Street, Providence, Rhode Island, 02904 Tel: 401-274-0600 Fax: 401-421-6117 e: clisa@lisasousa.com

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We Know your Business.

alleged overcharging was less than $40. Nevertheless, he hired a consumer class action attorney and filed a lawsuit in New Jersey’s highest trial court claiming the franchisees and Dunkin’ Brands were guilty of unjust enrichment and consumer fraud. To make matters worse, Dunkin’ Brands asserted a crossclaim against the franchisees for indemnification based on the Franchise Agreement. Moreover, the franchisees could not point the finger at Radiant because their agreements for the point-of-sale systems put the onus on the franchisees to ensure that the systems were programmed with the correct sales tax exemptions and information. After extensive research and consultations with tax professionals, the defendants responded to the Complaint by serving a frivolous litigation letter explicitly detailing how the franchisees were simply following New Jersey’s complex Sales and Use Tax Act and its recognized exceptions. Specifically, the Act provides an exception for certain sellers of prepared foods who meet a specific statutory definition and sell items that contain four or more servings packaged as one item sold for a single price. In this case, the exception was triggered upon the sale of four or more servings of donuts or Munchkins that were packaged as one item on the menu board and sold for a single price. For instance, six donuts were offered and packaged as one item sold for a single price on the menu board and therefore, the franchisees did not collect or remit sales tax on the sale. By contrast, the franchisees also offered one donut for sale. Because this item does not meet the “four or more” statutory threshold, the franchisees were required under the Act to collect and remit sales tax on such a purchase. Thus, defendants explained that the plaintiff was appropriately charged sales tax on his purchases and his only recourse was to take this up with the Legislature.

Franchise Corporate & Business Real Estate & Development Employment Trust & Estate Planning Litigation

The Rhode Island Supreme Court licenses all lawyers in general practice of law. The Court does not license or certify any lawyer as an expert or specialist in any field of practice.

Carl B. Lisa Sr. & Louis A. Sousa named Legal Eagles 2009 & 2010

AV® Rated by Martindale-Hubbell Signifying the highest standards of legal proficiency and ethics.

Lisa & Sousa Ltd. is general counsel for the Dunkin Donuts Independent Franchise Organization (DDIFO) with a membership of approximately 2000 Dunkin Donuts franchise units nationwide. Our clients have chosen to have an on-going relationship with Lisa & Sousa Ltd. because of experience, proficiency, determination and attention to detail.

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Because the rules governing sales tax varies from state to state and even city to city, it’s advisable all Dunkin’ Donuts franchisees consult with their accounting and legal professionals when programming their point-of-sale systems. In the end, the franchisor and point-of-sale vendor will look to the franchise owner to ensure that sales tax is collected appropriately from customers. If not, they may wind up in court—or at least paying to retain legal counsel.

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JUNE 2013 21

Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at www.DDIFO.org ViewPoint Sign and Awning

Marathon Energy Corp.

Adrian A. Gaspar & Company, LLP, CPAs

Bill Gavigan 508-393-8200 • billg@viewpointsign.com 35 Lyman Street, Northboro, MA 01532 www.viewpointsign.com

Bederson & Company LLP - CPAs and Consultants

Devon Mourer 217-442-0611 • devon.mourer@watchfiresigns.com 1015 Maple Street, Danville, IL wwwwatchfiresigns.com

Marc Bodner 919-614-2293 • marc@plotwatt.com 1715 Six Gables Road, Durham, NC 27712 www.plotwatt.com

BUSINESS BROKER

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David Stein • kstein@kensingtoncompany.com W: 516-626-2211 • M: 718-490-2218 185 Roslyn Road, Roslyn Heights, NY 11577 www.kensingtoncompany.com

Tom Fitzgerald • 401-574-1119 tfitzgerald@bankri.com One Turks Head, Providence, RI 02903 www.bankri.com

ACCOUNTING

Robert Costello 617-621-0500 • cpas@gasparco.com 1035 Cambridge Street, Suite 14, Cambridge, MA 02141 www.gasparco.com Steven Bortnick, CPA 973-736-3333 • sbortnick@bederson.com 405 Northfield Avenue, West Orange, NJ 07052 www.bederson.com

Cynthia A. Capobianco, CPA

Cynthia Capobianco 401-822-1990 • cynthia@capobianco.necoxmail.com 60 Quaker Lane, Suite 61, Warwick, RI 02886-0114

Rubiano & Company, CPA’s

Daniel J. Rubiano, CPA 401-949-2600 • dan@rubianocpa.com 5 Austin Avenue, Suite 1, Greenville, RI 02828 www.rubianocpa.com

Sansiveri, Kimball & Co., LLP

Michael A. DeCataldo 55 Dorrance Street, Providence, RI 02903 401-331-0500 • mdeca@sansiveri.com www.sansiveri.com

Thomas Colitsas and Associates, CPA

Tom Colitsas 609-452-0889 • tcolitsas@tcacpa.com 103 Carnegie Center, Suite 309, Princeton, NJ 08540

BACK OFFICE

Jera Concepts

Wynne Barrett 508-686-8786 • wynne@jeraconcepts.com 17 Fruit Street, Hopkinton, MA 01748 www.jeraconcepts.com

Neovision Consulting Inc.

Nish Parekh 609-531-4444 • nish@neovision.com 1246 South River Road, Suite 101 Cranbury, NJ 08512 www.neovisioninc.com

BUILDING

Trane HVAC

Jonathan Ralys 225 Woldwood Avenue, Woburn, MA 01801 781-305-1335 • Jonathan.Ralys@Trane.com www.Trane.com/commercial

WatchFire Signs

Kensington Company & Affiliates

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AUGUST 2013

Plotwatt, Inc.

Bank RI

Business Financial Services

Mid-State Isuzu

Scott Kantor • 954-509-8019 skantor@businessfinancialsservices.com 3111 N. University Dr, Suite 800 Coral Springs, FL 33065 www.businessfinancialservices.com

COMMUNICATIONS

Comcast Business Services

Deborah Blondin 603-589-4071 • dblondin@centrixbank.com 1 Atwood Lane, Bedford, NH 03110 www.centrixbank.com

Sprint

Robyn Gault 603-433-9476 • rgault@directcapital.com 155 Commerce Way, Portsmouth, NH 03823 www.franchise.lendedge.com

COST RECOVERY

Bedford Cost Segregation, CPAs

Sally Buffum 508-762-3604 • sbuffum@fidelitybankonline.com 465 Shrewsbury Street, Worcester, MA 01604 www.fidelitybankonline.com

Performance Business Solutions, LLC

Karen Johnson 402-562-5111 • karen.johnson@firstfcc.com 2715 13th Street, Columbus, NE 68601 www.firstfranchisecapital.com

ENERGY

Christine Keating 203-229-1804 • christine.keating@ge.com 201 Merritt 7, 2nd Floor, Norwalk, CT 06851 www.gefranchisefinance.com

Craig Judge 860-281-4117 • craig@midstateisuzu.com 35 Southwest Cutoff, Worcester, MA 01604 www.midstateisuzu.com

Comcast National Sales • 866-407-6338 Dunkin_National_Sales@comcast.com 500 South Gravers Road, Plymouth Meeting, PA 19462 www.business.comcast.com/internet Caroline Fedele 781-367-1057 • caroline.fedele@sprint.com 3 Van De Graaff Drive, Burlington, MA 01803 www.sprint.com/ddifomembers

Bill Cusato 978-263-5055 • bcusato@bedfordcostseg.com 60 State Street, Suite 700, Boston, MA 02109 www.bedfordcostseg.com/who_we_serve/ddifo.asp Jeff Hiatt 508-878-4846 • jdh@revenuebanking.com 87 Lafayette Road, Suite 11, Hampton Falls, NH 03844 www.revenuebanking.com

Glacial Energy

Lourilynn Throgmorton • 340-201-4323 Lourilynn.throgmorton@glacialenergy.com 24 Route 6A, Sandwich, MA 02563 www.glacialenergy.com

DDIFO® does not endorse or recommend commercial products, processes, or services. A DDIFO® sponsor 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.

22 INDEPENDENT JOE

Mauricio Rojas 340-244-7050 • mauricio@mecny.com 868 39TH Street Brooklyn NY 11232 www.mecny.com

Centrix Bank & Trust

Direct Capital Franchise Group

Fidelity Bank

First Franchise Capital

GE Capital, Franchise Finance

Infinity Franchise Capital

Sharon Soltero 402-562-1801 • ssoltero@infinityfranchise.com 3154 18th Avenue, Suite 3, Columbus, NE 68601 www.infinityfranchisecapital.com

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Directory of Sponsors Joyal Capital Management Franchise Development

TCF Franchise Finance

Daniel Connelly 508-747-2237 • dconnelly@joycapmgt.com 50 Resnik Road, Plymouth, MA 02360 www.jcmfranchise.com

Mike Vallorosi 201-818-2700 • mvallorosi@tcfef.com 300A Lake Street, Suite B, Ramsey, NJ 07446 www.tcfef.com

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TD Bank

Brian Frank 203-761-3818 • brian.frank@td.com 40 Danbury Road, Wilton, CT 06857 www.tdbank.com

Larry Howard 205-871-8450 • lhoward@nfaloans.com 400 E. 22nd Street, Suite A, Lombard, IL 66148 www.nfaloans.com

Priority Capital

United Capital Business Lending

Brian Gallucci 800-761-2118 ext. 14 • bgallucci@priotiycapital.com 174 Green Street, Melrose, MA 02176 www.prioritycapital.com

Trey Grimm 410-771-9600 • tgrimm@ucbl-inc.com 215 Schilling Circle Suite 100, Hunt Valley, MD 21031 www.unitedcapitalbusinesslending.com

Sovereign Bank

FOOD PRODUCTS

Mark E. McGwin 508-890-6880 • mmcgwin@sovereignbank.com 446 Main St., Worcester, MA 01608 www.sovereignbank.com

CSM Bakery Products

Marla Cushing 770-723-2083 • marla.cushing@csmglobal.com 1901 Montreal Road, Suite 121, Tucker, GA 30084 www.csmbakeryproducts.com

Susquehanna Commercial Finance

Brian Colburn 443-996-1792 • brian.colburn@susquehanna.net 2 Country View Road, Suite 300, Malvern, PA 19355 www.susquehanna.com

Quaker Oats A Division of PepsiCo

Ed Bowes 610-948-8309 • Ed.bowes@pepsico.com 402 Kilarney Way, Royersford, PA 19468 www.pepsico.com

HUMAN RESOURCES CareerBuilder.Com

Chris Stec 781-343-4347 • christopher.stec@careerbuilder.com 400 Crown Colony Drive, Suite 301, Quincy, MA 02169 www.careerbuilder.com

Employers Reference Source

Sandra Fabrizio 888-512-2525 • sandraf@employersreference.com 1587 Hamilton Avenue, Waterbury, CT 06706 www.employersreference.com

Gecko Hospitality

Robert Krzak 630-390-1000 • robert@geckohospitality.com 1415 West 22nd St., Tower Floor Oakbrook, IL 60523 www.geckohospitality.com

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INDEPENDENT JOE

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JUNE 2013 23

Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at www.DDIFO.org Granite Payroll Associates

Marco Schiappa 401-263-7921 • marco@granitepayroll.com 176 Granite Street, Qunicy, MA 02169 www.granitepayroll.com

Gulpfish.com

Ilya Reikhrud 800-974-4514 ext. 101 • ceo@gulpfish.com 1005 Main Street, Pawtucket, RI 02860 www.gulpfish.com

Ovation Payroll

Paris Ackerman & Schmierer LLP

David Paris 973-228-6667 • david@paslawfirm.com 101 Eisenhower Parkway, Roseland, NJ 07068 www.paslawfirm.com

Vernis & Bowling of Palm Beach, P.A.

Tammy Bouker • 561-775-9822 • 561-775-9822 tbouker@national-law.com 884 US Highway One, North Palm Beach, FL 33408 www.national-law.com

Zarco, Einhorn, Salkowski & Brito, PA

Jim Ferreira • 203-530-3512 777 Westchester Ave, Ste 101 White Plains NY 10604 jferreira@ovationpayroll.com • www.ovationpayroll.com

Robert Salkowski, Esq 305-374-5418 • rsalkowski@zarcolaw.com 100 SE 2nd Street, 27th Floor, Miami, FL 33131 www.zarcolaw.com

Snagajob

OPERATIONS

Erin Brumfield 804-822-4604 • ebrumfield@snagajob.com 4851 Lake Brook Drive, Glen Allen, VA 23060 www.snagajob.com/employer-solutions

INSURANCE

Ecolab

Arliene Bird arliene.bird@ecolab.com 8300 Capital Drive, Greensboro, NC 27409 www.ecolab.com/Businesses

eCube

Cardie Saunders 888-99-ECUBE • cardie.saunders@getecube.com 5 Cold Hill Road, Building 20, Mendham, NJ 07945 www.getecube.com

Grainger

Valerie Jenkins 503-887-6775 • valerie.jenkins@grainger.com 100 Grainger Parkway Lake Forest, IL 60045 grainger.com

Green Turtle Americas

3M Company

Eric Hancock 704-295-3964 • ehancock@greenturtletech.com 2709 Water Ridge Pkwy Charlotte NC 28217 www,greenturtletech.com

Bill Muenkel 952-484-4875 • wemuenkel@mmm.com Bldg. 223-2N-20 St. Paul, MN 55144 www.3M.com/communications

Hi-Tech Sound

Rita Frailey 800-446-1775 • rfrailey.hilla01@insuremail.net 5 Washington Avenue, Endicott, NY 13760 www.thehillagencyinc.org

Derek Knapp 518-563-3200 • derek.knapp@3wire.com 101 Broadway Street West, Osseo, MN 55369 www.3wire.com

3 Wire Group, Inc.

Gary Hanna 508-624-7479 • gary@hitechsound.com 53 Brigham Street, Unit 8, Marlborough, MA 01752 www.hitechsound.com

KK Insurance Agency

Access to Money ATM, Inc./Cardtronics

Brady Campbell 858-535-6034 • bcampbell@hme.com 14110 Stowe Drive, Poway, CA 92064 www.hme.com

The Hill Agency

Ashish Vadya 866-554-6799 • ashish@kkinsuranceagency.com 541 Broadway, Long Branch, NJ 07740 www.kkquote.com

Doug Falcone 973-599-0600 • dougf@accesstomoney.com 628 Route 10 - Suite 8, Whippany, NJ 07981 www.accesstomoney.com

HME Drive-Thru Headsets

Jarrett Services ATM, Inc.

Matt Ottaviano 203-284-3235 • mottaviano@sinclair-insurance.com 4 Tower Drive, Wallingford, CT 06492 www.srfm.com

Fran Kauth 206-718-3573 • fran_kauth@belshaw.com 814 44th Street NW, Suite 103, Auburn, WA 98001 www.belshaw-adamatic.com

Belshaw Adamatic Bakery Group

Eric Johnston 732-572-0706 • ej@jarrettforcash.com 1315 Stelton Road, Piscataway, NJ 08832 www.jarrettforcash.com

Starkweather & Shepley Insurance Brokerage, Inc.

Bunn-O-Matic Corporation

Mark & Debi Macdonald 508-384-9361 • debi@macdonaldcompany.com PO Box 61, 83 Pond Street, Norfolk, MA 02056 www.macdonaldcompany.com

Delphi/Fast Track 2+2 Drive-Thru Timer

Amie Yee 877-646-8224 • ayee@mint-x.com 2048 199th Street, College Point, NY 11356 www.mint-x.com

DTT Surveillance

Joanna Barrett 803-396-1656 • joanna_barrett@muzak.com 3318 Lakemont Boulevard, Fort Mill, SC 29708 www.muzak.com

Sinclair Insurance Group - Risk Management

Sabrina San Martino 800-854-4625 ext. 1121 • ssanmartino@starshep.com 60 Catamore Boulevard, East Providence, RI 02914 www.starkweathershepley.com

Wells Fargo Insurance Services

Mark Stokes 813-636-5301 • mark.stokes1@wellsfargo.com 2502 North Rocky Point Drive, #400, Tampa, FL 33607 wfis.wellsfargo.com

LEGAL

Lisa & Sousa Attorneys at Law Ltd.

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

Todd Rouse 800-637-8606 • Todd.Rouse@bunn.com 1400 Stevenson Drive, Springfield, IL 62703 www.bunn.com Mike Pierce 714-850-1320 • mike@phaseresearch.com 3500 West Moore Ave., Suite M, Santa Ana, CA 92704 www.fasttracktimer.com Mira Diza 800-933-8388 • mdiza@dttusa.com 1755 North Main Street, Los Angeles, CA 90031 www.dttusa.com

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Macdonald Restaurant Repair Service, Inc.

Mint-X Corporation

Muzak

New England Drive-Thru Communications

Angela Bechard 888-966-6337 • angela@nedrivethru.com 12 Wildwood Road, Auburn, NH 03032 www.nedrivethru.com

Directory of Sponsors New England Repair Service

Jerry Brown • A Division of New England Coffee Co. 781-873-1536 • jerry.brown@necoffeeco.com 100 Charles Street, Malden, MA 02148 www.nerepairservice.com

Paramount Restaurant Supply Corp.

Silver King

Chris Lyons 630-462-4906 • lyonsc@silverking.com 1600 Xenium Lane North Plymouth, MN 55441 www.silverking.com

SKAL East, Inc

Jeffrey Cartier 401-247-6500 • jcartier@pararest.com 101 Main Street, Warren, RI 02885 www.pararest.com

Kevin Huerth 508-238-0106 • kevin@skaleast.com PO Box 303, 31 Eastman Street, Easton, MA 02334 www.skaleast.com/index.cfm?keyword=dunkin

SureShot Dispensing Systems

Payless Shoe Source

Steve Robert 905-827-4415 • srobert@sureshotdispensing.com 100 Dispensing Way, Lower Sackville, NS, Canada B4C 4H2 www.sureshotdispensing.com

Matt Lemke 785-368-7530 • matt.lemke@payless.com 3231 SE 6th Avenue, Topeka, KS 66607 www.payless.com

TredSafe/WalMart

R.F. Technologies

Ted Travis 909-949-0495 • ttravis@esoriginals.com 450 West 33rd Street, New York, NY 10001 www.walmart.com

Jennifer Morales 618-377-4063 ext. 121 • jenm@rftechno.com 542 South Prairie Street, Bethalto, IL 62010 www.rftechno.com

UAS Security Systems

Shoes For Crews

Chris McGurk 800-421-6661 • chrismcgurk@uas.com 700 Abbott Drive, Broomall, PA 19008 www.uas.com

Tina Manos 877-437-6176 • tinam@shoesforcrews.com 250 S. Australian Ave. West Palm Beach Fl 33401 www.shoesforcrews.com

Waste Management

JoAnn Bradbury 215-378-1417 • jbradbury@wm.com 107 Silvia Street, Ewing, NJ 08628 www.wm.com

Wentworth Technology

Lisa Keslar 207-571-9744 • jlisakeslar@wentworthtechnology.com 77 Industrial Park Road Saco Me 04072 www.speedthruheadsets.com

TAX DEFERRED EXCHANGE Exchange Authority

Marie Dias 978-433-6061 • mdias@exchangeauthority.com 9 Leominster Connector, Suite 1, Leominster, MA 01453 www.exchangeauthority.com

s! r o s n o p S r u O o t u o Y Thank

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FREE ATMs! dunkin’ bRAnds AppRovEd pRogRAM suRchARgE FREE ATMs nEw REvEnuE souRcE REducE cREdiT cARd cosTs build TRAFFic And cusToMER loyAlTy All AT no cosT To you!

973-599-0600 x14240 www.dunkindough.coM INDEPENDENT JOE

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JUNE 2013 25

My Perspective:

Remodels By Adam Goldman

hen I first entered the system in 2010, I was thankful my shop was not scheduled for a remodel anytime soon. The thought of hanging a “Closed” sign for weeks, losing revenue while spending hundreds of thousands of dollars—on top of learning how to run a Dunkin’ shop—was stressful, indeed. My experience as an IT Project Manager taught me the key to any successful project was planning early. Plan for contingencies and delays, and plan for success. I figured the same principles should apply to a Dunkin’ remodel. Still, I was glad I had some time to learn the business before learning how to manage a remodel.

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Remodels offer the opportunity to plan for future enhancements, like pre-wiring for eventual digital menu boards. One key lesson New Jersey franchise owner Adam Goldman learned was to create a project plan to identify and track tasks and responsibilities.

When I purchased an existing store in late 2012, I knew it was slated for a remodel in the summer of 2013. So, on the day we passed papers, I began the planning for the project. The first order of business was to create a project plan—basically a list of all of the tasks, from start to finish, that were needed to complete the remodel and get Dunkin’ Brands’ blessing. For my list, I used MS Project (you could also use an Excel program), because I wanted this to be a fluid and living document. I knew I would be adding and moving tasks based upon delays and interdependencies. I reached out to my Dunkin’ construction manager who provided me with

the overall scope of work for the project, including all of Dunkin’s requirements for sign off. At the same time, I sat down with my Dunkin’ OM, my own general manager and some of my employees to see what could be improved in the current layout of the store. It was clear we needed a specific area for food pick-up. What’s more we had a bottleneck behind the counter where the sandwich station was situated too close to the shop’s only coffee station. Employees and customers were crowded and there was a lack of flow. Identifying this information was critical in the discussions I had with the architect and contractor. We needed to not only

meet Dunkin’s requirements to improve the flow in the store; we also needed to keep costs down. And, I wanted to ensure this redesign would seamlessly allow for future enhancements like wiring for a digital menu board (DMB). What’s more I wanted to use robust materials like stainless corner beads to reduce upkeep costs over the next 10 years. Once the drawings were complete and signed off, my contractor and I could update the project plan to identify the items for which I was responsible, the detailed tasks he would perform and the milestones he would need to reach to get paid on time. This is a critical step that requires a franchisee’s attention. Consider the process of installing new ovens. Your utility company needs to upgrade the gas meter, but, in order to get the meter, you need new permit—and that can take four weeks. Whose responsibility is that? Some municipalities issue permits on the spot; some don’t. You need to know ahead of time. I know two franchisees whose remodels were held up over 6 months due to delays in obtaining permits. They

missed their contractual remodel date and got dinged on their rating. My list of tasks was small compared to my contractor’s. I needed to spec and order equipment, Coke coolers, DMBs, music, TV, speakers, booths, chairs, and a water filter system, among other things. Some of these items were in stock; others required two-month lead times. We determined which items would be shipped to the store and which would go to my contractor’s warehouse to accommodate my space constraints. The key is to have all of the materials and equipment delivered before the work begins; missing one small item could create a snowball effect and delay the project. Once we knew how long it would take to order and receive delivery of these items—plus the cost estimates from the contractor—we were able to finalize the project plan. Fast forward ten weeks, all of the permits were obtained, all of the equipment was on site, and the various trades were scheduled. We chose a Sunday afternoon in February as the day we would close

and promptly at 4 pm, 20 members of my contractor’s crew were on-site to begin the demolition. While the existing floors were grandfathered, we still needed to go back to the studs. Within two hours the place was bare and the new construction began. There is an old adage, “An army marches on its stomach,” which means people who are working need to be fed. Knowing that not too many places are open late on a Sunday in the suburbs, we pre-scheduled to have dinner delivered so the crew could work through the evening. Having been fed, and with a clear plan for what needed to be done on this first night, the crew was able to build a new soffit, put new millwork in place, wire and plumb the shop before leaving at 2:00 Monday morning. One of the most critical items on our plan was learning what the town health and building departments required before a retail food business like ours could reopen. We learned that as long as the place was clean, met health codes and there were no safety hazards, we could open for business before everything was

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MY PERSPECTIVE REMODELS Because Goldman’s remodel did not require ripping up the existing floors, the crew was able to turn around the bulk of the demolition and reconstruction in two days, minimizing lost revenue.

complete. That meant installation of new LED lights, wall paper, chair rails, and even refitting the bathrooms could wait until after we reopened. At 7:00 Monday morning—just five hours after they had left—the crew was back on site. The demolition and reconstruction continued for the next 18 hours, at which time the contractor informed me we were ready to clean the store, reinstall equipment, stock and put seating and tables back. We were right on schedule. My plumber and electrician were on site early Tuesday morning, along with my crew. For the next three hours, plumbing and equipment were tested; the shop was cleaned from top to bottom; the front counter and sandwich station was stocked; and donuts and baked goods

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were stocked in their new Lakeside cases. Having met the Red Book requirements, we opened the doors and welcomed in our morning customers. It had been a mere 37 hours since we closed. Over the course of the next few weeks we closed one bathroom for reconstruction and left the other open. We hung wallpaper, painted, installed lighting, hung the DMB and completed the final punch list. Dunkin’ gave us final approval on the remodel four months prior to our contractual remodel date. We finished the project less than 0.5% over my budget estimate. Admittedly, this shop is located in a strip center without a drive-thru. We kept the existing flooring and didn’t face the same

challenges that owners of free-standing shops with drive-thrus face. But, because we began our planning months before we closed the doors and because we had a detailed project plan with key dates, interdependencies, responsibilities and contingencies identified, we never felt like we were behind the 8-ball. Remodels are stressful, no matter how you do it. But if you do your homework, plan for contingencies and hire outstanding professionals, you can minimize the anxiety and get back to the business of serving your customers.

•

Adam Goldman is a DD franchise owner with a successful multi-store network in Northern New Jersey. Contact him at njddonuts@gmail.com.

The Kensington Company - Your franchise expert since 1995, specializing in Dunkin Donuts re-sales since 2005. Our Team includes two Former Dunkin Brands Franchise Managers who have experience in selecting new franchisees for DD approval 40% of all deals that were sold had no Financing Contingencies We continually update our database with franchisees that are approved for Expansion; We currently have Six networks under contracts, Five under Letters of Intent and Six active listings which are available for sale.

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