Independent Joe #40 October/November

October/November 2016

The Magazine for D D

Independent Franchise Owners

National Conference Speakers Address Key Issues Facing Franchisees

C-stores Stir Coffee Competition

Family Legacy Guides Franchise Owner

YOU CAN MAKE MONEY AND HAVE MORE TIME TO SPEND IT.

$3,187,100 $392,495

AVERAGE ANNUAL GROSS SALES PER STORE OF THE TOP 1/3RD FRANCHISED STORES1

RECORDED AVERAGE ANNUAL EBITDA OF THE TOP 1/3RD FRANCHISED STORES2

PETS ARE RECESSION RESISTANT • $58 billion industry and growing3 • 20 consecutive years of growth3 OWN YOUR OWN PET SUPPLIES PLUS FRANCHISE • America’s favorite neighborhood pet store • 330 stores in 26 states with great territories available “Pet Supplies Plus has been a proven concept for more than 25 years. Its franchise owners have a record of success because it’s a fun business and it’s a much easier retail concept to execute than a 24/7 operation.”

– Steve Siegel, former partner with Watermark Donut Company, Dunkin’ Donuts franchisees in Boston, and currently a director of Pet Supplies Plus

• Celebrating 26 years

For more information, contact Steve Olson at 734.793.6532 or visit us online at www.pspfranchise.com

PSP Franchising, LLC, 17197 N. Laurel Park Drive, Suite 402, Livonia, MI 48152 1 This advertisement is not an offer to buy a franchise. An offer to buy a franchise can be made by prospectus only. Item 19 of PSP Franchising. LLC’s 2016 FDD provides that $3,187,100 is the average annual gross sales achieved by the “top third” of PSP franchisees (measured by gross sales), which consists of 55 reporting franchised stores during the measurement period beginning 1/4/15 and ending 1/2/16. Your results as new franchisee may differ. Of the 55 “top third” franchise stores, 9 reporting stores or 16% achieved exceeded the average “top third” annual gross sales.

2 Item 19 of PSP Franchising, LLC’s 2016 FDD provides that of the 55 reporting franchised stores, 5 reporting franchised stores (9%) achieved an Annual EBITDA that exceeded the $392,295 “top third” Average Annual EBITDA during the measurement period of 1/4/15 and ending 1/2/16.

3 According to the APPA: http://www.americanpetproducts.org/press_industrytrends.asp.

©2016 Pet Supplies Plus. All rights reserved.

I CR EAT D E MA N E YO U D.

CA S H I N

.

I’M THANKFUL FOR… Growing up, I always loved the fall and the Thanksgiving holiday. It was the first family gathering after the World Series and there would always be some spirited conversations about the winners and the losers. For the longest time, the Chicago Cubs were one of the losers, but that all changed this year. As a Red Sox fan, I knew exactly how those Cubs fans felt when the curse was lifted. They were so thankful…

And that got me thinking about the importance of taking a step back, not just at Thanksgiving time, and contemplating what we have to be thankful for. For the purposes of this column, let me share why I am thankful to work with this organization.

The franchise owners in the Dunkin’ Donuts system are a fine group of businessmen and women. Each brings a sense of dedication and professionalism to his or her stores day in and day out. It is remarkable to see from my position, and I know it is inspirational to those with whom you work.

In my four years as your Executive Director I have been thankful for the challenges the job presents. This is not meant as a tonguein-cheek or a “left-handed compliment,” but rather as an acknowledgement that sometimes we need to overcome adversity to thrive; we need to confront our fears to develop courage; we need to fail in order to succeed; and sometimes we need to break something in order to fix it. It makes all of us better for the effort.

We should all be thankful for those franchisee leaders who have stepped up and supported DDIFO throughout its 27 year existence. These are professionals who recognize the value an independent organization brings to bear on their relationship with the brand. We heard the theme echoed in conversations around the DDIFO National Conference and from the stage at the Hall of Fame dinner. “This organization is there for the franchisees like none other and everyone should support its

efforts by paying to be a member.”

As I’m sure you’ve heard by now, Dunkin’ Brands proposed some important changes in its 2016 Franchise Agreement that would have negatively impacted a majority of Dunkin’ franchise owners.

Dunkin’ pulled the deal off the shelves after Carl Lisa, acting as DDIFO general counsel, highlighted the changes in a memo to me, which we later publicized to our members. Even though the status of a new franchise agreement remains up in the air, all franchisees should be thankful for Carl’s work.

Today there are some 8000 Dunkin’ shops around the country and DDIFO has members in 22 states. We continue to make inroads with new franchise owners in emerging markets as well as with long-time, non-member franchisees in established markets. We were pleased to see members from 16 different states represented at our 7th annual National Conference, held at Foxwoods Resort & Casino in Connecticut. That’s progress and the right kind of growth. We are thankful for it.

Harkening back to the Cubs’ exciting World Series win, they were not discouraged when the Indians tied the score in the bottom of the 8th inning. Their now-famous team huddle during the late-inning rain delay proved they could pull together as a unit—one team with a shared goal, recommitted to the task at hand, with even more determination not to be denied. So, too, has DDIFO. We have faced our challenges, but we continue to do the work that our founders had in mind 27 years ago, when everyone thought the Chicago Cubs would always be loveable losers.

Ed Shanahan DDIFO Executive Director

INDEPENDENT JOE • OCTOBER/NOVEMBER 2016 1

SUB HEADLINE

CONTENTS

From the Executive Director I’m thankful for… • • • • • • • • • • • • • • • • • • • • • • 1 What’s Brewing: A Look at State Issues Around the Footprint • • • • • • • • 5 C-stores Stir Coffee Competition• • • • • • • • • 9 CELEBRATING YOUR INDEPENDENCE

8

2016 DDIFO NATIONAL

CONFERENCE FOXWOODS MASHANTUCKET, CT

National Conference Speakers Address Key Issues Facing Franchisees • • • • • • • • • 12 Appreciation for Two Outstanding Franchisees • • • • • • • • 14 Franchisee Profile: Family Legacy Guides Franchise Owner John Motta• • • • • • • • • • • 18 Directory of Sponsors • • • • • • • • • • • • • • • 21 Legal: Why Elusive Franchise Legislation is Fundamentally Important • • • • • • • • • • • • • • • 22 HISE O W N

E

FR

ANC

HISE O W N

E

R

ANC

R

FR

18 2 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

9 12

The application made financing my store

FAST AND USER FRIENDLY. – Mike White, Dunkin Donuts Franchisee

FROM $2,000 TO $20 MILLION Financing that’s quick, easy and affordable.

New Stores

|

Development Lines Remodels

+

Relocations

Technology Upgrades

Acquisitions & Partner Buy-Outs

Working Capital Loans

Equipment Upgrades

Equity Advances

Get started now: DD.DirectCapital.com or 888-501-6846

Independent The Magazine for DD Independent Franchise Owners

•

October/November 2016 Issue #40 Independent Joe® is published

by DD Independent Franchise Owners, Inc. Editors: Edwin Shanahan, Matt Ellis Contributors: Stefanie Cloutier, Lisa Iannucci Peter C. Lagarias, Esq., Debbie Swanson, Scott Van Voorhis Business Member Coordinator: Joan Gould Creative Director: Caroline Cohen Direct all inquiries to: DDIFO, Inc. 2 First Avenue, Ste. 127 – 3, Peabody, MA 01960 978-587-2581 • info@ddifo.org • www.ddifo.org DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners.

INDEPENDENT JOE®, INDY JOE®, and DDIFO® are registered trademarks of DD Independent Franchise Owners, Inc. Any reproduction, in whole or in part, of the contents of this publication is prohibited without prior written consent of DD Independent Franchise Owners, Inc. All Rights Reserved. Copyright © 2016 Printed in the U.S.A.

Dunkin' franchisees who would like to upgrade their coffee program with a new Silver King dairy dispenser to replace an existing unit in their stores, are eligible to receive a complimentary Bagel Saber. Prince Castle will ship out a free Bagel Saber to franchisees rewarding them for upgrading existing dairy dispensing equipment into current Silver King dairy dispensing technology with proven dispensing consistency. Effective September 15th through December 31st, 2016 (new store opening purchases are not eligible). To take advantage of this offer, order your SilverKing dairy dispenser from the NATDCP. Please submit this completed request form to Silver King by email to customerservicega@princecastle.com or by fax to: 866 653 1453. Please allow 3 -4 weeks for processing, validation and final delivery of your new Bagel Saber. Questions can be sent to Gail Kilgore at kilgoreg@princecastle.com.

4 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

WHAT’S BREWING A LOOK AT STATE ISSUES

AROUND THE FOOTPRINT

By Scott Van Voorhis Election Day may have come and gone, but don’t expect big changes soon, especially when it comes to the bottom-line issues that matter most to franchise owners.

so do wages. While a new administration will certainly have an impact on growth, it’s unclear exactly how the economic dominos will fall.

While the national election is crucial for determining our country’s overall direction, pocketbook issues like the big three of minimum wage hikes, sick leave benefits, and scheduling mandates are mostly being pushed on the local and state level.

The same can be said for issues like sick leave and scheduling mandates. These two issues are being driven by activists and unions on the local level, and will continue to be fought over and pushed, regardless of who occupies the White House.

Sure, minimum wage legislation in Congress would be a big deal, but even with a deadlock on the issue in Washington, wages have been going up – and bottom lines have been tightening– for a couple of years now.

As we wrap up 2016, action is percolating on all these fronts, from a potentially trend setting move by New York Mayor Bill de Blasio to require businesses to provide a two-week warning before changing a workers shift, to a proposal in Minneapolis to boost the minimum wage to $15 an hour.

That’s due in part to the torrent of minimum wage proposals and referendums in cities and states in just about every region, but, to be fair, it’s not the whole story. A national economy that has been slowly and steadily building up steam is making it harder for businesses across the board to find the workers they need, with franchise owners definitely feeling the pinch.

And as competition for workers goes up,

“The outcome is going to be increased costs at the end of the day,” said Ben Litalien, founder and principal of FranchiseWell LLV, a consulting firm.

“I expect we will see a fairly significant potential for inflation.”

“Fair Scheduling” the next big thing?

The headline in Atlantic Magazine just about says it all: “Predictable Schedules

Are the New $15 Minimum Wage.”

More than a year after San Francisco passed a wide-ranging set of regulations mandating how businesses can schedule shifts, the idea appears to be gaining traction nationally.

The Seattle City Council passed a “secure scheduling ordinance” in late September that takes its lead from San Francisco’s controversial regulations and includes all major quick-service chains and retail stores.

The new rules require franchise owners and others to provide new hires with an estimate of the hours they can expect to work and post shifts at least two weeks in advance. Restaurant and retail store owners must also provide at least a 10-hour breather to workers between opening and closing shifts, and give parttimers first dibs on new hours. What’s more, it calls for shelling out an hour’s worth of wages if they make scheduling changes within the two-week window. If additional hours are added, the franchise owner would have to pay the employee an extra hour’s pay; if hours are reduced, then the employee would get half the hourly rate for each hour lost.

INDEPENDENT JOE • OCTOBER/NOVEMBER 2016 5

WHAT’S BREWING

Now the first big East Coast city is about to jump on the fair scheduling bandwagon.

The few details de Blasio has released are straight out of the San Francisco and Seattle “secure scheduling” playbooks.

In New York, de Blasio’s communications office recently sent out an epic, 5,200+word press release announcing the mayor’s intentions of passing new rules that would regulate shifts at the city’s “fast food” establishments.

Franchise owners and chain operators would have to put up shift schedules two weeks in advance; provide extra compensation for last-minute changes; and address problems created by the practice of “clopenings,” which refers to a schedule that require employees to work consecutive closing and opening shifts with fewer than ten hours between them.

Despite the length of the release – about five times the typical press announcement and packed with endorsements from various activist and labor groups – New York’s mayor stopped short of unveiling an actual plan.

Instead, he announced plans to work with the City Council to draft legislation that would regulate the schedules of quickservice restaurant workers.

The proposal is aimed at 65,000 quick service restaurant workers and the franchises and chains that employ them, city officials stated.

6 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

A newly created city watchdog will be in charge of enforcing the new “Fair Workweek” regulations, de Blasio’s office also announced. New York City’s new Office of Labor Policy and Standards is touted as the “first-ever municipal office dedicated to addressing the needs of workers.”

The new unit’s job will include “enforcement of important workplace laws, such as the City’s Paid Sick Leave and Commuter Benefits Laws, in addition to any future municipal workplace-related

laws,” according to de Blasio’s press office.

Back on the West Coast, Portland may be next.

A city commissioner in Portland reportedly wants to follow Seattle’s lead, but must wait until mid-2017, since the Oregon Legislature has temporarily banned local communities from passing scheduling ordinances.

Coming to a city near you: $15 minimum wage Minneapolis, Cleveland and Palo Alto may become the next big cities to boost their minimum wage to $15 an hour.

Minneapolis: Supporters of hiking the minimum got a big boost from a University of Minnesota study whose researchers included the AFL-CIO’s chief economist and others from a unionbacked think tank.

The 200-page study declared raising the minimum wage to $15 would help workers

without harming local businesses. The report argued the number of restaurant employees might decline by as much as three percent, while wage increases could jump as much as 28 percent, according to the Star Tribune newspaper. Menu prices, in turn, might increase by as much as five percent, the study found.

However, that assessment was challenged by local business leaders.

The head of the Southwest Business Association said his members fear losing tens of thousands of dollars.

“When I read this report and it says there will be minimal or no cost to the business, that just doesn’t jibe with what we’re hearing back from business owners,” Matt Perry told the Star Tribune.

Minneapolis officials are now planning to make a recommendation by mid-2017 on whether to move forward, with plans to consult with business owners and other stakeholders, the paper reported.

Marvin Fong,The Plain Dealer

Cleveland: City voters will go to the polls on May 2, 2017 to decide whether to hike the minimum wage to $15 an hour.

If passed, the proposal would start by hiking the minimum to $12 an hour in January, 2018. Supporters, led by the SEIU, had pushed for raising the minimum to $15 in one single increase, only to have to back off amid concerns that it would be too much, too fast for city businesses to

handle. (The minimum wage in Cleveland and across Ohio currently stands at $8.10 an hour.) Instead, after the initial jump to $12 in 2018, the minimum would rise $1 each year for the following three years, after which increases would be tied to the cost of living.

Palo Alto: The city at the heart of Silicon Valley is now moving to match San

Increase Profits COST SEGREGATION STUDIES • Improved Cash Flow • Accelerated Depreciation • New Construction/Remodels

ENERGY MANAGEMENT

Lower Rates, Aggregated Purchasing & Online Reverse Auctions.

All Utilities - Gas, Electric, Water and Sewer CT US CONTA AY! TOD

AUDITED AND TRACKED! Call Jeff Hiatt at 508-878-4846 jdh@revenuebanking.com

www.revenuebanking.com

PERFORMANCE BUSINESS SOLUTIONS, LLC INDEPENDENT JOE • OCTOBER/NOVEMBER 2016 7

WHAT’S BREWING

Francisco’s $15 an hour minimum. The Palo Alto City Council recently voted to boost the minimum to $15 by 2019, according to the Mercury News. The minimum, which currently stands at $11 in Palo Alto, could jump to $12 an hour in January, and then $13.50 in January 2018, followed by a final jump to $15 a year later.

The move came despite strong opposition from some restaurant owners, with one warning that it would boost his costs alone by $8,000, the paper reported.

Sick leave gains traction Of course, no round-up of issues that could affect the bottom lines of Dunkin’ franchise owners would be complete without a look at sick leave.

It’s a jump ball as to what’s spreading faster right now, sick leave proposals or $15 minimum wage bills.

Chicago and its suburbs are the latest to require franchisees and other business owners to provide sick leave. Cook County, which includes Chicago and its suburbs, recently voted to require all businesses to

Learn more at watchfiresigns.com/donuts

8 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

provide at least one hour of sick leave for every 40 worked.

The new law, passed Oct. 5, goes into effect on July 1 of next year and is similar to one already passed by Chicago. It caps total sick leave in a single year at 40 hours and allows employees to use it for a range of reasons, including taking care of family members.

All told, 38 cities, counties and states have passed sick leave laws, the Associated Press has reported, citing Family Values Work, an advocacy group.

And the pace at which these proposals are being passed is accelerating dramatically, with 31 in just the last three years, the news service reports.

Many of the new laws, however, tend to have a bigger effect on smaller businesses which are less likely to already offer this benefit, according to the AP story.

The list of jurisdictions mandating sick leave now includes California, Oregon,

Massachusetts and Connecticut as well as cities ranging from Washington, D.C. and Philadelphia to San Diego and Los Angeles.

A tidal wave of new mandates, laws During these politically volatile times, the only certainty is that costs are going up for Dunkin’ Donuts franchisees and other business owners across the country. While an improving economy has contributed to a shortage of workers, the growing number of cities, states and counties instituting scheduling restrictions, minimum wage hikes and sick leave bills is pushing up payroll costs.

While the business community has had some success in a few cities forcing a phased-in approach to wage increases, the momentum clearly is sustaining the efforts to press harder for the big three of wage hikes, sick leave and fair scheduling.

The question remains how franchise owners will have to balance their bottom lines with these increased pressures and whether big labor’s momentum will stall if customers start waiting in longer lines or paying more for their coffee and snacks.

•

C-stores Stir Coffee Competition

By Debbie Swanson

M

ike White, owner of two Dunkin’ Donuts franchises in Kennesaw, Georgia, wasn’t worried when a high-end convenience store, Quick Trip, wanted to move into the same strip mall as one of his restaurants. In fact, he negotiated with the landlord and worked out a win-win plan, where he moved his Dunkin’ into a larger location at the other end of the strip center and QT took his original spot, complete with space to install even more gas pumps than originally planned.

White says he never feared the competition. “QT would be replacing a badly run gas station, building a much better one. They’ll provide the gas, I’ll provide the product.”

INDEPENDENT JOE • OCTOBER/NOVEMBER 2016 9

C-STORES COMPETITION A year after the move, White says the change has been favorable. He often looks out his window to see a car pull up to QT for gas, then watches as the customer walks over to his restaurant for coffee or a snack.

“It’s increased the number of cars stopping in,” he says.

Since the 1990s, convenience stores have been striving to win over the coffee and breakfast on-the-go crowd, offering interesting menu items, new brews and flavor. But many Dunkin’ franchise owners remain unruffled by the competition, and welcome the co-existence.

The rise of convenience store coffee “Coffee is a huge category in the convenience store business. Hot coffee generates 98% of their hot beverage sales,” reports Donna Hood Crecca, associate principal at the research firm Technomic. “C-store owners know that coffee brings people in the door, customers with the potential to become a loyal crowd.”

Convenience stores weren’t always focused on coffee; originally, customers came in for cigarettes, snacks and quick grocery

KK Insurance Agency We will save you money $$$...

We do Franchise Restaurant Business in All 50 States

Specialized Insurance Professionals for Dunkin' Donuts Immediate quotes We insure 24 Hours of Operation Commercial Property Commercial G.L Commercial Auto Hired & Non-owned Auto Workers’ Compensation EPLI Umbrella Coverage  Crime Coverage One source for all your insurance needs since 1987.

Call Us for a “No Obligation Quote” Toll Free # 866.554.6799

Fax # 866.554.6507 • Fax # 732-455-3444 E-Mail: info@kkinsuranceagency.com

Web-site: www.kkquote.com

10 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

items, or gas. 7-Eleven was the first to offer fresh brewed coffee in to-go cups, introducing the beverage in Long Island, New York in 1964. With the 1990s came improved selections, such as the introduction of their Café Select roast and frozen cappuccino.

Flavored iced coffee was introduced in 2009 and, in 2011, the brand revamped their coffee bars. With 50 years in coffee sales, the chain now celebrates its accomplishment, selling special brew cups and making certain blends available for home preparation.

7-Eleven was early to the game, but their aggressive approach to coffee growth is typical of the industry’s trajectory, according to Crecca. She says that the 1990s was a time when many convenience stores began setting their sights on coffee drinkers.

“The move to more quality coffee has been progressive among c-store chains. They’re serving a more premium roast, as well as different types of coffee and fair trade,” Crecca says. “They’re also paying attention to their execution – how long [the coffee] sits, how often it is brewed.”

A closer look at the consumer While older coffee drinkers will remember the days when the thought of convenience store coffee conjured up an image of a lonely pot kept warm on a burner, the younger crowd sees c-store coffee in a new light, and is more than willing to seek a hot, fresh cup of coffee at a Wawa, Cumberland Farms or Speedway.

“Gen X, millennials, Gen Y,” says Crecca of the typical demographic. “They’re of diverse nationality, with Hispanics over-indexed by ten points, and really a broad swath of income levels, from low to affluent.”

These generations are known for trying different flavors, personalizing their cup, and embracing new methods, reports the National Coffee Association. They’re also eager to support

White agrees that a reputable product, strong customer service, and cleanliness are key components to standing apart. Convenience store competition is familiar to him; a year after opening his first Dunkin’ franchise in suburban Atlanta in 2002, a Quick Trip moved in nearby.

“They installed a kitchen where customers can get their breakfast. I was a little worried, but we weren’t really negatively impacted,” he says.

“It increased traffic tremendously, our lowest increase in sales annually since 2002 was six to seven percent.”

products that align with their social beliefs. Convenience stores are carefully catering to these characteristics.

For example, the convenience store chain Quick Check promotes the customer’s ability to “make it personal” and offers a large variety of sweeteners, creamers and toppings. Last summer, Pennsylvania-based Swiss Farms introduced their new coffee collection which focuses heavily on a clean label – including an organic blend, a rain forest certified, and a chemical-free, natural decaf. They’re also answering their customer’s desire for product sourcing knowledge by promoting their own dairy line.

not a passing trend.”

Convenience stores are in the coffee business for good, according to Technomic’s Crecco. “There may be trends within, but c-store coffee is

That means Dunkin’ operators will need to stay sharp and focused on their products and customer service.

“If you do it right, they worry, not you,” says White.

www.lisasousa.com

•

5 Benefit Street, Providence, RI 02904 Tel: 401-274-0600 Fax: 401-421-6117 E-mail: clisa@lisasousa.com

Friend or foe?

While the effort among c-store chains to tantalize younger coffee drinkers may seem threatening, Dunkin’ franchise owners we talked with see it as just another part of the business.

Eric Eskander, who operates several Dunkin’ Donuts restaurants in southeastern Massachusetts, says there is a high saturation of convenience stores in his region, but he’s never been overly worried about them.

“Any competition is a problem,” says Eskander, who opened his first Dunkin’ shop in 1998. “The [convenience stores are] doing a terrific job executing their model; for them, the coffee business is a loss leader, to drive customers to the counter.”

The key difference, he says, is the focus. “Everyone wants a piece of the breakfast business. It’s just one piece for c-stores, but for us, it is our business.”

He keeps his shops up for the challenge, wherever it may arise.

“We’re laser-focused on our operations, customer service, and speed,” he says. “In my opinion, the customer can differentiate: do they want a 99-cent cup of coffee from a convenience store, or come into our clean store for good, quality products?”

We Know Your Business.

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

A Transactional Law Firm The Rhode Island Supreme Court licences all lawyers in the general practice of law. The Court does not licence or certify any lawyer as an expert or specialist in any field of practice.

Carl B. Lisa Sr.* and Louis A. Sousa named Legal Eagles 2010 Martindale-Hubbell ®

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

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

Specific examples include: transfer of ownership of 100 franchise locations in the Northeast, Southeast and other parts of the United States; sale of 48 locations in New York; purchase of 15 stores in the Northeast; acquisitions of multi‑shop networks in Florida (42, 18), Vermont (20) and Cape Cod, Massachusetts (20); Store Development Agreements (SDA’s) throughout the country; and formation of cooperative Central Production Locations (CPL’s).

Lisa & Sousa Ltd. is general counsel for the Dunkin Donuts Independent Franchise Organization (DDIFO) with a membership of approximately 2000 Dunkin Donuts franchise units nationwide.

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

INDEPENDENT JOE • OCTOBER/NOVEMBER 2016 11

CELEBRATING YOUR INDEPENDENCE

2016 DDIFO NATIONAL

CONFERENCE FOXWOODS MASHANTUCKET, CT

National Conference Speakers Address Key Issues Facing Franchisees

By Matt Ellis

12 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

I

f there was one theme that ran throughout the recent DDIFO National Conference held at Foxwoods Resort Casino, it was “Be vigilant.” The theme framed discussions on franchising, government relations, Dunkin’ Brands’ new franchise agreement and the competitive landscape facing QSRs like Dunkin’ Donuts. And while some speakers presented the theme in more desperate terms than others, there was no doubt that franchisees who attended the annual conference returned home with a sense that the franchising industry in general, and their business units in particular, are facing great challenges in the coming new year.

INDEPENDENT JOE • OCTOBER/NOVEMBER 2016 13

THE FRANCHISING BUSINESS

FR

ANC

HISE O W N

E

R

As a successful multi-unit franchise owner, the chairman of the International Franchise Association (IFA) – and now the head of a private equity firm that buys franchised brands – Aziz Hashim has a broad and insightful view of the industry.

He started his career in franchising in 1996 with one QSR location and has built a network of restaurants with brands like Popeye’s, Domino’s and KFC to become one of the top 200 franchise operators in the country.

“We’re business people. Our job is to make money, whether there is good [economic] news or bad news,” he told the assembled crowd in the Grand Pequot Ballroom.

During Hashim’s hour-long presentation, he warned franchisees they need to be prepared for an economic slowdown. He cited comments from experts like Morgan Stanley Chief Economist Ellen Zentner, who said, “We seem to be moving into the late phase of business expansion with credit issues, earnings under pressure and job growth slowing.” Echoing the voices of experts on both sides of the political spectrum, Hashim said a recession could be five or seven years away. His point was that franchisees should be vigilant and understand how to take advantage of the economic cycles that have repeated throughout history.

“We, as business people, have to read the tea leaves,” he said. “We are professional risk-takers, so how do we take advantage of what could be a potentially down cycle?”

He cited three important steps to be ready not just for a downturn, but also for the inevitable recovery: 1) Sell low-quality assets at premium prices; 2) consolidate, simplify and refinance holdings; 3) remove personal guarantees and cross-collaterals.

“Money is made [at the bottom] because you buy stuff cheap and you get rid of it [at the top].”

Underscored throughout Hashim’s National Conference Keynote Address Monday morning was the idea that “You

INDEPENDENT JOE • OCTOBER/NOVEMBER 2016 14

Appreciation for two outstanding franchisees Boston radio legend Howie Carr had just wrapped up the live remote of his radio show from the DDIFO National Conference when he found himself in the middle of the cocktail party that preceded the Hall of Fame dinner. Carr, who is known for telling it like it is, whether the topic centers on politics or on Boston’s most famous wiseguy, crime boss Whitey Bulger, was making his way towards some hors d ‘oeuvres.

“I have to get something to eat. I’m starved,” he said.

When this writer asked him to join the group for dinner and help celebrate two of Dunkin’ Donuts’ most impactful franchisees. Carr was grateful for the invitation but said he had to return to Boston. As he assembled some cheese, crackers and veggies, Carr said, “Just tell those guys, I love Dunkin’ Donuts.” Had he stayed, Carr would have gained an even deeper appreciation for the brand and the people who make it successful.

Nick Apostoleres was a Dunkin’ Donuts trailblazer in the truest sense of the word. When, as a teenager, his family moved from New Jersey to open a Dunkin’ Donuts in Brandon, Florida, just outside Tampa, the community had 40,000 residents. In 1973, there were no Dunkin’ Donuts in the immediate area and the brand had little recognition.

Still, the family saw Dunkin’ as an opportunity to create something lasting for themselves and their community.

When Apostoleres’ father contracted Leukemia and died shortly after, Nick and his family doubled down on the effort to succeed. When he relocated the family’s original shop to a nearby location which featured a drive-thru, it became Dunkin’ busiest location in the state of Florida.

Over the years, the Apostoleres family expanded their footprint and Nick took on the responsibility of representing the

15 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

now-growing Tampa market on several brand advisory councils and the local Advertising Committee. His goal was always to improve conditions for the new franchisees that were developing the region.

“The Tampa market wasn’t like those markets in the Northeast. It took years for the market to transition from donuts to coffee,” he told Independent Joe over the summer.

Today Nick Apostoleres is recognized by his peers as a leader, for his work helping position Dunkin’ in the market and assisting other franchisees. One of those peers, Tom Daly, introduced Apostoleres as he was being officially recognized as a member of the DDIFO Franchise Owners Hall of Fame.

“I met Nick in 2007 when my family and some business partners entered the Tampa market, in a very difficult time, and Nick was always there to help and support us in any way possible,” Daly said.

As he thanked the attendees and the Hall of Fame Nominating Committee that night, Apostoleres immediately turned the focus away from himself and onto the organization hosting the festivities.

“I’ve seen so much value in the DDIFO. I hope we can get a lot more nationwide participation,” he said noting how unity is so critical for everyone’s success.

“Having one voice, and having something like the DDIFO and all of us banding together in times like these where the brand is a publicly traded company and has a lot of pressure [on it], if we stay united, we will keep the brand great.”

Even as Apostoleres expressed his honor

at being recognized as a member of the Hall of Fame, he found a way to share the spotlight. “It’s nice for Tampa to get a little recognition, too.”

Duke Carvalho doesn’t worry whether his hometown is on Dunkin’s radar.

As a longtime franchise owner in Watertown, Mass. – just 25 miles from brand headquarters – Carvalho has been at the center of Dunkin’s continued growth and popularity. Like so many of his peers, Carvalho was recruited to be a franchisee through a network of Portuguese immigrants who settled in New England and sought opportunity as small business owners.

Carvalho’s introduction to the system came through another DDIFO Hall of Fame member, Tony Couto.

“When I started in this business in 1978, I could not have imagined or envisioned where it would have brought us. But with dedication, hard work and a passion for this brand, I stand here tonight humbled to receive this recognition,” Carvalho said.

In his nearly 40 years as a Dunkin’ Donuts owner and operator, Carvalho has taken an active role on several councils and committees, including the Ad Committee, the DCP and the Leadership Council, on which he served as co-Chair. He is a past recipient of the Dunkin’ President’s Club Award, the Combo-Operator of the Year Award, and the Irv Robins and Burt Baskin Award for Superior Innovation in 1999.

He was also part of the leadership of DDIFO, serving as Treasurer in 1981 and Chairman some years later.

As he received his Hall of Fame award, Carvalho stopped to recognize the people who helped him get here. “I would not be here today if it wasn't for the support of my family, my friends and my fellow franchisees.”

CELEBRATING YOUR INDEPENDENCE

2016 DDIFO NATIONAL

CONFERENCE FOXWOODS MASHANTUCKET, CT

have to do your homework,” because the threats from economic slowdowns and government overreach, from customers who don’t understand franchising and from franchisors that don’t always have the best interests of franchisees in mind, are all real. But, so are the opportunities.

“You do your homework, you figure out where you want to be. And afterwards, you upgrade your holdings. Because when it turns around, guess what? Good assets are a little bit cheaper,” Hashim explained.

“During the downturn, the price gets just low enough to where it’s possible to buy.”

Hashim is an example of someone who does his homework—not just in his business as a franchise owner. In a presentation to the National Conference on Tuesday, Hashim made the pitch to franchisees that they should be franchisors as well, through the private equity fund he runs, which buys undervalued brands like Frisch’s Big Boy and Fuzzy’s Taco Shop, and has franchisee partners operate the businesses, then get paid from both sides of the ledger.

Clearly it’s why Hashim says franchising is “perhaps the best business invention ever, so we are in the right business.”

VIGILANCE CLOSER TO HOME DDIFO General Counsel Carl B. Lisa learned years ago that vigilance was an important tool for engaging with Dunkin’ Brands.

Vigilance paid off in 2011 when Dunkin’ Brands agreed to a new process of negotiating changes to the franchise agreement. He’s called 2011 “a watershed moment,” because there was a general

understanding that franchisees would have opportunities to review any material changes before they became the rule.

That changed this year when Dunkin’ Brands filed a new franchise agreement, which Lisa characterized as a “step backwards,” and he used the platform of the National Conference to lay out some of the reasons why. Even though Dunkin’ rescinded the changes for the remainder of 2016, Lisa said there is no telling what might be included in a 2017 version, which is being drafted now.

Among the more notable changes included in the brand’s 2016 agreement were those resulting from the National Labor Relations Board’s Joint Employer decision. For example, the brand wrote that franchisees now “have the sole right and responsibility to exercise day-to-day control over your franchised business,” and added specific terms like training, disciplining and scheduling of employees in order to “distance itself from liability of the acts of franchisees,” Lisa said.

In addition, the brand wrote into the 2016 agreement important specific changes that gave it much broader rights of first refusal around transfers involving franchisee ownership, whether through sales of stock or through gifts to family

members.

Lisa was quick to remind National Conference attendees that his law firm reviewed the changes at the behest of DDIFO and characterized membership in the organization as valuable because it is focused entirely on the well-being of its franchisees.

(DDIFO published details of the franchise agreement changes in the June/July 2016 issue of Independent Joe).

“Who’s watching out for this other than the DDIFO?” he asked, noting that the Brand Advisory Council didn’t spot these changes, nor did it trigger any franchisee lawyers to conduct a review.

Lisa suggested that franchise owners would be far better served if the BAC pressed Dunkin’ Brands to return to its previous practice of providing a final draft of the next year’s proposed agreement, featuring tracked changes of language from the prior agreement. Echoing the theme of vigilance, Lisa also reminded DDIFO members in attendance that, unless the BAC gets to the table with Dunkin’ in short order, the new 2017 agreement will be filed and “franchisees will have zero input.”

IF YOU’RE NOT AT THE TABLE… Washington insiders like Michael Layman, the VP of Regulatory Affairs for the International Franchise Association (IFA), have an expression they like to use when convincing franchisees why it’s

16 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

important to develop relationship with their lawmakers. “If you’re not at the table, then you’re on the menu.”

In a year when the franchising industry is under increasing pressure to comply with challenging labor and tax regulations, franchisees have more incentive than ever to have their voices heard.

“You are a special interest and you need to start acting like one,” Subway franchisee Keith Miller said. “A congressman will always take a meeting with you and you can voice your opinion with someone who actually has a vote.”

Miller, who is also chairman of the Coalition of Franchisee Associations (CFA), was a key figure in the passage of California’s Fair Franchising legislation and remains active on issues affecting the industry. He reminded the audience that many tax and regulatory issues begin at the local level and eventually find their way to Washington, so it’s important to develop relationships with their local lawmakers.

Joe Giannino, the founder of Government Relations Group, which works with DDIFO in Dunkin’s home state of Massachusetts, said policy makers want to hear from franchisees and learn about their business. “If you don’t speak up, you forfeit the right to complain when government does what it does.”

Giannino and franchisee Rob Branca, who serves on the BAC, have worked closely to change the language of the Massachusetts state law regulating which employees are allowed to receive tips. Branca has seen

firsthand how a local public servant can move into a position of influence in the government. His neighbor, Karyn Polito, served on the Board of Selectmen in their hometown of 35,000 people before going on to serve in the state legislature – she is currently the Lieutenant Governor of the Commonwealth. Branca uses the story to reinforce the point that, local business owners should have relationships with the people who make the laws that govern them.

Panelist Chirag Shah, the vice president of the Asian American Hotel Owners Association (AAHOA), which is the largest hotel association in the world, said lawmakers often don’t understand how franchisees support their local communities and assume that the brand can absorb higher labor costs and pass it down to consumers without causing any pain. That’s why it’s up to the franchisee to help educate those lawmakers.

“You have more power than the average voter because of the influence you have in your community, as an employer and a taxpayer,” which is why, Shah said, when a franchise owner meets with his state representative or mayor or congressman, he represents the interests of a great many people and can leverage that to influence the lawmaker’s understanding of an issue.

THE COMPETITIVE LANDSCAPE DDIFO welcomed restaurant analyst Roger Lipton on a panel with its own John Gordon and Bloomberg Intelligence reporter Michael Halen to discuss Wall Street’s

perception of Dunkin’ Brands and the DNKN stock. And, while all reiterated why investors like Dunkin’s “asset light” model, where franchisees invest – and risk – their own capital, they were quick to note that Starbucks has greater national penetration and a darling CEO in Howard Schultz.

Lipton, who has written extensively about the economic factors plaguing growth in the restaurant sector, said one of the biggest challenges operators face is maintaining a strong workforce. “You are really in the adolescent training business,” he reminded the audience, prompting franchisees to be more vigilant in how they hire, train and retain workers.

And, while the panel explored how competitors like Starbucks, McDonalds and local convenience stores measure up to Dunkin’ Donuts, Gordon emphasized that Canadian coffee and donut giant Tim Hortons should be included in any conversation about Dunkin’ competition.

“Tim Hortons continues to open new restaurants in U.S. markets and expand recognition of its brand,” Gordon said.

Halen, who has researched and analyzed restaurant performance since 2011, reminded franchisees that their business model is built on an important premise.

“You are selling an addictive product.

People love their coffee and will continue to buy it even if the economy struggles.”

Still, he and the others reinforced the message that franchise owners need to remain vigilant if they are to ride out the competitive and economic challenges they face now and in the future.

•

INDEPENDENT JOE • OCTOBER/NOVEMBER 2016 17

Family Legacy Guides Franchise Owner John Motta

By Lisa Iannucci

J

ohn Motta’s childhood memories are soaked with sunshine and soccer balls. Steeped in the bayside community of Bristol, Rhode Island, where the DaMotta family settled (John later shortened his name), was a community of Portuguese immigrants.

Soccer was their game and, for John, it became very personal.

“My father built the first soccer field in town, which is still there at Colt State Park,” he says of his father, John. “As soon as I was walking, I was on soccer fields with my dad.”

Soccer has remained John Motta’s avocation, throughout his successful career as a Dunkin’ Donuts franchisee. Beyond playing the game, Motta started refereeing in 1986, eventually becoming chairman of the Referee Committee for the United States Adult Soccer Association.

His involvement in soccer has opened many doors.

“In 1992, the national team of Portugal came to play the United States at Soldier Field in Chicago and I was there as an official

18 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

translator/liaison,” he said. “They played the national anthem of Portugal and then the United States and there was such pride at knowing that these are my two countries. The hairs on my arm stood up. I’ll always treasure that night.”

Two years later, he would attend the Super Bowl of soccer, the World Cup. “I was the official liaison and escort for President George Bush Sr, to three World Cup games,” says Motta, who has a photo with both the former president and the owner of the New England Patriots, Robert Kraft.

“Owning my own business has given me the opportunity to do these extracurricular activities and meet people all over the world,” says Motta. “It was a once-in-a-lifetime experience to be at the World Cup.” Well, for Motta, it was twice-in-a-lifetime. In 1999, he again accompanied the U.S. Women’s Soccer team to the World Cup, and sat with former President Bill Clinton. It was the memorable World Cup where United States soccer player Brandi Chastain

made a left-footed penalty kick to win the final game and then ceremoniously tore off her shirt.

“After the game was over, I remember walking with my wife and the president of the U.S. Soccer Federation around the field, taking it all in that our women were world champs,” says Motta. “I took a chunk of grass from the field where the penalty shot was taken.”

John DaMotta made sure to instill his love for soccer in his son.

He also helped direct John into the family business. He had a family connection to Dunkin’ Donuts through his brother-inlaw, Antonio Andrade. Antonio’s brother Manuel was the first Portuguese immigrant to enter the Dunkin’ system and DaMotta saw how the business was proving successful. DaMotta invested everything he had to buy his own Dunkin’ Donuts restaurant in Newton, Massachusetts.

Motta remembers when he was 21 years old and Dad pulled him and his siblings aside to ask what would be the defining question in his life. Did he want to go to work at Dad’s Dunkin’ Donuts shop?

It was an easy answer. “I said, ‘Okay, let’s do it.’”

Years later the scene was repeated when Motta – who by then owned 10 of his own franchises –asked his four children the exact same question.

“When my youngest was a senior in college, I sat them down and asked them if they wanted to pursue their careers or work for Dunkin’ Donuts,” he said. “Without hesitation they all chose to work for Dunkin.”

When it was his time, Motta knew going to work for his father would be hard, but he also knew the effort would pay off.

“I said yes to my father because I saw how successful my relatives were and how there was an opportunity to work for yourself, be a supervisor, and make decisions on growth and development,” Motta says, also recalling the challenges he faced getting his own network off the ground.

In 1985, Motta and his brother-in-law, Antonio Quintanilha, purchased one of his Dad’s four stores in Newton. “That partnership lasted only about a year,” Motta says, recalling how he wanted to be more hands-on at the store, but was spending most of his time in New Hampshire managing Dad’s shop in Nashua. It was 40-miles from the Boston suburb of Newton, a drive that could take two-hours on the area’s gridlocked roads. It wasn’t working.

They sold the Newton shop, and Motta ultimately went solo in 1987, buying his first franchise in Merrimack, New Hampshire, just 15-minutes up the road from Nashua.

“The store I purchased was not as busy as the one I was managing for my father, but it was still a good shop,” he says. “It had been the first Dunkin’ Donuts drive–thru in the United States.”

He next purchased his father’s store in Nashua. “When I was

running it for my dad, it was like I owned it anyway.”

At the time, Nashua was a city of approximately 75,000 people and only had two Dunkin’ locations. “There was a lot of growth opportunity here,” he remembers. A local businessman approached him to develop a new store. “When you take over an existing shop, it’s an easy transition,” he says. “Developing one, getting plans done, and making deals with the landlord was totally new territory for me. I was very cautious because, again, I’d never developed a Dunkin’ Donuts from the ground up, but this store ended up being the best store I had volume-wise.”

Until now, Motta had not owned the land on which his restaurants sat, but that changed when he purchased a site to develop in Merrimack, down the street from his existing shop.

“This one was different because now I would be the landowner, the landlord, and the Dunkin’ Donuts owner, so it was another new step,” he says. “Every time I opened up a new one, it was a new challenge, a new step in my career.”

As the family business expanded, Motta’s children were old enough to start working. “They would get up at 4:30 in the morning on weekends and learn the business,” he says. “I’m a believer that how you learn your lessons in life is by going out there and working.”

When it came time to question the kids about their careers, Motta already had the 10 New Hampshire locations. “I told them we could keep these and have a good life, but if we wanted to grow we would have to look for other locations outside of New England and they would run the stores,” he says. “They all said, ‘We want to grow, so let’s look outside of New England.’”

Motta contacted Dunkin’ Brands in 2006, and they offered him a chance to develop sites in South Georgia, Jacksonville and the Florida Panhandle. He decided to pass on those locations, hoping for something further up the coast. Not long after, the operator of a six-store network in Virginia Beach put his stores up for sale.

Motta and his son bought the network, but soon found out how developing in a new territory can lead to unexpected trouble.

The Motta family agreed to open 40 new locations in Virginia Beach over a seven-year span. As he remembers it, “That was almost like opening a new store every other month for 7 years.

It looked easy,” he thought in a good market. “But then we got hit with the market collapse and the banks’ collapse and a big recession.”

Still, the Motta family moved ahead. They opened six stores, which John Motta describes as “the biggest Dunkin’ Donut dumps that I had ever seen. I told Dunkin’ Donuts they should have been embarrassed to have their name on those buildings.”

They were financing remodels when suddenly the bank cut the credit line. “I’m in Virginia Beach with all this debt, buying these locations, a store is under construction, and all of a sudden the bank tells me, ‘I’m sorry, but we have no more money for you.’ I had no way to get money.”

INDEPENDENT JOE • OCTOBER/NOVEMBER 2016 19

FRANCHISEE PROFILE: MOTTA

It was troubling to say the least. Motta recalls the sleepless nights when and his wife Maria wondered if they would lose everything. It was clear the situation in Virginia was desperate, so Motta and his accountant contacted Northern Bank & Trust in Massachusetts. Dunkin’s stability in the region was an important factor in the bank’s decision to refinance Motta’s debt and make cash available.

one little storm to put everything you worked for at risk.”

At the same time, Motta and Dunkin’ Brands agreed to reduce the number of stores that would open during this contract cycle—going from 40 to less than 20, which he calls much more manageable.

“What I love about working for Dunkin’ Donuts is that there’s always a challenge,” he says. “What’s the next big thing?

Where’s the next location I’m going to build? What’s it going to look like?”

Motta says the family learned some important lessons.

“What I learned is don’t overcommit yourself with so many locations because you don’t know where the future lies. It takes

Over the years, Motta has been active in the Dunkin’ system. He serves on the Brand Advisory Council and is co-chairman of the development sub-committee and a member of the government affairs committee. He is also chair of the DDIFO Hall of Fame committee.

His development agreement ends next year, but Motta says he’s already told Dunkin’ Brands he would like to sign another. “If I sign an agreement, it protects my area and allows us to continue to grow,” he says.

Motta doesn’t show any sign of slowing down, in his day job with Dunkin’ or his sideline work with soccer. “I’ve played soccer all my life, so it’s in my blood. You can’t take it away from me and you can’t get it out of me.”

倀爀漀瘀椀搀椀渀最 唀渀瀀愀爀愀氀氀攀氀攀搀 䌀漀瘀攀爀愀最攀ᤠ猀Ⰰ 倀爀椀挀椀渀最 ☀ 匀攀爀瘀椀挀攀 昀漀爀 伀瘀攀爀 ㌀ 夀攀愀爀猀

Motta was recently elected president of the United States Adult Soccer Association and sits on the board of the U.S. Soccer Federation, the governing body of all soccer in the United States.

His recognition as a national soccer official was highlighted again after the U.S. women’s team won their third World Cup. “I was invited in 2015 to visit President Obama at the White House after the women won the World Cup again,” he says. “I’ve met three presidents because of my soccer career.”

䌀漀渀琀愀挀琀 匀愀戀爀椀渀愀 匀愀渀 䴀愀爀琀椀渀漀 㠀 ⴀ㠀㔀㐀ⴀ㐀㘀㈀㔀 砀 ㄀㄀㈀㄀ 眀眀眀⸀猀琀愀爀猀栀攀瀀⸀挀漀洀

His favorite part about being involved in soccer, he says, is the people he meets and the friendships he’s made. “There’s absolutely nowhere in the United States I can’t go to that I can’t find some really good friends to meet up with,” he says. “Those are everlasting.”

It’s a sweet sentiment from a man who appreciates what he and his family have built. And he celebrates that every day when he indulges in his favorite sweet: a jelly donut.

“Every day, for 36 years I’ve eaten a jelly donut and had a coffee in one of my Dunkin’ Donuts shops,” he says, relishing the taste.

•

20 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

Directory of Business Members ACCOUNTING

BUILDING

COST RECOVERY

Adrian A. Gaspar & Company, LLP, CPAs

Persona Signs, Lighting, Image

EF Cost Recovery

Robert Costello cpas@gasparco.com • 617-621-0500 1035 Cambridge Street, Ste. 14, Cambridge, MA 02141 www.gasparco.com

Brendon Pierson

Peggy Pierson 732-681-4800 • peggy@brendonpierson.com PO Box 1750, Wall, New Jersey 07719 www.brendonpierson.com

Marcovich, Mansour & Assoc. Inc.

Joseph Mansour 401-334-9099 • jmansour@mm-cps.net 640 George Washington Hwy., Lincoln, RI 02865

Neovision Consulting Inc.

Nish Parekh 609-531-4444 • info@neovisioncpa.com 1246 South River Road, Ste. 101 Cranbury, NJ 08512 www.neovisioncpa.com

Sansiveri, Kimball & Co., LLP

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

BACK OFFICE BlumShapiro Consulting

Susan Koelzer 700 21st Street SW, Watertown, SD 57201 800-843-9888 x390 • skoelzer@personasigns.com www.personasigns.com

Poyant Signs

Jackie Linhares 125 Samuel Barnet Blvd, New Bedford, MA 02745 508-207-1273 • jlinhares@poyantsigns.com www.poyantsigns.com

Steven Song Marketing Door to Door

Steven Song 626-423-2660 • steven@marketingD2D.com 70 South Munn Ave., E. Orange, NJ 07018 www.marketingD2D.com

Watchfire Signs

David Watson 205-542-7881 • David.Watson@watchfiresigns.com 1015 Maple Street, Danville, IL www.watchfiresigns.com

COMMUNICATIONS Charter Business

Chris Lawrence 207-632-0562 • Chris.Lawrence1@charter.com 477 Congress St. Portland, ME 04102 www.charter.com

David Fionda 781-610-1206 • dfionda@blumshapiro.com 2 Battermarch Pk.;1 Pine Hill Dr Ste. 301, Quincy, MA 02169 consulting.blumshapiro.com

Comcast Business Services

Jera Concepts

Granite Telecommunications

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

866-407-6338 • national_sales@cable.comcast.com 500 South Gravers Road, Plymouth Meeting, PA 19462 www.business.comcast.com/internet

Daryl Chelo 401-334-3176 • dchelo@granitenet.com 1 Albion Rd., Lincoln, RI 02865 www.granitenet.com

Ed Craig 774-263-7388 • ecraig3@efcostrecovery.com 32 William St., New Bedford, MA 02740 www.efcostrecovery.com

Performance Business Solutions, LLC

Jeff Hiatt 508-878-4846 • jdh@revenuebanking.com 87 Lafayette Road, Ste. 11, Hampton Falls, NH 03844 www.revenuebanking.com

FINANCE Analytix Solutions

Satish Patel 781-503-9000 • snpatel@analytix.com 800 West Cummings Park, Ste. 2000, Woburn, MA 01801 http://insight360.analytix.com/dunkin

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

Berkshire Bank

David L. Sabourin 508-329-7851 • dsabourin@berkshirebank.com 303 Turnpike Road, Westborough, MA 01581 www.berkshirebank.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

INDEPENDENT JOE • OCTOBER/NOVEMBER 2016 21

Directory BusinessMembers Members Directory ofofBusiness Bridge Funding Group

Pinncale Commercial Capital

HIRETech

Sue Hacker Nelson 317-258-0983 • SNelson@BankUnited.com 215 Schilling Circle, Suite 100, Hunt Valley, MD 21031 www.bridgefundinggroupinc.com

Mylan Dawson 317-472-2828 • dawson@pincomcap.com 101 W. Ohio St., Suite 2000, Indianapolis, IN 46204 www.pincomcap.com

Lindsay Conderman 281-558-7100 x123 • lconderman@hiretech.com 1500 S. Dairy Ashford Rd. Ste. 240, Houston, TX 77077 www.hiretech.com

CIT

Santander Bank

Paychex

Douglas Solomon 603-433-9413 • DSolomon@cit.com 155 Commerce Way, Portsmouth, NH 03823 www.cit.com

Peter J. DiFilippo 401-752-1060 • peter.difilippo@santander.us One Financial Plaza, Providence, RI 02903 www.santanderbank.com

City National Bank

TCF Franchise Finance

Ryan Birtles (843) 576-9337 • rbirtles1@paychex.com 7204 Copperfield Ct, Wilmington, NC 28411 www.paychex.com

Paycor Inc.

David Sandoval 213-673-9026 • david.sandoval@cnb.com 555 S. Flower Street. Los Angeles, CA 90071 www.cnb.com/franchise-finance

Bill Johnson 952-656-3268 • wjohnson@tcfef.com 11100 Wayzata Blvd., Ste. 801, Minnetonka, MN 55305 www.tcfef.com/franchise

Jim Ferreira (203) 530-3512 • jferreira@paycor.com 12 Dale Dr., Greenwich, CT 06831 www.paycor.com

Eastern Bank

TD Bank

TalentReef

Deborah Blondin 603-606-4724 • D.Blondin@Easternbank.com 11 Trafalgar Square, Ste. 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

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

Chris Holland 856-505-4206 • cholland@marlinfinance.com 300 Fellowship Rd, Mount Laurel, NJ 08054 www.marlinfinance.com

Northern Bank & Trust Company

Kelley Munsell 781-569-1584 • kmunsell@nbtc.com 275 Mishawum Road, Woburn, MA 01801 www.nbtc.com

Pacific Premier Franchise Capital

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

Mark Wasilefsky 860-652-6550 • Mark.Wasilefsky@td.com 2461 Main Street, Glastonbury CT 06033 www.tdbank.com

United Bank

Mark McGwin 508-793-8342 • mmcgwin@bankatunited.com 33 Waldo St., Worcester, MA 01642 www.bankatunited.com

Wells Fargo Bank

Julianna Fritz 203-225-5894 • Julianna.M.Fritz@wellsfargo.com 4 Corporate Dr. Suite 495, Shelton, CT 06484 www.wellsfargo.com

HUMAN RESOURCES The Ahola Corporation

Tim Yonek 440-717-7620 • tyonek@ahola.com 6820 West Snowville Road, Brecksville, Ohio 44141 www.ahola.com

CareerBuilder

Kylie Cox 781-343-4351 • Kylie.Cox@CareerBuilder.com 400 Crown Colony Dr., Ste. 301, Quincy, MA www.careerbuilder.com

Cassie Altbrandt 303-667-2328 • caltbrandt@talentreef.com 210 University Ste. 300, Denver, CO 80206 www.talentreef.com

INSURANCE American Family Insurance

Todd L Laczynski 219-406-8633 • tlaczyns@amfam.com 2502 Beech St Ste 70, Valparaiso, IN 46383 www.ToddLaczynski.com

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

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

Marks & Klein LLP

Justin Klein 732-747-7100 • justin@marksklein.com 63 Riverside Avenue, Red Bank, NJ 07701 www.marksklein.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.

22 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

PLEASE VISIT THE DDIFO BUSINESS MEMBER DIRECTORY ONLINE AT WWW.DDIFO.ORG Paris Ackerman & Schmierer LLP

David Paris 973-228-6667 • david@paslawfirm.com 103 Eisenhower Parkway, Roseland, NJ 07068 www.paslawfirm.com

OPERATIONS

DTT Surveillance

Mira Diza 800-933-8388 • mdiza@dttusa.com 1755 North Main Street, Los Angeles, CA 90031 www.dttusa.com

Ecolab

3M Company

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

Alarm Grid

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

Armor SafeTechnologies, LLC

Alexander Pezzolla 732-572.0706 ex 202 • alex@jarrettforcash.com 1315 Stelton Road, Piscataway, NJ 08832

Bill Muenkel 952-484-4875 • wemuenkel@mmm.com 3M Center, 220-12E-04, St. Paul, MN 55144 www.3M.com/communications

Joshua Unseth 954-933-5095 • support@alarmgrid.com 2510 NE 47th St, Lighthouse Point, FL 33064 www.alarmgrid.com/alarm-monitoring-dunkin-donuts Patrick Moore 214-636-8409 • prmoore@armorsafe.com 5916 Stone Creek Dr., The Colony, TX 75006 www.armorsafe.com

Bunn-O-Matic Corporation

Todd Rouse 800-637-8606 • Todd.Rouse@bunn.com 1400 Stevenson Drive, Springfield, IL 62703 www.bunn.com

Cardtronics

Tom Spooner 973-452-4131 • tspooner@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

Crane Payment Innovations

Ray Picard 603-809-3584 • ray.picard@cranepi.com 1 Executive Pk. Dr. #202, Bedford, NH 03110 www.CranePI.com

HME Drive-Thru Headsets

Jarrett Services ATM, Inc.

New England Drive-Thru Communications

Angela Bechard 603-475-2046 • angela@nedrivethru.com 999 Candia Rd. Ste. 7, Manchester, NH 03032 www.nedrivethru.com

Pentair Filtration & Process

Jeannine Gaine 630-240-1298 • jeannine.gaine@pentair.com 1040 Muirfield Dr., Hanover Park, IL 60133 www.everpure.com

Prince Castle/Silver King

Zachary Waas 630-873-0088 • waaz@princecastle.com 355 East Kehoe Blvd., Carol Stream, IL 60188 www.princecastle.com

R.F. Technologies, Inc.

Michael Murdock 847-495-7350 • michaelm@rftechno.com 330 Lexington Drive, Buffalo Grove, IL 60089 www.rftechno.com

safeTstep by Payless Shoesource

Kyle Clendennen 785-295-6664 • kyle.clendennen@safetstep.com 3231 Southeast Sixth Ave, Topeka, KS 66607 www.payless.com/safetstep-1/

SKAL East, Inc

Kevin Huerth 781-806-3139 • kevin@skaleast.com PO Box 303, 31 Eastman Street, Easton, MA 02334 www.skaleast.com/index.cfm?keyword=dunkin

Solink

Christopher Beaudoin 884-463-5730 • cbeaudoin@solinkcorp.com 390 March Road, Ste, 110, Ottawa, Ontario k2k 0g7 www.solinkcorp.com

Squadle

William Chen 617-299-0753 • william@squadle.com One Broadway, Floor 14, Cambridge, MA 02142 www.squadle.com

Staples Advantage

Joe Shea 508-238-0106 • joseph.shea@staples.com 31 Commercial St. Sharon, MA 02067 www.staplesadvantage.com

SuzoHapp

Tom Orton 847-660-4289 • Tom.Orton@suzohapp.com 1743 Linneman, Mt. Prospect, IL 60056 www.suzohapp.com

Torrco

Marcos Valladares 301-775-5046 • tej.guthalagowda@workpulse.com 2 Eastwick Dr., Suite 200, Gibbsborro, NJ 08026 www.workpulse.com

Workpulse, LLC

Tej Guthalagowda 301-775-5046 • tej.guthalagowda@workpulse.com 2 Eastwick Dr., Suite 200, Gibbsborro, NJ 08026 www.workpulse.com

Thank You to Our Business Members!

INDEPENDENT JOE • OCTOBER/NOVEMBER 2016 23

A LOOK ON THE LAW

BY PETER C. LAGARIAS, ESQ.

Why elusive franchise legislation is fundamentally important F

ranchise legislation can provide fundamental protections for franchisees. Franchise agreements are often non-negotiable and provide few rights for franchisees. The fine print of franchise agreements is by, of, and for the franchisor. Without franchise statutes, franchisees’ rights are usually limited by the terms of the franchise agreement.

What can franchise legislation do to overcome the one-sided adhesion terms of the common franchise agreement?

Statutes can address the three stages of the life of a franchise: the formation, the ongoing relationship, and the ending of the relationship. But such laws are absent from most states: a majority of states have no franchise laws at all. Of those that do, almost none of them govern the ongoing relationship.

Franchise formation: Franchise legislation may address misrepresentations and fraud in the offer and sale of franchise units.

One of the sleight of hand provisions in many franchise agreements, called a “no-representation and no-reliance clause,” is aimed at insulating franchisors from claims for fraud in the sale of franchises.

Here is how no representation and no reliance provisions work. Buried deep in the agreement, they state that no additional representations were made in the franchise sale other than those set out in the franchise agreement and FDD, and that the franchisee relied on nothing else in buying the franchise. But in reality franchisees often ask questions of the franchise sales staff, who actively seek to complete sales by providing additional information. According to the no-reliance clause, the franchisee is supposed to determine which statements are proper and disregard any others, including earnings claims they asked for and were given. A properly drafted

24 INDEPENDENT JOE • OCTOBER/NOVEMBER 2016

franchise statute could forbid the use of no-representation and no-reliance clauses, or declare them to be void, and stop misrepresentation in the sale of franchises.

End of the relationship: Franchise legislation sometimes addresses franchise terminations and non-renewals. Most franchise agreements provide that the franchisor can terminate the agreement a myriad of reasons. Statutes can limit termination only to cases where there is good cause, and require the franchisor to provide notice and an opportunity to cure, thus giving the franchisee a chance to avoid termination. Statutes can also provide a right to renewal, and protect franchisees’ equity by requiring approval of sales and assignments of franchise agreements to qualified buyers. Such statutes recognize that franchisees have too much money, capital and sweat equity in their businesses to be subject to arbitrary terminations, denials of renewals, and refusals to allow transfers of franchise agreements.

Do these things happen? Unfortunately, they do. Franchisees in some systems are targeted for termination, or threatened with it, unless they accept expensive new programs or pay for “voluntary” remodels.

Simply put, the modern franchise agreement makes almost every franchisee vulnerable to their franchisor’s overreach.

Statutes can help to level the playing field.

During the relationship: Franchise legislation may protect franchisees from unfair conduct during the ongoing life of his or her relationship with a franchisor. Unfortunately, only a handful of states provide statutory protections for franchisees during the term of their franchise relationship. Thus, if a franchisor puts another competing franchise outlet near a franchisee’s existing unit – which cannibalizes the

existing franchisee’s customers and reduces his or her sales – the case will be decided on the contract language.

Unfortunately, such language often directly or indirectly immunizes the franchisor’s conduct. Likewise, if a franchisor requires its franchisees to purchase products used in the business from specified vendors, franchisees generally must do so, even if the product is overpriced because the franchisor is receiving kickbacks. Statutes can address unfair conduct like permitting encroachment and making decisions based on kickbacks.

In the last few years in California, the Coalition of Franchisee Associations, with the support of franchisees from multiple systems, including 7-Eleven and Subway, sought to strengthen California’s franchise laws in each of these three key areas. The ambitious initial effort failed, and, as a result, the next proposed bill was limited to amending the California Franchise Relations Act regarding unfair terminations and transfer denials, and protecting franchisee equity. That effort took three more years and ultimately succeeded, despite an initial veto by Governor Jerry Brown. Initiatives are proceeding in other states as well, including Maine, Massachusetts, and Pennsylvania. These efforts are worthwhile and should eventually bear fruit. Why? Because the need to overcome one-sided unfair franchise agreements and level the playing field for franchisees is enormous and fundamental, and because justice is on the side of franchisees.

•

Peter C. Lagarias is a nationally known trial lawyer with Lagarias & Napell, LLP, a law firm in San Rafael, California representing franchisees and franchisee associations. He is a certified specialist in franchise and distribution law by the Office of Legal Specialization of the State Bar of California.

What Matters To You?

EXPERIENCE MATTERS Working with PPFC gave me a lot of

With decades of franchised restaurant lending experience, we can quickly review your business performance and financing requirements, and then recommend a loan structure that best

confidence. They really understand the restaurant business. They helped me move through the loan process quickly and were great to work with. — 6-Unit Midwestern Franchisee

fits your needs.

www.ppbifranchise.com ∙

402.562.1800

Exceptional An

Family OfďŹ ce Experience JCM PRIVATE CLIENT GROUP Joyal Capital Management is a leader in providing very sophisticated deliverables for every client on demand. With more than fifteen companies and thirty years of experience, JCM provides solutions for Proprietary Estate Planning, Growth Financing, Franchise Development, Mergers and Acquisitions, Strategic Recapitalization, Business Advisory Services and Private Equity Investments.

FOR MORE INFORMATION CONTACT PRINCIPAL RICHARD P. JOYAL AT 508.283.1434 OR VISIT WWW.JOYCAPMGT.COM.