August/September 2015
The Magazine for D D
Independent Franchise Owners
Setting the Stage at Caesars U DDIFO NATIONAL
CONFERENCE
2015
LAS VEGAS
nparalleled Las Vegas Icon Plus H all of Fame Agenda Highlights
PREPARING FOR MORE STYROFOAM BANS
STANDING UP TO THE COMPETITION
“IT’S WHAT YOU DO” There is a series of very clever TV commercials running these days for the insurance company GEICO. The first of this series that caught my eye was one where a man being chased through the desert steps into quicksand and immediately sinks to his waist. Above him waits a vulture on a tree limb, but there at the edge of the quicksand sits his potential rescuer: a tabby cat. The man then tells the cat to, “Go get help, boy. Right now!” Needless to say, the cat doesn’t move and the voiceover explains “If you’re a cat, you ignore people. It’s what you do.” Other commercials in the series include a fisherman lying about his catch, free-range chickens, a Billy goat (scapegoat) that crashes an assembly line and torturers in a medieval dungeon. Each ad ends with the qualified statement, “If you’re a . . . it’s what you do.” The commercials got me thinking about DDIFO and what we do. How do we best present ourselves and provide value to the community of Dunkin’ franchise owners? To consider the question, let’s look at the near term – specifically the upcoming DDIFO National Conference ¬– and then let’s consider what other services and benefits might fit your needs. The National Conference provides DDIFO the opportunity to bring together many franchise owners from around the country and present them with information on a host of issues that threaten to impact Dunkin’ franchisees in every geographic region. Whether it’s the product mix in the southwest, J-BOD issues in the southeast, kitchen challenges in the Midwest or delivery problems in the northeast, each is important to your future growth and success and each can be addressed by your independent franchisee organization. And because we have participation from franchise owners in every region, we are able to capture the wisdom of longtime franchisees from more established markets who may have decades of experience in the system and can provide guidance to newer franchisees in emerging markets where they may still be experiencing growing pains. This sense of camaraderie and ability to share stories from behind the counter is a veritable win-win for all attendees. But there’s much more from which attendees will benefit. Since I began my tenure with DDIFO three years ago, we have pounded the drumbeat that government is becoming an unwelcomed partner in your business; that interference by federal, state and local government in your daily business operations is a main obstacle to your future success as a Dunkin’ franchisee. Unfortunately, that prediction becomes more and more true each day – whether it’s mandated $15 an hour wages, paid sick leave requirements, unfair taxing policies, union rabble-rousing with the blessing of Washington or egregious NLRB rulings, government has a big hand in how you can – and cannot – run your business.
That is why DDIFO is assembling experts to help guide you through the ever-changing legal and regulatory business environment. I would be remiss if I didn’t also comment on our Franchise Solutions Marketplace and the exceptional support of our Business Members. This year, we expect approximately 60 of our Business Members to sponsor booths in the Marketplace where they will highlight their services, explain their benefits and showcase their goods, all with the goal of keeping attendees up to date on what’s available to help them succeed. But, we’re also adding a new twist to our Franchise Solutions Marketplace for 2015 with the addition of a handful of non-competing franchise concepts exhibiting as well. We know that many Dunkin’ franchise owners are very successful multi-unit franchise owners and that other franchise concepts are anxious to have you also consider their brands. We’re happy to accommodate that desire so long as it’s of benefit to our membership – and we believe it is. One last component of the National Conference that I must mention is the Hall of Fame induction dinner. This event is a highlight of our conference each and every year as we recognize and honor those whose efforts have helped Dunkin’ Donuts become the powerhouse business it is today. This year, we honor two of those giants: John Cadete and Guido Petrosinelli. It is on their shoulders that we stand and it is their tremendous contributions to the success of Dunkin’ Donuts that we acknowledge with Hall of Fame recognition. As an organization, thankful for their foresight and grateful for their tireless efforts, it’s what we do. Now, as a long-winded Irishman, I used up my space too quickly – it’s what I do! So I’ll close by asking you to think about what other services and benefits your independent franchisee organization – DDIFO – can provide to better serve your interests. Maybe we can talk it over when I see you in Las Vegas! Ed Shanahan DDIFO Executive Director
INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 1
SUB HEADLINE
CONTENTS
From the Executive Director: “It’s what you do”• • • • • • • • • • • • • • • • • • • • • • • 1 What’s Brewing: A Look at State Issues Around the Footprint • • • • • • • • • 5 Franchisees Preparing for New Styrofoam-free Coffee Cups • • • • • • • • • • • • • • • • • • • • • • • • 9
5
9
10 DDIFO NATIONAL
12
CONFERENCE
2015
LAS VEGAS
DDIFO National Conference 2015 Caesars Palace: An Unparalleled Las Vegas Icon• • • • • • On and Off Stage at the 2015 National Conference• • • • • Two More Franchisees Join DDIFO Hall of Fame• • • • • • • Franchisee Profile: Baker turned Franchisee Finds Success Standing up to the Competition• • • • • • • • • • Apples and Oranges: A Simple and Effective Approach for Comparing Interest Rates • • • • • • • • • • Directory of Sponsors • • • • • • • • • • • • • • • • Legal: Mass. Supreme Court Clarifies Tip Pooling Law• • •
2 INDEPENDENT JOE • AUGUST/SEPTEMBER 2015
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A captive insurance program may be the single biggest opportunity Dunkin’ Donuts franchisees have to increase the profitability of their business.
Turning premiums into
If you don’t own your insurance program, you don’t control it. Our goal is simple: drive down claims and costs by putting you in control of your own insurance and risk management program. Turn your insurance program into a profit center! "While we are new to this, we are moving to establish a captive in the hopes that we can turn what was always a pure cost center into one that could potentially become a profit source, or at least provide a cost reduction for workers compensation and property insurance. In the current punishing regulatory and labor environment we have to look everywhere to cut costs and find ways to preserve our margins. We are looking at new ways of doing things in the hopes of doing that."
- Robert Branca, Jr. To speak with someone about Dunkin’ Donuts captive insurance program opportunities, please contact Lori Ross at 337.230.5437 or lori.ross@yorkrsg.com.
www. RestaurantFranchiseCaptiveProgram .co m
Independent The Magazine for DD Independent Franchise Owners
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August/September 2015 Issue #33 Independent Joe® is published by DD Independent Franchise Owners, Inc. Editors: Edwin Shanahan, Matt Ellis Contributors: Cheryl Alkon, Cindy Atoji-Keene, Richard Henderson, Lisa Iannucci, Carl B. Lisa, Esq., Scott Van Voorhis Business Member Coordinator: Joan Gould Creative Director: Caroline Cohen Direct all inquiries to: DDIFO, Inc. 10 First Avenue, Suite 20, 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 © 2015 Printed in the U.S.A.
The experTs OTher experTs Turn TO Tax Deferred Exchange for Income & Investment Property 9 Leominster Connector, Suite 1 P (978) 433-6061 Leominster, MA 01453 F (978) 443-6261 www.exchangeauthority.com 1031@exchangeauthority.com
4 INDEPENDENT JOE • AUGUST/SEPTEMBER 2015
SUB HEADLINE
WHAT’S BREWING A LOOK AT STATE ISSUES
AROUND THE FOOTPRINT By Scott Van Voorhis Customers may be lining up like never before for coffee, donuts and other treats as the economy rolls again, but Big Brother appears intent on crashing the party. Dunkin’ and other quick service franchise owners are facing an avalanche of new regulations and laws across the country dictating everything from what you pay an employee to how you schedule their hours.
In a move that is likely to reverberate around the country, New York State will now boost the minimum wage for quick service restaurant owners to $15 an hour. But that is just the tip of the iceberg when it comes to the new challenges franchise owners face. Congress and state legislatures are increasingly tinkering with workplace scheduling issues as well, while the National Labor Relations Board pushes New York Governor Andrew Cuomo announcing the state's new $15 minimum wage for fast food workers
ahead with its own rulings that critics contend could undermine the whole franchise system altogether. One bright spot is California, where a deal between two major franchise groups has paved the way for the passage of a bill, one that would protect the considerable investment, from cash to sweat equity, that franchise owners pump into their businesses. New York goes to $15 With Gov. Andrew Cuomo leading the charge, the Empire State’s Wage Board recently voted to phase in a $15 an hour minimum for all employees of fast-food chains with 30 or more locations. The hike will take place over three years in New York City, and six years across the state.
Photo Credit: Office of the Gov.
New York now becomes the first state to target an individual industry for such a wage increase, potentially opening itself up to litigation as it singles out quickservice restaurants, observers say. Yet however the decision plays out legally, it will have a significant impact on the bottom line of franchise owners, notes Mary Chapman, senior director of product innovation at Chicago-based restaurant
INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 5
WHAT’S BREWING
consulting firm Technomic Inc. In a national survey by Technomic, 84 percent of 1,000 restaurant operators polled said a $15 an hour minimum wage would hurt their businesses. Of those, more than half said they would have to slash hours and raise prices. Just under half said they would cut staff and more than a third would hire fewer people and cut employee benefits. A startling number, 12 percent, said they might have to close their doors altogether. That sounds harsh, but it makes sense when you crunch the numbers. Profit margins at restaurants are notoriously thin – 3 to 5 percent. A minimum wage increase of just 25 percent, which is less than the increase that yields a $15 an hour wage, would force franchise owners to either cut staff or boost prices by 5 to 7.5 percent, according to Technomic. Still, franchise owners also have to think carefully before broaching the issue with
customers, with Technomic’s poll also showing strong support for minimum wage increases among the public at large. “Customers support minimum wage increases and operators fear that consumers don’t realize the impact on the local operator,” Chapman notes. “They think the big bad corporation is sticking it to the little guy, but it’s often the franchise operator, the smaller restaurant operator who lives in the community and whose own kids are looking for work,” who are taking the hit, she says. New York’s big vote is likely to further encourage activists around the country to push minimum wage proposals, with the $15 minimum having been passed by San Francisco, Seattle and Los Angeles. A proposal in Washington, D.C. to boost the minimum to $15 an hour is pending. Mandating shifts and hours San Francisco’s retail workers’ bill of rights went into effect in July, making sweeping changes to the way many
Customers support minimum wage increases and operators fear that consumers don’t realize the impact on the local operator franchise owners do businesses. The new regs require business to post work schedules two weeks in advance and pay workers extra for having to change plans at the last minute. Part-time and full-time workers are granted equal status, with business owners obligated to offer extra hours first to part-timers who want to go full time. Franchise owners must also pay workers
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Dedicated provider of accounting, income tax, payroll and consulting services to Dunkin’ Donut franchisees across the country.
6 INDEPENDENT JOE • AUGUST/SEPTEMBER 2015
changes, the bill would require employers to sign off on those changes unless they can show “legitimate business reasons” why they cannot.
who are on-call or sent home early. San Francisco’s new labor ordinance, in turn, has provided a template for activists around the country as well as in the nation’s capital. Legislators in Michigan, Massachusetts, California, Connecticut, Maryland, Minnesota, Indiana, Oregon and New York have all filed bills that would regulate how businesses set work schedules. On the federal level, Sen. Elizabeth Warren (D-Mass.) is leading a group of senators pushing the “Schedules That Work Act.” Businesses with more than 15 workers would be barred from using split shifts and from putting workers on call or sending them home without pay. Under the Senate proposal, quick service restaurant owners, as well as business owners in a range of service industries, would have to post workers schedules two weeks in advance or pay a penalty. If workers invoke heath, education, child or elder care when requesting schedule
“There is really no reason for it,” said Ben Litalien, founder and principal of FranchiseWell LLV, a consulting firm. “The business owner is the one who has the eyes on the employee, who has the relationship with the employee, and who understands the needs of the employee better.” GMO labeling Dunkin’ and other quick service restaurants across the country are already dealing with the headaches of putting up calorie counts alongside menu items, courtesy of the federal healthcare law. So franchise owners haven’t exactly been thrilled by the prospect of someday having to deal with GMO labelling – and the concerns it might raise among consumers already skittish about tales of “Frankenfoods.” That labeling nightmare looked like it was
about to come true back in 2014 when Vermont passed a bill requiring labels on foods containing genetically modified organisms, or GMOs. Connecticut and Maine have passed similar laws that will go into effect once other states in the region act as well. But what appeared to have been a growing state movement may have met its match in Congress, with the House of Representatives passing a bill in July that would block states from enacting GMO labeling laws. On top of that, Vermont is also facing lawsuits from various food industry groups as well.
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Dunkin' Donuts and Employees
Applies to select regularly priced Sprint monthly service.
Find your local Store: sprint.com/storelocator Mention this code for the Sprint Discount Program Corporate ID: NDDFR_ZFR_ZZZ
Activ. Fee: $36/line. Credit approval required. Early Termination Fee (sprint.com/etf): After 14 days, up to $350/line. SDP Discount: Avail. for eligible company employees or org. members (ongoing verification). Discount subject to change according to the company’s/org.’s agreement with Sprint and is avail. upon request for monthly svc charges. Discount only applies to Talk 450 and primary line on Talk Share 700; and data service for Sprint Family Share Pack, Sprint $60 Unlimited Plan and Unlimited, My Way, Unlimited Plus Plan and Sprint Family Share Plus plans. Not avail. with no credit check offers or Mobile Hotspot add-on. Other Terms: Offers and coverage not available everywhere or for all phones/networks. Restrictions apply. See store or sprint.com for details. © 2015 Sprint. All rights reserved. Sprint and the logo are trademarks of Sprint. N145633CA Android, Google, the Google logo and Google Play are trademarks of Google Inc. Other marks are the property of their respective owners.
INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 7
WHAT’S BREWING
The House voted 275-150 in favor of the bill, with 45 Democrats joining the Republican majority. Franchise rights bill clears major hurdle A groundbreaking California bill, one that would protect all franchise owners from having their businesses arbitrarily terminated by their franchisors, has cleared one of its last big hurdles.
to compensate business owners if they decide to shut down or sell a franchise remains intact. But changes in the language of the proposal were included to satisfy some of the IFA’s concerns. “We still have a way to go,” says John Gordon, principal of Pacific Management Consulting Group and DDIFO’s restaurant analyst, who has been involved with the effort. “It’s moving.”
Opposition to the California Franchise Relations Act by the International Franchise Association (IFA), which represents franchisors, was a key element in the demise of the bill last year, when Gov. Jerry Brown killed it in an 11th hour veto.
The bill was amended to, among other things, make it clear that a franchisor which pays to buy out a franchisee “is entitled to receive clear title to and possession of the items,” according to a joint letter put out by both industry groups.
But it looks like that won’t be the case this time around, with the Coalition of Franchisee Associations (CFA) and the IFA recently coming to a consensus where the IFA will end its opposition.
Additional language was also inserted into the bill stating that the franchisor’s obligation to buy out a franchise owner is moot if both sides agree to terminate or not to renew.
The core of the bill, which would protect franchise owners from arbitrary termination and require franchisors
Mounting challenges For Dunkin’ and other quick service franchise owners, good times never felt so
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bad, to put a twist on an old Lionel Richie lyric. The economy is booming and customers are spending, with the potential for growing profits as we head towards the end of 2015. Yet how much of those profits franchise owners will actually be able to pocket remains to be seen as the federal, state and local governments boost minimum wages and mandate shift schedules. For Dunkin’ Donuts franchise owners facing new mandates for a $15 an hour minimum wage, Franchise Well’s Litalien has a few words of advice. “You had better field the very best team you can possibly put in the store,” Litalien said. “There will be no margin of error when you are paying someone $15 an hour to work in a fast food environment.” “Your expectation of their productivity has to go up,” he says.
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Franchisees Preparing for New Styrofoam-free Coffee Cups
NYC’s new ban may be the tipping point By Lisa Iannucci
A
Photos Courtesy of National DCP
sk most any Dunkin’ Donuts customer and they will tell you they love the brand’s iconic foam coffee cup and spill-saver lid. But time is running out on the foam cup. As more and more cities and states implement bans on Styrofoam, Dunkin’ Brands is pushing hard for a replacement that will keep coffee hot and keep franchisees in compliance with new environmental regulations. Bans have been rolling in slowly. Washington, DC, Minneapolis, San Francisco, and Albany, NY are among the largest cities to force restaurants to replace Styrofoam cups and other foodservice containers with suitable, recyclable alternatives.
“Overall, Dunkin’ Donuts is actually late in terms of switching from Styrofoam,” says John A. Gordon, principal of Pacific Management Consulting Group and DDIFO’s restaurant analyst. “McDonald’s had switched all of its cups from polystyrene to paper in 2012 and changed all of the sandwich clam shells in 1990.” Time is no longer on Dunkin’s side. The tipping point came when Mayor Bill de Blasio announced that as of July 1, 2015, food service establishments, stores and manufacturers in New York City may not possess, sell, or offer for use single service Expanded Polystyrene (EPS) foam articles.
“By removing nearly 30,000 tons of expanded polystyrene waste from our landfills, streets and waterways, it is a major step towards our goal of a greener, greater New York City,” de Blasio said in a press release. Styrofoam is the brand name for polystyrene, a petroleum-based plastic that’s lightweight and insulates well—two key ingredients for a perfect hot coffee-to-go cup. But, it has several downsides. First, according to the Environmental Protection Agency, Styrofoam is a carcinogen that can also cause skin irritation, as well as problems with the gastrointestinal and nervous systems. Second, it is manufactured by using hydrofluorocarbons, which can affect the environment’s ozone layer, and petroleum, which is a non-sustainable resource or a resource that can run out. Third, Styrofoam cups do not break down in landfills. According to the EPA, Americans throw away 25 billion Styrofoam cups every year and these will still be around 500 years from now. So, with the nation’s largest city forced to find a foam alternative, Dunkin’ has stepped up its R&D efforts. The problem is, it’s hard to replicate the functions of the iconic Styrofoam cup. In Brookline, Massachusetts, for example, Dunkin’ adopted a paper lined paper cup alternative and a recyclable lid. When filled with hot coffee, the cup is warmer to the touch than a
INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 9
"It’s a double-layered paper cup that holds the same amount of liquid, but will have a slimmer shape. The new lids are also better because they have a wider sipper… The customers love the new look even though most are clueless about the new July foamless environmental law." — Ann Nasary, Brooklyn, NY Franchisee foam cup. The lid looks similar but is not as tall and doesn’t have the removable tab. It is working in Brookline but isn’t the alternative Dunkin’ is using in Brooklyn, one of New York City’s five boroughs. Ann Nasary, who owns a Dunkin’ Donuts shop in Brooklyn, has already made the switch to recyclable coffee cups made of polypropylene (PP). “The cups can be thrown away with the recyclables,” says Nasary. “It’s a double-layered paper cup that holds the same amount of liquid, but will have a slimmer shape. The new lids are also better because they have a wider sipper.” The good news, according to Nasary, is that customers are responding favorably overall. “The customers love the new look even though most are clueless about the new July foamless environmental law.” The bad news is that the cups are more expensive, by a wide margin. “We are committed to finding the most cost-effective, sustainable solution for Dunkin’ Donuts franchisees,” says Roland Ornelas, Chief Procurement Officer at the National DCP (NDCP). “The weighted
average cost of the new Versalite cups will be 65 percent more expensive across all cups and lids and the medium cup has the highest increase at around 180 percent more on a per-unit basis. We may be able to shrink the gap on the costs given the alternatives being evaluated, but the foam cup was a very low-cost solution.”
new lids and cups did not affect our bottom line.”
“The problem with having to change the cup and having it cost more is the reality of higher wages,” says Gordon, referring to the national push to raise the minimum wage. Already, in New York State, the minimum wage for fast food workers is slated to increase to $15 per hour by 2018.
“This is a matter of providing assured supply for our members,” says Ornelas. “We need over a billion coffee cups and there aren’t a lot of suppliers with a billion cup capacity, but the New York City ban is moving the timeline forward. This is a large step toward making the country Styrofoam-free, an important move in terms of corporate social responsibility and responding to the needs of customers. New York was substantial enough from a regulatory standpoint that we had to have serious discussions about this. As more of the country is facing Styrofoam ban regulations, we are working very closely to find the ultimate solution.”
For franchisees like Ann Nasary, the double whammy of higher labor costs and higher cup costs may be enough to raise prices for certain menu items. So far, Nasary says she hasn’t felt that pressure. “We did not need to change our menu prices due to any increase in new cups or lids, but when milk prices, the cost of paper and the cost of minimum wage all go up we may finally need to increase menu prices, but thank goodness these
Photo by Ken Parry
STYROFOAM-FREE COFFEE CUPS
The PP cup has performed well in initial tests. Franchisees in selected locations in Massachusetts, Vermont and California are currently testing the PP cup as well as a double-walled paper cup.
And, Ornelas points out, testing will be underway for different lids. The “ultimate solution” will have to accommodate a number of items on the NDCP and Dunkin’ Brands checklist, chief among them, that the cup is durable and able to withstand the heat of a steaming hot Dunkin’ coffee. “Is it too hot to touch? How heavy is the cardboard or paper? These things need to be thought about and tested,” says Gordon.
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“It’s also really important that any alternative lid is embraced by the Dunkin’ consumer considering their passion for what we have today. We are working hard to source a value-driven solution that feels familiar while being fully compliant.”
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Photo Courtesy of National DCP
And, that’s not all. The right cup needs to be paired with a lid that can do its job without leaking or spilling.
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Setting the Stage at Caesars By Cindy Atoji-Keene
T
here’s no apostrophe in “Caesars Palace.” And the lack of punctuation speaks volumes about the world-class resort in Las Vegas which will host this year’s DDIFO National Conference on Sept. 21 and 22.
goal of modern Las Vegas: To make you say, ‘Oh my God,’” says Michael Green, a professor of history at University of Nevada, Las Vegas (UNLV), and a local columnist, blogger, commentator as well as a researcher for the Mob Museum.
Jay Sarno, the American entrepreneur who was the brains behind Caesars, believed that everyone should be emperor of Caesars for the day – not just one person. That kind of thinking typifies the resort that’s officially named Caesars Palace Las Vegas Hotel & Casino. It also exemplifies Caesars’ iconic status as a tribute to excess and luxury.
What to say about Caesars? The accolades are endless. The glitzy, over-the-top Strip classic, located on the west side between the Bellagio and the Mirage, is truly a palace. The Roman-themed casino hotel has an illustrious past of mobsters and motorcycle stunts; glamour and gaming; boxing and beauty. There is nonstop entertainment, including a coliseum-inspired performance venue with top headliners like Celine Dion, to lovely pools, worldclass shopping, and luxurious accommodations. Caesars needs
“In three words, we have the role of Caesars Palace and the
1965
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www.ddifo.org/2015-ddifo-national-conference
September 21-22
DDIFO NATIONAL
CONFERENCE
LAS VEGAS
2015
LAS VEGAS
An Unparalleled Las Vegas Icon its own zip code, because, as the saying goes, “All roads lead to Caesars Palace.” The iconic empire is an 85-acre destination resort, with 3,960 well-appointed rooms and suites that set the stage for an unmatched experience of opulence combined with impeccable service and every contemporary luxury imaginable.
statuary in The Forum Shops that were then the talk of the town. They say the same three words: ‘Oh my God.’ My small-town friend says it with complete wonder and my classicist friend [says it] with complete disgust.” But one thing is for sure, says Green. Caesars and Las Vegas are never boring.
Green, who has written the centennial history of Las Vegas and taught a class on the history of the region, likes to tell this story to explain Las Vegas and Caesars in a nutshell. He describes hosting two friends, one a historian from a small town and the other an urban-based classicist and philosophy professor.
If you could point at any one man and say, “He changed Las Vegas,” it would be Jay Sarno. A World War II veteran, Sarno got his start in the hotel business developing the famed Atlanta Cabana Motel, then went on to design and build Caesars Palace as well as Circus Circus. Sarno was the first to envision themebased casinos and is widely credited for creating the modern Las Vegas.
“I took them to Caesars and showed them the talking, moving
1966
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“He was a man way before his time, and bigger than life,” says David G. Schwartz, director of the Center for Gaming Research at UNLV and author of the book, Grandissimo, The First Emperor of Las Vegas. Schwartz calls Sarno the patron saint of Las Vegas, and says that even more than 25 years after his death, the city is still built in his image. “Before anyone else, Sarno knew that Las Vegas should be about one thing: action,” says Schwartz. “Sarno built a casino, Caesars Palace, around the idea that not only was it okay to indulge yourself, but that you should celebrate doing it. Gambling, eating, enjoying pleasure more than you should, this was action as delivered by Jay Sarno.”
LAS VEGAS
Schwartz spent six years researching his book, raising funds on Kickstarter to support his endeavor. He describes when the visionary Jay Sarno first showed up in Las Vegas; it was 1962 and it was still a frontier town, even though it was 16 years since Bugsy Siegel opened the famed Flamingo Hotel on the fledgling Vegas Strip. Historians can draw many parallels between the Flamingo and Caesars: the European style, the luxury and the backing of organized crime.
1967 1968
Sarno got a $10 million dollar loan from his friend Jimmy Hoffa, president of the Teamsters Union and a reputed mobster, to begin plans for a European-style hotel in the middle of the American desert. Many believed the project would be a failure. As Schwartz points out, “It was the most expensive casino ever built, anywhere, costing about four times more than earlier casinos like the Sands or Dunes.” But, Sarno persevered, constructing the original 14-story building as the centerpiece of a tribute to the Roman Empire. From Cleopatra's Barge to a restaurant called the Noshorium, everything about Caesars evoked ancient Rome. When it opened on August 5, 1966, it quickly became the most successful casino in the world, says Schwartz. “Sarno knew what made Las Vegas tick: expensive thrills and cheap luxury. Guests would walk into his place as ordinary schlepps and, amid scaled-down replicas of Michelangelo's David and the Nike of Samothrace, become emperors for a few days. It was a crazy idea, to indulge the tourists' egos like that; it might have been the greatest idea anyone ever had in Las Vegas,” Schwartz says. For its interior, Sarno had the Caesars casino built in a series of ovals because he believed they made for a more restful, pleasant atmosphere; for the exterior, Sarno built a statue of the Roman Goddess of Love to greet its visitors. “Whether it was the way the craps tables were laid out in the oval casino or the thrill of being served by wine goddesses who peeled grapes for and massaged the temples of male guests, visitors realized that Caesars Palace gave them something they wanted that they’d never known they were missing,” wrote Schwartz in his book.
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www.ddifo.org/2015-ddifo-national-conference 1982
Throughout the years, Caesars had its notable moments – it was where stunt motorcyclist Evel Knievel attempted to jump the resort’s famed 18 fountains. The daredevil failed to complete the jump, but it launched him to fame and fortune while also bringing international attention to Caesars, the kind even the best advertising agency would have trouble matching. It became a premier sports venue, hosting major boxing matches and procelebrity tennis tournaments. Over the years, major headliners have taken the stage at Caesars Palace, including Celine Dion, Elton John, Cher, Bette Midler, Rod Stewart, Mariah Carey, and numerous others. According to Professor Green, the opening of the Forum Shops in the early 1990s and the arrival of Wolfgang
2011
2014
Puck’s restaurant Spago triggered changes in the offerings of the Strip, making eating and shopping into major attractions and pastimes. Things are good in Las Vegas today. Tourism numbers for May 2015 were the highest ever and Nevada Governor Brian Sandoval recently convened a committee to focus on growth for Vegas’ future. Whatever the future holds for this self-professed “Entertainment Capital of the World.” Dunkin’ Donuts franchise owners planning to gather here in September will be treated to luxurious surroundings, fine entertainment and top-shelf service—just the way Jay Sarno said it should be.
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On and Off Stage at the 2015 National Conference LAS VEGAS
B
efore his career as a Dunkin’ Donuts owner and franchise industry expert, Rob Branca practiced law at the firm of Lisa & Sousa in Providence, RI. He worked closely with many Dunkin’ franchisees, setting up their business entities and real estate transactions—all the while gaining valuable insight into how family businesses operate and how franchisors and franchisees work together to achieve common goals. He also learned that the men and women involved in operating Dunkin’ Donuts restaurants all have great stories to share. As he prepares to host another “Conversation with Franchisees” at the 2015 DDIFO National Conference at Caesars Palace in Las Vegas, Branca is reminded that what makes a panel discussion memorable is the personal stories franchisees tell on stage. “People like to share stories. They are interested in hearing different franchisee experiences, but also enjoy hearing the similarities because it resonates with them,” he says. “As the host, I’m like an audience member. I find the same stories interesting and, like the audience members, I identify with the panelists. They all bring their own perspective to our business.” This year’s panel includes: Mike Cavallo, who has worked and partnered with the Carlos Andrade network for many years; Nicole Hansen, who recently opened her second store in Reno; Parag Patel, who started his Dunkin’ career in Baltimore and is now developing new locations in southern California; and Alex Smigelski, a franchsiee whose network includes New York, Pennsylvania and Indiana. Branca says most of the panelists have experience beyond Dunkin’. Smigelski has a finance background; Hansen developed
16 INDEPENDENT JOE • AUGUST/SEPTEMBER 2015
her own coffee retailing business in Seattle before joining Dunkin’ Donuts. “I try to select different people from different parts of the country. Even though they have different business or cultural backgrounds, they all have so much in common. I like hearing what attracted them to Dunkin’ Donuts; I find it fascinating,” says Branca. “By far the best feature of the conversation is when a panelist talks about a problem he or she encountered, everyone else gets to hear how they solved it.” So, what’s on the agenda this year? Branca wants to keep some of that under wraps until the actual session, but he does say the topics will be timed to the issues and challenges that people are dealing with today—with Dunkin’ Brands and outside as well.
Labor issues
One issue that’s received a great deal of attention in the franchising world is the recent National Labor Relations Board decision that designated McDonald’s a joint employer because the company wields extensive influence over how the franchisees operate. In the practical sense, whether the government views a Dunkin’ Donuts shop as a large or as a small business matters with regard to how it is regulated and what kind of autonomy its owners and managers have to run the business. Nationally renowned franchise attorney Robert Zarco has some interesting opinions on the NLRB ruling and he will make those clear when he addresses the National Conference September 21, 22.
www.ddifo.org/2015-ddifo-national-conference
Conference Agenda Subject to Change Monday, September 21
8:00–11:00 am DDIFO Board of Directors Meeting 11:00–12:30 pm “Conversation with Dunkin’ Franchisees” Rob Branca, Alex Smigelski, Parag Patel, Nicole Hansen and Mike Cavallo
12:30 pm Lunch with Exhibitors in Franchise Solutions Marketplace 2:00–3:15 pm “Ten Secrets to Success”, Dr. Sneh Desai 3:30–4:30 pm “The View from Wall Street”, John Gordon,
Pacif ic Management Consulting
6:00–7:00 pm Member Welcome Reception Apollo Pool, Caesars Palace
Tuesday, September 22
8:30–9:00 am Continental Breakfast 9:00–10:15 am “Navigating the Purchase and Sale of a Dunkin’ Franchise” Dan Connelly, Gary Joyal, Attorney David Paris and Attorney Carl Lisa, Jr.
“His perspective challenges the notion that this ruling is bad for franchisees,” says Shanahan. “There is a line of thinking that says it’s actually worse for franchisors and may cause them to soften how much control they try to have on your business.” Zarco has appeared at a number of DDIFO regional meetings and once testified before a Massachusetts Senate committee considering fair franchising legislation for the Commonwealth. He enjoys talking with franchisees in social settings as well and is expected to spend some time meeting with DDIFO members during his stay in Las Vegas.
11:00–12:00 noon “Joint-employer: What it Means for You and Franchisors” Attorney Robert Zarco 12:00 noon Lunch with Exhibitors in Franchise Solutions Marketplace 2:00–3:15 pm “Expanding Your Franchise Portfolio: Investment in Emerging Brands” Attorney Joyann Kenny with Franchisor and Dunkin’ Multi-unit franchise owner (TBD)
3:45–4:15 pm Closing Keynote Address Nick Varano,
Restauranteur & Founder, The Varano Group (invited)
6:00–7:00 pm Hall of Fame Cocktail Reception 7:15–10:00 pm Hall of Fame Induction Dinner Inductees John Cadete and Guido Petrosinelli
10:00 pm Conference Conclusion
Further focus on labor issues
The NLRB ruling is just one of many labor-related issues about which Dunkin’ Donuts franchise owners are expressing concern. Higher minimum wages, sick leave and scheduling regulations and “ambush election” rulings all present new opportunities for labor unions to organize. In fact, the national “Fight for $15” effort to mandate a $15 minimum wage for fast food workers is being led by the Service Employees International Union (SEIU). “Franchisees need to be cognizant of these developments because they are going to be costly and difficult to implement,” says Shanahan.
Finding the right balance
Motivational speakers are not typically on the agenda for the National Conference because, as Executive Director Ed Shanahan notes, Dunkin’ Donuts franchisees are a pretty motivated group. But, he also recognizes that the conference provides
Rob Branca
Robert Zarco
Dr. Sneh Desai
an opportunity to expose members to new ideas that can help them run their business. It was with that in mind that Shanahan clicked on to YouTube earlier this year to view some clips of Dr. Sneh Desai, an expert in the power of the mind. “He is a very well-known speaker and talks on enhancing the life,” says New Jersey franchisee Amul Modi, who suggested Shanahan watch Dr. Desai’s videos.” He can shed light on a lot of the issues we face in business. He addresses how to manage time and expectations and be happy. But, we are not just looking at money; as we grow in business we are also looking for balance in life.”
INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 17
DDIFO
NATIONAL CONFERENCE
2015
Dr. Desai speaks English and Hindi and will be presenting in English when he takes the stage at Caesars Palace.
LAS VEGAS
“He has the challenge of coming in and motivating a motivated group of people, but part of what the National Conference is about is helping Dunkin’ franchisees elevate themselves to the next level. It could be your focus, your money management, the expansion of your holdings. So he is someone who can help you get to the next level. He represents one flight of stairs, if you will, one avenue to the next level” says Shanahan. Modi, who says he has used Dr. Desai’s “train the trainer” videos in his network’s management training programs, was happy to make the connection and coordinate Dr. Desai’s appearance at the National Conference.
Not for competition
There’s a new component to the always-popular National Conference exhibit hall this year. DDIFO has invited vendors representing other successful franchise chains – ones that are not direct
competitors to the Dunkin’ system – to exhibit along with the multitude of business members that offer goods and services specifically for Dunkin’ franchisees. According to Shanahan, it promises to provide even more valuable information for DDIFO members, especially as more Dunkin’ franchisees begin to explore franchise opportunities outside of Dunkin’ Donuts. Each year the DDIFO National Conference offers insightful discussions, industry-specific guidance and a chance to meet and greet franchisees from across the Dunkin’ footprint. This year, amid the luxurious confines of Caesars Palace, there is a renewed focus on creating memorable programming and an enjoyable respite from the day-to-day operations that keep franchisees busy. Hopefully, the knowledge gained and relationships formed this year in Las Vegas won’t just stay in Las Vegas.
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Two More Franchisees Join DDIFO Hall of Fame
I
n more than 60 years of serving coffee and snacks to hundreds of millions of customers, Dunkin’ Donuts has featured many great operators, visionaries and business leaders. Once again this year, DDIFO is proud to honor some of those who made significant contributions to help grow the brand.
It didn’t take long for Cadete to enter into a partnership with Tony to purchase a shop in Brockton, Mass. Cadete and Andrade bought three shops together before Cadete split off on his own. From there, he has expanded his network to 53 shops in southeastern Mass. and Cape Cod.
On Tuesday September 22, two franchise owners with deep Dunkin’ roots and years of service on various boards, committees and leadership groups will be entered into the DDIFO Hall of Fame during ceremonies at Caesars Palace in Las Vegas. They are John Cadete and Guido Petrosinelli.
Dunkin’ Donuts provided a springboard for Cadete – as well as his two brothers – to create a solid business, built on hard work and dedication, which gave his family security and comfort.
A family connection
John Cadete
Like so many longtime franchisees, John Cadete found his way into Dunkin’ Donuts through a family connection. It was the late 70’s, Cadete was working as a maintenance supervisor at Rhode Island Hospital when his aunt married Tony Andrade, who had followed his brother Manny into the business.
“We were among the first in the Portuguese community. We put in a lot of work and tried hard to be successful and, now, we got to that point we have been successful,” Cadete says. Before he could say that, Cadete faced some difficult – and lean – years. But, the turning point came in 1985, when he bought his fifth store, on Plain St. Marshfield, Mass. “Then I felt like I was on the right track to grow more,” he remembers. Along the way, Cadete took advantage of opportunities to join various boards and committees. “I put my time in to help any way I could to be sure the business was running correctly and to help others,” he says. “My favorite board was the DCP. I sat on that board for 6 years in the mid to late 90s.” Cadete has also served on the RAC, DAC and several
INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 19
DDIFO
NATIONAL CONFERENCE
2015
LAS VEGAS
DDIFO Hall of Fame
Established in 2011, the DDIFO Hall of Fame will now have 24 members. Below are the names of the pioneers and visionaries that helped build the Dunkin’ Donuts brand.
2011
John Boujoukos Antonio Couto Jose Couto Ralph Gabellieri John Henderson George Mandell William Rosenberg
2012
Manny Andrade Brooks Barrett Jason Dubinsky John Rader Bob Rosenberg Michael Vale
2013
Antonio Andrade Helen D’Alelio Carl Lisa Amrit Patel Dave Segal Mark Silverstein
2014
Carlos Andrade Joe Batista Bill Daly
2015
John Cadete Guido Petrosinelli
subcommittees. In addition, he has been an avid supporter of local Little Leagues and the Cape Cod League, which was founded in 1885 and is considered a top destination for college players with aspirations of playing Major League Baseball. Cadete’s Dunkin’ shops are featured on the outfield fences at Guy Fuller Field, the home park of the Falmouth Commodores. Cadete also donates money, coffee and snacks to the team. “I am honored to be part of the Hall of Fame,” says Cadete. “Being included with all the great franchisees out there feels great!”
He saw the sign
You could say Guido Petrosinelli’s entrance into the Dunkin’ Donuts system was an accident; he says there was a sign. It was 1967, and Petrosinelli was in the industrial catering business in Providence. When he needed donuts, he bought them from the Dunkin’ shop on Reservoir Avenue in Cranston, RI. At the time, he didn’t really give Dunkin’ a second thought, until he was driving along Mineral Spring Avenue in Pawtucket one day and saw a sign advertising a franchise opportunity with a soon-tobe-built Dunkin’ Donuts shop. There was a phone number and Petrosinelli made the call.
Guido Petrosinelli
That led to a meeting with Ralph Gabellieri, who was Dunkin’ founder Bill Rosenberg’s right hand man managing franchisee relationships (Gabellieri was part of the first Hall of Fame class in 2011). As Petrosinelli remembers it, Gabellieri was supremely confident that Dunkin’ Donuts would take off. Later, when he met with Rosenberg, Petrosinelli was convinced he could have a successful future as a Dunkin’ Donuts franchise owner. “At the time, I was earning a good living in the catering business,” Petrosinelli says. “But Dunkin’ seemed like a good opportunity.” Petrosinelli opened that shop in Pawtucket in 1968, but success didn’t come right away. “It was discouraging for me in the first couple of years. In those early days it was not profitable. It took a while to take off,” he says.
20 INDEPENDENT JOE • AUGUST/SEPTEMBER 2015
But, he kept replaying the conversations he had with Rosenberg and Gabellieri, “If you are hard workers and loyal to brand it will work,” he remembers them saying. Finally the business turned the corner. Then, 10 years after opening his first shop, Petrosinelli bought his second. Today, he has 16 shops in Rhode Island.
www.ddifo.org/2015-ddifo-national-conference “We kept moving forward with it,” he says. “We are successful and happy. It was a fantastic move on our part to buy into the Dunkin’ concept.” Once he got the business up and running, Petrosinelli sold the catering business and got involved serving on franchisee boards and committees. He was a member of the Providence Ad Committee for more than 20 years, and spent several years in the leadership of the District Advisory Council (DAC). He is also part of the ownership and sits on the board of his CML, which opened in 2005 and manufactures baked goods in East Providence. This year, he took over as chairman of the DDIFO Roundtable, advising the board of directors and working closely with franchisees to maximize the power of the independent franchisee association. “We have a great group of franchisees; we are always there for one another. DDIFO is one example of how franchisees work together to achieve the goals that we have in common,” he says. “It’s a great organization and it’s there for us when we need it on various issues.” Petrosinelli says he’s grateful his wife and children were so supportive through the years, while he was busy attending meetings after long days at the shop. He also gives a nod to his employees for making the extra effort over the years.
A lot has changed since 1968. As Petrosinelli recalls, there were very few franchisees when he bought into Dunkin’. But, over the years, as the system has grown so has Dunkin’s influence—not just in the quick service restaurant business, but also in the way the brand connects with its communities through sponsorships, charities and being a meeting place for so many customers. “All the time and commitment and sacrifice was worth it in the end,” says Petrosinelli. “It’s like Ralph and Rosenberg said, ‘There is a light at the end of the tunnel.’ Dunkin’ Brands is good to deal with; it’s a great partnership.” “DDIFO is honored to add John Cadete and Guido Petrosinelli to the Franchisee Hall of Fame,” says Ed Shanahan, executive director of DDIFO. “These men have proven themselves as great leaders who have helped grow the brand through their involvement with franchisee committees and local charities. We are proud of their accomplishments and their induction into the Hall of Fame.”
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INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 21
Standing Up to the Competition
By Cheryl Alkon
Baker Turned Franchisee Finds Success in Santa Fe
C
ompetition doesn’t scare Irene Deubel. As the only Dunkin’ Donuts franchise owner in Santa Fe, New Mexico – and an employee of the business since the early 1970s – Irene has seen it all. At one time, New Mexico’s capital city had a Mister Donut, but it long-ago shut down. The closest Dunkin’ is 50 miles away in Albuquerque. In the competition for donut dollars, Santa Fe has several choices. There’s Whoo’s Donuts, an organic, high-end bakery which sells organic donuts for $14 for a dozen, compared to the $8.99 at Deubel’s shop on Saint Francis Drive. Local supermarkets, such as Walmart and Smith’s offer frozen products, but, according to Deubel, “They aren’t the same.”
When it comes to coffee, there’s plenty of competition. At santafe. org, the official travel site for the city, a person can sign up for a guided coffee tour, which stops at gourmet shops like C.G. Higgins Confections, Liquid Outpost and Ohori’s Coffee Roasters. In addition, Santa Fe is home to three Starbucks as well as McDonald’s and other mom-and-pops. But, Deubel doesn’t believe they are hurting her sales.
Later this year, Krispy Kreme will open shop in Santa Fe. Deubel says the store is expected to open just in time to attract the tour buses headed to the Albuquerque Balloon Fiesta in October.
“I thought Starbucks would influence it, but it did not,” she says. “I run different specials on Saturday, Sunday and Monday, and people ask us ,‘Why can’t you have the same sales every day [like Starbucks does]?’ but it brings people in.” Even though Starbucks or McDonald’s have more consistent specials, customers tell them why they prefer the local Dunkin’ store. “People say we can get it out faster than McDonald’s can, or that our sandwiches are better,” she says.
“I tell my staff we’ve got to watch closely once Krispy Kreme goes in,” she says. “I’ve never had a direct competitor like them. People tell me, ‘Oh, their coffee is really bad,” or, ‘The donuts are too sweet.’”
Hers is a story of perseverance and of love. Deubel can’t hide her affection for the Dunkin’ brand. Like so many long-time franchisees, she got her start as a baker, but quickly learned what it means to run a business. Even as Dunkin’ Donuts retreated
22 INDEPENDENT JOE • AUGUST/SEPTEMBER 2015
Photos by Bill Stengel
"I thought Starbucks would influence it, but it did not. I run different specials on Saturday, Sunday and Monday, and people ask us ,‘Why can’t you have the same sales every day [like Starbucks does]?’ but it brings people in.” — Irene Deubel, New Mexico Franchisee
from markets west of the Mississippi during the 1980s and 90s, Duebel’s shop has kept the lights on, 24 hours a day, beating back all competitors with consistently hot, fresh coffee and delicious donuts. Here in the desert, donuts are the draw, accounting for a greater portion of sales than in other long-established markets.
Beginnings in Baking
Deubel first joined Dunkin’ in 1972, after her sister Isabel began working there and told her the shop needed a finisher—someone to frost, fill, and put final decorations on each donut. She started shortly before Valentine’s Day and loved the creativity in the confections. “I had a blast,” she says. My boss had a book about preparing fancies, and I loved it. I have nervous energy and need to be busy.” Deubel worked while another sister, Betty Jo, watched her nine-month old daughter, in addition to her own children. When her boss offered to raise her pay by a quarter an hour to become a baker, “I never thought I could do it,” Deubel remembers. “There were never any women bakers. But I took the job. It was hand-cutting, and I was taught to pound the donuts out, flip
them, and put them on a screen. My hands hurt so much—I had a bruise in the middle of my palm.” She persevered, baking 276 dozen donuts during her eight-hour overnight shift. “I am right handed so when I cut donuts, the fingers on my left hand were able to hold about 18 donuts before I had to put them on a screen,” she says. “People would watch me work in a big window, and if I missed one, it would hit the table. People would count how many donuts I could hold.” Today, everything is automated, and the days of balancing donuts by hand are behind her. Deubel held jobs as assistant manager, then manager, before she and a co-worker, Randy Schelly, raised the money to buy the shop in 2005 from Robert Amelunxen, the previous franchisee. In her first year as owner, sales were about $78,000. Ten years later, sales topped $1.6 million. “I watch the numbers monthly and we go up about 10 percent every month,” she says. In 2012, she decided to go it alone and bought out her partner.
INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 23
FRANCHISEE PROFILE: STANDING UP TO THE COMPETITION Two years later, having secured $180,000 in loan and grant money from Century Bank and the Federal Home Loan Bank of Dallas, she gave the store a facelift, which included a new roof, oven, furniture, outdoor awning and a digital menu board.
Family Ties
But even with new equipment, things still sometimes stop working. When that happens, Deubel turns to her husband Chris, who spent three decades as a machinist. “He maintains all the machines, and takes care of the trees and a shed for our equipment,” she says. “He’s very meticulous and a great help to me.”
Deubel’s daughter Jackie spent seven years working at Starbucks before joining the family business. “She brought a lot to the customer service arena, because Starbucks caters to the customers,” says Deubel. “She does very good employee training, too. She’s better than me—I get agitated when people don’t learn quickly enough.” Deubel has two other children. Jolene, 31, who is raising infant twin boys, and Justin, 27, who works for the Public Records Retirement Association of New Mexico. All three of her kids have worked for Dunkin’ at some point in their lives. The store is open around the clock, 364 days a year (they close on Christmas). Keeping the business running fits their family tradition of hard work. “When I was growing up, my dad had a taxi service and my mom worked in a restaurant, and then they bought a grocery store,” says Deubel. “We weren’t allowed to sleep late; we had to open the store at 6 a.m. I was 15 when I started working for them.” Today, Deubel has 20 people on staff. She likes to hire high school students when they’re in tenth grade so they will work for her for two-to-three years before they leave for college. She also has two part-time and three full time bakers, who together have nearly 30 years of experience working in her shop. “They are really, really good,” she says. “I hope they will always stay with me.”
Dollars to Donuts: What She’s Learned
In her 43 years working at Dunkin’, Deubel has learned a lot about donuts. In Santa Fe, the treats are still big sellers. “We
24 INDEPENDENT JOE • AUGUST/SEPTEMBER 2015
sell more donuts than we do coffee,” she says. Her store’s biggest sellers are glazed, chocolate frosted, and Boston Kremes, but the maple frosted are her favorite. So, when she heard that Krispy Kreme made a maple frosted donut as well, she and Chris took a trip to an Albuquerque store to try them. She wasn’t impressed.
walking their three dogs—a Labrador named Winnie, a Labmix named Roxy, and Rat Terrier named Pete. The family has a vacation home in Chama, a village along the Rocky Mountains in northern New Mexico. Deubel loves to read while traveling. James Patterson and Anne Rice are her favorite authors.
“They glazed the donut first, then put the maple on top,” she says. “On the donut I got, the glaze was cracking—it wasn’t really fresh. Plus, the coffee was really bad.”
The vacation time helps her to recharge, which ultimately helps the business. Her best advice to other franchise owners: “Put your heart into it,” she says. “Once your heart is there, everything just falls into place. If your heart is there, you can make the best sandwich ever, or pour the best cup of coffee.”
Chris, however, enjoyed the jelly-glazed donut he ordered, which inspired Deubel to make something similar in her shop. “I can create anything they have,” she says. “We glaze the shell you put the jelly into, then put the jelly in after it has dried. It’s really good,” she says. It’s not the only time Deubel has been inspired from a visit elsewhere. On a trip to Massachusetts, she first saw a Boston Kreme munchkin, then brought it back to Santa Fe, where they have been well received.
•
Photos by Bill Stengel
Besides improving business through innovation, Deubel says cultivating reliable employees helps her keep the store going strong. “Having trustworthy people working on staff makes a big difference. I thank my crew every day for being there; they’re all very honest,” she says. Relying on her crew helps Deubel fully enjoy her time away from the store. She typically works four 12-hour days and takes a three-day rest. “Unless there’s something major, I try to stay away from the shop,” she says. She and Chris enjoy fishing, hiking, and
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INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 25
Apples and Oranges
A Simple and Effective Approach for Comparing Interest Rates
By Richard Henderson
A
s a Dunkin’ Donuts franchisee, you have no doubt realized there is no shortage of lenders who want your business— badly. As a lender to the community of Dunkin’ franchisees, I’m certain you are regularly contacted by companies like ours and presented with various offers—some more compelling than others.
us to deliver a great rate in an effort to satisfy prospective borrowers and to compete with the myriad other lenders vying for your business, that some among us are willing to do so by simply modifying their definition of the word “rate.” It’s not really a new practice—in fact it’s age-old, but it is one worth considering each and every time you search for franchise project financing.
Because of Dunkin’s market strength, capital is easily accessible at rates that are better than competitive. But even though you have money available when you need it, you would be well served to remember the famous Latin saying, “caveat emptor,” which means, buyer beware. By taking a little time to separate the lender wheat from the chaff, you can sort through the various offers and feel confident you are getting the best available rates and terms.
So why is this age-old practice so pervasive? Easy. Lenders gamble that you either don’t know how to calculate your rate accurately or that you just won’t even try. The problem for you, the borrower? Lenders generally wind up on the winning side of those odds.
Acquiring bragging rights for having negotiated a “great rate” with a lender is much easier than actually negotiating an economically “good deal” when it comes to financing franchise projects. This is in large part because comparing financing rates is not as straightforward as many borrowers think it is. People in the financing community know how important it is for borrowers to believe they’ve received the lowest rate possible. In fact, there is such a tremendous pressure on
26 INDEPENDENT JOE • AUGUST/SEPTEMBER 2015
Let’s just look at the most basic presumption borrowers make that allows lenders to get away with this. Borrowers presume that there is only one kind of rate. Naturally, when you ask a lender to answer the question, “What’s your rate?” they answer by quoting an accurate APR, or annual percentage rate. But, in many cases, the rates you are quoted are not true APRs and are not accurate by any particular universal standard. And you would be safe to bet that if you are looking at multiple offers, each rate was calculated differently. Rather than enumerating all of the variables that actually go into calculating your true cost of financing (e.g., fees, interim rent charges, upfront payments, etc.), I suggest a much simpler approach which will get you to about the same place. Believe it or not, all you really have to do is add up all of the cash leaving your wallet and ending up in the hands of your lender, then compare each offer. We like to quote this obvious rule: All else being equal, the less cash you pay lenders for the use of their money, the better it is for you! So, how can you be sure the rate you are quoted will actually cost you less than other offers might?
We have these simple steps you can follow:
STEP 1
Add up all nonrefundable upfront fees and any lease/loan termination fees.
STEP 2
Add up all advance payments.
STEP 3
Add up all of your remaining lease/loan payments.
STEP 4
Determine the expected residual payment owed to transfer ownership of financed equipment, etc. from the lessor to you when the term is up (for leases with purchase options).
STEP 5
Arrive at the total amount of cash you will pay over the life of the lease/loan by taking the sum of the results in STEP 1 through STEP 4.
STEP 6
Add up all moneys paid from lease/loan proceeds to equipment vendors, contractors, other third parties, and yourself in connection with the lease/loan.
STEP 7
Subtract the result from STEP 6 from the result from STEP 5. This is your total cost of financing. By stripping out the complicated and, in most cases, unnecessary time-value-of-money math from the comparisons to make the calculation much simpler, you are stripping out all of the “rate
semantics,” which some might call tricks, from your financing proposals, you can immediately examine an apples-to-apples comparison of financing costs with a thorough accounting of the amount and timing of all fees before you commit. So, the next time you are in the market for financing, give your lenders' proposals a careful review. You may be surprised to find just how little correlation there is between the rates you are quoted and the actual amount of money that is leaving your wallet. Caveat emptor!
•
Richard Henderson is a banking and finance industry veteran specializing in franchise financing. He is vice president of franchise finance at Direct Capital Corporation, a CIT Company, based in Portsmouth, NH.
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INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 27
2015
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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
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BUILDING
Poyant Signs
Bill Gavigan 125 Samuel Barnet Blvd, New Bedford, MA 02745 508-717-4930 • bgavigan@poyantsigns.com www.poyantsigns.com
Trane HVAC
Jonathan Ralys 225 Woldwood Avenue, Woburn, MA 01801 781-305-1335 • Jonathan.Ralys@Trane.com www.Trane.com/commercial
WatchFire Signs
Trivanta, LLC
Mark Wheeler 512-473-8322 • mark@trivanta.com 807 Nueces St., Austin, Texas 78701 www.trivanta.com
COMMUNICATIONS
AT&T Corporate Business Solutions
Sophy Englund 954 383-8133 • SE1885@ATT.COM 13450 W Sunrise Blvd, Ste. 602, Sunrise FL 33323 http://att.com/wireless/dunkindonuts
Comcast Business Services
Comcast National Sales • 866-407-6338 Dunkin_National_Sales@comcast.com 500 South Gravers Road, Plymouth Meeting, PA 19462 www.business.comcast.com/internet
Sprint
Heath Stone 603-793-2129 • heath.h.stone@sprint.com 3 Van De Graaff Drive, Burlington, MA 01803 www.sprint.com/ddifomembers
Time Warner Cable Business Class
Alex Foreman • 217-442-0611 alexander.foreman@watchfiresigns.com 1015 Maple Street, Danville, IL wwwwatchfiresigns.com
Tricia Petway 919-654-4115 • tricia.petway@twcable.com 4200 Paramount Parkway, Morrisville, NC 27560 bc2.timewarnercable.com/nationalsales/copartner/dd1.html
BUSINESS BROKER
COST RECOVERY
Ellen Hui 949-428-0498 • eh@Nationalfranchisesales.com 1601 Dove Street, Ste. 150, Newport Beach CA 92660 www.nationalfranchisesales.com
Ed Craig 774-263-7388 • ecraig3@efcostrecovery.com PO Box 79361 North Dartmouth, MA 02747 www.efcostrecovery.com
National Franchise Sales
EF Cost Recovery
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
Plotwatt, Inc.
Adam Gardiner 401-297-5439 • adamgardiner@plotwatt.com 1715 Six Gables Road, Durham, NC 27712 www.plotwatt.com
FINANCE
Analytix Solutions
Jessica Shaheen 781-503-9000 • ashaheen@aixsol.com 80 West Cummings Park Ste. 2000, Woburn, MA 01801 http://insight360.aixsol.com 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.
28 INDEPENDENT JOE • AUGUST/SEPTEMBER 2015
2015
Directory of Business Members
BUSINESS MEMBER
Bank of America/Merrill Lynch
Earl Meyers 585-546-9162 • earl.w.meyers@baml.com 1 East Ave., Rochester, NY 14450 www.bankofamerica.com
Bank RI
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
Business Financial Services
Scott Kantor • 954-509-8019 skantor@businessfinancialsservices.com 3111 N. University Dr, Ste. 800 Coral Springs, FL 33065 www.businessfinancialservices.com
City National Bank
Dave Skinner 425-468-2851 • dave.skinner@cnb.com 10900 NE 4th St. Suite 1920, Bellevue, WA 98004 www.cnb.com
Direct Capital Franchise Group
Richard Henderson 603-433-9434 • rhenderson@directcapital.com 155 Commerce Way, Portsmouth, NH 03823 www.franchise.lendedge.com
Eastern Bank
Deborah Blondin 603-606-4724 • D.Blondin@Easternbank.com 11 Trafalgar Square, Suite 105, Nashua, NH 03063 www.easternbank.com
Fidelity Bank
Sally Buffum 508-762-3604 • sbuffum@fidelitybankonline.com 465 Shrewsbury Street, Worcester, MA 01604 www.fidelitybankonline.com
First Franchise Capital
Richard Riecker 201-326-4021 • Richard.riecker@firstfcc.com 2715 13th Street, Columbus, NE 68601 www.firstfranchisecapital.com
GE Capital, Franchise Finance
Christine Keating 203-229-1804 • christine.keating@ge.com 201 Merritt 7, 2nd Floor, Norwalk, CT 06851 www.gefranchisefinance.com
Joyal Capital Management Franchise Development Daniel Connelly 508-747-2237 • dconnelly@joycapmgt.com 50 Resnik Road, Plymouth, MA 02360 www.jcmfranchise.com
Marlin Franchise Finance Group
Josh Rouswell 856-505-4450 • jrouswell@marlinfinance.com 300 Fellowship Rd, Mount Laurel, NJ 08054 www.marlinfinance.com
Pacific Premier Franchise Capital
United Bank
Mark McGwin 508-793-8342 • mmcgwin@bankatunited.com 33 Waldo St., Worcester, MA 01642 www.bankatunited.com
United Capital Business Lending
Sharon Soltero 402-562-1801 • ssoltero@ppbifranchise.com 3154 18th Avenue, Ste. 3, Columbus, NE 68601 www.ppbifranchise.com
William Wildman 844-848-4739 • WWildman@BankUnited.com 101 W. Ohio Street, Suite 2000, Indianapolis, IN 46204 www.unitedcapitalbusinesslending.com
Santander Bank
FOOD PRODUCTS
Michael DiSandro 401-752-1037 • michael.disandro@santander.us One Financial Plaza, Providence, RI 02903 www.santanderbank.com
Susquehanna Commercial Finance Inc.
Brian Colburn 443-966-1792 • brian.colburn@susquehanna.net 2 Country View Road, Ste. 300, Malvern, PA 19355 www.susquehanna.net
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 ADP
TCF Franchise Finance
John Stefko 908-625-7966 • john.stefko@adp.com 99 Jefferson Rd. MS 322, Parsippany, NJ 07054 www.adp.com
TD Bank
Suzanne Cormier 317-245-1665 • Suzanne.Cormier@fadv.com 9800 Crosspoint Blvd., Ste. 300 Indianapolis, IN www.fadv.com
Bill Johnson & Brittney Weber 952-656-3268 • bjohnson@tcfef.com 11100 Wayzata Blvd., Ste. 801, Minnetonka, MN 55305 www.tcfef.com Michael Vallorosi 201-962-5187 • michael.vallorosi@td.com 535 East Crescent Avenue, Ramsey, NJ 07446 www.tdbank.com
First Advantage
INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 29
2015
BUSINESS MEMBER
Directory of Business Members Please Visit The DDIFO Business Members Directory online at www.DDIFO.org 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
Paris Ackerman & Schmierer LLP
David Paris 973-228-6667 • david@paslawfirm.com 101 Eisenhower Parkway, Roseland, NJ 07068 www.paslawfirm.com
OPERATIONS
3M Company
Bill Muenkel 952-484-4875 • wemuenkel@mmm.com 3M Center, 220-12E-04, St. Paul, MN 55144 www.3M.com/communications
Alarm Grid
Joshua Unseth 954-933-5095 • support@alarmgrid.com 2510 NE 47th St, Lighthouse Point, FL 33064 www.alarmgrid.com/alarm-monitoring-dunkin-donuts
Bunn-O-Matic Corporation
Granite Payroll Associates
Marco Schiappa 401-263-7921 • marco@granitepayroll.com 176 Granite Street, Qunicy, MA 02169 www.granitepayroll.com
Heartland Ovation Payroll
Jim Ferreira 203-530-3512 • jferreira@ovationpayroll.com 90 Linden Oaks Ste. 110, Rochester, NY 14625 www.ovationpayroll.com
Paychex
Diana Devivo 844-846-7827 • ddevivo@paychex.com 911 Panorama Trail South, Rochester, NY 14625 www.paychex.com
HK Payroll Services, Inc.
Laurie Fleming 732-968-2700 Ext: 41916 • lfleming@honkamp.com 2345 JFK Rd, PO Box 3310,Dubuque, IA 52004 www.hkpayroll.com
Snagajob
Chris Wirt 804-433-2761 • chris.wirt@snagajob.com 4851 Lake Brook Drive, Glen Allen, VA 23060 www.snagajob.com/employers
INSURANCE
Insurance World Agency Inc.
Anil K. Sharma 630-654-6067 • info@iwainsurance.com 100 E Ogden Avenue Ste. 203, Westmont, IL 60559 www.iwainsurance.com
Leavitt Group
Angela Newman • 951-202-9086 lori.ross@restaurantfranchisecaptiveprogram.com 1820 East First Street, Ste. 500, Santa Ana, CA 92705 www.leavitt.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
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
York Risk Services Group
Lori Ross • 337-230-5437 Lori.Ross@yorkrsg.com 99 Cherry Hill Road, Suite 102, Parsippany, NJ 07054 www.rfcp1.com
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.
30 INDEPENDENT JOE • AUGUST/SEPTEMBER 2015
Todd Rouse 800-637-8606 • Todd.Rouse@bunn.com 1400 Stevenson Drive, Springfield, IL 62703 www.bunn.com
Cardtronics
Doug Falcone 973-599-0600 • dougf@cardtronics.com 628 Route 10 - Ste. 8, Whippany, NJ 07981 www.cardtronics.com
Carrier Corp
Bob Eckweiler 973-222-6742 • Bob.Eckweiler@carrier.utc.com 3 Hollyhock Way, Newton, NJ 07860 www.carrier.com
Davis Bancorp
Richard Davis 847-998-9000 • security@davisbancorp.com P.O. Box 1690, Barrington, IL 60010 www.davisbancorp.com
Delphi/Fast Track 2+2 Drive-Thru Timer
Mike Pierce 714-850-1320 • mike@phaseresearch.com 3500 West Moore Ave., Ste. M, Santa Ana, CA 92704 www.fasttracktimer.com
DTT Surveillance
Mira Diza 800-933-8388 • mdiza@dttusa.com 1755 North Main Street, Los Angeles, CA 90031 www.dttusa.com
2015
Directory of Business Members
Dunbar Security Products
Dustin Gosewisch • 800-766-9145 dustin.gosewisch@dunbararmored.com 8525 Kelso Drive, #L, Baltimore, MD 21221 www.dunbarsecurityproducts.com
Ecolab
Arliene Bird arliene.bird@ecolab.com 8300 Capital Drive, Greensboro, NC 27409 www.ecolab.com/Businesses
Green Turtle Americas
MCD Innovations
Will Knieper 214-883-5656 • wknieper@mcdinnovations.com 3303 N.McDonald St., McKinney, TX 75071 www.mcdinnovations.com
New England Drive-Thru Communications
Angela Bechard 603-475-2046 • angela@nedrivethru.com 999 Candia Rd. Suite 7, Manchester, NH 03032 www.nedrivethru.com
OnsiteRIS, Inc.
BUSINESS MEMBER
ServSafe/NRA Solutions, LLC
Kevin Scott 540-868-8292 • kscott@restaurant.org 175 W Jackson Blvd. Ste 1500, Chicago, IL 60604 www.servsafe.com
Shoes For Crews
Rebecca Tharp 877-437-6176 • rebeccat@shoesforcrews.com 250 S. Australian Ave. West Palm Beach FL 33401 www.shoesforcrews.com
SKAL East, Inc
Eric Hancock 704-295-1733 • ehancock@greenturtletech.com 2709 Water Ridge Pkwy Charlotte NC 28217 www.greenturtletech.com
Joey Agee 404-952-2745 • joey.agee@onsiteris.com 2010 Avalon Pkwy, Ste 400, McDonough, GA 30253 www.onsiteris.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
Hi-Tech Sound
Pentair Filtration & Process
Tellermate
Gary Hanna 508-624-7479 • gary@hitechsound.com 19 Brigham Street, Unit 10, Marlboro, MA 01752 www.hitechsound.com
HME Drive-Thru Headsets
Jeannine Gaine 630-240-1298 • jeannine.gaine@pentair.com 1040 Muirfield Dr., Hanover Park, IL 60133 www.everpure.com
Dana Glaze 770-220-5113 • dana.glaze@tellermate-us.com 3600 Mansell Road, Ste 500, Alpharetta, GA 30022 www.tellermate-us.com
R.F. Technologies
Tryad Solutions
Brady Campbell 858-535-6034 • bcampbell@hme.com 14110 Stowe Drive, Poway, CA 92064 www.hme.com
Michael Murdock 847-495-7350 • michaelm@rftechno.com 330 Lexington Drive, Buffalo Grove, IL 60089 www.rftechno.com
Hockenbergs
Becky Dubose 800-643-2980 • bdubose@qualservsolutions.com 7400 28th Street, Fort Smith, Arkansas, 72906 www.qualservsolutions.com
KD Kanopy
Kyle Clendennen 785-295-6664 • kyle.clendennen@safetstep.com 3231 Southeast Sixth Ave, Topeka, KS 66607 www.payless.com/safetstep-1/
Tom Schrack Jr. 402-609-5111 • tomjr@hockenbergs.com 7002 F St., Omaha, NE 68117 www.hockenbergs.com John Behrens 303-650-4707 • john@kdkanopy.com 1921 E. 68th Ave. Denver, CO 80229 www.kdkanopy.com
Magna Industries, Inc.
Jeff Simmons 914-388-1949 • jeff.simmons@magnaindustries.com 1825 Swarthmore Ave., Lakewood, NJ 08701 www.magnaindustries.com
QualServ
Nick Restivo 630-549-0079 • nick@tryadsolutions.com 2015 Dean St. Ste. 6A, St. Charles, IL 60174 www.tryadsolutions.com
UAS Security Systems
Walter Bass 800-421-6661 • walter.bass@uas.com 700 Abbott Drive, Broomall, PA 19008 www.uas.com
safeTstep by Payless Shoesource
SensoScientific
Zary Lahouti 800-279-3101 ext. 475 • ZaryL@sensoscientific.com 685 Cochran St, #200, Simi Valley, Ca 93065 www.sensoscientific.com
Thank You to Our Busin ess M emb ers!
INDEPENDENT JOE • AUGUST/SEPTEMBER 2015 31
A LOOK ON THE LAW
BY CARL B. LISA, ESQ., LISA & SOUSA, LTD., DDIFO GENERAL COUNSEL
T
Under what circumstances can an employer be liable seeking to enforce a no-tipping policy, notwithstanding such a policy, where tips or loose change are left by customers and are retained by the employer?
The facts of the case are pretty straightforward. Scrivanos implemented a no-tipping policy, which required that signs be posted at various places in all his shops, clearly stating that there was no tipping allowed and/or thanking customers for not tipping. The policy also directed employees to communicate the policy to customers. In the event change was left behind, it could be placed into an abandoned change cup commonly known as a “take a penny leave a penny” cup, or put into the cash register.
In such cases the court found that the employer must inform the patron that the tip or service charge does not represent a tip or service charge for covered employees, citing G.L.c.149 S 152(d) and (b), or the employer will be held in violation of the act for not remitting such to the wait staff employees.
he Massachusetts tip pooling law, which prevents managers from taking a cut of the tips left for servers, has been the subject of close scrutiny. Several franchise owners have been sued for allowing managers and supervisors to share the tips, and DDIFO has provided testimony for lawmakers explaining why the law is confusing and needs clarification. The law has forced many franchisees in Massachusetts to ban tipping altogether.
The lower court found that the no-tipping policy did not violate the Tips Act, but ruled putting the money in the register, was in violation of the Tips Act. Later, a different lower court judge, responding to a motion for summary judgment, certified two questions to the Supreme Judicial Court.
Constantine Scrivanos is among those who banned tipping in most of his shops, but he was nonetheless sued by a group of employees who claimed the no-tipping policy violated the law. The case made it all the way to the Massachusetts Supreme Judicial Court and provided DDIFO the opportunity to file an amicus brief. In
Here the court did not accept the plaintiffs’ (employees’) view that the plain meaning of the statute required an interpretation that a no-tipping policy could not be maintained by the defendant. To the contrary, the Court found that the Tips Act contained no prohibition against such a policy.
32 INDEPENDENT JOE • AUGUST/SEPTEMBER 2015
2.
April, the court ruled against the employees and clarified answers to important questions raised under the Massachusetts Tip Act (G.L.c.149 S 149).
1.
Whether the Tips Act permits an employer to maintain a no-tipping policy.
The court gave further guidance to employers as follows: “A clear communication of the no tipping policy could be accomplished through the posting of signs such as those conveying that employees may not accept tips. In addition employers could instruct wait staff employees to convey to customers orally that the store maintained a notipping policy, and could provide training regarding the content of the communication, as well as when during various points of interaction with a customer the information should be conveyed.” What is the takeaway? Clearly the court emphasizes communication to maintain compliance with the law. That’s means placing signs which cite the no-tipping policy and the effect of loose change left at the point of payment, in the store and at drive thru windows. Plus, ensuring employees understand their responsibility to clearly communicate the policy to customers who want to leave a tip, will assist in complying with the law and could help avoid future lawsuits.
•
This publication is not intended to constitute legal advice. If legal advice is required, the services of a competent legal professional should be obtained.
Photo Credit: Tip Cup & TIPS : castro, san francisco (2014) via photopin (license)
Mass. Supreme Court Clarifies Tip Pooling Law
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