Independent Joe #50 - June/July 2018 by Dunkin' Donuts Independent Franchise Owners

SODA WARS

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RISING WAGES

LOOKING BACK

June/July 2018

Award-Winning Magazine

for D D Independent Franchise Owners

8 1 0 2 O F I D D NATIONAL CONFERENCE

Succeeding as a Business Owner in the Next Generation

HALL OF FAME

SUPPLY CHAIN

LEGAL

Welcoming Three New Members

Delivering the Goods

Issues Affecting Franchisees Today

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SICK LEAVE

WHAT’S

BREWING

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FRANCHISEE FINANCING FOR Remodeling Lines of Credit Real Estate Restructuring Refinance Building and Acquiring Stores

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MESSAGE FROM THE EXECUTIVE DIRECTOR This issue of Independent Joe is our 50th issue. DDIFO first published “Indy Joe” back in the spring of 2009 as a 16-page quarterly publication. The cover of the inaugural issue teased a feature on the benefits of mediation versus litigation, along with a photo insert of Brad Pitt carrying a medium cup of Dunkin’ coffee. Mediation may still be a wise road to follow and Brad Pitt may still run on Dunkin’, albeit without Angelina Jolie, but there’s been much that’s changed since that first issue nine years ago. Dunkin’ Brands’ leadership has undergone significant changes during that time. In January 2009, Nigel Travis took over as CEO. Later that year (and after we published issue No. 1) Dunkin’s controversial chief legal counsel Steve Horn left the company. It was never lost on Indy Joe that Horn’s resignation came after this organization publicized how the Horn’s Loss Prevention initiative was a profit center suing franchisees and churning ownership groups. Furthermore, since that first issue came out, Dunkin’ went to Wall St. with a highly publicized initial public offering of stock on the NASDAQ exchange at an initial price of $19. To underscore the changes in the DNKN stock, Wall Street analyst Piper Jaffray recently upped the Dunkin’ target price to $70 per share. In 2009, Barack Obama was inaugurated President and assumed leadership of a nation stinging from a global recession and facing 10 percent unemployment. Today, President Donald Trump, a bona fide political newcomer, is presiding over an expanding economy with a 3.8 percent unemployment rate and for the first time ever, more jobs open (6.7 million) than there are unemployed individuals (6.1 million) to fill them. In 2009, organized labor was metaphorically singing “Happy Days Are Here Again!” as the Obama administration moved to codify mandates extending employee pay, rights and benefits while simultaneously tightening the screws on small business. By contrast and illustrative of significant change, on the last day

of its 2018 session, the U.S. Supreme Court ruled in Janus v AFSCME that the government cannot mandate that employees pay fees to unions to which the employee may not wish to belong. And, while the Janus decision only applies to public employee unions, many believe it will ultimately apply to private sector unions as well. DDIFO has changed in many ways as well. In 2009, our membership was largely concentrated in the six New England states, with some representation in New York, New Jersey, and a handful of shops in the Midwest. Today representation is more widely spread across the Dunkin’ footprint. One year after Indy Joe came on line, DDIFO held its first National Conference. A few weeks ago, the 8th annual National Conference was held in New Orleans and welcomed members and nonmembers alike from 22 different states. Yet, despite these examples, many things have not changed at the Canton, Mass. headquarters of Dunkin’ Brands. Dunkin’ continues to push costs down onto franchisees. Store remodels now range anywhere from $425,000 to $750,000, and every penny of it comes out of the franchisee’s pocket. Similarly, Dunkin’ has made material changes to its franchise documents, many of which may not be in the best interests of franchise owners. Case in point, the 2016 Franchise Agreement Dunkin’ put on the table, which could have negatively impacted franchisee equity had DDIFO not stepped in to review the documents and press the brand for changes. I wanted to be sure to reference the Janus decision because I see some major parallels between the new rules under which public employee unions now must operate and how DDIFO has functioned over its almost 30 year history. DDIFO’s mission is to represent the interests of the Dunkin’ franchise owner community, whenever and wherever their interests are being threatened. It doesn’t matter if the franchisees under threat are members of this organization or not. It doesn’t matter if the threat comes from the federal government, or a state or local government. It doesn’t matter if the threat comes from Dunkin’ Brands, in the form of new mandates or stealthily

adopted language changes. Since its inception, DDIFO has always kept that vigil and it will continue to do so. The former chief executive of the Hardees and Carl’s Jr chains, Andy Puzder, said something that stuck with me when he took the stage at the National Conference in New Orleans. He told the crowd, “If you own a business, you have to speak up.” And he encouraged people to speak up both as individual owners, and as part of their system, if they operate a franchised business. Puzder’s point is that those who own businesses, pay corporate taxes, and contribute to their communities are also the ones trying to find workers to fill the nation’s 6.7 million open jobs. As a group you have leverage to see that the rules and regulations impacting your industry don’t interfere with your ability to hire people and recognize profits. It remains to be seen whether the economy will continue the growth it has achieved under the business-friendlier policies of the Trump administration. And it remains to be seen whether the public employee unions will survive the Janus decision. Who knows if Brad Pitt still runs on Dunkin’? What we do know is that this organization will continue the mission of communicating, educating and advocating on behalf of Dunkin’ Donuts franchise owners. You only need to look within the pages of this magazine to know we have our eye on the ball. Ed Shanahan DDIFO Executive Director

INDEPENDENT JOE • JUNE/JULY 2018

SUB HEADLINE

CONTENTS From the Executive Director: What do 50 issues of Independent Joe mean to you?. . . . . . . . . . . . . . . . . . . . . 3 What’s Brewing: A Look at State Issues Around the Footprint . . . . . . . . . . 7 EL

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Summer Season Help Wanted. . . . . . . . 9 Looking back over 50 issues of Indy Joe. . . . . . . . . 12

9 16

19 7

Succeeding as a Business Owner in the Next Generation.. . . . . . . . . . . . . 16 10 Key Takeaways. . . . . . . . . . . . . . . . . . . . 18 Legal Issues Affecting Franchisees Today. . . . . . . . . . . . . . . . . . . 19 DDIFO Welcomes Three New Members to the Franchisee Hall of Fame. . . . . . . . . . . . . . . . . . . . . . . . . . 20 National Conference Photo Album...24 Delivering the Goods. . . . . . . . . . . . . . . . 30 4

INDEPENDENT JOE • JUNE/JULY 2018

Directory of Business Members............. 27

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Independent The Magazine for DD Independent Franchise Owners June/July 2018 • Issue #50 Independent Joe® is published by DD Independent Franchise Owners, Inc. Editors: Edwin Shanahan, Matt Ellis Contributors: Cindy Atoji-Keene, Erin Z. Bass, 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 978-587-2705 • info@ddifo.org • www.ddifo.org DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners. INDEPENDENT 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 © 2018 Printed in the U.S.A.

GROW YOUR SALES

10% OR MORE “One day we advertised our 99 cent breakfast oatmeal. That morning the manager called me to say that we sold out all of our oatmeal. I noticed that whatever we advertise on the LED sign sells fast and usually sells out.” GIANNA D’ANGELO Dunkin’ Donuts®, Everett, MA

Learn more at watchfiresigns.com/donuts

INDEPENDENT JOE • JUNE/JULY 2018

WHAT’S

BREWING A LOOK AT STATE ISSUES By Scott Van Voorhis Looks like it could be a long, hot and potentially expensive summer for Dunkin’ and other quick service franchise owners around the country. Several states and cities hiked their minimum wage on July 1, with a few now even pushing past the much ballyhooed $15 an hour mark. Activists pushing for sick leave mandates are gaining ground in Texas and Michigan, following in the footsteps of campaigns that have passed similar legislation in 10 other states and Washington, D.C. In California, there has been an amazing about face for communities already collecting taxes from the purchases of soda. Such taxes are now banned until 2031. Across the country in Pennsylvania, the highest court is preparing a decision on a legal challenge mounted by the business community that could cancel Philadelphia’s controversial soda tax.

Sick leave campaigns brewing In Dunkin’s home state of Massachusetts, the Legislature has just approved a bill calling for mandatory paid family and medical leave. The so-called “grand bargain” bill would allow workers to take up to 12 weeks of paid family leave to care for a new child or 20 weeks of paid medical leave to deal with a serious injury or illness for themselves or family members. The bill also calls for raising the minimum wage to $15 an hour by 2023.

AROUND THE FOOTPRINT Meantime, Dunkin’ franchise owners in Michigan and Texas are watching closely as activists push proposals that would require businesses to provide paid sick leave. Working Texans for Paid Sick has collected 110,000 signatures in a bid to either force the Dallas City Council to vote on a sick leave proposal or to put it on the Nov. 6 ballot for voters to decide, the Texas Monitor reports. Dallas is the third major city in Texas targeted by the activist group, which wants to force franchise owners and others to provide up to 8 days, or 64 hours, of paid sick leave a year. For businesses with 15 employees or less, that number would be six days or 48 hours. The Austin City Council passed a mandatory sick leave law – the first of its kind in the state’s history – earlier this year. San Antonio voters will go to the polls this November to vote on the proposal by the activist group. Still, opposition is brewing, with the conservative Texas Public Policy Foundation’s Center for the American Future having already filed suit in a bid to derail the new Austin law. In Michigan, sick leave supporters have submitted 380,000 signatures to state officials in a bid to get the proposed Earned Sick Time Act on the fall ballot, the Detroit Free Press reports. The proposal by the group Michigan Time to Care would mandate up to 72 hours of sick

time for employees of businesses with ten or more workers, and 40 hours for smaller firms. The move comes three years after the Michigan Legislature voted to bar local cities and towns from passing their own sick leave ordinances. The Michigan Chamber of Commerce warns the proposal could backfire, forcing businesses who can’t afford to provide the benefit to cut back on raises, bonuses and hours for their employees. The chamber said the proposal is a “onesize-fits-all- … mandate,” arguing companies that can afford sick leave typically provide it while for those that don’t, “cost is the driving factor.” “A paid leave mandate, if approved by voters, will have a chilling impact on many businesses,” the Chamber warns on its website. Ten states and Washington, D.C., have sick leave laws on their books, including Oregon, Massachusetts, Rhode Island and Vermont, with New Jersey officially joining the ranks on Oct, 29, according to the National Conference of State Legislatures.

Soda wars end in California; bubble over in Pennsylvania Just weeks ago, California killed any chances of a statewide soda tax, thanks to a cleverly worded legislative compromise

INDEPENDENT JOE • JUNE/JULY 2018

WHAT’S

BREWING that ultimately led to Republicans and Democrats in this deep blue state passing a bill the governor could sign. The beverage industry had helped bankroll a ballot question with the help of the California Business Roundtable that would have required local cities and counties get a two-thirds vote, instead a simple majority, in order to raise any taxes. The organization offered to pull the ballot question if Governor Brown would sign the bill that barred cities and counties from imposing any new taxes on food or drinks for 12 years. Brown signed it on June 28. The battle is being waged differently in the Pennsylvania legislature, where Philadelphia’s controversial soda tax would get the axe under a proposal by Republican State Representative Mark Mustio. His bill would also prevent other Keystone State cities and towns from passing similar soda taxes. Mustio contends that Philly erred in not getting permission first from the state Legislature. The proposal comes as the Pennsylvania Supreme Court weighs a lawsuit by local business and trade groups challenging the 1.5 cent-an-ounce tax on sweetened beverages sold in the City of Brotherly Love. In January 2017, Philly became the second city in the nation (after Berkeley in 2015) to pass a soda/sweetened beverage tax, but the proposal has been met with fierce opposition from the American Beverage Association and other business groups. Among other beefs, the group contends that Philly consumers are effectively getting taxed twice, first with the sales tax and then with the soda tax. While the tax is levied on distributors, it is effectively passed on to consumers, opponents contend. At a hearing in May, justices on the state’s highest court zeroed in on the legal challenges. A state law already prohibits Philadelphia from imposing taxes on items already taxed by the state.

But the tax has also fallen short in meeting initial revenue projections, forcing city officials to scale back spending plans on various programs and renewing criticism from business groups that the tax is a heavy burden and can’t be maintained. Fighting obesity with soda taxes “not sensible,” group contends The battle over Philly’s soda tax is likely a preview of what’s to come as activists turn their sites on “big sugar” and press for similar taxes in cities and states across the country. Already, 30 countries around the world have slapped taxes on sugary beverages, according to Bloomberg, the financial news service founded by former New York Mayor Michael Bloomberg, whose own push for a soda tax in the Big Apple fizzled. The rub against soda, critics contend, is that people imbibe soda and sugary drinks without cutting back in other areas to offset the extra calories they are gulping down. But Katherine Loughead, a Policy Analyst with the Center for State Tax Policy at the Tax Foundation, thinks soda tax activists are all wet in their belief that penalizing consumers to take a bite out of the obesity epidemic. Sure, soda sales have gone down when they have been hit with new taxes, but that’s simply the law of supply and demand, not people getting more health conscious. Rather, Loughead points to a 2012 Cornell University study that found consumers coped with soda taxes by buying more beer. Whether it is beer or other treats, people who cut back on soda after a tax increase replace those calories elsewhere, she notes, pointing to National Health and Nutrition Examination Survey data. But if we are going to start using taxes to fight obesity, why stop there?

“The argument is that Philadelphia did this artfully to get around the Sterling Act,” Justice Max Baer said, the Philadelphia Inquirer reports. “The question is: Did they succeed?”

Taken to its logical conclusion, this approach of taxing our way to health might someday include penalties for watching too much TV or skipping workouts, Loughead suggests.

City officials have touted the tax, saying it has raised more than $96 million.

“Perhaps we could do annual weigh-ins and calculate an income tax credit

INDEPENDENT JOE • JUNE/JULY 2018

program for those that meet the expertlydetermined ideal number,” she writes. Japan instituted a weigh-in program earlier this year. According to The New York Times, people between the ages of 40 and 74 will have their weight and waistlines checked as part of their annual checkups. Men are allowed 33.5 inch waistlines; women are allowed 35.4 inch waistlines. People who don’t measure up – or out in this case – will be given dietary guidance and re-education on proper food and nutrition.

A summer of rising wages Beginning July 1, the minimum wage jumped in several cities and states. Washington, D.C., is pushing ahead with one of the biggest wage hikes in the country, to $13.25, minimums in Maryland and Oregon will rise to $10.10 and $10.50, respectively. A number of cities raised their minimum wages on July 1, including Portland, Maine, Chicago, Minneapolis, and San Francisco, where the minimum hourly rate hit $15 an hour. Some cities are now even pushing beyond the $15 an hour mark, including Seattle, which is requiring $15.45 an hour of companies that don’t offer health insurance, according to Bloomberg Law.

Summing up New laws, mandates and regulations can quickly chew up profit margins for small business owners, so it pays to keep a close eye on new proposals that could impact your bottom line. While the number of states forcing businesses to offer paid sick leave remains in the minority at 10, activists appear to be gaining momentum in Michigan and Texas. The battle over Philly’s soda tax also has wider implications, as other groups eyeball opportunities for copycat legislation around the country should the city’s tax on sweetened beverages survive legal challenges. Meanwhile, the cost of doing business rose in several states on July 1, when a number of minimum wage hikes became law. Throughout the year, Independent Joe will continue to monitor the issues, rules and regulations that will impact how you operate your business and profit from it.

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FEATURE Photo credit:Watchfire Photo Illustration: Caroline Cohen

hese are the vacation spots that symbolize an idyllic summer: Cape Cod to Mackinac Island; Ogunquit, Maine to Hilton Head. They’re as American as apple pie. But increasingly, these hot spots have relied on foreign workers to do jobs that would otherwise go unfilled. With an unemployment rate hovering around 4 percent and a scarce year-round population in many tourist areas like these, businesses – especially those in the hospitality and restaurant industries – have traditionally turned to seasonal guest workers from countries like Ukraine, Belarus, China and Bulgaria. Last summer, changes to the visa program caused chaos and a severe shortage of short-term workers. Some restaurants and hotels had to open late or close early in the season or cut-back or reduce services, with others scrambling to find staff. And this summer there’s a feeling of deja vu for many business owners – combined with the hopes that somehow they’ll find enough employees.

" The cultural benefits of this program can’t be overemphasized...We do five times the sales in the summer versus the winter, which is a tremendous fluctuation. I count on these people coming over to make my business work." — Greg Nigro

On the eastern seaboard, Dunkin' Donuts franchisee

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FEATURE

Greg Nigro has 17 stores, stretching from Richmond, Virginia, to the Carolina coast. He has five shops in the Outer Banks, where the population swells from 35,000 residents to more than 350,000 between mid-May and early September. One of Nigro’s Dunkin’ shops, off the beach in Elizabeth City, is large enough so that there’s usually no labor shortage year round, but for most of his Outer Banks stores, Nigro says, “Even if every person – child through elderly – worked, it would not be enough to support the tourists.” Nigro hires international students on a J-1 visa to fill the workforce gap. The program allows students to work and travel in the

U.S. during the summer. These student workers have become a summer staple at not just Dunkin’ Donuts, but elsewhere— stocking grocery shelves, cleaning hotel rooms, selling clothing at outlets, selling french fries and ice cream. Nigro works with sponsoring agencies to provide housing and transportation and help workers navigate cultural differences. "The cultural benefits of this program can’t be overemphasized,” says Nigro, who has seen lifelong friendships develop and an increased global awareness. According to the U.S. State Department, about 300,000 foreign visitors from 200 countries, mostly under age 30, come to this country for temporary work every year.

Franchisee Greg Nigro relies on dozens of international students to supplement his labor force in summer resort towns where he operates Dunkin' Donuts shops.

Nigro is in the camp that these workers are not taking jobs away from Americans, but are instead filling vacancies that locals can’t. “We do five times the sales in the summer versus the winter, which is a tremendous fluctuation. I count on these people coming over to make my business work,” says Nigro, who relies on 50 to 60 overseas helpers, from mostly Eastern Europe and Asia. He rotates them in and out to fill out his work force. He also saves on payroll taxes, since J-1 visitors do not pay Social Security, Medicare or federal unemployment taxes, so employers don’t have to match these costs. But an executive order issued last year by President Donald Trump, “Buy American, Hire American,” has raised concerns that the U.S. will limit the number of visas it issues and restrict J-1 students to work only two out of four seasons – spring and summer, for example, which would make it very difficult for business owners like Nigro to staff the shoulder seasons. Since much lead-time is needed to process these short-term visas, Nigro started early this spring to identify applicants and find them housing. Another location he owns, in Williamsburg, also has seasonal staff shortages in the summer when tourists from colonial Williamsburg and Busch Gardens stream in; he supplements regular staff there with a handful of J-1 students during the summer months. But not everyone thinks that guest workers are a good solution to a tight labor market. Todd LaLumiere, a Dunkin’s franchisee in Annapolis, MD, first used temporary foreign workers over a decade ago when he was opening up his first five DD shops and didn’t have enough people to run his business. “It was like going to the people store,” says LaLumiere, who sponsored students in the J-1 trainee and intern program, which allows college students and others to receive 18 months of work and training experience in the United States. While he ended up having two general managers as a result of the J-1 management program, he found that over time, it was much harder than it was worth. “It wasn’t a good solution for me,”

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Photo Credit:@melisfoulks

LaLumiere says. “Kids come and go so fast, and you need to teach them what a bagel is; what a dollar is; how to make change – then they’re only here for two to three months and you have to go through the whole thing over again.” He says he found J-1 students not unlike local students he hired: “A perfect bell curve of humanity [where] two kids are great; two kids awful, and all the rest in the middle, no matter where they came from.” LaLumiere admits student visas might make sense in rural areas or for seasonal businesses, but he found that ramping up his recruitment and offering better benefits was a better way of attracting reliable help. “Everyone feels the labor shortage,” says LaLumiere. “We’ve been working really hard to make our business attractive to workers and hang onto them. It’s improving the culture of your business and not relying on a revolving door of workers.” In the meantime, Nigro deals with labor

shortfalls the same way many employers are responding in an ever-tightening labor market: if you can’t find enough employees, give the ones you have more work. He has district managers and supervisors fill in; other staffers work overtime. Sometimes he can contact overseas agencies and recruiters and request some additional J-1 students or find a guest worker who was scheduled to work in another state and move them to his business instead. “It creates some anxiety and a lot of work on the back end to try to figure out how to fill slots and positions,” says Nigro. One of his Outer Banks shops in secluded Corolla even closes down for five months, because there’s only 390 people in the winter – 100,000 in the summer – and it’s not economically viable to keep the store open. If the worker shortage became severe enough in other parts of the barrier island, he’d consider that same option but

he’d like to avoid that at all costs. So the weather is finally warmer, which Nigro loves, but the summer labor forecast remains cloudy. Nigro hopes the political climate will change and become more favorable toward foreign-visa workers. After all, there are people lining up to buy coffee and donuts.

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" Everyone feels the labor shortage. We’ve been working really hard to make our business attractive to workers and hang onto them. It’s improving the culture of your business and not relying on a revolving door of workers." — Todd LaLumiere INDEPENDENT JOE • JUNE/JULY 2018 11

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50 ISSUES OF IJ

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Looking Back Over 50 Issues of Indy Joe

here is a sense of continuity that comes with publishing a magazine every two months. For DDIFO, this magazine has provided an opportunity to explore and explain in detail how the business of running a Dunkin’ Donuts restaurant is constantly changing. Our work requires that we are always looking ahead—to understand how the past can impact the future and to present information in a context that will be beneficial to our members. With this being our 50th issue, we wanted to take a moment to look back at some of the important and notable stories we’ve covered and remind you that Independent Joe was recognized with Folio Magazine’s national Eddie & Ozzie Award for cover design in 2014. One thing we noticed as we combed through piles of old magazines: Even as the look and feel of the magazine has changed over time, the content is consistently focused on the great work franchisees do every day to keep Dunkin’ Donuts the premiere coffee and snacks brand in America. There is a strong sense of loyalty among the ranks of franchisees, whether they be in Massachusetts, Missouri or Montana. There is also a sense among franchisees that the relationship they have with their brand can be altered by circumstances beyond their control. It is why DDIFO exists and is a model for other franchisee associations to follow. Even as we work towards publishing IJ No. 51, we don’t want to miss the chance to share with you some of the highlights of our first 50 issues. The following snapshot doesn’t come close to commemorating all the work our team has accomplished, but like IJ itself in 2009, it’s a start.

AUGSEPT, 2009

The second issue of Independent Joe devoted several pages to recalling the contributions franchisee John Henderson made to the Dunkin’ franchisee community.

Henderson was part of the original group of franchisees that established the first supply chain cooperative for Dunkin’ franchisees— the forefather of today’s National DCP. As franchisee Bill Donovan remembered, “John said, ‘Let’s hire guys to bring [supplies] to us.’ It started out simple without much of a budget. It was just a flicker of a shadow of what it is today.” The issue came out just months after Henderson’s death shook the franchisee community. The article we published announced the establishment of a golf tournament in Henderson’s name. The first John Henderson Memorial Tournament was held in August, 2009. Like Indy Joe, the annual tournament is still going strong. Throughout his life, John Henderson devoted his time and effort to raising money for worthy causes, like the Special Olympics cancer research. When the disease took his life, the Dunkin franchisee community came together to ensure John Henderson would always be remembered for his good works – behind the counter and in the community. Franchise owner Joe Prazeres said, “John was all about the brand and the franchisees. Dunkin’ Donuts was his life and his commitment spread to the charities in the community.”

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When it came on line, the Chicago CML was the largest central manufacturing facility ever built for the Dunkin’ Donuts system. Independent Joe featured the news in Issue No. 3 and interviewed franchisee Vishal Shah, one of the founders of the 45,000 square facility. He said, “We were able to design [the kitchen] to maximize work flow, and the cost of our product is at, near or lower than the cost to any franchisee in our market.”

DEC 2009

At the time, Chicago had not yet established central kitchens. Shah and his partners had the foresight to build a production facility capable of expanding as more Dunkin’ Donuts shops opened in Chicagoland. Today that first Chicago CML is the second largest in the DD footprint, eclipsed by an even more impressive operation near Chicago Midway airport. It is a model other operators have since followed and, it is still one fine example of how innovation among franchisees drives the success of Dunkin’ Brands.

Discussions about how Dunkin’ Brands was allocating advertising funds generated by franchisee contributions were getting heated in 2009, right as Nigel Travis was getting established as the new CEO of the then privately held company. When Independent Joe looked into ad fund spending in Issue No. 4, what we mostly heard was that franchisees were optimistic there would be greater transparency in how ads were designed, produced and placed under the brand’s new leadership team.

DEC 2010

For decades, Dunkin’ franchisees had invested in newspaper coupons, radio ads and signs adorning the walls and fences of sports arenas. Franchise owners understood the value of smart ad spending through the pooling of funds. But over the years, many franchisees expressed concern that decisions about how that money was being spent were made without enough of their input. “Years ago, we saw ad sketches,” one franchisee who requested anonymity told Independent Joe in 2010. “More recently, we see them when they are on television. If we complain, we are told the focus groups like the ads,” he said then. Concerns in 2010 faded as Travis’s leadership team held true to their promise to make the process more transparent. Dunkin’ has maintained its lead as an advertiser in the QSR category, helping fuel excitement for new store openings in emerging and West Coast markets.

The headline said “All in a day’s work,” and for Boston franchisee George Alepedis and his general manager George Simopoulos that was the only way to approach their busiest day of the year: Marathon Monday. In Issue No. 9, Independent Joe spent the day at the Dunkin’ Donuts shop located at the finish line of the Boston Marathon. It’s what you might call “controlled chaos.”

JUNE 2011

“On a normal day, we serve around 1,100 customers, but on Marathon Day it’s over 1,500,” said Simopoulos. “We sell more of everything,” and thousands of people are lined up outside their location to get a view of the elite and not-so-elite runners completing the world’s oldest annual marathon. One lesson the team at 715 Boylston St. learned over the years is that ice can be the first thing to go. Alepedis, who has been a franchisee since the 1970s, says he never really grasped why people would want to drink cold coffee, yet iced brews are a top seller at his shops—especially when the third Monday in April is hot and humid. Alepedis used to have bags of ice delivered, until one year when they ran out, owing to the increased popularity of Dunkin’ iced coffee. That was when he installed three ice machines. On Marathon Monday one crew member is assigned to scoop ice and monitor the machines’ performance. In fact, the crew has hand signals they use to keep operations behind the busy counter running smoothly—like the distance runners passing by their shop and through the finish line. Two years after Indy Joe visited the Copley Square shop, terrorists detonated two homemade bombs just yards from Alepedis’s front door. Three bystanders were killed and 264 were injured, many severely. No one inside the Dunkin’ Donuts was harmed, but the blast left a lasting impression and has changed how everyone – the Dunkin’ team included – looks at Marathon Monday.

INDEPENDENT JOE • JUNE/JULY 2018

50 ISSUES OF IJ

In 2011, the Dunkin’ Donuts supply chain was about to undergo a massive transformation—from four regional and separately operated entities to one merged supply chain cooperative, to be known as the National DCP. Franchisees had to vote to approve the merger and the DCP’s executive team was holding a road show to educate franchisees ahead of the historic vote. Independent Joe was invited into one of the meetings to understand what the franchisee community was hearing. The article in Issue No. 11 traced the process from the time on Halloween Day when the team gathered to plan their strategy to the actual road shows. Merging the management of the regional distribution centers into one national entity offered DCP a tremendous economy of scale. Before the merger, the DCP generated $1.4 billion in revenue; today, it tops $2 billion and has worked to keep the cost of goods down through improved sourcing, purchasing and distribution. As important as the merger was for franchisee profitability, the merger facilitated a new agreement with Dunkin’ Brands, which gave franchisees a “seat at the table,” in the words of National DCP board member Dipak Patel. National DCP has a role in the development of new products and has the flexibility to find multiple vendors to secure the best price for its franchisee members.

DEC 2011

APRIL 2013

By the time DDIFO published issue No. 19 in April 2013, the magazine had undergone a transformation under the leadership of Ed Shanahan and the design expertise of Caroline Barney Cohen. For the first time, and in response to what many franchisees were already talking about, the magazine zeroed in on government rules and regulations that were threatening operations and profits. Shanahan wanted every issue of the magazine to feature an article examining federal and state issues from around the Dunkin’ footprint, so franchisees would know Independent Joe was a place to turn for updates on costly issues. The feature, which we titled, “What’s Brewing,” has become a consistent source of valuable information for franchisees. Interestingly, the first edition of What’s Brewing contained information on a possible increase in the federal minimum wage. At the time, lawmakers were proposing raising the rate from $7.25 to $9.00. That effort has failed, though many states now have rates double the national minimum.

DEC 2013

OCTNOV 2014

As the Dunkin’ Donuts Independent Franchise Owners association was turning 25, Independent Joe took a look back at how the organization began.

In 1989, Dunkin’ was in the throes of a hostile takeover bid by one of its shareholders, who was interested in selling off pieces of the company to cash in on its real estate holdings. Unwilling to yield, Dunkin’ founder Bill Rosenberg made a deal to sell his coffee and donuts brand to a British company, Allied Lyons. At the time, Rosenberg approached franchisee leaders and advised they establish for themselves an independent organization that could speak for their interests. Jason Dubinsky was one of those leaders; he served as DDIFO’s first president. In 2009, before his death, he spoke to the magazine about how the situation unfolded. His interview was included in the article, “An Independent Voice for 25 Years.” “We didn’t really know the new owners or what their policies would be. They were in London and we still felt there could be a threat to our business interests. We strongly felt that if Dunkin’ was sold once it could very well be sold again,” said Dubinsky. We had no way of knowing who the future owner’s might be or what their policies might be.” Years later, DDIFO is still loyal to its mission of advocating for franchisee interests and franchisees are still wondering what would happen if the Dunkin’ brand gets sold again. In late September 2014, California Governor Jerry Brown vetoed a fair franchising bill that had been years in the making. With the stroke of a pen, Brown nearly dismantled an important piece of legislation, designed to level the playing field between franchisors and franchisees. Issue No. 28 took a close look at the effort to pass the bill. As it turned out, Gov. Brown’s dispute lay with three words contained in the bill, “standard and material breach,” which referenced what franchisors would have to prove before being able to terminate a franchisee agreement. Yes, the bill was dead for now, but, no, it was not a lost cause. Indeed, the parties, which included Dunkin’ franchisee Rob Branca, Subway franchisee Keith Miller and DDIFO restaurant analyst John Gordon, kept at it. And, in October of 2015, Brown signed Assembly Bill 525, which amended key provisions of the California Franchise Relations Act. Independent Joe allocated several pages of Issue No. 36 to a careful examination of how the bill came to life and what impact it would have on franchising.

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APRMAY 2015

In April 2015, Dunkin’ Brands announced a new deal to sell single-serve, Dunkin’branded K-cup coffee pods in supermarkets and other retail stores. The news was heralded because Dunkin’ had agreed to a 50-50 profit split.

“We believe this profit-sharing agreement is unprecedented in our industry and underscores the collaborative franchisor/franchisee relationship we have at Dunkin’ Brands and our focus on building store-level profitability,” Dunkin’ Brands’ chief communications officer Karen Raskopf told Independent Joe in Issue No. 31. Franchisees could have been forgiven for feeling like they had a case of whiplash after the news broke, because eight years earlier, Dunkin’ made the opposite decision to keep the profits it earned selling bagged Dunkin’ coffee on store shelves through its consumer packaged goods deal with Proctor & Gamble. “This was a better outcome than all of us would have hoped for because there is a win on the franchisor side and the franchisee side,” said John A. Gordon, principal of Pacific Management Consulting Group and DDIFO’s restaurant analyst. “I give the brand and [Dunkin’ CEO] Nigel Travis credit for waiting for a period of time and staying true to his word of concern about franchisee profitability.”

JUNJULY 2016

ugh review of the new form franchise agreement Dunkin’ Brands put on the table in 2016. Lisa, whose experience with the association goes back to the beginning, was surprised at the changes in the new document. In an interview for this magazine, he characterized it as “a step backwards,” because in prior years changes had been minimal. “No one expected this,” he said at the time, specifically citing changes to the provisions involving issues of wealth transfer or real estate ownership.

As a result of Lisa’s exhaustive work, Dunkin’ eventually pulled the 2016 deal off the table and allowed those franchisees whose agreements had expired, to sign the 2015 pact until a new one – a more equitable one – was written. “This is exactly why DDIFO exists,” said Ed Shanahan, the executive director. “We are the only truly independent voice for Dunkin’ franchisees with the resources capable of representing this group of owners and operators in the face of regulatory, legal or, most importantly, corporate threats.”

this day and age, people are always in a hurry, no matter APRIL- “In what time of day or what day of week, and On-the-Go serves MAY them well. It’s exponentially faster.” That is what California franchisee Matt Cobo had to say about Dunkin’s new mobile 2017 ordering system.

Based on data showing the explosion in mobile phone ordering for consumer goods, ride shares, food and beverages, Dunkin’ introduced the on-the-go ordering application to tie in with its existing DD Perks program. Ultimately, the mobile ordering app was an important consideration in the design of the Dunkin’s Next Generation stores, which feature a drive-thru lane dedicated to picking up items ordered ahead. Franchisees we talked to said the roll out of the new platform had worked well and was an instant hit with customers seeking more control and more convenience in their beverage and snack purchases. While on-the-go represented a major technological advancement for Dunkin’ Donuts, it also reinforced the relationship between the brand and its customers, according to franchisee Larry Lemos, who told us, “[It] creates a more personalized experience, because the customer’s name is on the receipt, so the server can call out, “Maria, here’s your iced coffee. Have a great day!”

JUNJULY 2017

A year ago at this time, franchisees who get their donuts from central production locations (CPL) were surprised to learn of new language in the Dunkin’ franchise agreement that changed the definition of CPLs and altered key terms in the relationship between the cooperatively owned and operated kitchens and Dunkin’ Brands.

E BR ATI N

UES OF I

A year after Dunkin’ introduced the new “Manufacturer” agreement, the CPLs are still busy baking, keeping Dunkin’ Donuts stores stocked with the best baked goods in the QSR industry, but time will tell if the new agreement means more than just calling them by a different name.

With regard to the brand’s commitment to using central production locations to bake donuts, the memo said Dunkin’ makes “…no commitment on its own behalf or on behalf of its franchisees to purchase, distribute, or to cause to be purchased or distributed any minimum amount of Products….”

DDIFO General Counsel Carl Lisa provided a detailed analysis of the kitchen agreement and circulated a memo through DDIFO. As we reported in Issue No. 44, the current renewal agreement grants an ‘approval’ ‘to supply baked goods and other products…’ and refers to the kitchen entity as ‘Manufacturer.’”

INDEPENDENT JOE • JUNE/JULY 2018 15

8 1 0 2 O F I D D E C N E R E F N O C L A N IO T A N

Succeeding as a Business t x e N e h t n i r e n Ow Generation

By Erin Z. Bass

s Dunkin' Donuts tests a Next Generation store concept and innovations in coffee products, franchisees must decide how they will make the leap into the next generation themselves. Moving forward in a competitive landscape can be both exciting and challenging. With 70 years of history behind the brand, Dunkin' Donuts has evolved and diversified to remain relevant in modern times. Franchisees must do the same. Whether you're preparing to test a NextGen store, undergo a remodel or hand off your stores to the next generation in your family, Dunkin' owners are tasked with navigating an ever-changing business landscape. The recent DDIFO National Conference, held at Harrah’s Casino in New Orleans, addressed some of those issues and more during two days of talks and panel discussions. Notable speakers and special guests

included Phantom Gourmet Founder and CEO Dave Andelman, analyst with Piper Jaffray Nicole Miller Regan, Vice President of First Manhattan Co. Michael Kelter, DDIFO restaurant analyst John Gordon and former CEO of CKE Restaurants Andrew Puzder. With a theme of helping business owners and franchisees be as successful as possible in 2018 and beyond, these speakers addressed everything from current trends and regulations in the restaurant environment to encroachment and other legal issues. Puzder, the conference's closing keynote speaker, served as the personal attorney for Carl's Jr. Founder Carl N. Karcher and eventually became president and CEO of the company. He was nominated by then President-elect Trump to be the United States Secretary of Labor, and his latest book The Capitalist Comeback explains how and why capitalism is

16 INDEPENDENT JOE • JUNE/JULY 2018

working under Pres. Trump and what the left is doing to stop it. “If you own a business, you need to speak up,” Puzder told a room full of franchisees from around the country. It was a sentiment that other speakers, like Andelman, echoed throughout the conference. Andelman founded and served as president of the Restaurant and Business Alliance, a

will rule against public sector unions in the Janus v. American Federation of State, County and Municipal Employees (AFSCME) case. In terms of customers, Andelman warned that “people have become more sophisticated about food and service. Expectations are getting higher and higher.”

Massachusetts-based trade association providing members a “seat at the table” in government and media, and has been the face of Phantom Gourmet on WSBK and WBZ TV in Boston since 1993. He said “business owners are way underrepresented in our political discourse. We don't want to be perceived as the 'mean' guy.” Andelman often takes to social media to call out state representatives and unruly customers. He said that bullying of business owners by customers and the media has added a new challenge in business. “Business owners too often are chasing bad customers and chastising employees over bad reviews,” he said. “How do you deal with these people?” Andelman and several other speakers also addressed the effects of raising the minimum wage to $15 and extending paid leave and sick time. “Labor is going to cost me $20 an hour,” he said. “How am I going to run my business? You need to begin strategizing in that way.” He added that dining rooms will get smaller, prices will rise and restaurants and diners will open less hours or even be forced to close with another minimum wage hike. Business owners are welcoming some good news with the Trump Administration’s moves to reduce federal regulations, along with Andelman's prediction that the Supreme Court

Customer needs and wants are driving the Next-Gen store concepts. John Motta, owner of 29 Dunkin' Donuts shops in New Hampshire and Virginia and the recently appointed Coalition of Franchisee Associations chair, was joined by Greg Sagris, another NH franchisee for an open discussion of the nuts and bolts around remodeling into and building new Next-Gen stores. Known only by the name Dunkin', Next-Gen stores are designed for quick delivery and convenience. Their design features an open layout and several ways for guests to order. The concept – complete with special drive-thru lanes for items ordered through the mobile app – is designed to forge a stronger bond between the brand and its guests. The digital screen at the drive-thru, which is still optional for franchisees, indicates when orders are ready. Customers can also enter the store and order at the counter, which features a glass display next to the cashier and an eight-tap cold beverage system of traditional coffee, iced teas and nitrogen-infused cold brew coffee. Motta has one Next-Gen store open and another under construction. Sagris volunteered to test two of his New Hampshire locations up for remodel and said his low-volume location in Bradford averages an 11 percent increase most weeks and as high as 30 percent other weeks. The owners do caution that switching to a Next-Gen store can be expensive in terms of equipment, technology and millwork, not to mention disruptive to high-volume locations.

Dunkin’ Brands is working with franchisees to help stagger remodels and provide some financial assistance, but both Motta and Sagris say there are still a lot of kinks to work out. The Next-Gen concept was a topic of discussion in the panel titled, “A 3-Dimensional Look at Dunkin'.” Kelter, whose company is one of the largest investors in DNKN stock, was joined by Miller Regan from Piper Jaffrey and Gordon. “Next-Gen is a natural progression of something you need to do for modern expression of the brand. Even if the economics are close to break even, it's still the right thing to do,” said Kelter, who cited a notable McDonald's quote about the “halo effect” of launching a new concept doesn't set in until 40 percent of a remodel is complete, so shop owners will need to be patient. Regan, who has an obvious passion for brands and their consumers, advised franchisees to align with each other and give feedback to corporate so that a middle ground can be found when it comes to implementing such bold ideas. She also sees great promise in the tap system and nitro brew, especially among millennials. “The taps are beautiful and can bring romanticism to your coffee and your brand. They engage the customer on a completely different level,” she said. “The taps are an experience that can cause customers to socialize in stores, linger longer and spend more.”

“This is still a test phase. I'm confident that we're going to get the pricing to a better level,” Motta said.

INDEPENDENT JOE • JUNE/JULY 2018 17

Here are 10 Key Takeaways from the 2018 DDIFO National Conference 1. Business owners need to participate in political discourse and fight back against bullying from the media and unruly customers. 2. $15 minimum wage will hurt businesses and even cause some to close. 3. Janus v. American Federation of State labor union case could be a big win for business owners. 4. Customers are more sophisticated and their expectations are getting higher. 5. Next Generation store concepts are under way but are still in the testing phase and the cost of entry is high. 6. Taps and nitro-brew represent an opportunity to capture a younger customer base and invite customers to stay longer and spend more. 7. Coffee at home and in-store are not interchangeable and CPG won't hurt your business. 8. There is a high chance of Dunkin' being sold in the next five years. 9. As the No. 1 problem of businesses today, the labor shortage must be addressed. 10. Dunkin' is at the top of its game both from a financial and consumer satisfaction standpoint.

Kelter also talked about the future and the multiple parties interested in purchasing the brand—from JAB to 3M and Coca-Cola. “The chance Dunkin' is a standalone public company in five years might be a coin flip,” he said. He also advised that more substantial international expansion makes sense, as does CPG. “Coffee at home and away from home are not interchangeable from a consumer standpoint,” he told franchisees. “I don't think you're being hurt by CPG.” Analyst Gordon brought up the important point of labor, a topic that was prevalent throughout the conference. “In terms of cost, you want to make your model more laborefficient,” he said. “The Next-Gen model has to address labor.” A shortage of labor and rising labor costs continue to be concerns for franchisees, and no one in New Orleans was able to provide a magic solution to this problem. Puzder said that while business optimism in the country is high, the No. 1 problem of businesses today is finding good employees to fill job openings. “We have the highest number of people ever employed in the U.S. and the lowest number of unemployed people since 2009,” he said. “The American economy is roaring back, and we've seen a 180-degree turn based on capitalist economic principles.” His ideas for expanding the number of employees available to businesses

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include raising salaries, training and increasing the number of legal immigrants. With a shortage of labor and rising minimum wage on their minds, today's franchisees must also contend with consumer expectations, in-store technology and the rise of the breakfast sector. As Andelman made clear, Dunkin' owners need to take care of themselves, their employees and their customers. Puzder leaned heavily on the theme of the American Dream and quoted Carl Karcher as saying, “The American Dream is alive and well in this nation of ours.” Today, Puzder believes the American Dream is under threat. “It's still alive,” he said, “but how well is it?” He urged business owners to take advantage of the opportunities that President Trump is presenting right now and fight labor unions and $15 minimum wage in order to help secure that dream for the future. “Franchisees are the quintessential American entrepreneurs,” said Puzder. “Be proud of what you do and not at all embarrassed to say you make a profit.” Kelter sees only a bright future for Dunkin' and its franchisees. “Consumer spending is up 80 percent,” he said. “We've seen one of most successful 10-year growth periods of any consumer brand out there. This brand is resonating with consumers in a major way, and it's succeeding.”

•

Legal Issues Affecting Franchisees Today Y

ou have a lot of people with their eye on your money,” Attorney Christopher Menihan warned franchisees attending the DDIFO National Conference. “If your network happens to get hit, one of these is enough to topple everything you've been working for.” Menihan is an associate with Lisa & Sousa, DDIFO’s General Counsel. And, he was referring to the damage a class action lawsuit can have on a franchisee, but his comments apply to other legal risks franchisees face in today's world. Class actions, which involve groups of people filing suit as one entity, are becoming much more prevalent, as law firms seek out disgruntled customers around the country and steer them into court against brands like Dunkin'. Menihan and attorney Diane Saunders, with the labor and employment firm Ogletree, Deakins, Nash, Smoak & Stewart, referenced three cases involving Dunkin' Donuts franchisees accused of fraud. One case centered on the use of margarine instead of butter; another questioned the quality of Angus steak; and the third asserted franchisees put fake blueberries in their donuts. What these cases have in common, the attorneys said, was that a customer ordered one thing, received something else, paid (in some cases a premium of 25 or 50 cents more) for what they ordered, and were not informed that some switch had been made in what they ordered. “If the customer had been informed, we start to lose a lot of the risk of these lawsuits,” explained Menihan. In the butter vs. margarine cases, a margarine spread was used on a bagel instead of actual butter. In the April/May issue of Independent Joe, Executive Director Ed Shanahan explained that franchisees

By Erin Z. Bass

often use margarine instead of real butter since it can be stored at room temperature and is therefore more easily spread. But when customers ask—and pay—for butter, they want butter. The Angus steak case against Dunkin' Brands in New York is similar. A customer named Chufen Chen ordered an Angus Steak Sandwich, and paid 50 cents more for the steak, but alleges that she received a beef patty instead. In the case of the blueberry donut, Grabowski v. Dunkin' Brands, corporate blamed the Chicago franchisee in court, saying the brand is “shielded from any harm” and that “franchisees would be responsible for any economic harm.” Menihan said Dunkin' Brands made it clear they want franchisees to foot the bill for these frivolous lawsuits. “I can see these things very easily traveling throughout the country and hitting Dunkin' franchisees all over,” he added. “Consider what that might mean to your network.” Menihan offered strategies for avoiding such consumer claims, including asking the franchisor to eliminate certain products to eliminating price premiums for products like butter, and training staff to inquire if a product substitution is acceptable to a customer. Saunders warned against similar class action cases for labor disputes involving

misclassification of employees as exempt, meal and rest breaks, tipping violations, off-the-clock work and overtime violations. She advised that franchisees consider a voluntary or mandatory arbitration program as a way of avoiding a class action, in addition to employment practices liability insurance. Another big legal trend with the potential to devastate franchisees is encroachment or intrusion on a person's territory. Say you have a very successful store and are looking for expansion opportunities, then your brand goes and builds a store right next to you. Bad for business, right? Miami attorney Robert Zarco and a California jury agree. In May, Zarco scored a landmark win representing a husband and wife franchisee team, Michael Bryman and Janice Handler-Bryman, against their own franchisor, the fast food chain El Pollo Loco. The judge found that when El Pollo Loco Inc. opened two company stores just miles from the Brymans' existing location, it breached its implied

INDEPENDENT JOE • JUNE/JULY 2018 19

Legal Cont.

N C HISE O W NE

covenant of good faith and fair dealing. The judge awarded the Brymans $8.8 million. Zarco, who has been promoting franchisee and franchisor relationships for more than 30 years, said franchisees need to be aware of the “reservation of rights” clause in their Franchise Agreements, which basically says franchisors can put a location wherever they want. “The only way to change that is by establishing new laws either through legislation or in the courtroom,” he said. Zarco admitted most franchisees are reluctant to go to court, but they need to be aware of the impact of encroachment on sales and how it can really affect their store's bottom line. In the Brymans’ case, their El Pollo Loco store saw sales drop 17 percent when another location opened 2.2 miles away. Zarco said in some cases the impact on sales can be as high as 30 percent. In court, Zarco successfully argued that the reservation of rights clause was legally unconscionable; it was so dishonest, unfair and immoral that it is appalling to a person's senses, he remarked. The court’s judgment essentially allowed the Brymans to not only recover damages for lost sales in the store that was encroached upon, but also be paid for 20 years’ worth of lost net income because El Pollo Loco had blocked the Brymans from opening new stores that would have yielded significant profits. Zarco called recovering these lost opportunities for the franchisee a “home run.” “Never say, ‘I don't stand a chance,’” he advised franchisees. “The reason why [encroachments] occur is because we don't stand up to franchisors. There is always hope.”

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DDcoImFeO s

Wel Three New Members to the Franchisee Hall of Fame By Matt Ellis

Every year, the DDIFO Franchise Owners Hall of Fame honors those franchisees who have made significant and lasting contributions to build the Dunkin’ Donuts brand. This year’s inductees are Adrian Gaspar, Jose Salema, and Rod Valencia. them, being amongst them, I have come to appreciate the hard work they do on a day to day basis.” The experience has benefited both sides of his career, Gaspar says. “I have some very savvy clients, and I’ve learned a lot from them, probably more from them than they’ve learned from me.” As he stood on the stage and accepted his induction into the Hall of Fame, Gaspar reflected on his career and his affection for those in the Dunkin’ system. “Being part of the Dunkin’ family has blessed me with many lasting friendships. One in particular comes to mind, my friend and mentor Tony Couto. Tony helped many of us, may he rest in peace.” Tony Couto and his brother Jose were among the first inducted into the Hall of Fame in 2011. “I’m so honored to be here among such a group of intelligent and especially hard working people [and] humbled to have the opportunity to be inducted with a group of people that have been larger than life to me.”

Adrian Gaspar

Long before he held the keys to his own shops, Adrian Gaspar had roots in franchising. His accounting firm, Adrian A. Gaspar & Company, was an established and respected accountant, serving a clientele of hundreds of Dunkin’ Donuts shops, plus other small businesses. “I started my company with my wife Connie by my side. Since then, we’ve moved three times and have grown to six partners and 37 staff members. A lot has changed but our dedication to our clients remains constant,” he told the

audience at the Hall of Fame Luncheon in New Orleans. “In 1996, I was helping a client who wanted to sell some of their stores. After we figured things out, the client asked me if I wanted to buy two,” he recalls. “I became a franchisee [and] have been able to gain a better understanding and perspective of the Dunkin’ business that has helped my clients and me. When my clients ask things that they hear about at meetings, I’m there too so I know what they are going to ask me and, I try to research it even before they ask,” he said. “By knowing them and being with

INDEPENDENT JOE • JUNE/JULY 2018 21

Jose Salema

Jose Salema is one of many Dunkin’ Donuts franchisees who traces his roots back to the Azores. When he came to the United States he was 23 and eager to start a new life. After working for 10 years in a cable factory, he followed the advice of his brother-in-law Carlos Andrade, who was already established as a Dunkin’ operator and learned how to bake donuts. “’It’s a good thing to try,’ Carlos told me,” Salema recalls. “So when I took my vacation in July of 1979, I spent two weeks with him, learning how to bake donuts.” Salema, like so many Portuguese immigrants, seized the opportunity to be an entrepreneur, accepting the guidance of family members and close friends in the system. With hard work, he was able to establish a lasting business for his family. Salema also gave a shout out to Tony Couto. “[Tony] helped me tremendously and I will never forget it,” he said, sharing how Couto helped negotiate the terms for Salema’s first Dunkin’ shop in Exeter, New Hampshire. Couto’s daughter, Maria Mello, who was in attendance with her husband John, thanked both Salema and Gaspar for publicly remembering her dad. Salema’s family is well known and respected among Dunkin’ owners and operators, and at the luncheon, attendees got to learn a little more about his granddaughter Lauren who is 13 years old. “She was so excited to come here and share this special moment with me,” he said, noting that she bought a new dress to look her best when he received the award and recognition for his work as a franchisee and contributions to the Dunkin’ system. But, because state law in Louisiana forbids any person under the age of 21 from setting foot into a casino, and the luncheon was held in the Theater inside Harrah’s Casino, she

could not attend. “It’s not anybody’s fault, but it is just really sad for her,” he commented. Later DDIFO Executive Director Ed Shanahan promised to more closely review the rules to ensure no family members would be excluded because of age at future Hall of Fame events. In his interview with Independent Joe prior to the luncheon, Salema shared his feelings for the brand and the people who proudly fly the Dunkin’ Donuts flag. “I’m pleased, and humbled, to be part of a large group of great franchisees, both those before me, and those still to come. These 39 years have been a privilege. It’s a great group; I’m honored to be sharing the spotlight with one of the first people I met, my accountant and friend Adrian Gaspar.” Salema’s heartfelt comments drew loud applause from the audience and smiles from the families of those he mentioned.

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Rod Valencia

Aside from the professional success he’s achieved over 35 years as a Dunkin’ Donuts franchise owner, Rod Valencia has conquered great challenges. Chief among them may be his ascent to one of the highest points in the world. When his son Rex and daughter Joumana introduced their dad as a 2018 Hall of Fame inductee, they reminded the audience that Valencia had once climbed Mount Kilimanjaro in order to raise money for the Dunkin’ Donuts Community Foundation. Valencia has a passion for adventure – hiking, trekking and scuba diving – which complements his passion for the Dunkin’ brand. “To say I am delighted to receive this honor and recognition from my peers would be an understatement,” Valencia he said as he stood behind the podium on the Theater stage. “I’d like to thank DDIFO and the nominating committee for this great honor.”

DDIFO HALL OF FAME

Started in 2011, the DDIFO Franchise Owners Hall of Fame honors franchisees and others who made important contributions to the Dunkin’ Donuts system. The inductees include:

Valencia, a native of the Philippines, first came to the United States for vacation, but wound up staying to help his cousin’s husband get started as a Dunkin’ Donuts franchisee. He found himself intrigued by the opportunity and unafraid of the adventure that would ensue. He learned the business, raised the capital and, in 1984, opened his first store in New York City.

have also expanded in other franchised brands: Checkers, Rally’s, and Popeye’s restaurants.

Eventually Valencia grew his network throughout Brooklyn, Bronx, Manhattan and Queens. While his early success was welcome, it also posed a challenge.

Valencia’s adventuresome spirit is sometimes masked by his quiet and calm persona. Even when he was told he would be honored in the DDIFO Franchise Owners Hall of Fame, Valencia said he didn’t believe it.

“We opened too many stores, too fast. At one point, [we opened] a store every other month—12 stores in 18 months.” Valencia recalls that he had to scale back the business in order to build an organizational structure to support future growth. Today, Valencia’s network includes stand-alone Dunkin’ shops, satellite stores and combos, which feature Baskin Robbins and Togo Eateries in New York and Florida. He and his family

Throughout the years, Valencia has always tried to share his knowledge with other franchisees and help his employees move up the ladder. “Some have become franchisees themselves,” he says proudly.

“When [nominating committee Chairman John Motta] asked me if I could come to New Orleans to accept the recognition, I thought there was a catch to his question, but I immediately said yes anyway. I have been a franchisee for 35 years and have received numerous awards and recognition from the brand and others, but this recognition from my peers tops it all,” he said.

•

2011: John Boujoukos, Antonio Couto, Jose Couto, Ralph Gabellieri, John Henderson, George Mandell and Dunkin’ Donuts founder William Rosenberg 2012: Manuel Andrade, Brooks Barrett, Jason Dubinsky, John Rader, Robert Rosenberg and actor Michael Vale, famously known as “Fred the Baker” 2013: Tony Andrade, Helen D’Alelio, Carl Lisa, Amrit Patel, Dave Segal and Mark Silverstein 2014: Carlos Andrade, Joe Batista, Bill Daly 2015: John Cadete, Guido Petrosinelli 2016: Nick Apostoleres, Duke Carvalho 2017: Carl Andrade, Jim Cain, Joe White

INDEPENDENT JOE • JUNE/JULY 2018 23

The 2018 DDIFO National Conference featured informative panel discussions, insightful speeches and a celebration for three new inductees into the DDIFO Franchise Owners Hall of Fame. In between the general session, there was time for franchisees to meet and talk with business members about important products and services to help Dunkin' Donuts franchisees keep their business running effectively and efficiently. New Orleans provided a festive backdrop for franchisees to relax and share stories with friends and colleagues. DDIFO wishes to thank our business partners for their continued support of the organization as well as members of the franchisee community for their involvement making the 2018 National Conference a success.

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Directory of Business Members ACCOUNTING Adrian A. Gaspar & Company, LLP, CPAs Robert Costello 617-621-0500 • cpas@gasparco.com 6 Kimball Lane, Ste. 150, Lynnfield, MA 01940 www.gasparco.com

Employers Unity LLC

Shawn Anderson 585-202-6901 • sanderson@employersunity.com PO Box 173836, Denver, CO 80217 www.employersunity.com

Marcovich, Mansour & Capobianco, LLC

Joseph A. Mansour, Jr. 401-334-9099 • jmansour@mm-cpas.net 640 George Washington Hwy. Bldg C Suites 200-201, Lincoln, RI 02865

Sansiveri, Kimball & Co., LLP

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

BACK OFFICE Jera Concepts

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

BUILDING Persona Signs, Lighting, Image

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

Creative Materials Corporation Tile

Amy Zywot-Slagen 518-713-5367 • azywot@creativematerialscorp.com One Washington Sq., Albany, NY 12205 www.creativematerialscorp.com

Poyant Signs

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

Restroom Remodels Company

Keith Vanderbilt 617-500-2554 • keith@restroomremodels.com 15 Hammatt St, Ipswich, MA 01938 www.restroomremodels.com

SignResource

Mike Blinkhorn 323-562-7638 • mblinkhorn@signresource.com 6135 District Blvd, Maywood, CA 90270 www.signresource.com

Watchfire Signs

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

BUSINESS BROKER National Franchise Sales

Ellen Hui 949-428-0498 • eh@Nationalfranchisesales.com 1601 Dove Street, Ste. 150, Newport Beach CA 92660 www.nationalfranchisesales.com

COMMUNICATIONS Granite Telecommunications

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

Verizon

Dustin Ray 207-317-1406 • Dustin.Ray@vzw.com 352 Center St, Auburn, ME 04210 www.verizon.com

DDIFO

BUSINESS MEMBER 2 018

Yext

Angela Berger 774-488-9251 • aberger@yext.com 21 Wormwood St., Unit 608, Boston, MA 02210 www.yext.com

COST RECOVERY EF Cost Recovery

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

Waste Cost Solutions, Inc

Michael Mintz 561-372-3190 • michael@wastecostsolutions.com 131 NW 43rd St., Boca Raton, FL 33431 www.wastecostsolutions.com

ENERGY Secure Energy

Jodi Maurer 413-733-2571 x218 • jmaurer@sesenergy.org 12-14 Somers Rd., East Longmeadow, MA 01028 www.sesenergy.org

FINANCE Bank of America/Merrill Lynch

Earl Meyers 585-546-9162 • earl.w.meyers@baml.com 1 East Ave., Rochester, NY 14450 www.bankofamerica.com

BankNewport

Paul Sousa 401-578-1210 • paul.sousa@banknewport.com PO Box 450, Newport, RI 02840 www.banknewport.com

Thank You to Our Business Members! INDEPENDENT JOE • JUNE/JULY 2018 27

DDIFO

BUSINESS MEMBER 2 018

Directory Business Members Directory ofof Business Members

Bank RI

Sands Investment Group

Paychex

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

Kaveh Ebrahimi 805-889-7837 • kaveh@signnn.com 2701 Ocean Park Blvd., Ste 140, Santa Monica, CA 90405 www.signnn.com

Erin Robertson 702-807-7854 • enrobertson@paychex.com 100 E Hines Hill Rd., Hudson, OH 44236 www.paychex.com

Beirne Wealth Consulting Services, LLC

Sterling National Bank

TalentReef

Jeff Bradanini 203-951-5917 • jbradanini@beirnewealth.com 3 Enterprise Drive, Ste. 410, Shelton, CT 06484 http://beirnewealth.com

Lindy Baldwin 402-312-2542 • lbaldwin@snb.com 500 7th Ave., 3rd Floor, New York, NY 10018 www.snb.com

Bridge Funding Group, Inc.

TCF Franchise Finance

Abby Sandbach 720-399-2494 • asandbach@talentreef.com 210 University Ste. 300, Denver, CO 80206 www.talentreef.com

Rick Riecker 800-928-8537 • Franchise@BankUnited.com 215 Schilling Circle, Suite 100, Hunt Valley, MD 21031 www.bridgefundinggroupinc.com

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

Eastern Bank

Deborah Blondin 603-606-4724 • D.Blondin@Easternbank.com 11 Trafalgar Square, Ste. 105, Nashua, NH 03063 www.easternbank.com

TD Bank

Peter J. DiFilippo 401-525-6771 • Peter.DiFilippo@td.com 180 Westminster St, Providence, RI 02903 www.tdbank.com

Dennis McClelland 770-274-2914 • dennis.mcclelland@regions.com 12725 Morris Rd. Ext. Bldg. 100 Ste. 200 Alpharetta, GA 30007 www.regionsinsurance.com

Fidelity Bank

Wintrust Franchise Finance

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

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

Pinncale Commercial Capital

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

Sandra McCraren 847-432-2488 • smccraren@wintrust.com 9700 W. Higgins Road, 1st Flr, Rosemont, IL 60018 franchise.wintrust.com

HUMAN RESOURCES CertiPay

Danielle Post 813-300-6953 • dpost@certipay.com 130 Bates Ave. SW, Ste. 101, Winter Haven, FL 33880 www.certipay.com

Employers Reference Source

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

HIRETech

Malak Mansour 281-558-7100 • mmansour@hiretech.com 200 Westlake Park Blvd., Suite 501, Houston, TX 77079 www.hiretech.com

INSURANCE Regions Insurance

Starkweather & Shepley Insurance Brokerage, Inc.

LEGAL Constangy, Brooks, Smith & Prophete, LLP

Jeffery Rosin 617-849-7882 • jrosin@constangy.com 535 Boylston St, Ste. 902, Boston, MA 02116 www.constangy.com

Lisa & Sousa Attorneys at Law Ltd.

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

Paris Ackerman & Schmierer LLP

David Paris 973-228-6667 • david@paslawfirm.com 103 Eisenhower Parkway, Roseland, NJ 07068 www.paslawfirm.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 • JUNE/JULY 2018

PLEASE VISIT THE DDIFO BUSINESS MEMBER DIRECTORY ONLINE AT WWW.DDIFO.ORG

DDIFO

BUSINESS MEMBER 2 018

OPERATIONS

HME Drive-Thru Headsets

safeTstep by Payless Shoesource

3M Company

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

Acrelec America

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

Kristy Weber 412-532-1246 • kristy.weber@acrelec.com 5490 Campbells Run Rd.,Pittsburgh, PA 15205 www.acrelecamerica.com

Brink's Inc.

Shawn O'Sullivan 617-653-8462 • shawn.osullivan@brinksinc.com 46 Sprague St., Boston, MA 02136 www.brinks.com

Bunn-O-Matic Corporation

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

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

Jarrett Services ATM, Inc.

Loomis

Emily Wiley 832-925-5283 • Emily.Wiley@us.loomis.com 2500 Citywest Blvd., Ste. 2300, Houston, TX 77042 www.loomis.com

MCD Innovations — Airxcel, Inc.

Christina Trammell 972-548-1850 • christina@mcdinnovations.com 3303 N. McDonald St. McKinney, TX 75071 www.mcdshades.com

Nano Safety Solutions

Cardtronics

Carrier Corp

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

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

DTT

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

Ecolab

Michael Quate 215-287-6953 • michael.quate@ecolab.com 8300 Capital Dr, Greensboro, NC 27409 www.ecolab.com/Businesses

New England Drive-Thru Communications

Torrco Everpure

Chris Williams 651-503-4763 • christopherJ.Williams@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 Dr, Buffalo Grove, IL 60089 www.rftechno.com

Staples Advantage

Joe Shea 781-806-3139 • joseph.shea@staples.com 31 Commercial St. Sharon, MA 02067 www.staplesadvantage.com

Tellermate

Kyle Anthony 770-220-5113 • kyle.anthony@tellermate-us.com 3600 Mansell Road, Ste 500, Alpharetta, GA 30022 www.tellermate-us.com

TGC Development Group

Jim Muldoon 978-273-1847 • jim.muldoon21@gmail.com 6 Argyle St, Andover, MA 01810 www.nanosafetysolutions.com

Tom Spooner 973-452-4131 • tspooner@Cardtronics.com 628 Route 10 - Ste. 8, Whippany, NJ 07981 www.cardtronics.com

SKAL East, Inc

Carl Huerth 781-806-3139 • carl@skaleast.com 131 Padelford St., Berkley MA 02779 www.skaleast.com/index.cfm?keyword=dunkin

Chris Hitchcock 316-393-6802 • chris@tgcdevgroup.com 125 N Emporia, Ste. 202, Wichita, KS 67202 www.tgcdevgroup.com

Wind River Environmental

Samantha Kelley 978-344-0926 • skelley@wrenvironmental.com 46 Lizotte Dr., Ste. 1000, Marlborough, MA 01752 www.wrenvironmental.com

TAX DEFERRED EXCHANGE Exchange Authority

Robert J. Charland, Esq. 978-433-6061 • rcharland@exchangeauthority.com 9 Leominster Connector, Suite 1, Leominster, MA 01453 www.exchangeauthority.com

Thank You to Our Business Members!

INDEPENDENT JOE • JUNE/JULY 2018 29

Delivering the Goods By Erin Z. Bass

between corporate and franchisees and franchisees and their co-ops. In the Dunkin' system the National DCP, which has grown into a $2 billion supply chain management company serving franchisees, is one of the “best in class,” according to Walters, along with supply chains for Yum! Brands, Wendy's, Subway, Applebee's/IHOB and Burger King.

f the many notable discussions featured at the DDIFO National Conference, one that got especially heated centered on the National DCP and overall supply chain trends. Attorney Sarah Walters, special counsel for Foley & Lardner, explained why supply chain management is so integral to a successful franchised system. She said increased regulatory and product liability risk, food safety, changing consumer habits and technology innovation are all driving change. Customers want it all, and franchisees are expected to deliver. In terms of innovation, Walters said lessons can be learned from companies like Amazon and Alibaba without trying to be them. She also mentioned the capabilities of facial recognition for customer service and robotics in automation of the supply chain, along with Blockchain—a shared ledger for recording the history of transactions—which she said has “enormous utilities” even though use is still in its infancy. But innovation isn't just about adopting emerging technology. It can come in the form of improving existing processes and setting goals that impact the bottom line. One way to do this is by being constantly aware of how your supply chain is functioning. Walters stressed the need for transparency and communication

“Co-ops have been successful because they're independent and focused solely on supply chain,” she said. “It's not just the supply chain, it's what's happening from a climate standpoint, geopolitically, [and on the] regulatory front both domestically and internationally. Most franchisors don't dedicate the personnel or resources to be able to deal with it.” In response to audience questions about transparency and communication between franchisees and DCP, Walters said solutions need to be collaborative. Key performance indicators and regular reporting are keys to success. She said people need to come first and the right people engaged early and often. “This gives franchisees a place in the supply chain decision,” she added. Scott Carter, the National DCP’s chief executive, was also in the audience and shared his thoughts after Walters' presentation. “The key differentiator for us is we own distribution,” he said. “We have nine buildings around the country that provide those services directly to stores. Distribution was

30 INDEPENDENT JOE • JUNE/JULY 2018

the genesis behind our creation.” DCP started as a membership cooperative created by Dunkin’ franchisees in the Northeast in 1983 to leverage more buying power. Similar entities formed in other regions of the country, merging together to create National DCP in 2012. Headquarters was relocated to the Atlanta area in 2013 in order to better serve 8,900 U.S. quick service restaurants and customers in 51 countries. In terms of transparency and communication, Carter said NDCP has made communication with members a priority, building an internal team and investing in a web portal just for members to see financials, minutes from board meetings, limited time offers, etc. “Every year, we make significant improvements in providing transparency,” he said. “All brands have a bad habit of marketing saying this next, best, great program is good enough, let's roll. They make speed the primary driver of decision making and make errors in the supply chain that become very costly.” Carter added that a co-op like NDCP, which manages that process with its brand, can further add visibility to decision making and hold all parties accountable. According to Walters, “Accountability is key to the success of a supply chain and a co-op’s ability to maximize efficiencies in the supply chain. Transparency and accountability of the brand and in the operation of the co-op are integral to establishing the trust among co-op members that is necessary for the supply chain to function effectively.

REACH A SPECIFIC AUDIENCE

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