WHAT’S
BREWING
HEALTH CARE HEAT UP
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FIGHT OVER $15
•
SCHEDULING
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October/November 2018
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A REASON TO STAND TOGETHER Last month, I visited the 9/11 Museum and Memorial at the site of the World Trade Center towers in New York City, which were knocked down by terrorist attacks 17 years ago. The memorial is a stark but solemn reminder of that horrific day when America came under attack. During my visit, I recalled how, for weeks after the towers fell, Americans came together as one – liberal/conservative, Democrat/ Republican, black/white/Asian, Christian/Jew/Hindu/Muslim – to embody this nation’s slogan, E Pluribus Unum (From Many, One). One America, where perhaps we didn’t agree on everything, but we all agreed that we were one people, seeking what was in our mutual best interests: Peace, safety and prosperity. Later that night I went to the Guys and Dolls fundraiser in Manhattan to benefit the Dunkin’ Brands Joy in Childhood Foundation, where franchisees come together again for one important purpose: Raising money to help some worthy organizations support worthy causes. And that’s when the similarities jumped out at me. It struck me how we can come together when we, as a people, as a nation, or as a franchise owner community, face a common foe or a common challenge. That is the rule - disparate interests may exist, but they are secondary to the common mutual interest. As the old saying goes, “The enemy of my enemy is my friend.” In that context, we note that Tim Hortons franchisees never saw the need for their own independent franchisee association, until the company was bought by Restaurant Brands International, which virtually eliminated the influence and independence franchisees had previously enjoyed. The Tim Hortons franchisee community came together as one in the face of that common challenge and created the Great White North Franchisee Association (GWNFA). Today, the GWNFA is involved in significant litigation with their own brand on both sides of the border. Having an effective functioning independent franchisee association never seemed
important in the Tim Hortons system. That is, until it was. Likewise, Jack in the Box opened its first restaurant back in 1951 and grew to about 1,200 stores by 1992 when a leveraged buyout and an E.coli epidemic was enough for its franchisees to recognize the wisdom of the independent franchisee association, and in 1995 created the Jack in the Box National Franchisee Association (JIBNFA). Twenty-eight years later, the association boasts a membership consisting of 90 percent of the franchised stores in the Jack in the Box system. Citing an “unsustainable loss in sales and transactions,” the association, speaking with one powerful voice, announced a vote of no-confidence in the current CEO. There wasn’t much need for the JIBNFA to take any action for almost three decades. That is, until there was. And in the face of continuing demands for more franchisee modernization and investment along with more franchisor control, some 400 McDonald’s franchise owners (representing 25 percent of the company’s U.S. stores) met last month and created an independent franchisee association of McDonald’s franchisees. Heretofore blind to the need and the benefit of joining together as one voice, franchise owners in the McDonald’s system now see the benefits of joining together for a common goal. The plateaued success of individual stores in the McDonald’s system was sufficient to meet franchisee needs. That is, until it wasn’t. In the Dunkin’ system, we’re fortunate on a couple of fronts. For nearly a decade, Dunkin’ has been more mindful of franchisee concerns and cognizant of the need for greater balance in the franchiseefranchisor relationship. And, new Dunkin’ CEO Dave Hoffmann has thus far shown himself to be very much aware of and, to an extent, in sync with franchisee needs and interests. However, as bright as the relationship horizon may seem, and as closely aligned on issues as the franchisor and franchisees appear, there are always disparate
interests just below the surface. One looks at the top line, while the other lives by the bottom line. As a case in point, the unilateral changes made to the franchise agreement back in 2015 were completely logical and understandable through the lens of Dunkin’ Brands. But they were anathema to the franchisee when viewed from the franchise owners’ perspective. Fortunately, this independent franchisee association had its eye on the ball and quickly mobilized to analyze the changes and explain to the franchisee leadership the devastating impact they could have on the entire Dunkin’ franchisee community. For some, having DDIFO available and prepared to review and identify those significant changes was just not that important. That is, until it was. In September 2001, members of the Congress of United States stood together on the steps of the U.S. Capitol and sang God Bless America. Democrats and Republicans, with tears in their eyes, joined together as one to stand against the common enemy, the terrorist threat. The image stands in stark contrast to the recent Congressional confirmation hearings for Supreme Court nominee Brett Kavanaugh, which both Democrats and Republicans called “a national disgrace.” Some Americans wonder if today there is any reason for our elected officials to stand together as one. History tells us there isn’t, until there is! Ed Shanahan DDIFO Executive Director
INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
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SUB HEADLINE
CONTENTS From the Executive Director: A Reason to Stand Together. . . . . . . . . . . . 3
7
What’s Brewing: A Look at State Issues Around the Footprint. . . . . . . . . . . 7 Smart Policies and Procedures are Keys to Crime Prevention at Dunkin' Shops. . . . . . . . . . . . . . . . . . . . . 10 Troubled Systems Illustrate the Need for Healthy Franchisee/ Franchisor Relationships. . . . . . . . . . . . . 13
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Why DD Perks is a Top Loyalty Program. . . . . . . . . . . . . . . . . . . . . 16 COVER STORY Alexa, Tell Me About Dunkin’ and Data. . . . . . . . . . . . . . . . 18 Franchisee Profile: Maria Icaza . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Directory of Business Members .... 24
16
Look at the Law: Pins are in at In-N-Out Burger. . . . . . 26
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INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
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Independent The Magazine for DD Independent Franchise Owners October/November 2018 • Issue #52 Independent Joe® is published by DD Independent Franchise Owners, Inc. Editors: Edwin Shanahan, Matt Ellis Contributors: Cheryl Alkon, Cindy Atoji-Keene, Cathy Cassata, Michael Hoban, 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 978-587-2705 • 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.
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INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
WHAT’S
BREWING A LOOK AT STATE ISSUES By Scott Van Voorhis
AROUND THE FOOTPRINT
Congress is getting ready to welcome scores of new members from both parties in the wake of the recent midterm elections.
with some quick-service employees jumping ship over all the new apps and other gadgets they are expected to master and monitor, a new MIT report finds.
But while some of the faces and names will change, lawmakers in Washington are expected to take up the debate anew on some core issues for Dunkin’ and other franchise owners across the land.
To get the scoop on the latest developments, read below.
Both parties appear eager to do battle over health care again, while some Democrats are gearing up to push plans for a national $15 an hour minimum wage. Still, given the gridlock that has bogged down Congress in recent years, more debate rather than dramatic action is likely. However, it has been a different picture on the state and local level, with a growing number of jurisdictions voting in $15-an-hour minimums, paid family leave benefits and now looking to regulate how businesses schedule employee work shifts as well. Meanwhile, franchise owners across the country are scrambling to hire new workers at a time when turnover has hit record levels. But apparently it is not just the hot economy that’s to blame for the churn,
Health care battle poised to heat up again The Congressional midterm elections are over. So it’s time for, what else, another showdown over health care in Washington. It wasn’t all that long ago that the debate over health care dominated the headlines out of Washington as Republicans in Congress and the Trump Administration battled, mostly unsuccessfully, to repeal Obamacare. The issue took a back seat over the last several months as other controversies and issues grabbed the spotlight, from immigration to the Supreme Court hearings. But health care emerged again as a major issue in the midterms, ensuring whoever wins will be pushing for changes in the newly elected Congress. Senate Majority Leader Mitch McConnell (R-KY) vowed last month to push for another repeal of the Affordable Care Act. With its expansion of health care access
and its regulatory headaches, the ACA has long been a bone of contention for franchise owners and other small business owners. “If we had the votes to completely start over, we'd do it. But that depends on what happens in a couple weeks,” McConnell told Reuters in October. “We're not satisfied with the way [the Affordable Care Act] is working,” Photo by rawpixel on Unsplash
Democrats, in turn, made their efforts to spare a key part of the ACA, the guarantee of insurance for people with pre-existing medical conditions, which was a key talking point in their midterm campaigns. Both parties spent millions on political ads touting their differing positions on the hot button issue, with health care accounting for the largest share of ads of any issue in the run-up to November’s congressional elections, according to The Wall Street Journal.
Fight over $15 poised to escalate Giant online retailer Amazon’s decision to boost its own base wage to $15 an hour could set the stage for a renewed debate in Congress over boosting the federal minimum.
INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
7
WHAT’S
BREWING Amazon followed that move by announcing it would now lobby Congress to boost the federal minimum wage, which stands at $7.25. Still, the company has stopped short of calling for a $15 an hour mandated minimum and has declined to say exactly what the new number should be. The decision came after Amazon was called out by Sen. Bernie Sanders, (D-VT), who pointed to stats showing that Amazon has more employees on food stamps in a number of states than any other company. It’s notable because when Amazon talks, many politicians listen. The company employs more than 566,000 people across the globe, with Amazon founder and chief Jeff Bezos also owner of one of Washington’s most influential news organizations, The Washington Post. It’s also notable however, that after Amazon made its splash with the $15 minimum, the company much more quietly but dramatically reduced their employee stock and bonus programs.
“Think it can’t pass in a divisive or divided Congress? Every single time Congress raised the minimum wage, it passed with strong bipartisan support,” Norcross wrote. His piece was followed by a rebuttal – also carried by Roll Call – by Michael Saltsman, managing director of the Employment Policies Institute. Most workers who start off at the minimum get a raise within their first year, Saltsman wrote, citing research by Trinity and Miami Universities. This dynamic has only been accelerating as other major companies, including quick-service chains like McDonald’s, boost their pay. But a one size fits all standard could prove devastating in some cities, he noted, pointing to Seattle, where some research has pointed to restaurants and retailers cutting jobs after pushing the minimum to $15 an hour.
Meanwhile, a proposal that would raise the federal minimum to $15 an hour is being crafted by Rep. Donald Norcross (D-NJ).
“If a $15 minimum wage — which is double the historic federal wage precedent — is too radical for Amazon’s high-wage hometown of Seattle, imagine would it would do to Sioux Falls, St. Louis, or even Seaside Heights,” Saltsman wrote.
In a column for Roll Call, a Capitol Hill newspaper, Norcross called for a gradual but steady increase to $15 over seven years.
Yet the real battle over the minimum wage is increasingly taking place not in Washington, but on the state and local level.
The average annual turnover rate is 150 percent...One big culprit is the quickservice sector’s rapid embrace of new technology, such as mobile apps and selfservice kiosks. 8
INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
While a gridlocked Congress has a hard time advancing even the most innocuous legislation, state and especially city and town governments have far fewer constraints. A number of states and cities have raised their minimum wage to $15 an hour, including California, New York and San Francisco. St. Paul is among the cities currently considering a $15 an hour minimum, with a proposal recently rolled out before the St. Paul council, according to station KMSP. Mayor Melvin Carter reportedly hopes to push the wage hike through by the end of the year.
Scheduling regs starting to spread Philadelphia has become the latest major city to explore new regulations limiting the ability of businesses to schedule employee work shifts. The Philadelphia City Council is weighing rules that would force restaurant chains and other large, service-sector employers to post employee schedules in advance. Councilwoman Helen Gym’s proposed “fair workweek” bill would require companies to give workers a two-weeks’ advance notice of their schedules. The proposal would also require businesses to offer more work to existing workers before hiring new employees, and “predictability
WHAT’S
BREWING pay” if forced to make last-minute schedule changes. The Philly proposal comes as a number of cities across the country have begun regulating work schedules, including San Francisco, San Jose, Seattle and New York.
New tech stressing quick-service workers out Too much technology too fast? Turnover rates at quick-service restaurants are spiking, which, given the hot economy and competition for workers, may not be all that surprising. Still, the churn rate in the quick-service sector is now the highest it has been since Bill Clinton was president in the mid1990s, the MIT Technology Review notes. The average annual turnover rate is 150 percent. To put it another way, a franchise owner with a payroll of 20 can expect to go through 30 workers in a single year, according to Business Insider.
One big culprit is the quick-service sector’s rapid embrace of new technology, such as mobile apps and self-service kiosks. Customers may love the convenience, but some quick-service workers complain the new gadgets frequently break down and require extra supervision, BI reported. One problem is a lack of training in how to use the new technology, quick service workers told Business Insider and Bloomberg. Stress and frustration over dealing with gadgets they don’t know how to use – and which break down frequently – are prompting some workers to jump ship, the website and the financial news organization both report. Average wait times have also increased by 30 seconds, according to QSR magazine. “Less-experienced employees juggling orders from all these new platforms could be to blame,” the MIT Technology Review wrote of the increase in turnover.
Summing up As we’ve seen, rules and regulations have a way of eating away at profit margins for small business owners. The revival of the debate over health care, as well as efforts to hike the federal minimum wage to $15 an hour, bears watching. So does the proposal in Philadelphia and elsewhere that would have the government regulate employee work shifts, which comes as a small but growing number of cities have passed similar “fair workweek” bills. And franchise owners need to keep a close eye on new technology, and, in particular, how their employees are dealing with all the new apps and other devices that are transforming the quick-service industry. While profits have gone up, so have wait times for customers, with the array of new gadgets a challenge for some employees to keep up with. Throughout the year, Independent Joe will continue to monitor the trends, rules and regulations that will impact how you operate your business and profit from it.
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FEATURE
Smart Policies and Procedures are Keys to
Crime Prevention at Dunkin' Shops A
s any Dunkin’ franchisee can attest, criminal threats – both internal and external – are an unfortunate reality of doing business. And although crime rates have been in steady decline since the late 1990’s, QSR operators still have to deal with robberies, break-ins, employee theft, and increasingly, drug-related issues inside their businesses. The good news, according to QSR-focused security and insurance experts, is that the probability and consequences of those criminal behaviors can be greatly reduced by adopting preventive security and safety policies and procedures, as well as incorporating tech-enabled security systems. “Most criminals go to the easiest opportunity possible, so if they know that business A,B and C has some pretty good policies, a smart safe, and they don’t have a lot of cash in their tills, they’re going to go to business D,” says Mike Anderson, VP of national accounts for cash-handling firm Loomis. “They want to minimize their risk too. They know what’s there and they go where there aren’t a lot of obstacles.” Employee and guest safety are always at the top of the list of priorities for Dunkin’ franchisees, so while devising and investing in adequate security measures may consume both time and dollars, these loss prevention strategies are a vital aspect of running a profitable business. John Malachowski, who operates a pair of stores just north of Boston, accepts the realities of the business and has implemented countermeasures to reduce the
effects of criminal activity on his stores. “We’ve been robbed with a gun – although it’s been quite a while – and we’ve been broken into through the drive-thru windows. I’ve been in the business for 40 years, so we’ve pretty much seen everything,” says Malachowski. His stores come equipped with the full arsenal of recommended measures against the various threats – alarms, camera systems, 24-hour lighting inside and out – but his most significant deterrent to theft may be an old school solution. During a remodel of his Malden store in the late 90’s, he installed a bank vault door to the office, and did the same with new construction in 2005 at his Saugus location (and included one for the back door as well), creating a kind of impenetrable internal fortress. And while the installations weren’t cheap, the doors have significantly reduced large-scale theft opportunities. “It has pins that go directly into the wall, so you’d be better off trying to take down the whole wall than trying to get through that door,” says Malachowski. “A lot of time, theft comes from within, like from friends of employees, so we’ve been very fortunate. Disgruntled employees know that they can’t get in to the office and they tell their friends the same thing.” Most of the break-ins are now of the “nuisance” variety, he says, with minimal losses, such as when a man was arrested for breaking in and making off with a haul of cream cheese and sodas. “We don’t leave the money in the tills at night, we hide the money behind vault doors…so
10 INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
By Michael Hoban what’s the point?” asks Malachowski. A 2004 National Restaurant Association report estimated that employee theft, much of which occurs at the point-of-sale (POS) terminals, accounts for a reduction of between 5 to 7 percent of gross revenue per year. In order to combat direct employee theft, Malachowski keeps a close eye on patterns of deletes, voids, refunds, and over-rings, “the typical ways that people take money from the register,” he says. He has also instituted a system to monitor those occurrences, and stresses to employees the importance of keeping no-sale drawer openings to a minimum. Employees sign in with their personal register code for their shift, and must mark down the reason for each no-sale, so when a suspicious trend emerges, he can simply go to the surveillance video cameras, which are linked to the POS data. An effective (and up-to-date) video surveillance program remains one of the best preventative security measures available to Dunkin’ franchisees, which experts say extends far beyond employee theft.
Cameras and CCTV (closed circuit television) can protect employees and guests from violent crime as perpetrators are much less likely to carry one out if there is a threat of being identified and caught. Video surveillance programs also reduce incidents of vandalism and discourage loitering, which ultimately deters crime, according to security experts. Delaget, a provider of loss prevention software for the QSR industry, published a
restaurant loss prevention checklist last year on its website, and included these guidelines for enhancing security: Change your building’s locks following the termination of a manager. • Deactivate unused security codes. • Keep all restaurant keys and swipe cards in a secured location, such as the safe. • Keep all employment files in a locked box or cabinet with access only to the
appropriate management.
• Have clearly defined employee entry
(before open) and leaving (after close) procedures – and make sure they’re followed. • Train your late-night drive-thru team to lock the drive thru-window between transactions and when walking away from the area. • Conduct regularly scheduled loss prevention, safety, and human resource audits.
INDEPENDENT JOE • OCTOBER/NOVEMBER 2018 11
FEATURE
Delaget also recommends having the opening manager drive around the building before entering in the morning to identify potential forced entry and to call the police if necessary. Another area where preventative measures can be implemented is with the handling of cash. Sabrina San Martino, VP and franchise practice group leader for Rhode Island based Starkweather & Shepley Insurance Brokerage, says some franchise owners do not follow good practices when it comes to cash management. “Sometimes owners or managers don’t make end of the day deposits to the bank and they’ll just put the day’s receipts in a drawer or a closet in the office – and that’s very dangerous,” says San Martino. She advises her clients to keep the amount of cash in the store low, make daily deposits, and where possible, have the owner make the deposit himself. “Controls are really important in the Dunkin’ Donuts business,” she says. In addition to employee-assisted theft, there is always the threat of robbery by outside forces – in-store, in the parking lots or while transporting cash to the bank. The results of a 2015 survey conducted jointly by CAP index and the Restaurant Loss Prevention and Security Association (RLPSA) indicated that while there were less than four robberies per 100 QSR locations annually in the period from 2012-2014 (with 92 percent occurring instore), the potential for harm to employees and guests is substantial. Loomis’ Anderson affirms what Malachowski told us—that most of the QSR robberies occur with the help of inside information. “There’s usually someone who knows about the internal workings of the restaurant,” he says, and the inside confederates pass on that information to perpetrators, including items such as which managers have access to the safe, what the big cash days are, bank deposit schedules, etc. “So these occurrences aren’t just somebody randomly deciding to walk into that business to rob it.” To protect against robberies and other forms of larger scale theft, Anderson recommends a smart safe system, which
also streamlines the cash management process while storing money in a more secure environment.
responsibility for the cash from the point it enters the safe, and makes regularly scheduled pickups by armored car.
With a smart safe, managers empty the till, take the cash to the smart safe (which is bolted to the floor of the office), enter their assigned identification numbers and insert bills they receive at the point of sale into the safe, which are fed in like a vending machine. The funds are then electronically transferred to the bank account of the business, eliminating physical cash transfers and potentially unsafe trips to the bank. The third-party vendor (such as Loomis, which offers SafePoint, their smart safe product) assumes
Anderson also recommends putting a sign in a window of the store that indicates that there is a smart safe in use, and that employees have no access to cash. This reduces the appeal of the store as a target, and also deters employee-assisted crime.
12 INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
“Cash is the biggest attraction for [criminals],” says Anderson. “Most companies are interested in keeping their employees safe, and the best way to keep them safe is to deter in advance somebody even wanting to rob them.”
•
Troubled Systems Illustrate the Need for Healthy
Franchisee Franchisor T
wo years after Don Fox became CEO of Firehouse Subs in 2003, he did something most franchise owners wouldn’t dream of: he encouraged franchisees to gather and form an independent franchisee association, and pledged the brand would recognize it. Ten years later, he made another move that might raise an eyebrow: he added four franchisee seats to what was then a nine-member board of directors, increasing the overall board size to 13 members, and giving the franchisees a super majority.
Don Fox
Where many franchisors might have opted to keep their distance, Firehouse, under Fox’s leadership, sought to maintain togetherness. Franchisees and the brand were aligned when Fox came on board, and have been since. Fox credits the pre-emptive move for supporting a continued, positive relationship.
“Historically with franchise brands, at some point there will be grievances. I felt it was wise to embrace the franchisees early on, to give them a channel for effective discussions,” Fox says. It’s worked well; Florida-based Firehouse Subs, which originated in 1994 and began growing in earnest in 2002, now has 1144 restaurants across the United States, with about 80 stores added this year. Good relations with a CEO are important. One need look no further than Jack in the Box, whose CEO, Lenny Comma, is under fire from the independent franchisee association that has called for his ouster.
/ Relationships
“We really need change,” Michael Norwich, the chairman of the National Jack in the Box Franchisee Association told Bloomberg News. “Nobody is taking ownership and it’s resulting in the condition we’re in now.”
In a perfect world, franchisees and their franchisor would coexist peacefully, each steadily working toward common goals, such as boosting brand recognition, delivering a quality product, and maximizing profits. However, it’s inevitable that problems occur, and recent disputes in the news have shone the spotlight on what happens when these two sides clash.
Canadian coffee chain slips out of favor
Coffee chain Tim Hortons generated international attention last September when parent company Restaurant Brands International (RBI) changed the locks on four Alberta Tim Hortons stores on a Sunday afternoon, thereby seizing ownership from franchisee David Hughes. While RBI cited the cause as “owner breached confidentiality issues,” others called it an intimidation tactic stemming from accusations that the brand’s parent company misused $700 million from a national advertising campaign. Hughes is a member of the Tim Hortons independent franchises association, the Great White North Franchisee Association (GWNFA), which has been in vocal in their disagreement with brand ownership. Hughes isn’t the only franchise owner caught in the crossfire; other GWNFA members say the chain has denied them contract renewals.
The conflict over advertising dollars isn’t the only issue muddying the waters between Hortons’ parent company and franchisees. In the past year, franchisees have vocalized many issues, including requests for compensation lost due to cash register outages, resistance to costcutting changes and shifts, accusations of price gouging and equity theft, and complaints about inferior equipment. Bad press is never a good thing, and Tim Hortons felt the fallout. The brand– historically embraced by Canadians–fell from 4th to 50th in the Leger Research Group’s 2018 ranking of brand reputation. The drop is significant, particularly given that the coffee chain typically maintains a comfortable seat among the top 10.
7-Eleven’s new contract leaves franchisees in a dilemma
Another brand currently feeling the heat from disgruntled franchisees is Dallas-based convenience store chain 7-Eleven, owned by the Japanese firm Seven & I Holdings. With about 11,600 stores in the United States, 7-Eleven franchisees have been simmering since new contract changes were unveiled last summer. “We expected an overhaul of the financial agreement in 2019, and had hoped it would present a chance to sit down with the franchisor and discuss some of the financial difficulties we face, and bring in some balance,” reports Rehan Hashmi, a Chicago 7-Eleven franchisee who is also vice chairman of the National Coalition of Associations of 7-Eleven Franchisees
INDEPENDENT JOE • OCTOBER/NOVEMBER 2018 13
FEATURE
By Debbie Swanson
(NCASEF). “Unfortunately the new agreement did the opposite; [it] tipped the balance more on their side.” Under the 2019 contract, franchisees will be required to pay a renewal fee of $50,000, as well as a larger share of profits to the parent company. In addition to imposing a significant financial drain, Hashmi says the new contract also hinders each individual franchisee’s ability to make decisions in the best interest of their own stores. “The problem is not having a choice,” he explains. “For example, we used to be able to decide when to close shifts, what is best for each store - now that’s much harder. We used to be able to modify an order when the sales rep arrived – for example, add a case of soda – but now, we can’t do that as easily.” Hashmi says franchisees agree with the need to buy into the 7-Eleven brand and its infrastructure, but “the [ability to apply] common sense and independence has been taken away.”
Survey question
%
7-Eleven treats its franchisees better than America’s other leading franchisees
6.9%
of those who strongly agree/agree
In working with 7-Eleven brand I am treated as an independent contractor 16.1% The 2019 agreement shows that 7-Eleven cares about the well being of its 8.01% franchisees Based on the new 2019 agreement, my stores will be more profitable
4.58 %
7-Eleven trusts its franchisees
11.6 %
But franchisees are feeling the pressure to sign the new agreements early. The brand wants as many signed up as possible, which is why it offered a $1,000 cash signing bonus and an opportunity to delay the onset of a new graduated gross profit split, which could force some franchisees to hand over 52 percent of their profits to the company. “They are signing just to save their livelihood, not because they endorse the provisions,” says Hashmi, who has two of his five stores due for renewal. “I’ll sign for those two, but will probably wait on the other three.”
While Horton’s invoked a drop in customer favoritism, the conflict at 7-Eleven sent a direct blow to franchisee morale, made apparent in a survey that went out to 1000 operators and representing approximately 2,500 stores. (See survey responses above.)
Keeping the peace
“Conflict breeds animosity. It takes away from the goals of the brand, and prevents the system from moving forward,” says Ben Lawrence,
Ben Lawrence
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Advertising in Independent Joe is the yeast that makes the dough rise... Contact Joan Gould to Advertise 978-933-1123 or joan@ddifo.org 14 INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
One of the most influential elements in the franchisee - franchisor relationship can be a strong franchisee association. “When things are going well, members may wonder, why do we need the association? But when there’s a conflict, the association is an important, common voice. Individual franchisees can’t always get access to the brand owner, but a group that bargains collectively has more power and influence,” Lawrence says. Because they generate funding over time, franchisee associations can also help by hiring professionals to assist with problems, such as legal advice or assistance
" Individual franchisees can’t always get access to the brand owner, but a group that bargains collectively has more power and influence."
deciphering and negotiating a contract. Respect is a crucial part of the success in any business relationship. In the franchising world, mutual respect is important, both between franchisee and franchisor, as well as among franchisees themselves. “The franchisor should always respect the investment of the franchisee. The franchise wouldn’t have growth without the franchisee,” says Fox, who also points out how every brand has a culture and if franchisees are on board with this culture, overall alignment becomes stronger. “When both sides can come together for a bigger cause, it can help to create a common bond,” he says. Such a system is in place with Firehouse Subs’ public safety foundation. Created after hurricane Katrina, the foundation focuses on providing lifesaving equipment, public education and disaster relief to the community. “Franchisees are the heroes of that effort,” says Fox. A healthy system is also based on transparency—as the Tim Hortons situation
illustrates. With a significant financial investment tied up in the brand, franchisees naturally keep a watchful eye on how their capital is spent. “Franchisees want to know where their money is going, where it’s invested, what’s spent on advertising, what’s the return. Franchisees are happier when they feel their money is well spent,” says Lawrence. While maintaining a healthy level of transparency rests largely with the franchisor, franchisees can do their part by voicing the need for information from the brand, and openly raising questions and issues early if they arise. Often, these steps are taken through the independent franchisee association. Conflict is inevitable in every business, and franchising is prone to disputes because often franchisors are focused on the top line while franchisees are focused on the bottom line. But, as healthy systems demonstrate, common goals remain the unifying factor and, at the end of the day, the brand’s success is what matters most.
•
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INDEPENDENT JOE • OCTOBER/NOVEMBER 2018 15
FEATURE
professor of Franchise Entrepreneurship at Georgia State University. “A system in conflict is not productive.”
By Matt Ellis
Why DD Perks is a Top Loyalty Program By Matt Ellis
A
recent article in the restaurant news site Eater referred to data as “the new gold,” pointing out that “consumers should know that in 2018, basically every restaurant and business is trying to collect personal data — some are just more up front about it than others.” Speaking at the Multi-Unit Foodservice Operators Conference in Dallas last month, Sherif Mityas, chief experience officer of TGI Fridays, explained how his company boosted its to-go business over the past 12 months in part by sending push notifications to customers who had signed up for their loyalty program so they
could be prompted to order dinner from the chain like they had in the past. Among its many values, loyalty programs allow brands to tailor experiences to customers who have opted in to having their data and buying habits to be collected and analyzed. As loyalty programs go, Dunkin’s is among the best, according to Terri Burton, Content Team Lead at Paytronix, a customer engagement software Terri Burton, Paytronix
16 INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
provider. “Data is everything. What menu items they want and what drives behavior and what they buy. We stacked Dunkin’ up against our design principles and they checked all the boxes,” Burton says. Paytronix has identified four principles of a successful loyalty program: 1. Simplicity 2. Core Program Design 3. Engagement 4. Segmentation When Dunkin’ launched the DD Perks program in 2014 – two years after it
“ More than 289,000 people enrolled in the program, so that was really great acquisition tool for them. It incentivizes people to join the program, which is kind of a genius idea. They evolved from giving anyone a free coffee if the Patriots won, to saying, ‘Hey you’ve got to be a member of the program and then you get coffee for 87 cents,’ so there was incentive to sign up for the program.”
premiered its mobile app – then-CEO Nigel Travis said, “Dunkin’ Donuts is committed to developing and delivering technology that supports our growth and distinguishes our brand for offering the very best guest experience.” Burton says the brand was able to accomplish those goals by making its program simple for customers to use and quick to pay off its benefits. “It is simple for customers to understand and for servers to understand and explain it to customers,” she says, noting that customers who sign up get a free beverage right away and then one each time they
earn 200 points. Dunkin’ is also successful, she says, because the rewards customers earn represent high-margin items for the franchisees, so the impact to their bottom line is minimal. In terms of program design, Burton notes that Dunkin’ wisely targets its program to its average guests— not the ones who are already most loyal, since they will be coming in anyway. “Those in the 50th to 90th percentile are the ones that are really going to move the needle for you,” she says. “In terms of the core program give back, we think the sweet spot is 4 to 8 percent. You don’t want to be too high because you want to leave room to do some offers as well.” Paytronix finds Dunkin’s give back is squarely at 5 percent. Dunkin’ also rates high in terms of member acquisition—giving customers new reasons to enroll in DD Perks and download the app. One strategy Burton highlighted in her Paytronix webinar, “How Dunkin' Keeps Us Running Back For More,” was the tie-in with the New England Patriots. In 2015, Dunkin’ gave away 2.25 million free cups of coffee to customers who came in on the day after the football team won. In subsequent years, Dunkin’ made the prize available only to those enrolled in the DD Perks program. “More than 289,000 people enrolled in the program, so that was really great acquisition tool for them,” Burton says. “It incentivizes people to join the program, which is kind of a genius idea. They evolved from giving anyone a free coffee if the Patriots won, to saying, ‘Hey you’ve got to be a member of the program and then you get coffee for 87 cents,’ so there was incentive to sign up for the program.” Dunkin’ has also made a concerted effort to reward loyalty members by providing a special drive-thru lane or in-store pick up area for mobile orders made through the app. Tony Weisman, Dunkin’s CMO, told QSR Magazine that the brand was seeing “significantly higher” mobile order and pay in markets and stores that lend themselves to it. “We're making the mobile order and pay pickup area clearer for consumers to see it, so that those who are not aware are trying it,” he said.
The brand’s adoption of technology is definitely paying off. This year, the location technology company Foursquare ranked Dunkin’ second among brands with the most loyal customers—just behind Starbucks and ahead of national giants like McDonald’s, Taco Bell and Panera Bread. When he released third quarter 2018 earnings last month, Dunkin’ Brands CEO Dave Hoffmann said same store sales were up, even as foot traffic had slowed. Dunkin’ announced it was investing $100 million in upgrading restaurant equipment and technology—which will further support the DD Perks program. According to Burton, another way Dunkin’ is pulling people into its loyalty program is by creating incentives that drive customers into slower dayparts— like late afternoons. Offering $2 iced coffee between 2:00 p.m. and 6:00 p.m., she says, helps “change people’s behavior and get them out of their typical buying habits,” and because Dunkin’s loyalty program is so simple to join and rewards its members quickly and easily, the brand has a great opportunity to acquire more members from the cohort of casual customers drawn in by limited time offerings. So how can Dunkin’ franchisees help increase loyalty program members? Burton says servers need to engage directly with customers and ask them, “Are you a member of our DD Perks program?” She also believes the brand could do a better job explaining the simplicity of the program and its benefits through in-store signage. Those criticism aside, Burton believes Dunkin’s program can be held up as a model for others in terms of its simplicity, program design, engagement and segmentation: using the data available to segment guests and target them appropriately. For decades, franchisees have preached the importance of treating their customers like gold—knowing their names and how they take their coffee. Now, in the age of “new gold,” customers enrolled in the DD Perks loyalty program are paying the franchisees back with a treasure trove of big data the company can use to generate more sales and even more loyalty.
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INDEPENDENT JOE • OCTOBER/NOVEMBER 2018 17
COVER STORY
ALEXA, TELL ME ABOUT DUNKIN’ AND DATA
By Cindy Atoji-Keene
18 INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
“Alexa, open Dunkin.” “ Alexa, order me a pumpkin spiced iced coffee.” “ Alexa, drink my coffee for me and bring me my slippers and newspaper.” The flourishing realm of voice activation isn’t quite up to these last tasks – yet. But for Dunkin’ Brands, voice-activated ordering is a clarion call towards sales growth and forward-thinking. Nearly one in four 16 to 24 year-olds use voice search on their mobile devices, according to the Global Web Index. And by 2020, half of all searches will be voice searches, estimates comScore. All this means that Amazon’s Alexa, and other voice tech protocols, will be very busy. Brands like Dunkin’ that are integrating cloud-based voice services with their mobile app are creating a seamless experience for their customers and catering to their daily routines. But as Dunkin’ users have discovered, voiceactivated On-the-Go Mobile Ordering requires set-up; if you’re an occasional customer and not a DD Perks Member, Alexa can’t help you. A customer can’t look at a screen and double-check their order, and the coffee still has to be picked up at the store. For the brand, voice commerce puts more customers in the app ecosystem and opens doors that go from merely being able to reorder a donut to a full “conversation.” Systems are evolving to become more functional, to recognize preferences (no sugar, extra milk); to enable pick up or delivery, and to facilitate easier payment methods. This is still early in the game, putting Alexa on the basement level of voice-technology potential. Right now, companies like Dunkin’ can see usage stats for their Alexa apps – such as the number of times it was used as well as locations or zip codes – but not what people are actually saying. In the future, tech companies believe voice search can be trained to provide anonymized data about the voice queries made using their “skill,” as well as metrics on the habits of the users, the types of searches they make, their location data and other general information that can help build a marketing profile of someone without violating their privacy rights.
MOBILE + VOICE
While Alexa is still in her infancy – yes, she sounds grown up but is still a babe in arms – the information collected through mobile voice technology can be aggregated and analyzed along with customer data. The volume and types of data that a mobile app can provide an operator like Dunkin’ is huge, according to Kevin Schimpf, an industry research manager at Technomic. He lists just some examples: • Order history patterns such as items that are commonly purchased together. • Able to push out customized deals, coupons, rewards to customers (direct marketing). • Ability to up-sell and suggest other items patrons may enjoy. • Potential ability to gather some demographic info on customers (privacy limits this). • Mapping of stores that customers visit – does a Dunkin’ customer typically visit multiple stores? Or just one? “Data collection isn’t just necessary for Dunkin’ to stay competitive, it’s honestly becoming necessary for all restaurant operators to stay relevant,” says Schimpf. But nipping on Dunkin’s heels is Starbucks, which is on the cutting-edge of app and loyalty program development. Starbucks remains the mobile payment app leader, even over Apple Pay, Google Pay and Samsung Pay, according to eMarketer data. “Dunkin’ really has to keep pace with them to not lose market share among consumers who default to Starbucks solely because of the ease of their digital platform,” says Schimpf, who believes Starbucks’ success is due to its ability to
combine its payment and loyalty programs, giving convenience and value to its consumers. Despite that, Dunkin’ is holding strong, adding more than 2 million members to its DD Perks Loyalty program last year, and bringing its total membership to approximately 8 million. The On-the-Go Mobile Ordering for DD Perks members continues to prove very popular, with a retrial rate of 80 percent.
ADDING LOCATION SERVICES
Dunkin’ is also evolving its mobile ordering platform by optimizing speed in drive-thru locations, especially with the use of Waze. Dunkin’ claims it is the “first partner” for Waze, the Google-owned, crowd-sourced traffic and navigation app, and may well be blazing a trail for other brands to follow. In 2012, Waze mapped all Dunkin’ destinations within the app. Waze then integrated an ordering function, so drivers could use the technology to pinpoint the nearest Dunkin' Donuts location and tap a single button to launch On-the-Go Ordering. For Wazers, it personalizes the driving experience, saving them time and money; for Dunkin’
“ Data collection isn’t just necessary for Dunkin’ to stay competitive, it’s honestly becoming necessary for all restaurant operators to stay relevant" INDEPENDENT JOE • OCTOBER/NOVEMBER 2018 19
ALEXA: DUNKIN’ AND DATA Brands, it makes the route to a Dunkin' shop fast and easy for DD Perks members. “Our new Order Ahead feature expands Waze's mission of saving time on the road by enabling consumers to now also save time in-store, while giving brands a new opportunity to engage with their customers,” Jordan Grossman, head of business partnerships North America at Waze, said in a press release. Use of the Waze app – and also Alexa – solidifies brand loyalty, Dunkin’s Chief Digital Officer Scott Hudler said in the same release. “Loyalty is the main focus for all that we do at Dunkin'. Leveraging the best technologies helps our brand continue to stand apart for valuing our loyal guests and providing them with exciting and innovative new ways to purchase Dunkin' Donuts food and beverages as quickly and seamlessly as possible,” he wrote. But sometimes technology doesn’t work and problems ensue, as we have seen
most notably with Starbucks, which says it earns 13 percent of its sales through mobile ordering. Over the summer, a system malfunction created quite a headache for the company and its customers. The popularity of the app has also created bottlenecks behind the counters where baristas can’t keep up with the flood of mobile orders for lattes and Frappuccinos. Dunkin’ is hoping to avoid such fiascoes by maintaining one of the fastest speed-of-service records in the QSR industry. And, the new NextGen restaurants include a dedicated mobile order drive-thru lane—no other QSR has yet offered that feature.
CAUTIONS WITH DATA
“Patrons who are on-the-go and needing a quick cup of coffee are increasingly seeking as frictionless and convenient of a process as possible,” Schimpf says. “Setting up intuitive and efficient ways for customers to both pre-order and pre-pay is becoming an expectation from customers who frequent coffee chains, and, operationally, [these methods] can help chains like Dunkin’ improve sales with quicker customer turnover.”
With increases in mobile devices and data in the future, no doubt Dunkin’ will be leveraging intelligence at a higher pace and across the entire organization – not only to fuel marketing efforts, but also to enhance their business strategies, according to Antonio Tomarchio, CEO of Cuebiq, a location intelligence and measurement company. There will be plenty of data to collect and mine. What it will show? Maybe Alexa knows.
"Our new Order Ahead feature expands Waze's mission of saving time on the road by enabling consumers to now also save time in-store, while giving brands a new opportunity to engage with their customers"
20 INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
What does the future hold for Dunkin’ and data? Ask Alexa, and she might accidentally order you a donut, as voice still has many kinks to work out. Cherri Pancake, president of the Association for Computing Machinery Code of Ethics for computing professionals, warns that as AI and other data collection and analytic technologies become more powerful, businesses like Dunkin’ need to be keenly aware of ethical issues and accountability for the systems they are putting into place. By 2020, there will be 20.4 billion connected devices in use, according to market research firm Gartner.
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FRANCHISEE PROFILE
By Cheryl Alkon
Maryland Franchisee Recalls Her Path to Dunkin’ Ownership A s the spectacular tan and orange landscape, the clear blue water and the architectural magnificence of the Hoover Dam sprawled below her, Maria Icaza reflected on the relationships, connections, and commitment to hard work that brought her and her general manager Kaiesha Carter on a helicopter ride and, later that day, to a champagne dinner in the Grand Canyon. Icaza, who is 54 and operates a network of Dunkin’ shops in southern Maryland, bestowed the experience on Carter recently when the pair attended the Dunkin’ convention in Las Vegas, as a way to honor Carter’s excellent work over the past eight years. “She started as a crew manager, then shift leader, then moved up to managing her own store, and became a general manager,” Icaza says about Carter. “I like people knowing that you can grow from
within in a network like mine, and you don’t necessarily have to go college,” Icaza says. Training the right people and watching them grow as they support the business has been a cornerstone for Icaza as she has established as she has established herself in the Dunkin' system.
Building the Business Icaza currently owns three Dunkin’ shops in St. Mary’s County and is building a fourth from the ground up in Prince Edward County, which she expects to open in late 2018 or early 2019. Her first store, located in California, Maryland, opened in 2007, and the second launched in Charlotte Hall, in 2011. The third opened in Leonardtown in 2016. A fifth store, in Prince Frederick in Calvert County, is expected to open in 2019-2020. Selling donuts and coffee is a change
INDEPENDENT JOE • OCTOBER/NOVEMBER 2018 21
“ I would really encourage new franchisees to plan their organizational structure for the very beginning. If they want to open one store, that’s one thing. But if they plan to open more, even if it’s more costly in the beginning, it allows you to grow in an organized manner and a better way. Otherwise, you’re putting out fires all the time and it snowballs.” from Icaza’s original career path. Icaza attended New England School of Law in Boston, where she earned her law degree and met her future husband, Glenn Heisler. Living in Boston, she became familiar with the coffee and offerings at area Dunkin’ shops, but her sights were set on practicing international law. Originally from Panama, Icaza returned home with her husband after graduation. For 10 years, she worked for a Panama City law firm, ultimately becoming a partner. Heisler, in the meantime, worked for the Panama Canal until the end of 1999, when Canal ownership reverted from the U.S. to Panama and his job was eliminated. At that point, the couple decided they wanted to return to the East Coast of the United States. By then, the couple had two small children—Carolina and Julia. Robert, their third child, would arrive soon after. Icaza chose to stay home with them while Heisler took a position as an attorney for the Patuxent River Naval Air Station along the Chesapeake Bay in Maryland. As the kids grew, Icaza pondered her next career move; she didn’t want to return to a law firm. When her in-laws came for a visit in 2005, it sparked a career change. “My mother-in-law said, ‘You need a Dunkin’ Donuts down here,’” Icaza recalls. “We looked it up on Saturday, and on Monday we called the brand, and here we are.
Why Dunkin’? Icaza and Heisler researched several franchise opportunities, but felt none
From left, Kaiesha Carter (General Manager), Maria Icaza, and Bridgett Sylvia (Network trainer and Hiring Manager)
were the right fit. “We had looked at other brands, not food brands, and they had not been completely truthful with us,” she says. “They had told us that there weren’t any stores in southern Maryland, and there were. They had wanted me to go to a different market,” which Icaza wasn’t interested in doing, preferring to set up businesses closer to home. Dunkin’ appealed to Icaza for several reasons. First, the brand was well-known and respected. “As a national brand, it’s been around for a long time,” Icaza explains. “When we went to law school, we knew they had great products, donuts, and coffee. We thought it could be a fun brand.” Second, her location in rural Maryland didn’t already have any Dunkin’ stores, and Icaza welcomed the chance to learn something new. “Finding sites took a while,” she admits. “In the meantime, I knew nothing about restaurants. I started going to visit a ton of franchises, and got involved before I had any stores.” The first year was a true educational experience. “I went to the training with Dunkin’ and it was like when you go to college and go for your first job—you don’t know anything. The first year was a learning process for someone who doesn’t know about food or restaurants, learning to manage food and labor and the customers, and the store,” she says. It took Icaza about a year to find and open her first location in the town of California, and she learned that getting the right people in place was crucial.
22 INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
“I had a manager from day one,” she says. “The mistake many franchisees make is that they become the manager. But when you are teaching someone to swim, the coach is always outside the pool; otherwise, you are going to drown. Having the manager gave me the ability to open my second, third and fourth stores” because she was responsible for hiring crew members, overseeing operations, and managing the day-to-day operations of each store.
Building A Strong Team In fact, having the right team in place early on helped provide a strong foundation from which to build. “I would really encourage new franchisees to plan their organizational structure for the very beginning,” Icaza says. “If they want to open one store, that’s one thing. But if they plan to open more, even if it’s more costly in the beginning, it allows you to grow in an organized manner and a better way. Otherwise, you’re putting out fires all the time and it snowballs.” Kaiesha Carter is the network’s general manager, overseeing all the stores. Icaza also employs a network trainer to hire and train new crew members, but each store has its own manager. The team oversees training new crew members, and handles all labor issues. Currently, Icaza’s three Dunkin’ shops employ about 65 people, most of whom work part time. “How are you going to grow if you are doing hiring and interviewing?” Icaza asks rhetorically. “You need systems in
MARIA ICAZA
The Crew at the Leonardtown, MD store
Icaza (second from right) with her family.
place, such as the [brand’s] Red Book log book to document daily standards on different aspects of the business, housekeeping, cleaning, and having your files done correctly. You can’t afford to make mistakes.”
challenges. “Finding the right people is tough,” she says. “There are more people retiring today than coming into the workforce. This young generation doesn’t necessarily want to work when they have vacation or summer or other things.”
Once in place, things are scheduled and run accordingly, with crew meetings occurring once a month to talk about what’s coming up. Shift managers and managers have weekly calls on Mondays to discuss commuter services and drivethru issues, and managers have weekly calls on Tuesdays to cover operational issues.
Plus, her location, about 60 miles from Washington, D.C., presents a competitive challenge. “But I’m ok with that,” she says, pointing out that she is always “trying to cultivate a culture in my network so that people want to come in and work for us.”
Having the right staff has helped Icaza fulfill her commitment to develop three shops in St. Mary’s County before expanding to surrounding counties in Southern Maryland. So, what’s next? “I don’t have a specific number of stores I want to run and I don’t want to put a limit on any opportunities, but I do envision having more than five stores,” she says. Icaza admits she works a lot, but she devotes her down time to her family. Her oldest daughter, Carolina, is now 22 and a recent James Madison College graduate, Julia is now 20 and a junior at Boston College, and Robert, 16, is a high school sophomore. The family travels to Panama several times a year, where they enjoy horseback riding and boating.
Cultivating the Right Culture In her decade-plus as a Dunkin’ operator, Icaza has learned the importance of surrounding yourself with the best people. But it remains one of her foremost
Once in the door, Icaza’s team will “shadow the new crew members in their first week, and do online training,” says Icaza. “We try to keep our meetings serious but fun when it comes to operations.” Younger workers, especially like to be trained and appreciate being given credit when they learn things, she says. Icaza remembers people when they are off the clock, too. “We’ve had times when one of the crew has had to go to the hospital or has had health issues, and I’ve gone to the hospital to visit them,” she says. “The nurses would say, ‘Bosses don’t typically come back here.’ But you take care of the people that take care of you—that’s what makes us different than our competition.”
Community Ties Icaza’s Dunkin’ stores are involved in several community service initiatives. They include Cops on the Rooftops, where local police officers spend 24 hours hanging out atop Dunkin’ shops while collecting donations to raise money for Special Olympics.
It’s a cause Icaza feels strongly about; five of her employees have special needs. Her stores also raise money to assist veterans with medical and living costs. Icaza served on the board of directors for her local chamber of commerce and her shops sponsor a variety of initiatives in the local schools, including sports and teacher appreciation days. Community service also happens at the local level. One elderly couple, Jackie and Jerry, were regular customers at her California and Leonardtown stores, but then stopped coming in for their daily breakfast order. “I didn’t know if something bad had happened, but we knew which retirement home they lived in,” says Icaza. “We went to the front desk there with their meal and asked if anyone had seen them—we didn’t even know their last name. It turned out one of them had had a bad infection and couldn’t get out of the house.” The couple is OK now and is back to their regular Dunkin’ visits. Jim, another regular customer, has undergone cancer treatment several times but still makes it into the Charlotte Hall Dunkin’ shop when he can. “Whenever he loses his hair, he comes to the store with a pink or purple wig,” Icaza says. “He knows we are there for them.” The strength of such relationships—at the local level with her customers and communities, or at the store level honoring a trusted associate with a Hoover Dam helicopter ride—are an important part of Icaza’s story as a successful Dunkin’ franchise owner.
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INDEPENDENT JOE • OCTOBER/NOVEMBER 2018 23
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Paycor
Nick DiCarlo 913-217-4281 • ndicarlo@intrepiddirect.com 10851 Mastin Blvd, Ste. 200, Overland Park, KS 66210 www.intrepidinsurance.com
Sands Investment Group
Sabrina San Martino 800-854-4625 ext. 1121 • ssanmartino@starshep.com 60 Catamore Boulevard, East Providence, RI 02914 www.starkweathershepley.com
Jim Curran 412-721-3404 • jcurran@paycor.com 2009 Mackenzie Way, Cranberry Twp., PA 16066 www.paycor.com/franchise-solutions Kaveh Ebrahimi 805-889-7837 • kaveh@signnn.com 2701 Ocean Park Blvd., Ste 140, Santa Monica, CA 90405 www.signnn.com
Starkweather & Shepley Insurance Brokerage, Inc.
LEGAL
TCF Franchise Finance
Carl Lisa, Sr. 401-274-0600 • clisa@lisasousa.com 5 Benefit St, Providence, RI 02904 www.lisasousa.com
Bill Johnson 952-656-3268 • wjohnson@tcfef.com 11100 Wayzata Blvd., Ste. 801, Minnetonka, MN 55305 www.tcfef.com/franchise
TD Bank
Peter J. DiFilippo 401-525-6771 • Peter.DiFilippo@td.com 180 Westminster St, Providence, RI 02903 www.tdbank.com
Wintrust Franchise Finance
Sandra McCraren 847-432-2488 • smccraren@wintrust.com 9700 W. Higgins Road, 1st Flr, Rosemont, IL 60018 franchise.wintrust.com
Jarrett Services ATM, Inc.
Alexander Pezzolla 732-572.0706 ex 202 • alex@jarrettforcash.com 1315 Stelton Road, Piscataway, NJ 08832
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
Jim Muldoon 978-273-1847 • jim.muldoon21@gmail.com 6 Argyle St, Andover, MA 01810 www.nanosafetysolutions.com
New England Drive-Thru Communications
Sterling National Bank
Lindy Baldwin 402-312-2542 • lbaldwin@snb.com 500 7th Ave., 3rd Floor, New York, NY 10018 www.snb.com
HME Drive-Thru Headsets
Brady Campbell 858-535-6034 • bcampbell@hme.com 14110 Stowe Dr, Poway, CA 92064 www.hme.com
Lisa & Sousa Attorneys at Law Ltd.
Angela Bechard 603-475-2046 • angela@nedrivethru.com 999 Candia Rd. Ste. 7, Manchester, NH 03032 www.nedrivethru.com
Paris Ackerman LLP
Zachary Waas 630-873-0088 • waaz@princecastle.com 355 East Kehoe Blvd., Carol Stream, IL 60188 www.princecastle.com
David Paris 973-228-6667 • dparis@parisackerman.com 103 Eisenhower Parkway, Roseland, NJ 07068 www.parisackerman.com
OPERATIONS
Prince Castle/Silver King
SKAL East, Inc
Carl Huerth 781-806-3139 • carl@skaleast.com 131 Padelford St., Berkley MA 02779 www.skaleast.com/index.cfm?keyword=dunkin
TGC Development Group
3M Company
Bill Muenkel 952-484-4875 • wemuenkel@mmm.com 3M Center, 220-12E-04, St. Paul, MN 55144 www.3M.com/communications
Chris Hitchcock 316-393-6802 • chris@tgcdevgroup.com 125 N Emporia, Ste. 202, Wichita, KS 67202 www.tgcdevgroup.com
Bunn-O-Matic Corporation
HUMAN RESOURCES CertiPay
Danielle Post 813-300-6953 • dpost@certipay.com 130 Bates Ave. SW, Ste. 101, Winter Haven, FL 33880 www.certipay.com
Todd Rouse 800-637-8606 • Todd.Rouse@bunn.com 1400 Stevenson Dr., Springfield, IL 62703 www.bunn.com
Cardtronics
Green Dot/rapid! PayCard
Tom Spooner 973-452-4131 • tspooner@Cardtronics.com 628 Route 10 - Ste. 8, Whippany, NJ 07981 www.cardtronics.com
Netspend a TSYS Company
Mira Diza 800-933-8388 • mdiza@dttusa.com 1755 North Main St, Los Angeles, CA 90031 www.dttusa.com
Edward Cole 813-340-3276 • scole@greendotcorp.com 2266 Bascom Way, Clearwater, FL 33764 www.rapidpaycard.com
Lacey Daniel 404-606-0893 • ldaniel@netspend.com 1591 Millspring Dr. Apt #106, Fort Mill, SC 29715 www.netspend.com
DTT
Ecolab
Michael Vuolo 800-737-8234 • Michael.Vuolo@ecolab.com 1 Edgewater Dr. Ste. 210, Norwood, MA 02062 www.ecolab.com
Thank You to Our Business Members!
INDEPENDENT JOE • OCTOBER/NOVEMBER 2018 25
A LOOK AT THE LAW
BY PETER BENNETT AND TIMOTHY POWELL
Pins are in at In-N-Out Burger
Appeals Court protects employees’ right to wear buttons advocating higher wages
W
hile employers may require employees to wear a uniform at work, under the National Labor Relations Act (NLRA) employees have the right to wear union buttons and insignia while working. Those conflicting rights have created fights over what a company may require and what they may restrict. This recurring clash between a company’s control of its image and employees’ efforts to advocate for workplace change most recently involved In-N-Out Burger employees wearing buttons that advocate for a higher minimum wage. In April of 2015, two employees at the InN-Out burger chain in Austin, Texas came to work wearing “Fight for $15” buttons during their shift in support of a national minimum wage and union campaign. Their supervisor told the employees that wearing the pins violated the company’s “no pins or stickers” uniform policy and asked them to take them off. While both workers complied, one of the employees also opted to file an unfair labor practice charge with the National Labor Relations Board (NLRB). The NLRB has long recognized that Section 7 protects the right of employees to wear items such as buttons, pins, and stickers relating to terms and conditions of employment such as wages, hours, unionization and other protected matters. In-N-Out argued, however, that their button rule fit under a category of “special circumstances” that would exempt them from a violation of Section 7 for two reasons. First, In-N-Out claimed that it had long maintained a carefully crafted public image with strict adherence to the employee uniform as part of their spotless image. Second, the company attempted to justify its policy as a safety issue, saying that the small size of the “Fight for $15”
button and its flimsy pin mechanism would create a hazard if the buttons fell into the food. The Administrative Law Judge rejected both arguments in 2016, a decision that was later upheld by the NLRB. The NLRB ultimately issued a cease-and-desist letter to In-N-Out to withdraw their pin and sticker ban, which “makes no exception for buttons or insignia pertaining to wages, hours, terms and conditions,” among other things. In-N-Out appealed the decision, asking for the ruling to be set aside. On July 6, 2018, the Fifth Circuit Court of Appeals sided with the NLRB, holding that the fast-food chain was unable to demonstrate the “special circumstances” necessary to allow it to avoid federal labor law’s general requirement that employees must be permitted to wear union insignia at work. The Court determined that the company’s first claim was undercut by its requirement that employees wear even larger buttons to promote the company’s charitable foundation each April and December. The Court also rejected In-N-Out’s argument regarding the concern of food safety, finding that the NLRB’s conclusion that the pins did not pose a safety hazard was “reasonable and supported by substantial evidence.” The ruling reaffirmed that the exception to the general rule under the NLRA is narrow and that employers will find themselves on the wrong side of the law if they try to block workers from displaying their support for unionization or union activity while at work. This case serves as a reminder to employers that even the benign managerial task of maintaining and enforcing uniform policy compliance can have legal
26 INDEPENDENT JOE • OCTOBER/NOVEMBER 2018
This case serves as a reminder to employers that even the benign managerial task of maintaining and enforcing uniform policy compliance can have legal implications. Employers should be aware that even a small lapel pin can be considered “protected activity.” implications. Employers should be aware that even a small lapel pin can be considered “protected activity,” and that even an otherwise sensible and valid uniform policy can draw scrutiny from the NLRB. Employers with a uniform policy that bans workers from wearing buttons, stickers, or other insignia should be sure that they have significant evidence to back up their argument of special circumstances. Employers should also consider carefully drafting their uniform policy to specifically exclude wearing buttons, pins, stickers, or other items pertaining to hours, wages, or other terms and conditions of employment that may be considered protected activity under the NLRA.
•
Peter Bennett is president and Timothy Powell is an associate of the Bennett Law Firm, representing management, including franchisees, in matters of labor and employment law.
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