Independent Joe #56 June/July 2019

WHAT’S

BREWING

FTC FRANCHISE RULE • TRADEMARK LICENSING • MINIMUM WAGE • PAID LEAVE June/July 2019

Award-Winning Magazine

for D D Independent Franchise Owners

BREWING BET TER

COFFEE

Dunkin’ secures new technology for more consistent brewing

CFA DAY FORUM

DDIFO HOF

PROFILE

Highlights Important Issues on Capitol Hill

A Legacy of Greatness

A FranchiseeFriendly CFO

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RECOGNIZING THE TEAM In case you haven’t been paying attention to this year’s World Cup, many are saying the 2019 U.S. Women’s Soccer team could be the best we’ve ever fielded. Skillful, devastating and balanced, the team that has been “humming through the World Cup is notable for boundless depth, waves of first-class forwards and hearty experience. There are famous players, rising figures and an unapologetic swagger that irks opponents,” according to the Washington Post’s soccer correspondent Steven Goff.

The team is chock full of stars and exciting to watch, but has achieved greatness this year because of its deep bench and team attitude.

Front line players and their bench backups have trained hard and prepared themselves for every game situation. When you think about it, what we are describing fits more than a championship-caliber sports team. It’s also fitting of a great corporation, where teams coalesce around a single purpose and give their all for the prize. In this issue of Independent Joe, I think we lay out a perfect illustration of exactly how to build that success.

We take some pages in this issue to reintroduce you to some of those who have made Dunkin’ a championshipcaliber brand; the men and women who have been placed into the DDIFO Hall of Fame. Started nine years ago, the Hall of Fame set out to honor those whose efforts were instrumental in forging the foundation that has allowed Dunkin’ to grow and prosper over the past half-century. Included in the hall are franchisees who were instrumental in creating the finest member-owned, cooperative supply chain found in any QSR; franchisees that strengthened the brand’s ranks when a black knight threatened a takeover of the company; franchisees who got their start as corporate

employees—some handpicked by the founder William Rosenberg; and even the man whose depiction of an exhausted baker made Dunkin’ Donuts a household name when he declared, “It’s time to make the donuts!”

Nothing in the retail business epitomizes the partnership mentality more than the franchise business model.

Good franchisees may run their stores to perfection, but without strong corporate support, it’s hard to keep customers coming back. Strong brands provide systems, training and market intelligence for their franchise owners.

In return, the franchisees invest their capital for the right to carry that flag and maximize their opportunities. In those cases where each gives his or her all, the equation works; when one tries to succeed at the expense of the other, the equation typically fails. Just like you might find on a contending World Cup team.

In this issue, we present a profile article about Dunkin’ Brands Chief Financial Officer Kate Jaspon. While we usually tell the story of a franchisee who best represents the spirit, character and commitment of the Dunkin’ brand, this time we wanted to do something a little different. Kate is a key player on the team. And, while her responsibility is to strengthen the financial side of the house, she’s done it while also strengthening her franchisees’ finances. Her efforts speak to her team approach and provide the perfect complement to the recap of our Hall of Fame honorees.

Those who know Kate and have worked with her describe her as a delightful woman and an accomplished financial officer. She is clearly a great teammate and very much worth of recognition.

We are pleased to use the pages of this

magazine to highlight the accomplishments of an important Dunkin’ executive because the level of collaboration that exists between franchisees and the brand is at an all-time high. That fact is underscored in another article from this issue about the new tools all franchisees will soon be using to improve the quality of their iced coffee.

Dunkin’ has stepped up to offset some of the costs franchisees will incur to outfit their stores with new IC3 brewers and refractometers. The company didn’t have to take that step, but made a decision that was in the best interests of its customers, its shareholders and its franchisees. It’s called team.

Success is built on the contributions of many people, over many years, guided by a commitment to achieve excellence. Regardless of the outcome of the 2019 World Cup tournament, the U.S. Women’s Soccer Team reminds us how excellence among all players leads to victory—on the field and off. It’s why we are glad to recognize those who have kept excellence in the Dunkin’ system for all these years.

Ed Shanahan DDIFO Executive Director

INDEPENDENT JOE • JUNE/JULY 2019

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SUB HEADLINE

CONTENTS From the Executive Director: Recognizing the Team. . . . . . . . . . . . . . . . . . . 3

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What’s Brewing: A Look at State Issues Around the Footprint. . . . . . . . . . . 7 Misinformation Campaign Derails Alabama Fair Franchising Law. . . . . . . 10 Photo Story: Annual CFA Day Highlights Important Issues on Capitol Hill. . . . . . . . . . . . . . . . . . . . . . . . 12 A Legacy of Greatness: DDIFO Hall of Fame Honors the Giants of the Dunkin’ System. . . . . . . . . 14

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Competition for Your Coffee Dollar How Convenience Stores are Keeping Up the Pressure. . . . . . . . . . . . 19 COVER STORY Brewing Better Coffee. . . . . . . . . . . . . . . . . . . 22

Franchisee Profile: Dunkin’ Brands’ Kate Jaspon Keeps Shop Owners in Focus. . . . . . . . 25 Directory of Business Members ..................... 28 A Look at the Law: Class Action Revived in Suit Alleging P.F. Chang’s Shortchanged Employees. . . . . . . . . . . . 32 4

INDEPENDENT JOE • JUNE/JULY 2019

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25

October 28–29, 2019

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TION A R T S I G RE EN |OW OP MER Plus SUM PRICING \ A I C E SP hisees for Franc

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June/July 2019 Issue #56 Independent Joe® is published

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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.

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WHAT’S

BREWING A LOOK AT STATE ISSUES

By Cheryl Alkon This summer, Independent Joe dives into several issues related to finding and retaining employees. Franchisees who make it their business to stay informed know that minimum wage reform, family leave policies and changes to immigration law are big news impacting small business owners around the country. Here’s our look at what’s brewing.

Just-Cause Termination This summer, the New York City Council is expected to take up a proposal to provide protection for fast food workers against being fired without a reason. Council members Brad Lander and Adrienne Adams proposed a just-cause termination bill that would protect workers in fast food chains from being “fired without a valid reason,” according to the New York Times. If it is adopted, employees would have a chance to improve their work performance before being let go, offering, in essence, a cure period.

The Times says the move would be a first for a city to provide such protections to workers in a specific industry, and would likely pave the way for similar efforts for fast food industry employees nationwide.

As expected, the restaurant industry is fighting the plan. The International Franchise Association (IFA) calls the plan a “solution in search of a problem,” and blames labor unions in general and the

AROUND THE FOOTPRINT Service Employees International Union (SEIU) in particular since it was behind the efforts to increase minimum wages.

Coalition of Franchisee Associations, of which DDIFO is a founding member, was among those providing comments.

“We’re always skeptical about any efforts by the SEIU that they’re really anything more than a front to help them increase their dues-paying membership and their political agenda,” said Matthew Haller, head of government affairs for the IFA.

The CFA “believes there is absolutely the need for the rule to continue, but with modifications that increase transparency to prospective franchisees,” wrote CFA executive director Misty Chally.

New York City’s unemployment rate is an all-time low four percent, but the City Council will still consider whether fast food workers, who are in high demand, need such protections.

FTC Franchise Rule The Federal Trade Commission recently closed its request for public comment on the Disclosure Requirements and Prohibitions Concerning Franchising, also known as the Franchise Rule. Franchise Disclosure Documents (FDD) exist to help prospective investors fully evaluate a franchised business, while also preventing brands from misrepresenting their businesses. Operators in many systems believe the rule should be strengthened to better protect people who invest in buying a franchise.

The public comment period extended from March 13 through May 13, 2019 and yielded more than 40 comments, which were posted to the FTC’s website. The

The CFA’s comments detailed several points that would help improve the Franchise Rule as a means of franchise industry oversight. They include: • Devoting more resources to fully enforce and validate all aspects of the Franchise Rule with oversight, especially when it comes to franchisees reporting potential Franchise Rule violations against franchisors without fear of retaliation.

• Preventing amendments to Franchise Disclosure Documents “beyond the four corners of the franchise agreement.”

• Cutting the mandate that franchisees “must waive their private right of action for Franchise Rule violations and eliminate pre-dispute binding arbitration clauses in Franchise Disclosure Documents.”

• Making the Franchise Disclosure Document and franchise agreement legally binding throughout the term of the agreement, including through franchisor ownership changes.

INDEPENDENT JOE • JUNE/JULY 2019

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WHAT’S

BREWING • Prohibiting “disclosures outside of the Franchise Disclosure Document, made both informally and by third parties.”

Trademark Licensing Bill Congress is currently reviewing language in the Trademark Licensing Protection Act of 2018, which clarifies that trademark licenses given to franchise owners aren’t considered “an employment” contract, an issue related to the National Labor Relations Board’s joint employer rule. Franchisees in Dunkin’ and other systems should be concerned that if a trademark is involved, then a franchisor can never be considered a joint employer, even if they act like one.

The current language in the Act only states licensing a trademark “may not be construed as establishing an employment or principal-agent relationship between the owner of the mark and the related company.”

According to attorney William Samuels, an intellectual property lawyer with the firm of Scarinci Hollenbeck, “With respect to franchises that license trademarks

8

from brand owners, the NLRB decision has created significant legal uncertainty.

Under federal trademark law, brand owners must control the use of their marks; however, complying with the Lanham Act could lead to increased liability under the Browning-Ferris joint-employer standard.”

As expected, the International Franchise Association is not interested in clarifying the language in the existing bill since clarifications may not always protect franchisors, which is that association’s primary objective.

Fixing the Depreciation Rule It’s a slim hope, but a bill that was filed in March by U.S. Senators Pat Toomey (R-PA) and Doug Jones (D-AL), would finally straighten out the ribbon of mistakes Congress made with the depreciation rule, known as section 168 (k). In what may go down as one of the greatest examples of a government SNAFU that just can’t get fixed, the depreciation rule was passed with good intentions. Business owners, like Dunkin’ franchisees, who invest in a

INDEPENDENT JOE • JUNE/JULY 2019

remodel were supposed to receive 100 percent depreciation in the first year, instead of waiting 39.5 years. Determining the right amount of depreciation, over the right period of time, has been a rather inexact science for tax code writers for years.

There have been many iterations of the depreciation rule, but when President Trump signed the Tax Cuts and Job Act (TCJA) in 2017, the rule was supposed to revert to a dollar for dollar deduction in the first year. Unfortunately, mistakes were written into the code that require bi-partisan support to fix. The first step is the bill filed by Toomey and Jones.

According to Forbes, “the bill would make the change retroactive to the intended date of January 1, 2018, meaning taxpayers may want to extend their 2018 returns in the hopes that this bill becomes a reality in the next six months. Alternatively, taxpayers could file and then amend the return later should the bill become law.”

But, as the publication also notes, “the Toomey/Jones bill is more of a symbolic

gesture, notifying those in the House that the Senate has some level of bipartisan support to get this mistake fixed.”

"This means that — for once — low-skilled workers have

Immigration Legislation The biggest complaint franchisees have is “I can’t get enough workers.” It appears the Department of Homeland Security (DHS) has been listening. DHS is issuing an additional 30,000 H-2B visas above its regular quota of 66,000 to address a shortage of seasonal, low-wage and temporary workers for fields other than agriculture.

Workers with H-2B visas can stay in the country through September 2019.

Only those people who have previously worked in the United States can qualify for the additional visas to work in landscaping, hospitality and retail. For small business owners, temporary workers can help ease the crunch—especially during busy summer months, but they are not a viable long-term solution.

As Vox noted in a March 2019 article, retail and restaurant workers are more in demand than tech workers.

“The hardest-to-find workers are no longer computer engineers. They are home health care aides, restaurant workers, and hotel staff. The shift is happening because more and more Americans are going to college and taking professional jobs, while working-class baby boomers are retiring en masse. This means that — for once — low-skilled workers have the most leverage in the current labor market.”

Minimum Wage Tight labor markets are prompting small business owners to increase the wages they pay to attract and retain good workers.

Employers are responding to market conditions that reflect a severe shortage of service workers. Despite employer initiatives, states are continuing to increase minimum wages, in the hope that will have a stronger effect on overall wage growth.

The federal minimum wage has been set at $7.25 since 2009. Twenty-nine states have minimum wages above the federal level; 21 states have left the wage unchanged from the national mark of $7.25.

A look at the list of states that have recently upped the minimum shows a strong blue hue. They include Connecticut,

the most leverage in the current labor market."

where Governor Ned Lamont signed a bill in late May that will raise the rate to $15 an hour in four years. The jump is gradual, with the current rate of $10.10 an hour rising to $11 by October 2019, and then going up a dollar an hour each year, to reach $15 an hour by 2023. On July 1, Oregon’s minimum wage increased by 50 cents as a result of a new law signed in 2016. Just adding more confusion to the equation, Oregon’s legislature divided the state into three regions, giving each a different minimum wage.

But, the move may be more show than anything else according to Oregon state economist Josh Lehner, who told the The Oregonian newspaper, "In the tight labor market today, the minimum wage rising is less of an issue, or it is less binding as worker's wages are going up due to the strong economy."

Still, as we’ve seen, raising minimums can have unintended consequences. A Mills College study found after the minimum wage was increased in Emeryville, California in 2015, 25 restaurants in the town closed.

A second study from the University of California Riverside, published in April, predicted wage increases will cause the Los Angeles area to lose 30,000 restaurant jobs by 2022.

Paid Leave In the field of paid family leave, Target has become the latest major U.S. company to extend family leave packages to its employees, announcing “it will expand childcare benefits and family leave for 350,000 employees at its stores, warehouses, and headquarters office—regardless of whether they are full-time or part-time,

salaried or hourly,” according to Quartz.

According to federal statistics, 25 percent of people who work for private businesses that employ more than 500 workers have access to paid leave in the United States.

Experts note more companies are making paid leave a perk in order to attract and retain employees in this historically tight labor market. But, private sector activity is not preventing more states and municipalities from enacting their own family leave laws—along with new payroll taxes to fund them.

Following its move to boost minimum wage, the Oregon House of Representatives passed a paid leave bill requiring 12 weeks of paid leave (the original proposal called for 32 weeks). Employers with more than 25 employees would have to cover 40 percent of the tax, but small businesses would not have to participate.

In Albany County, NY, paid leave failed to pass the local legislature in June; the body voted 21-17 to kill the proposal. New York State, however, has a family leave policy, along with east coast neighbors New Jersey, Rhode Island, Massachusetts, the District of Columbia and Connecticut, which passed the most generous package in the nation in June. On the left coast California and Washington have also instituted leave policies.

As we’ve seen, business and labor regulations continue to change, based on political whim and business lobbying. Some things change quickly, others can get mired in the process. Independent Joe is keeping tabs on all this and will continue to report the items of importance to your Dunkin’ business.

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INDEPENDENT JOE • JUNE/JULY 2019 9

Misinformation Campaign Derails Alabama Fair Franchising Law

By Matt Ellis

I

n early June, after the dust had settled on an extraordinary legislative session in Alabama, which included the passage of the nation’s most restrictive abortion law and a new gas tax to fund infrastructure improvements, a television station in the city of Birmingham conducted a poll of its viewers. Birmingham is the 43rd largest television market in the U.S., with an available audience of roughly 680,000 homes. The poll asked: Do you think Alabama legislators are accurately representing the interests of the people?

Eighty-eight percent of viewers said No; 12 percent answered Yes. While not a scientific survey, the CBS 42 poll does show how even in a state that is overwhelmingly Republican – with one party controlling the legislative and executive branches – there is not strong consensus that the work representatives are elected to do is getting done.

Among the bills that never had an airing before the full elected body was SB 129, a fair franchising bill cleverly titled the Protect Alabama Small Business Act. Introduced by Republican State Senator Chris Elliott, a former ServiceMaster franchisee, the bill was designed to protect franchise owners from predatory franchisors. Specifically, it called for the prevention of unjust terminations and non-renewals without good cause, as well as unjust restrictions on the sale or transfer of a franchise. The bill also required legal disputes between local franchise owners and their franchisors be heard in Alabama.

According to Cooper Trent, an Alabama attorney who specializes in government relations and worked with the Coalition of Franchisee Associations (CFA) to get fair franchising passed, many franchise owners in Alabama had “stressed the need

for [fair franchising], but wondered how they could get it done.

“We created a grass roots effort, reaching out to franchisees willing to take a stand and let the legislature know this is [what] we need to protect the businesses we’ve invested in. Behind these brands we love and recognize, there are local franchisees, who are employing Alabamians, paying sales tax, and are leaders in their communities,” Trent says.

Trent and Heather Wilson, a Huntsvillebased political consultant, formed the Alabama Franchisee Association to lead the effort, which he described as “a collective effort of a wide range of industries that united to promote the legislation.”

As the legislative session unfolded this spring, SB 129 received strong support in the Senate Government Affairs Committee and the House Commerce and Small Business Committee. It was the subject of a public hearing, at which Sen. Elliott spoke of his personal experience as a franchise owner and why the playing field is tilted away from those who actually invest their personal capital into a franchised business. The local association also had two current franchisees along to testify.

“We had stories to tell,” says Trent. “Stories of how small businesses are affected by the disproportionate relationship with their franchisor and about how the relationship can change in a second with new leadership.”

The International Franchise Association (IFA) had a representative at the hearing, who said the bill would kill franchising in business. At that point, Trent believed opposition to the measure was limited.

The local group and the CFA were optimistic the bill had enough votes to

10 INDEPENDENT JOE • JUNE/JULY 2019

get it passed once it cleared committee.

Keith Miller, a California-based Subway franchisee and former Chairman of the CFA, remembers the hurdles he had to jump in order to get a fair franchising bill passed in Sacramento in 2015. CFA worked closely with franchise owners from many different brands to help lawmakers understand why franchising is not always fair and press for their support. After years of sustained effort, the bill was signed into law. Since then, franchising has flourished in California.

“Dunkin’ has continued expanding there,” says John Motta, the current CFA chairman and a Dunkin’ franchise owner.

“The law did nothing to halt franchising growth.”

Veterans of the California campaign, Motta and Miller knew better than perhaps anyone in Alabama how the IFA could complicate matters. “IFA has big money and big resources,” Motta says.

“IFA claims they are for franchisees, but they’re there to protect the franchisors, not the franchisees.”

On May 27, an opinion article titled, “Franchisees like me are in union crosshairs,” appeared in the Wall St. Journal (WSJ).

The author, David Barr, is a KFC franchisee in Alabama and Georgia and the IFA’s current chairman. He wrote, “Labor unions and trial lawyers are pushing state legislators in Alabama and elsewhere to change longstanding rules governing franchise arrangements, upending the

Miller pulled no punches after reading the piece, calling it a “flat out lie, a diversion to get away from the facts.” He says the IFA “has to lie because the truth isn’t on their side.”

The next day, Barr appeared on the morning news program “Fox & Friends,” repeating the same information that was in his Wall St. Journal article. (Fox and the Wall St. Journal are owned by Rupert Murdoch's News Corp.) “[IFA’s] rhetoric that this is liberal anti-Trump resonated more so with Alabamians in general,” says Trent. “Their marketing strategy was focused not just on getting franchisors involved, but also the general public, getting them to sign up and oppose this because the bill is bad for business and will hurt Alabama.”

The CFA feels like it has truth on its side. It would only take a person a few minutes to read the actual text of SB 129 to know that the bill’s intentions were to strengthen franchising by protecting

those individuals who invest in opening franchised stores, equipping them, remodeling them and operating them in the best interests of their brands.

“I’m of the opinion, if the public and franchisees had read the bill and understood the goal, their opinions would have changed. Their message was framed in such a way that they thought this was a ‘union organized bill supported by trial lawyers,’” says Trent.

As Miller points out, the IFA never provided a link to the bill in any of their published materials. “They want to tell people what to think instead of letting them read it themselves. They’re truly acting like franchisors, aren’t they?”

Trent believes the IFA’s public relations effort “certainly had an effect on the Speaker deciding not to bring fair franchising to a vote this year,” but that won’t prevent franchisees from trying again.

“We have to regroup, look back at what we [did] and what we could have done differently and develop a strategy to go forward,” he says.

Trent and the CFA understand that if more franchise owners had come forward to explain why the bill was good for business and good for Alabama, the story could have had a different outcome.

“We need to get people mobilized. We need to wrangle more Alabama franchisees,” Motta says, knowing the challenge ahead.

“Franchisees are afraid to tell the truth,” says Miller, who faced the same struggles in California. “It highlights the problem of franchisees not being engaged. It’s hard to get more than a handful of franchisees to be vocal about it because they are so afraid of their franchisor.”

After wrapping up its business, Alabama Senate President Pro Tem Del Marsh, declared the session was one of the best he'd ever seen. “I think we’ll look back on this session as one of the most productive. A lot of big issues dealt with,” he said.

Unfortunately improving the business climate for thousands of small business owners was not one of those issues.

•

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INDEPENDENT JOE • JUNE/JULY 2019 11

FEATURE

business model and hurting companies, customers and communities.”

Annual CFA Day Highlights Important Issues on Capitol Hill In May, franchisees from across multiple systems gathered in Washington, D.C. for the annual CFA Day Forum, sponsored by the Coalition of Franchisee Associations. The group of more than 75 franchisees met to discuss issues with special guest Rep. Dan Crenshaw (R-TX). The group then attended briefings on the topics of concern they would bring to the attention of their representatives on Capitol Hill, particularly the labor shortage crisis, fixing a crucial depreciation error and higher labor costs.

Now under the Chairmanship of Dunkin’ franchisee John Motta, CFA is continuing to advocate for franchise business owners facing issues in legislative, regulatory and legal areas. DDIFO is a founding member of CFA.

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PHOTO STORY

INDEPENDENT JOE • JUNE/JULY 2019 13

A Legacy of

Greatness in 2011, the DDIFO Franchise Owners Hall of Fame DDIFO Hall Of Fame Started honors those who have made important contributions to the Dunkin’ system. As we prepare to honor the Class Honors the Giants of 2019, we revisit the stories of those who have been inducted thus far. Complete versions of each franchisee of the Dunkin’ System profile can be found on our website: www.DDIFO.org.

CLASS OF 2011 JOHN BOUJOUKOS

In 1963, John went to work for Bill Rosenberg at a Dunkin’ Donuts shop in Randolph, Mass.

He learned the business and Bill’s vision for franchising.

As a franchisee, he was active in the Ad Committee, helping fuel the company’s tremendous growth. He made an important impact on Dunkin’ Donuts—helping to create the public image of the company and enhance franchisee opportunities.

John died in 2006.

ANTONIO COUTO Antonio Couto came to the US from Portugal in 1959. He opened his first Dunkin’ franchise in 1974 on Route 44 in Raynham, Mass. and, with hard work and perseverance, built a network of over 25 shops in three states.

Couto was a philanthropist and was dedicated to helping others. Many franchisees have said, “If it wasn't for Tony Couto, I wouldn’t be where I am today.” He died in 2001.

JOSE COUTO Jose Cuoto was Antonio’s brother and got his start working in Antonio’s Dunkin’ shop.

After learning the business, Jose and his son Joe opened their first shop on Cape Cod in 1975.

From the beginning, Jose’s goal was to establish a successful business that his children could take over. When he retired, they did. Jose died in 2008.

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RALPH GABELLIERI Ralph Gabellieri worked as a baker for Dunkin’ founder Bill Rosenberg.

Later, Rosenberg put Ralph in charge of running company stores and, when Dunkin’ acquired the Mister Donut chain, he was instrumental in convincing franchisees to stay in the system. They thought Ralph had credibility as an operator and ally.

Ralph retired from Dunkin’ Donuts in the early 90’s after learning he was suffering from leukemia. He passed away in 1995.

JOHN HENDERSON Franchise pioneer Manny Andrade was John Henderson’s neighbor and got him to buy into a Dunkin’ Donuts shop. Over the years John bought and sold several stores and established himself as a real “Dunkin’ guy.”

GEORGE MANDELL George Mandell was a pharmacist when his brother-in-law became President of Dunkin’ Donuts. George bought in and opened his first two stores in Boston, expanding to the south shore.

A well-respected operator, George helped create the DCP and DDIFO. Cancer took his life in 1998. To honor his contributions to Dunkin’ Donuts, franchisees established a golf tournament in George’s name to raise money for Jimmy Fund cancer research.

WILLIAM ROSENBERG Bill Rosenberg was a visionary with the commitment to create something great and surround himself with the right people.

People remember how Bill presented himself as a regular guy. He recognized early on that franchising would be the most effective way to expand his coffee and donut chain. Bill chose his franchisees carefully and they helped him build Dunkin’ Donuts into what it is today.

CLASS OF 2012 MANUEL ANDRADE Manny Andrade left the Azores at 16. He spoke no English, but got a job at Dunkin’ Donuts, offering customers a smile and ‘regular’ coffee.

Manny learned English, made donuts, and built an empire.

His hard work was legendary as was his network, which controlled 40 percent of all the Dunkin’ Donuts in New England for a time.

FEATURE

He was deeply involved with the DCP and Ad Committee. He also supported causes like the Special Olympics, the Jimmy Fund and the Rhode Island Dunkin’ Donuts College Scholarship. John passed away in 2008.

Manny helped many franchisees along the way and says that was his greatest achievement.

BROOKS BARRETT Brooks Barrett bought his first Dunkin’ Donuts in Fairfield, Conn. in 1967. He saw that most customers took their coffee to go, so he removed the stools and created take-out counters.

Innovative, friendly, and always willing to listen, Brooks was chairman of the Northeast DCP for more than 15 years. In the franchise world, Dunkin’s distribution system has always been viewed as best-inclass, much like Brooks himself.

JASON DUBINSKY Jason Dubinsky was an early advocate of coffee-focused marketing. As Chairman of the Boston Advertising Committee, Jason was able to leverage the growing feeling that advertising dollars had to support coffee sales, not just donuts.

“That’s what helped drive the business,” Jason said. “The money was in beverages.”

Jason spent 37 years in the system, shaping its future and serving as the first President of DDIFO. He passed away in 2013.

JOHN RADER John Rader grew up in the Bronx and once drove an ice cream truck before buying his first Dunkin’ shop in Newark, NJ in 1965.

He worked on Dunkin' ad campaigns to develop fresh and creative ideas to attract new customers.

John ended up owning a baker’s dozen of Dunkin’ Donuts locations. Over the years, he spoke with a loud voice, maintained high standards and inspired enduring loyalty.

ROBERT ROSENBERG At age 25, with a freshly minted MBA from Harvard Business School, Bob Rosenberg earned a Harvard MBA before helping his father sell off parts of the family business to focus on Dunkin’ Donuts. He worked for the business for 35 years.

Bob is proud that the company he once led has continued to provide opportunities for thousands of people and real pleasure to millions more who start each day with a cup of Dunkin’ Donuts coffee.

MICHAEL VALE When Fred the Baker said, “It’s time to make the donuts,” actor Michael Vale became an icon. As the face of Dunkin’ Donuts, he appeared at charity events and franchise conventions. He loved meeting the people who really made the donuts. And they loved him.

When Michael passed away in 2005, fans from around the world flooded his family with emails. People loved the man behind the character and the brand he helped make famous.

CLASS OF 2013 TONY ANDRADE Tony Andrade was 17 when he came to the U.S. and began working in the family business. It didn’t take long before he opened his first of 36 Dunkin’ shops.

INDEPENDENT JOE • JUNE/JULY 2019 15

DDIFO HALL OF FAME Hard-working and community-focused, Tony’s goals were to create a business his children could run and support others.

“It’s what you do for people that they remember forever,” he says.

giving advice to family and friends in Chicago’s growing South Asian community. He says helping people is one of the biggest rewards of the job.

HELEN D’ALELIO

Fresh with an MBA from Columbia, Dave Segal was one of Bill Rosenberg’s first hires. When the company needed cash, Dave came up with a win-win idea: Sell the property to the franchisees. The plan generated tremendous income for Dunkin’ Donuts and provided franchisees a new opportunity to build equity.

Helen D’Alelio was a Dunkin’ Donuts pioneer, blazing a trail for women in the system while supporting Dunkin’s charitable causes.

After she and her husband bought a shop in Somerville, Mass., Helen started reading business books and gaining a keen understanding of marketing and customer service.

In 1989, when Allied Domecq launched its takeover bid, Helen helped establish DDIFO and strengthened the respect franchisees already had for her. Helen died in 2007.

CARL LISA For over 40 years, attorney Carl Lisa has represented Dunkin’ Donuts franchise owners and the DDIFO. It all started when a young franchisee named Manny Andrade walked into the office looking for an attorney.

“I looked at him, and he looked at me,” recalls Carl. “And I thought, I better learn about this.”

DAVE SEGAL

He believed in supporting franchisees and created the Dunkin’ advisory council system to give them a voice.

MARK SILVERSTEIN As an operator in New Hampshire, Mark Silverstein envisioned a supply chain without a middle man and helped create the Distributor Commitment Program or DCP. “The local DCP was the greatest innovation that the Dunkin’ chain ever came up with,” Mark says.

Later he supported the formation of the National DCP in 2011, which is the largest,

Carl learned his clients’ success was tied to the success of their brand. He’s negotiated tough franchise agreements, always keeping the long view in sight.

AMRIT PATEL Amrit Patel bought a Dunkin’ Donuts shop in Chicago in 1974. He worked hard – 12-hour days, seven-day weeks – and he baked. He loved to bake. Then he received a piece of advice: hire a baker and you’ll have time to manage more stores. So, he did.

As business grew, Amrit became the one

16 INDEPENDENT JOE • JUNE/JULY 2019

dedicated, member-only supply chain and distribution provider in the restaurant industry.

CLASS OF 2014 CARLOS ANDRADE Carlos Andrade got started at his cousin Manny’s shop in the 1970s. Later he established his own network, helping as many as he could along the way.

Over the years, Carlos brought many franchisees into the system.

His support of charities large and small is widely known. He was named the 2015 Dunkin’ Donuts Philanthropist of the Year. Carlos often fills his car with Dunkin’ beverages and treats to deliver to local community organizations.

JOE BATISTA Joe Batista and his younger brother John emigrated from Sao Miguel. In 1970, he got a job as a baker at Manny Andrade’s Dunkin’ shop in Providence. One year later, Joe opened his first of eight Dunkin’ locations.

He came to love franchising because it was a collective effort where everybody pulls together. Joe served on the Ad Committee

and the Advisory Council. He was on the board for the DCP and, in 1982, helped establish Dunkin’s first locations in Brazil.

BILL DALY Bill Daly worked at Dunkin’ Brands for over 20 years before becoming a franchisee.

Immediately recognized as a leader, Bill served on the DCP board and on his local Ad Committees and DAC. Bill always sought out the customer perspective, waiting in line at a Dunkin’ Donuts restaurant to buy coffee. Customer service has always been a priority for Bill Daly.

CLASS OF 2015 JOHN CADETE John Cadete partnered with his aunt’s husband, Tony Andrade, to buy a Dunkin’ shop. Cadete and Andrade bought three shops together before Cadete split off, developing a network in southeastern Mass. and Cape Cod. Along the way, Cadete served on the DCP board, RAC, DAC and several subcommittees. In addition, he has been an avid supporter of local Little Leagues and the Cape Cod baseball league.

GUIDO PETROSINELLI In 1967, Guido Petrosinelli saw a sign advertising a franchise opportunity with Dunkin’ Donuts. He called the number and opened a franchise in Pawtucket, RI. Today, he has 16.

Petrosinelli served more than 20 years on the Providence Ad Committee, and spent several years in District Advisory Council (DAC) leadership. He is on the board of a central kitchen in East Providence and served as chairman of the DDIFO Roundtable.

CLASS OF 2016 NICK APOSTOLERES Nick Apostoleres was just 14 when his mother and father moved the family from New Jersey to Tampa, so they could open a new Dunkin’ Donuts shop; the year was 1973.

Two year later, Nick’s father died and the family ran the business.

Because Tampa wasn’t a strong coffee market, Nick worked with

Dunkin’ Brands to help them understand the regional differences franchisees live with. Working with the brand to help franchisees became his mission.

DUKE CARVALHO Duke Carvalho was a bank manager when his friend Tony Couto came to see him with an offer to help Duke buy into Dunkin’ Donuts.

Carvalho left the bank and the rest is history.

Duke helped establish one of the first cooperatively run central kitchens, which

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 2019 17

DDIFO HALL OF FAME He took the offer.

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.”

JOSE SALEMA

took baking out of the stores “which meant we didn’t need as much space,” Carvalho says. Once Dunkin’ adapted to a smaller footprint, it enabled the brand to secure more locations, like strip centers, gas stations and convenience stores.

CLASS OF 2017 CARL ANDRADE

for it,” he recalls.

The youngest of three, Carl Andrade was working at his brother Tony’s Dunkin’ shop when a store became available in New Hampshire. “I had to go

That led to a network of 16 stores and a commitment to help fellow franchisees and community charities.

STEWART “JOE” WHITE Joe White bought a Mister Donut shop in Ohio in the late 1970s and converted when Dunkin’ bought the chain in 1990. His shops were often used to test market new products and he was invited to National Leadership Council meetings so he could provide Midwest perspective.

Joe has served on many councils and committees, including two years on the board of the Dunkin’ Brands Joy in Childhood Foundation.

CLASS OF 2018 ADRIAN GASPAR

“I want to give something back,” says Andrade. “We’re here doing business and appreciate being here.”

JIM CAIN

and New York.

Jim Cain started his career in Rhode Island working for some of the giants of the Dunkin’ system, but branched out to create his own network in Connecticut

As his children grew and came on board, Cain devoted more time to advisory work, serving as BAC co-Chair and Chairman of the Marketing Steering Committee, which made him see how “marketing is the lifeline of the business,” he says.

18 INDEPENDENT JOE • JUNE/JULY 2019

Adrian Gaspar had a bustling accounting practice servicing hundreds of Dunkin’ franchisees, when one of them offered to sell him two shops.

Jose Salema came to the U.S. from the Azores when he was 23 and worked in a factory.

Later he got a job as a baker with Carlos Andrade.

Like so many Portuguese immigrants, Jose 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.

ROD VALENCIA A native of the Philippines. Rod Valencia first came to the United States for vacation, but wound up staying to help his cousin open a new Dunkin’ Donuts shop. In 1984, he opened his first store in New York City.

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.

•

HOW CONVENIENCE STORES ARE KEEPING UP THE PRESSURE

I

t was former Dunkin’ Brands CEO Nigel Travis who loudly identified convenience stores as a serious competitor for coffee sales two years ago. During a presentation at the Jefferies 2017 Global Consumer Conference, Travis said the c-stores were a major factor for Dunkin’s dip in afternoon coffee sales. This warning was repeated during a recent earnings call when Dunkin’ Brands (DBI) Chief Marketing Officer Tony Weisman pointed to competition from c-stores as a concern in the quest for espresso sales.

customers. He started selling coffee by the cup in his Long Island store.

The test proved wildly popular, and by the late 1960s, all U.S. 7‑Eleven stores were in the brew. Today, 7-Eleven is a leader in coffee sales.

The chain has upped its game over the years from a standard

Photos courtesy of 7-Eleven.com

Espresso? At convenience stores? When did convenience stores, known largely for candy, sodas, and lottery tickets – and bad coffee – become the prince of java? It’s taken some time. As the story goes, 50 years ago a 7‑Eleven franchisee was looking for creative, everyday conveniences to offer his

INDEPENDENT JOE • JUNE/JULY 2019 19

FEATURE

Competition for Your Coffee Dollar

coffee maker to machines serving up hot beverages like pumpkin spice, fat-free French vanilla cappuccinos and Cuban cafe con leche, just to name a few. Their coffee stations include a variety of mix-ins, including cream and skim milk, bottled sweeteners, and even minimarshmallows. A new 7-Eleven lab store, which opened this spring in Dallas, offers a frozen yogurt, fresh-baked goods, local craft beers and a taco stand, as well as customizable coffee and beverage options,

including nitro cold brew, organic tea, cold-pressed juices, and kombucha tea (Asian tea with health benefits). Definitely not your grandfather’s convenience store.

"Convenience retailing is light years away from the days of bread and milk being sold from ice docks in 1927, and the industry is changing at a faster rate than ever before," 7-Eleven executive vice president and chief operating officer Chris Tanco said in a statement.

In fact, 7-Eleven customers guzzle more than 1.1 million cups of coffee per day with the fourth-largest share of hotbrewed coffee servings in the U.S., trailing only behind McDonald’s, Dunkin’s and Starbucks, according to StudyLogic, the market research firm.

But 7-Eleven franchisee Terry Hutchinson, who owns five shops in Naples, Ft. Myers and Estero, Fla., and is a Naples city councilman, thinks that there’s more than enough business to go around. Sitting in his 7-Eleven store in Estero, with a Dunkin’ shop right next door, he likened the situation to an auto row, when car dealerships are clustered together.

“Having other businesses that sell some of the same product as you in close proximity doesn’t always equate to a drop in business,” says Hutchinson, citing Hotelling’s law, an economics premise that says it’s rational for producers to make their products as similar as possible.

But Bruce Clark, a professor in marketing at the D’Amore-McKim School of Business at Northeastern University, says that convenience stores have the edge over coffee shops because of their lower price point, 24-hour availability in many markets, on-trend limited time offers, and sustainability initiatives. Two-thirds of customers say c-stores are just as capable as restaurants in offering a great cup of coffee, according to data firm Technomic.

The same report says c-store customers don’t mind that a self-serve machine was making their coffee instead of a barista— in fact, many preferred the automation and options for customization.

A recent report from the National Association of Convenience Stores, found a cup of 7-Eleven coffee costing $1 for a small, $2 for a large, and $3 for a super-size. It also found that this c-store had the highest amount of caffeine per medium cup, as compared to Starbucks, McDonalds and Dunkin’s. For those prices – and that jolt – it can be a draw for consumers watching their pocketbook. About 60 percent of convenience store food customers have household incomes of less than $40,000.

20 INDEPENDENT JOE • JUNE/JULY 2019

Hutchinson says he doesn’t mind making less money on a cup of coffee at his Florida 7-Eleven stores because coffee is what he calls “a high affinity purchase.”

Customers don’t just buy a cup of coffee, he says, typically they will also pick up another of the many items in his store, whether it be chips, bananas, or candy.

“The breadth and depth of our assortment eliminates additional stops for our customers,” he says.

In fact, according to the website Delish, 7-Eleven sells over 26 million pizzas, 30 million pounds of chicken wings and 1.9 million pounds of gummy worms in the U.S. Asser Christensen, a coffee industry observer and founder of The Coffee Chronicler, a website dedicated to the world of Specialty Coffee, says when it comes to c-store coffee versus coffee-shop coffee, it’s all about convenience. “How fast can you prepare a cup of coffee for the customer in the morning? How cheap can you do it?”

Hutchinson says that a fresh cup of coffee has the power of influence and suggestion – just the other day he was working the graveyard shift and three Uber drivers came in. “Guess what they wanted? A cup of coffee. I had a fresh cup brewing, so just selling just one cup more than pays for the entire pot. Never sell an old cup of coffee.”

Just like Dunkin’, c-stores operators care about quality coffee. And they’ve learned the power of loyalty programs to keep customers coming back. The latest promotion for 7-Eleven’s mobile app tells customers their 7th cup is always free when they scan their mobile device. Using mobile strategies to build long-term relationships with consumers is “what we are really fighting for,” says Hutchinson, “not only to maintain and retain foot traffic but to grow it incrementally.”

Of course, for all their growth and strategy, convenience stores do not command the kind of loyalty the major brands do.

This year, Dunkin’ was again named the

No. 1 brand for customer loyalty in the out-of-home coffee category in research conducted by Brand Keys. “When one considers how high coffee consumers’ expectations have grown over the past decade, in what can only be characterized literally as a highly caffeinated and competitive marketplace arena, being No.1 again is not only emblematic of customer loyalty, but a sign of sector leadership too,” Brand Keys founder and president said in a press release.

Because coffee is just one item for sale at 7-Eleven, AM/PM and other convenience store chains, it will never receive the kind of attention it does at a Dunkin’ shop.

What’s more, c-stores will never offer the kind of customer experience a Dunkin’ or another coffee shop can. Ultimately, that experience will keep c-stores stuck in their own category—still competitive, but never on the same level as a Dunkin’.

Christensen, the industry observer, puts it this way.

“7-Eleven is never going to be sexy.”

•

7-ELEVEN CUSTOMERS GUZZLE MORE THAN 1.1 MILLION CUPS OF COFFEE PER DAY WITH THE FOURTHLARGEST SHARE OF HOT-BREWED COFFEE SERVINGS IN THE U.S. INDEPENDENT JOE • JUNE/JULY 2019 21

BREWING BET TER

COFFEE

Dunkin’ secures new technology for more consistent brewing

22 INDEPENDENT JOE • JUNE/JULY 2019

In an internal communication titled, “We are stepping up our coffee brewing game,” Dunkin’ Brands Chief Operating Officer Scott Murphy acknowledged the need to make a change and spelled out the next steps. “In 2019, we will begin to install Digital IC3 brewers and refractometers throughout the entire Dunkin' system,” making Dunkin’ “a more modern relevant brand that delivers unparalleled convenience to our guest.”

For franchisees like Sid Mody, who operates a network in New Jersey and serves on the Brand Advisory Council (BAC), a digitally-powered coffee brewer and new measuring system opened his eyes to how improving the consistency of his product will help him and his fellow franchisees, especially in iced coffee sales. Murphy’s communique pointed out what many franchisees already know: as the iced coffee market is growing, Dunkin’ has been losing share.

“Iced Coffee Units were flat in 2016, declined in 2017, and only grew 1.2 percent in 2018,” Murphy wrote.

“This is a vital sales platform that Dunkin’ should not be losing sales share,” says John Gordon, founder of Pacific Management Consulting Group and DDIFO’s Restaurant Analyst. “The very logical first place to check for problems is whether equipment is producing out-of-spec brews.”

Because growth has stagnated and there are a lot of other competitors in the market space, Mody says, “We need to make sure that we are able to deliver a consistent cup of iced coffee to our guests.” He estimates iced coffee accounts

for as much as 15 to 20 percent of sales at many Dunkin’ shops.

franchisees, covering $600 per shop on new, or previously purchased, units.

DIGITAL COFFEE BREWING...

ANALOG TO DIGITAL

“While almost always franchisees are responsible for store equipment costs, it is good to see Dunkin' has taken the long view and is working to partially fund some costs itself,” says Gordon. “This is because otherwise it might take too long to get the franchise system changed over.

McDonald’s has done the same thing.”

The IC3 from Bunn is described as a “High volume brewer engineered specifically for consistently delivering tailored flavor profiles of iced coffee.”

According to Mody, the Digital IC3 brewer has been around in the Dunkin’ system for a couple of years. In that time, Dunkin’ and franchisees who were testing the brewer gathered data, which demonstrated a compelling case for the Digital IC3 brewer over its analog cousin. Mody says this led to a change in brand standards and the decision to replace all analog IC3 brewers with digital versions. But, Dunkin’ was not the only major QSR chain to greenlight an IC3 transition.

Mody notes that the BAC and National

" We need to make sure that we are able to deliver a consistent cup of iced coffee to our guests."

Mody told Independent Joe that Burger King was ready to pull the trigger on a major order with Bunn for IC3 brewers, which would have tied up their production capacity and forced Dunkin’ to wait until the BK order was fulfilled. "We got to Bunn first. Otherwise, it would have taken a lot longer for us to make the transition from analog to digital," he says.

Currently digital IC3 brewers are in use in approximately 2,500 Dunkin shops, and will ultimately replace all analog brewers, since manufacturers are planning to phase them out.

Today, franchisees who need to replace an old machine, must purchase the Digital IC3 brewer, which costs nearly $1,500.

Dunkin' has announced a cost share program for

INDEPENDENT JOE • JUNE/JULY 2019 23

COVER STORY

A

nyone who ever noticed the two clocks hanging side-byside at a Dunkin’ Donuts­—one showing the time 18 minutes ahead—knew they would get a cup of coffee that hadn’t been sitting around very long. For a company eager to sell more coffee, Dunkin’ always knows customers will return for a cup of coffee that is consistently flavorful, whether it is hot or iced. The clocks ensure old coffee will be poured out at the appointed time.

Technology has now changed the paradigm, and offers franchisees new tools to guarantee their coffee quality.

PROOF IS IN THE FEATURES

DCP negotiated down the purchase price, freight and installation. “It's almost like we're matching the DBI contribution, maybe a little bit more, and getting a new brewer,” he says.

REFRACTOMETER ENSURES CONSISTENT HOT COFFEE AND ESPRESSO

Refractometers measure total dissolved solids (TDS) in hot coffee and espresso to ensure brews are consistent across all stores. Dunkin' will be requiring refractometers in every restaurant and the brand is providing a subsidy of $100 on the first refractometer per restaurant.

By simply putting the brewed coffee on the lens of the refractometer, you'll know its quality. "It's a technical way of actually measuring the quality of the coffee or the strength of the coffee. We've never used that gauge before. We used to just check volume and temperature of the water on the brewer and the size and weight of the grinds on the grinder, but not the brewed coffee," Mody says. "The refractometer is a way to measure the final product."

Same goes for espresso. "We never measured the quality of our espresso, but the refractometer allows us to measure the TDS of the espresso for the first time," says Mody. "We put so much money into espresso and it's showing good results, but we have a long run ahead of us and we have to keep monitoring the quality of espresso we deliver."

Instead of having a crew member weigh grinds, look at the coarseness or fineness of the grinds, or examine the volume and temperature of the water every single day, the refractometer enables you to ensure coffee quality with a single step of checking the TDS of brewed coffee, which Dunkin’ Brands believes can help franchisees reduce labor costs.

"Instead of doing all that, you can take coffee from your brewers and put it on the lens of the refractometer, and boom, it gives you a reading," Mody says. "It definitely saves you a lot of time. I've used the refractometers in my stores for over a year as a test and we've been very happy with them."

But the device isn’t meant to substitute proper brewing procedures, brand standards, and processes.

Franchisees are still responsible for maintaining their grinders and brewers.

Dunkin’ says it is planning to have Digital IC3 brewers and refractometers installed throughout the system by the end of this year. The chain’s willingness to offset the cost of the new equipment underscores the importance of improving consistency in today’s highly competitive marketplace. Mody says it shows DBI is serious and putting skin in the game.

“There's always angst when we have to put out money; it's not easy to make these commitments. However, we did so recently when the brand partnered with us for the first time with espresso, and we saw results,” he says. By working together, we can preserve our market share, and hopefully grow.”

24 INDEPENDENT JOE • JUNE/JULY 2019

•

The biggest benefit of the digital brewer is that it creates a consistent and better brew batch every time.

There are a number of features that make it possible.

Temperature lockout

TEMPERATURE LOCKOUT

This feature ensures correct and consistent brewing temperatures every brew cycle. When you brew multiple batches back to back, sometimes the water does not get to the desired temperature.

Analog brewers are not able to detect the incorrect temperature and keep brewing, which can lead to inconsistent iced coffee.

A digital brewer is able to lock itself out if the water is not at the proper temperature, so a bad batch cannot be brewed. Once the water temperature is right, it begins brewing again.

AUTOMATIC BYPASS

This feature ensures that water is automatically added for proper tasting iced coffee, so the crew doesn’t have to do it manually.

Manually measuring and adding water to iced coffee leaves room for error. With the IC3 brewer, the bypass water is part of the recipe. The brewer itself has a nozzle that pumps the water into the batch of coffee so you don't have to add it or measure it.

HALF BATCH/FULL BATCH CONSISTENCY

With analog brewing systems, there is some inconsistency in flavor profile between a full batch and half batch. The digital brewer is able to brew either one or two or gallons at a time, keeping the flavor profile consistent regardless of the output.

RETENTION OF CALIBRATION

Digital brewers have proved reliable in retaining calibration.

Because analog coffee makers fall out of calibration often, you have to frequently ensure that they are delivering water at the correct temperature and volume. If they are not, you have to manually adjust them.

The IC3 Brewer holds calibration for an extended period, making consistent coffee. If calibration falls out of sorts, you can adjust settings through the digital panel.

PROFILE

A FranchiseeFriendly CFO Dunkin’ Brands’ Kate Jaspon Keeps Shop Owners in Focus

Y

ou might say it’s destiny that Dunkin’ CFO Kate Jaspon works for Dunkin’ Brands. After all, the donut company has been a consistent presence in her life. Jaspon grew up in Braintree, Massachusetts, one town over from the original Dunkin’ Donuts restaurant in Quincy.

Her high school is situated directly across the street from the brand’s training facility for franchisees and operations managers—known forever as Dunkin’ Donuts University. And, when she worked as an accountant at KPMG, Dunkin’ Brands was her client.

Then there are the fond memories she has from childhood, visiting Dunkin’ with her family to pick up Munchkins.

So when the Dunkin’ Brands VP of Finance called Jaspon in 2005 and invited her in for an interview, she felt something brewing.

At that time, Jaspon had spent nine years at KPMG, one of the Big Four accounting firms, but she wasn’t sure that achieving partner at the firm was still her career goal. The invite to come to Canton and talk to Dunkin’ seemed to come at the right time. “It just felt right,” Jaspon recalled during an interview on the “Between Milk & Water” podcast. She said she was ready for a change.

To be sure, there’s the emotional connection Jaspon has with Dunkin’, but she also attributes the iconic branding and growth opportunities as strong reasons for joining the company, as she told Babson Magazine.

And as the daughter of a small business owner, she appreciates Dunkin’s all-franchise model and the chance to work with entrepreneurs growing small businesses.

“She is franchiseefriendly, she works with the franchisees and goes a long way to get things done.”

—Jim Cain

Jaspon was hired as assistant controller, but was soon promoted to Vice President, Controller and Corporate Treasurer. In 2014, she rose to become Vice President of Finance and Treasury. In April of 2017, Jaspon was appointed to the interim CFO role when Paul Carbone left the company, and in June of that year she was promoted to CFO.

Going the distance for franchisees Since joining Dunkin’ Brands in 2005, Jaspon has been busy tackling a long and impressive list of initiatives (see sidebar). She was instrumental in helping take the company public in 2011, and notes that standing on the floor of the NASDAQ at the opening bell was a defining moment in her career.

But Jaspon has been a key player in other initiatives as well and continuously provides value for the franchisees.

Left to Right: Micheal Sequeira, Ram Hegde, Dominic Sequeira, Kate Jaspon, Jason Soares and Dwar Patel.

INDEPENDENT JOE • JUNE/JULY 2019 25

PROFILE Co-Chair of the Marketing Steering Committee (MSC) and as a member of the BAC. “From my time on the MSC and BAC, I saw first-hand many of the roles Kate played and the relationships that she has established with Wall Street, our board of directors, our CEO and our franchisees,” says Cain. “She provides the best in class leadership,” and Cain has seen that she keeps the interests of franchisees “top of mind.”

“She’s done a great job building bridges with the franchisees,” says Ken Blum, a franchisee who currently owns 26 stores in northeast Ohio with three more in development.

“We are a 100 percent franchise brand. We have no corporate stores, and corporate could have asked us to invest that money ourselves. But they didn’t. It’s quite bold,” says Blum.

Jim Cain, a franchisee whose family owns 65 stores in Connecticut and Queens, NY, agrees.

From donuts to coffee

“She is franchisee-friendly,” Cain says.

“She works with the franchisees and goes a long way to get things done.”

Blum, like Jaspon graduated from Babson College outside Boston–though their years there did not overlap–and appreciates how Jaspon is both approachable and transparent.

“If you ask her a direct question, she’ll give you a direct answer, but she’ll also make sure you understand the ‘why’ behind the answer,” he says.

As a result, she has earned a lot respect from the franchisees.

“She played a big role in minimizing our credit card transaction fees,” says Blum. “They would be a lot higher if she didn’t negotiate on our behalf.”

And, that respect increased even more when the company invested $100 million in a brand refresh, with most of the money going to the franchisees.

After a consumer study revealed that customers felt that Dunkin’ was lacking focus, the company began its transformation to an “on the go, beverage-centric” brand.

Recognizing the tremendous amount of competition in that space from mom-andpop shops to convenience stores and other QSRs, Dunkin’ wanted to place their stake in the ground.

“Our core business is coffee, but we still sell donuts,” Jaspon told Elizabeth Banks on the “Crazy Enough to Work” web series.

A large percentage of the $100 million investment is going toward store equipment such as espresso machines and new brewing machines that will further improve the brand’s coffee consistency.

The remainder will go toward the technology infrastructure and training to support Dunkin’s on-the-go strategy.

“This investment is unprecedented,” says Cain. “They are really stepping up,”

Providing best-in-class leadership Cain worked with Jaspon and her team as

26 INDEPENDENT JOE • JUNE/JULY 2019

One example he cited was when Dunkin’ converted its gift cards to a fully digital product, where customers can manage their card through the app or website.

Franchisees loved the new model, but there were unintended consequences.

Once it became more convenient, fewer customers left unused money on the cards. That leftover cash, known as the breakage rate, was a source of the program’s funding, but eroded with the digital model. Dunkin’ raised the red flag, questioning the program’s sustainability.

Jaspon, according to Cain, came to the franchisees to work out a compromise: they would pay for the shortfall in 2018, but in 2019, the shortfall would come out of the national advertising fund.

“That was all Kate. She advocated for that,” he says.

It’s in the data As a trained accountant, it’s no surprise Jaspon and her team focus on data, which encompasses the analytical, forecasting and planning sides of the brand. And during her tenure as CFO, she has helped the franchisees look at their businesses a bit differently.

“Now, when we run a promotion, we don’t just look at the specific products and price points,” Blum says. “So, if a breakfast sandwich was on special, we look at attachments like beverages and other add-ons. We didn’t do that before.”

He says that he applies a more scientific lens to his business. “Other franchisees do, too, and that’s all due to Kate’s help.”

Cain concurs.

“Kate’s team does stellar work”

“ Opportunity comes when the

In 2018, Dunkin’ Brands made another shift, this time with their advertising.

They decided to put more money toward national media campaigns, but did not want to dilute the local advertising campaigns already in the works.

“Kate and her team scrubbed the P & L and tightened the national budget. As a result, the allocation of funds to national media increased by 42 percent without impacting the local media budgets,” says Cain. “It was incredible.”

What she’s learned As company CFO, it’s no surprise Jaspon travels for work, domestically as well as internationally. She recently went to Saudi Arabia to help open that country’s 400th store, and notes on the “Between Milk & Water” podcast how, at that time, the country’s laws toward women were changing and she was one of the first women traveling without a spouse or business partner to be let into the country.

greatest risk is in front of you.

Take a chance, if it feels right.

And remember your career is a marathon, not a sprint. So enjoy the run.”

— Kate Jaspon On the same podcast, she also mused how when she traveled to Japan, she was handed a pen and notebook when she walked into a meeting.

“They assumed that since I was a woman, I was the secretary.”

Jaspon says she takes it all in stride and tries not to take it – or herself – too seriously.

She’s learned a lot in her time at Dunkin’

about herself, others and business. And what bit of advice would she share with others?

“Opportunity comes when the greatest risk is in front of you. Take a chance, if it feels right. And remember your career is a marathon, not a sprint. So enjoy the run.”

Fitting, since America runs on Dunkin’.

•

HIGHLIGHTS: • Returning nearly $3 billion to shareholders via dividends and share repurchases • Creating the Demand Planning team with a focus on forecasting LTO products and promotions • Implementing robust test and learn culture based on advanced analytics to minimize risk and maximize financial opportunity from both a top and bottom line perspective.

• Initiating long-range planning process which heavily emphasizes the continued financial strength of the Dunkin’ franchisee base • Lobbying for key policies impacting small business owners: • A 20 percent deduction for pass thru businesses • Opposition to the Border Adjustment Tax (BAT) • Opposition to the Massachusetts real-time sales tax provision

Turk Enustun

317-432-8809 Turk.Enustun@gapac.com www.gppro.com

INDEPENDENT JOE • JUNE/JULY 2019 27

DDIFO

Business Member 2019

Directory Business Members Directory ofof 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

DGC (DiCicco, Gulman & Company LLP)

Daniel E. Gaudet 781-937-5142 • dgaudet@dgccpa.com 150 Presidential Way, Ste. 510, Woburn, MA 01801 www.dgccpa.com

H&R Block

Kelly Cataudella 917-674-2126 • kelly.cataudella@hrblock.com 555 Seventh Ave., New York, NY 10018 www.hrblock.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

BACK OFFICE Jera Concepts

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

BUILDING Everbrite, LLC

Tiffany Walton 414-529-7169 • pluccas@everbrite.com 4949 S. 110th St., Greenfield, WI 53228 www.everbrite.com

Persona Signs, Lighting, Image

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

ENERGY Kobiona

Poyant Signs

Brian Choquette 203-672-6605 • bchoquette@kobiona.com 67 West Main Street, Suite 412. Clinton, CT 06413 www.kobiona.com

Watchfire Signs

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

Bill Gavigan, Jr. 860-324-1353 • bgavigan@poyantsigns.com 125 Samuel Barnet Blvd, New Bedford, MA 02745 www.poyantsigns.com David Watson 205-542-7881 • David.Watson@watchfiresigns.com 1015 Maple St, Danville, IL www.watchfiresigns.com

Secure Energy

FINANCE Bank of America/Merrill Lynch

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 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

Kathy Kutz 352-642-1435 • Kathy.Kutz@baml.com 2627 NW 43rd St., Gainesville, FL, 32606 www.bankofamerica.com

BankNewport

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

Bank RI

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

Bridge Funding Group, Inc.

Trey Peters 717-347-7721 • tpeters@bankunited.com 215 Schilling Circle, Ste. 100, Hunt Valley, MD 21031 www.bridgefundinggroupinc.com

CIT

Chris Wren 214-675-3333 • Christopher.Wren@cit.com 155 Commerce Way, Portsmouth, NH 03823 www.cit.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 2019

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

Netspend a TSYS Company

Subbu Viswanathan 213-673-9028 • Subbu.Viswanathan@cnb.com 555 S. Flower St., 21st Fl, Los Angeles, CA 90071 www.cnb.com

Lacey Daniel 404-606-0893 • ldaniel@netspend.com 1591 Millspring Dr. Apt #106, Fort Mill, SC 29715 www.netspend.com

Eastern Bank

Paychex

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

Kathleen Aaskov 207-415-1230 • kaaskov@paychex.com Fax: 877-841-9028 www.paychex.com

First Franchise Capital

TPI - True Payroll Integration

Bill Nicholson 317-428-3835 • bill.nicholson@firstfcc.com 8888 Keystone Crossing, Ste. 1700, Indianapolis, IN 46240 www.firstfranchisecapital.com

Northern Bank & Trust Company

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

Ecolab

Georgia-Pacific

Andy S. Aziz 203-930-1373 • andy@tpipay.com 2349 Black Rock Tpke., Fairfield, CT 06825 www.tpipay.com

Turk Enustun 317-432-8809 • Turk.Enustun@gapac.com 12425 Buccaneera Dr., Fishers, IN 46037 www.gppro.com

INSURANCE Intrepid Direct Insurance

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

Neto Insurance Agency

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

Starkweather & Shepley Insurance Brokerage, Inc.

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

HME Drive-Thru Headsets

Pacific Premier Franchise Capital

Paycor

Stephen Neto 508-678-9068 • steve@netoinsurance.com 1468 Pleasant St, Fall River, MA 02723 www.netoinsurance.com

Jim Curran 412-721-3404 • jcurran@paycor.com 2009 Mackenzie Way, Cranberry Twp., PA 16066 www.paycor.com/franchise-solutions

Sterling National Bank

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

LEGAL

TD Bank

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

Wintrust Franchise Finance

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

Peter J. DiFilippo 401-525-6771 • Peter.DiFilippo@td.com 180 Westminster St, Providence, RI 02903 www.tdbank.com Sandra McCraren 847-432-2488 • smccraren@wintrust.com 9700 W. Higgins Road, 1st Flr, Rosemont, IL 60018 franchise.wintrust.com

HUMAN RESOURCES CertiPay

Jeff Messner 800-422-3782 ext. 1018 • JMessner@certipay.com 130 Bates Ave. SW, Ste. 101, Winter Haven, FL 33880 www.certipay.com

Green Dot/rapid! PayCard

Edward Cole 813-340-3276 • scole@greendotcorp.com 2266 Bascom Way, Clearwater, FL 33764 www.rapidpaycard.com

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

Marks & Klein LLP

TGC Development Group

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

OPERATIONS 3M Company

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

Bunn-O-Matic Corporation

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

New England Drive-Thru Communications

Angela Bechard 603-475-2046 • angela@nedrivethru.com 999 Candia Rd. Ste. 7, Manchester, NH 03032 www.nedrivethru.com Zachary Waas 630-873-0088 • waaz@princecastle.com 355 East Kehoe Blvd., Carol Stream, IL 60188 www.princecastle.com

Lisa & Sousa Attorneys at Law Ltd.

Paris Ackerman LLP

Loomis

MCD Innovations — Airxcel, Inc.

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

TCF Franchise Finance

Tom Bessinger 952-656-3272 • tbessinger@tcfef.com 11100 Wayzata Blvd., Ste. 801, Minnetonka, MN 55305 www.tcfef.com/franchise

Cardtronics

Tom Spooner 973-452-4131 • tspooner@Cardtronics.com 628 Route 10 - Ste. 8, Whippany, NJ 07981 www.cardtronics.com Michael Vuolo 800-737-8234 • Michael.Vuolo@ecolab.com 1 Edgewater Dr. Ste. 210, Norwood, MA 02062 www.ecolab.com

Nick DiCarlo 913-217-4281 • ndicarlo@intrepiddirect.com 10851 Mastin Blvd, Ste. 200, Overland Park, KS 66210 www.intrepidinsurance.com

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

DDIFO

Business Member 2019

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

Thank You to Our Business Members!

INDEPENDENT JOE • JUNE/JULY 2019 29

A LOOK AT THE LAW

BY PETER BENNETT

Class Action Revived in Suit Alleging P.F. Chang’s Shortchanged Employees

I

n most states, employers are required by law to guarantee that an employee who is scheduled to work receives a guaranteed minimum number of hours and pay. Employers are compelled to keep accurate records documenting the actual number of hours worked. Requirements differ – and most would not apply the guarantee to those situations where an employee asks to leave –, but employers who fail to pay the guaranteed minimum and keep proper records are at risk of being sued. One such recent case, involving the restaurant chain P.F. Chang’s serves as a cautionary tale.

For eight years Felice Gammella worked at a number of different P.F. Chang’s performing a variety of tasks including greeting customers, helping behind the bar, running food, and assembling delivery orders. P. F. Chang’s paid Gammella, along with servers, bartenders, hosts, and other staff, on an hourly basis at the minimum wage.

In November 2014, Gammella sued under the Massachusetts Wage Act, alleging the company routinely denied employees pay for reporting to work. Specifically, he alleged that P.F. Chang’s had a common practice that violated the “reporting pay” or “three-hour” requirement, which requires Massachusetts employers to pay employees three hours’ wages at no less than the minimum wage if they report for a scheduled shift of three or more hours but are involuntarily dismissed before they have

This decision makes clear the importance of creating and maintaining good documentation systems for potential wage and hour issues.

worked three hours. Gammella testified that on numerous occasions, despite being scheduled to work three or more hours, he was dismissed against his wishes and forced to clock out before he had worked the minimum hours. On those occasions, he was not given three hours’ pay, but was only paid for his actual hours worked.

Although P.F. Chang’s claimed that its policy was to comply with the three-hour reporting requirement, it produced no evidence that it had ever done so. Rather, the reports it produced revealed that, in 20 instances involving Gammella and approximately 7,000 instances involving hundreds of other employees, it did not provide reporting pay when employees clocked out before they worked three hours. A company official claimed that the employees had voluntarily asked and were granted permission to leave before three hours elapsed.

Gammella’s lawyer moved to certify a class of employees who worked less than three hours of a scheduled shift without receiving reporting pay. Relying on an opinion letter interpreting the reporting requirement from the state’s Executive Office of Labor and Workforce, the trial court denied class certification, concluding that an employer did not have to provide reporting pay where an employee chose to leave work before completion of a three-hour scheduled shift, “completely on a voluntary basis.”

The trial court found that it was impossible to determine whether any employees would fall in the class, and so concluded that the class was insufficiently numerous to satisfy the certification requirements, or Massachusetts Rule of Civil Procedure 23 (Rule 23).

After class certification was denied, the employer made two settlement offers to Gammella that claimed to provide

30 INDEPENDENT JOE • JUNE/JULY 2019

complete relief to his individual claim but he rejected both of them. P.F. Chang’s then moved to dismiss the case on the grounds that by rejecting the offers of settlement, Gammella had mooted his claim. The employer also argued that the employee did not have standing to serve as class representative for any putative class he might seek to revive. The Massachusetts Supreme Court then transferred the matter from the Court of Appeals on its own motion.

The Massachusetts Supreme Court ruled that due to a combination of thousands of instances where P.F. Chang’s failed to accurately pay hundreds of employees for dismissing them from scheduled shifts before they had worked three hours, the absence of any recordkeeping related to whether the departures were voluntary thus justifying the non-payments, and the employer’s refusal to provide the names of the employees involved, made it reasonable to infer that the large number of employees would satisfy the requirement for a class action suit. Finding sufficient evidence that the employer may have shortchanged employees who were dismissed early from scheduled shifts, the state high court reversed the judgment of the trial court denying class certification.

This decision makes clear the importance of creating and maintaining good documentation systems for potential wage and hour issues. In this case, while the vast majority of the restaurant’s employees likely left voluntarily, with no records to substantiate what happened, the employer is left at the whim of an employee or ex-employee who sees the chance to file suit and get a settlement.

•

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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