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A Golden State Milestone for Dunkin’s Expansion
Three new technologies to reshape QSR industry
Misha Goli: Growing Up Dunkin’
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ON REACHING THE PINNACLE The idea of a Hall of Fame has its roots in Norse Mythology, but it was really brought to fruition with Ludwig I, who was the King of Bavaria, in 1842. He commissioned the building of a memorial called Walhalla to hold plaques and statues honoring great Germans. The Hall of Fame for Great Americans, where nominees were selected by a national board of electors, was established in New York City in 1900 and is the first recorded use of the English phrase, “Hall of Fame.” Since then, halls have been established to recognize famous and notable people in sports, business, the arts and everything in between. Halls of fame enable us to honor and elevate individuals in recognition of their achievements. The DDIFO Franchise Owners Hall of Fame is no different. Since 2011, DDIFO has identified the pioneers and influential men and women in the Dunkin’ system for induction into its Hall of Fame, identifying those that have exhibited outstanding character, put others above themselves and made a contribution of sustainable significance. Hall of Fame criteria stipulates that the inductee be a leader who sets an example for others to follow and puts the guest first. In the nearly 70 years since William Rosenberg founded that first Dunkin’ Donuts, there have been many who have met and exhibited these qualities—and still more continue to exercise the character, the generosity, the knowledge and the leadership necessary to keep Dunkin’ a leader in the QSR industry. And it is thrilling for DDIFO, as an organization, to annually recognize some number of these individuals. In the early years of our Hall of Fame, we had some catching up to do – with six individuals inducted in each of the first three years creating an unshakable foundation of excellence for future inductions. (Since then, we’ve limited inductions to no more than three per year.)
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That foundation of excellence we honor represents the backbone of Dunkin’ and the legacy of DDIFO. The growth of the brand, the success of its expansion, the value of its asset light model are in so many ways derived directly from the efforts of those who’ve been enshrined. As we stand on their shoulders to forge the future of Dunkin’, we must never forget their accomplishments.
This year’s class of inductees, Barkat Gillani, Peter Marcovich and Tony Salema further illustrate the foundation of excellence on which Dunkin’ stands. Each has been instrumental to the brand’s success in his own way; each has displayed the leadership and selflessness of those who have preceded them; and each is eminently worthy of Hall of Fame recognition. It is also fitting to note that as Dunkin’ has expanded its footprint across the country, the exceptional leadership of its franchisees has expanded right along with it. This year, we induct the fifth member of the Hall of Fame with roots beyond Dunkin’s historically Northeast base. Excellence does not live by geographic boundaries. When we honor excellence this fall at the giant resort in the Connecticut woods, we will also have on hand a different kind of Hall of Famer. This one earned his recognition protecting the blind side for NFL quarterback Tom Brady and, in the process, won three Super Bowl championships. DDIFO is honored to have New England Patriots Hall of Fame member Matt Light as a guest speaker for our Hall of Fame luncheon. Matt spent 11 years with the Patriots and was thrice chosen for the Pro Bowl before becoming the 27th member of the New England Patriots Hall of Fame. Birds of a feather indeed. Ed Shanahan DDIFO Executive Director
INDEPENDENT JOE • AUGUST/SEPTEMBER 2019
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SUB HEADLINE
CONTENTS From the Executive Director: On Reaching the Pinnacle. . . . . . . . . . . . . . . 3
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What’s Brewing: A Look at State Issues Around the Footprint. . . . . . . . . . . 7 With Greater Sophistication, Independent Franchisee Associations Step It Up. . . . . . . . . . . . . . . . 9 A Golden State Milestone for Dunkin’s Expansion. . . . . . . . . . . . . . . . . . 11 Three New Technologies Aim to Reshape QSR Industry. . . . . . . . . . . . . . . 14 2019 DDIFO National Conference Will Feature Insights and O p p o r t u n i t i e s . . . . . . . . . . 16 DDIFO Announces 2019 Hall of Fame Honorees. . . . . . . . . . . . . . . . . . . . 20 Franchisee Profile: Growing Up Dunkin’. . . . . . . . . . . . . . . . . . . 22 Directory of Business Members ..................... 24 A Look at the Law: Why Changes are Needed in the Franchise Disclosure Rule. . . . . . . . . . . . 26
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INDEPENDENT JOE • AUGUST/SEPTEMBER 2019
October 28–29, 2019 Agenda Highlights:
Making a Difference in Washington • Bridging the Generation Gap Cashing in on Cannabis • Mastering Customer Complaints
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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
Independent The Magazine for DD Independent Franchise Owners August/September 2019 Issue #57 Independent Joe® is published by DD Independent Franchise Owners, Inc. Editors: Edwin Shanahan, Matt Ellis
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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 © 2019 Printed in the U.S.A.
WHAT’S
BREWING A LOOK AT STATE ISSUES By Scott Van Voorhis Ready for a $20 an hour minimum wage? That’s just one of the burdensome new regulations recently proposed in cities and states that threaten to change the rules and raise costs for franchise owners across Dunkin’ and other systems. Democratic lightning rod and U.S. Rep. Rashida Tlaib is leading the charge for what would amount to a $40,000-a-year wage floor, paid through a heightened minimum wage. Meanwhile, Chicago has passed a restrictive, predictive scheduling ordinance, and, with its vote, the Maine legislature becomes the 11th to pass new sick leave regulations with violations costing business owners $1,000 a pop. These are some of the developments that could be on your radar this fall and on your balance sheets going forward.
Is $20 the new $15? Ready or not, here comes the next big push on the minimum wage front. Activists, apparently emboldened by the success of the new years-long campaign for a $15 an hour minimum, are now upping the ante and calling for a $20 an hour wage floor. Freshman Congresswoman Rashida Tlaib (D-Mich.) recently told activists in Detroit the minimum wage really needs to be raised to $18-20 an hour, not $15. Her comments came not long after the Democratic majority in the House voted in favor of hiking the federal minimum wage to $15 an hour, according to published reports.
AROUND THE FOOTPRINT In comments made to members of One Fair Wage, which lobbies for restaurant workers to be paid the same federal minimum paid to workers who don’t get tips, Tlaib argued that $15 is an outdated number that has been kicking around for a number of years at this point. “By the way, when we started it, it should have been $15. Now I think it should be $20. Make sure America Rising hears that. It should be $20 an hour — $18 to $20 an hour at this point," Tlaib said, according to a report in The Hill, a news site that covers Congress. OK, how seriously should anyone take this? After all, it sounds like a stretch. The odds the House’s $15 an hour federal minimum wage bill will get through the Senate, which Republicans control, are zilch. Yet the same could have been said seven years ago when the Service Employees International Union (SEIU) launched the “Fight for $15” campaign. Sure, the federal minimum wage has remained unchanged, but seven states and a number of cities have either already raised their minimum to $15, or are in the process of doing so in steps over the next few years. There have been multiple studies about the impact of hiking the federal minimum wage, with franchise and business owners warning they would have to reduce hours and learn how to do more with fewer
employees. Some economists warn big increases in the minimum wage will only hasten automation, a process many quick service chains, most notably McDonald’s and Dunkin’, appear to be steadily moving towards. A recent report from the nonpartisan Congressional Budget Office examined the impact of boosting the federal minimum wage. While it would boost pay for 27 million workers, it would also kill 1.3 million jobs. Rep. Bobby Scott (D-Va.), who sponsored the “Raise the Wage Act” in the House, said the CBO report shows “the $15 minimum wage would help more than it hurts,” according to The Hill, to which the publication wrote, “That’s easy for him to say; his job isn’t on the line.” No matter. There’s now a push on in Florida to get the Sunshine State to join the ranks of states that have passed $15-an-hour minimums. John Morgan, an Orlandobased lawyer, recently announced he has enough signatures to put a $15 an hour minimum on the state ballot. Morgan’s proposed Fair Wage Amendment would boost Florida’s minimum wage, now at $8.46 an hour, to $10 an hour in 2021. The law would then raise the minimum a dollar per year until it reaches $15 by 2026.
Sick leave spreading It’s catching. Maine recently became the 11th state to pass a sick leave law. But
INDEPENDENT JOE • AUGUST/SEPTEMBER 2019
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WHAT’S
BREWING in doing so, it also became the first in another category, allowing sick leave to be taken for something other than personal illness. The Pine Tree State in May passed legislation that requires businesses with 10 or more employees to provide as much as 40 hours per year in paid sick time. Employees will be able to use those hours for more than just personal illness however; earned leave time can be used to deal with family emergencies, or to care for a sick child or elderly parent. Maine’s business community lobbied to exempt businesses with fewer than 10 employees from having to offer the 40 hours of annual paid sick leave. It remains to be seen how much the new law will cost employers. State officials say the law would exempt 40,000 of the states 50,972 businesses, while still giving sick leave benefits to 85 percent of the state’s workers.
their own paid leave mandates. The law kicks in on January 1, 2020, at which point Maine will join the District of Columbia and 10 other states with sick leave laws (Arizona, California, Connecticut, Maryland, Massachusetts, New Jersey, Oregon, Rhode Island Vermont and Washington).
Chicago to Regulate Work Schedules The Windy City has become the latest in the country to get into the business of overseeing private sector workplace schedules. The Chicago City Council voted on July 24 to require large employers in the city to notify workers at least two weeks ahead of time of shift changes and to pay them for changes made without sufficient notice.
Chicago joins four other cities and one state with predictive scheduling laws on their books, after the city’s aldermen passed one of the broadest ordinances to date, covering restaurants and seven In Portland, Maine’s largest city, the city other industries. The “fair workweek” law council voted 5-4, to reject a similar sick was the product of two years of haggling leave proposal. But, that move was largely between city officials and the leaders of symbolic, as the new state law specifically various business and industry organizapreempts local communities from enacting tions. In the end, the pushback may have succeeded in softening the blow for some in the business community, including smaller franchise owners. While the Provide your company with one of the most comprehensive paycard programs new regulations that eliminates paper in the payroll cover restaurant office and benefits employers and employees chains with at least Card-linking for lost or stolen cards, Zero employer fees for the rapid! 30 locations and 250 no need for payroll to input new PayCard program including no workers, franchise account numbers shipping fees for card inventory and no training fees owners are off the Savings: Realize immediate savings Automated card inventory for multiple hook as long as they and efficiencies by reducing paper location inventory control paychecks don’t own more than three locations. What’s more, the law only applies to
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workers earning less than $26 per hour, or $50,000 per year. The new rules will go into effect next July 1, with an initial requirement of 10 days’ notice, increasing to 14 days’ notice in 2022. Changes made to a schedule without proper notice could cost franchisees an hour’s worth of “predictability pay.” Shifts that are cancelled – or trimmed –within 24 hours will cost the employer half of the total cost of the shift. There is also a “right to rest” provision that enables workers to refuse a shift that has been scheduled within 10 hours of their last shift. Chicago joins the cities of San Francisco and Emeryville, California, as well as New York City and Philadelphia, as municipalities now regulating workers’ shifts. Oregon is the sole state to date that has passed its own predictive scheduling law. On the other side of the coin, state lawmakers in Tennessee, Iowa, Georgia, and Arkansas have all passed laws banning their state government from passing predictive scheduling ordinances.
Summing up The actions taken by local and state governments can have a big impact on the bottom line of franchise owners, as seen above. Efforts to boost the minimum wage – including talk now of a $20 an hour standard – could have a big impact on your bottom line. So can state and local laws that require you and other small businesses to provide sick leave or impose restrictions on the way workplace schedules are drawn up. For franchisees and other business owners, it pays to be vigilant and stay ahead of proposals that could cost you time, money and expense. And here at Independent Joe, we’ll continue to keep an eye out for you.
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s franchisee profits were declining, brand leaders initiated cost-cutting moves to help bolster its earnings—ignoring a plea from its independent franchisee association to get together and talk about the issues that were crippling the company. This was the climate at Jack in the Box in July 2018 when its independent franchisee association, the JIB-NFA (National Jack in the Box Franchisee Association), began publicly calling for the brand’s CEO to be replaced. In a statement to QSR Magazine, JIB-NFA President Rabi Viswanath said, “We feel it is time to advise Jack in the Box’s other stakeholders, its investors and employees, so they gain an understanding of the gravity of the situation currently existing in the Jack in the Box system and why sales and transactions are on the decline, and perhaps they can offer suggestions on how to help solve these problems.” The squabble was widely reported, and in December 2018, JACK stock had lost 18 percent of its value. The company began talking about a sale to maximize its shareholder value, but that still hasn’t materialized. The stock has hovered slightly about $80 a share since February. Tabitha Burke is executive director of the JIB-NFA, which was formed in 1995 in response to the outbreak of e-coli bacteria at Jack in the Box restaurants two years earlier. That outbreak infected over 700 people and killed four children. Burke says there was a time when the JIB independent association worked closely and
collaboratively with corporate leadership, calling the relationship “intermingled.” But more recently, as problems arose, the relationship has strained. “Franchisees felt the company was listening, but nothing was happening,” Burke says. The “deaf ears” are what finally prompted association leadership to vote no confidence in CEO Lenny Comma.
More impact As franchising grows and well-capitalized franchisees invest millions into expanding major food and service brands, franchisee associations are having more impact than ever. Just last year McDonald’s created an independent body, the National Owners Association (NOA), to ensure “owners have net cash flow growth, financial viability and are immune from intimidation and retribution,” according to the association website. Same store sales have softened at McDonald’s and the franchisees are spending heavily on renovations, remodels and new technology like ordering kiosks. As investors, franchisees have an expectation that their voices should be part of the conversations that guide the company. As representatives of those investors, independent franchisee associations are making their voices heard. “Like franchising, independent franchisee associations have grown more sophisticated over time. Today, they are willing and able to step up and take action when members feel they are not being treated properly or fairly by their brands,” says
DDIFO Executive Director Ed Shanahan. “They are the ones with skin in the game.”
It has been nearly 10 years since DDIFO invited renowned franchise attorney Robert Zarco to address Dunkin’s practice in the early 2000s of suing franchisees to churn them from the system. DDIFO also invited a reporter from The Boston Globe to attend the meeting and talk with franchisees. As the Globe reported it, Dunkin’ was “aggressively targeting shop owners in an effort to terminate store agreements and collect hefty penalties for alleged contract violations.” The incident marked a low in the relationship between Dunkin’ franchisees and their franchisor—but it facilitated a change of leadership in Canton. New company chief Nigel Travis reorganized the C-suite and General Counsel Steve Horn left the company. Throughout Travis’s tenure, and now under CEO Dave Hoffmann, Dunkin’ has worked more collaboratively with its franchisees. All would agree the result is a stronger brand. “Franchisees are there to grow the brand. If you don’t have happy franchisees, they’re not building, developing and rehabbing. If they are not happy with the brand, they are not growing the brand. Building the relationship helps grow the brand,” according to Burke. But in an industry that is responsible for six percent of the nation’s gross domestic product, fairness is not always the guide for how franchisors and franchisees divide the profits. Keith Miller, a Subway franchisee and former president of the CFA, characterized it this way in testimony on Capitol Hill this summer, “Here is the problem in the industry: Far too many profit from the sale of a franchise, yet far too few, if any, are held accountable for the success of the franchise purchaser.” Miller was among a group of franchisee advocates appearing before the Senate Committee on Banking, Housing and Urban Affairs on July 17. Weeks later,
INDEPENDENT JOE • AUGUST/SEPTEMBER 2019 9
FEATURE
With Greater Sophistication, Independent Franchisee Associations Step It Up
By Matt Ellis
ASSOCIATION IMPACT Sen. Catherine Cortez Masto (D-Nev.), the ranking minority member on the Subcommittee on Economic Policy, filed legislation to boost accountability. Her bill, the SBA Franchise Loan Transparency Act of 2019, would compel franchisors to provide accurate and complete revenue and store closing data – including average and median first year revenue for all franchises, and the number of first year failures – before the franchisee could qualify for a government backed SBA loan. Franchise owners across the spectrum often complain that the information contained in the Franchise Disclosure Documents (FDD) that companies are compelled to provide to the Federal Trade Commission is neither accurate nor transparent—a point Miller made in his testimony. “The franchise business model can be, and should be, a model for economic mobility and realizing the American Dream. However, leaving the industry to police itself is not working, and is destroying lives while some profit. There is no reason for this, and access to SBA money should be the model of transparency for the industry, one that ensures the best underwriting procedures to those in search of the American Dream.”
Fighting for franchisee interests Yet, not all franchisees can even qualify for an SBA loan. The government refuses to back investors in the 7-Eleven system, even though the chain routinely scores high on Entrepreneur Magazine’s annual ranking of top franchises. (7-Eleven was No. 2 on the list in 2018, but fell to No. 10 in 2019 because of what the magazine described as “a long-¬standing and increasingly noisy confrontation with many of its franchisees.”) “7-Eleven is unique among established franchise systems because it is easy to get in with a low investment,” says Jaspreet Dhillon, a Los Angeles area franchisee and treasurer of their independent franchisee association, the National Coalition of Associations of 7-Eleven Franchisees (NCASEF). “As a first business, it can be good, but [7-Eleven] controls everything.” Not only that. 7-Eleven franchisees have
to split profits with their brand instead of paying royalties. In the new agreement 7-Eleven rolled out in 2018, the graduated gross profit split topped 54 percent for high performing stores in the chain—leaving just 46 percent for the franchisee. When he bought his first 7-Eleven, Dhillon says, the company paid 100 percent of a store’s credit card fees and provided a 25 percent commission on the sale of gasoline. But, after the chain came out with a new franchise agreement in 2005, gas commissions fell to 1.5 cents per gallon and franchisees were responsible for 50 percent of credit card fees. Dhillon says it is emblematic of how 7-Eleven has been chipping away at franchisee profits. “Knowing what they’ve done has made the work of National Coalition more important,” Dhillon says. “The independent association is important for any system, because we can have someone we choose looking through our agreements to make sure they are in the best interest of the franchisees.” The National Coalition has backed a lawsuit filed by several California franchisees which asserts 7-Eleven exercises pervasive controls over nearly every single aspect of day-to-day operations of its franchised locations – treating franchisees as employees rather than independent business owners. The lawsuit was the latest high profile move franchisees have taken in the hopes of improving their relationship with the corporation, and it was on the court docket when the National Coalition’s leadership – following the lead of Jack in the Box – voted No Confidence in 7-Eleven’s CEO, Joe DePinto.
An unprecedented step Yet, even with all the turmoil that swirls around franchising, there is one independent franchisee association that has capitalized on the collaborative and respectful relationship it has with its brand. Over the last year, the Planet Fitness Independent Franchisee Association (PFIFA) engineered a systemic change in the franchisee council structure—earning the approval of corporate leaders and the franchisee community. At its annual convention this past May, PFIFA and the Planet Fitness Franchisee Advisory Council (FAC) came together as one entity.
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“We saw the opportunity to increase cooperation and collaboration, while streamlining franchisee input and consolidating resources into a single, highly structured entity [providing feedback] to the C-suite,” said PFIFA President Stanley DeMartinis Jr. “It makes us more streamlined. We don’t have two groups trying to work through [the same issues],” Planet Fitness CEO Chris Rondeau said from the convention stage where he had traveled to help make the announcement. “These groups came together as a family and brought this idea of coming together and unifying as one group. [It] says a lot for who our franchisees are as a team. It’s not about trying to outdo each other, it’s about working together.” “Our franchisee volunteers were very strategic and thoughtful about how to build our association’s credibility with the franchisor over the years. The franchisor came to respect that the independent franchisee association was not made up of rogue franchisees arguing about every decision, rather invested partners who truly wanted to grow the pie together,” says Kristi Hoffman, executive director of the new Planet Fitness Independent Franchisee Council (PFIFC). “At the end of the day it was about mutual respect and trust.” Hoffman points out that unification took time to develop and was possible only because of “effort and strong leadership, putting aside egos to focus on the larger picture.” PFIFC is currently in the process of populating new brand operating committees and will be responsible for facilitating up-to-date committee reports and follow-ups. Whether the Planet Fitness unification leads to similar shifts in franchising remains to be seen. What we do know is that independent franchisee association efforts to stand up for their members’ interests and pressure corporations and lawmakers for more fairness and transparency are getting noticed. Just like in other industries, when the investors declare they have no confidence in corporate leadership, changes are right around the corner.
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By Cindy Atoji-Keene
G
o west, young man,” has been the call since the frontier days, along with the belief that more opportunities are available out west for pioneering spirits. This has proved true for Dunkin’, as the chain celebrated the opening of its 100th store in California, the land of the gold rush – and a rush of coffee drinkers as well. Four out of the five top cities for highest average coffee spending are in California, including Fremont, Irvin, San Francisco and San Jose, according to WalletHub. In San Francisco alone, there are 1,062 coffee shops, including chains and boutique coffee brands which enjoy cult-like followings of fans. In such a saturated coffee klatch, making a foothold is an accomplishment indeed for Dunkin’, a traditional east coast fixture. “It's a hard won waypoint,” says DDIFO Restaurant Analyst John Gordon, of Pacific Management Consulting Group. “The first 50, 100, 500 units are always the most difficult for a popular branded concept like Dunkin’,” says Gordon, adding, “California is a massive market that will take decades to fully develop.” In June, a Dunkin’ shop in Santa Ana became the 100th to open in California, a milestone proudly marked by franchisee Parag Patel, who also was the first to open a Dunkin’ next-generation concept store in the Golden State last year. Santa Ana has more adult coffee drinkers per capita than any other city in the country, so the location of the 100th
INDEPENDENT JOE • AUGUST/SEPTEMBER 2019 11
FEATURE
A Golden State Milestone for Dunkin’s Expansion
CALIFORNIA Dunkin’ store is bound to attract coffee drinkers. “We are thrilled to be a part of Dunkin’s next generation location initiative and incredibly proud to be opening the brand’s 100th location in California,” Patel said in a company press release. The store celebrated with a ribbon cutting at the store, which includes the fully integrated digital kiosk ordering, faster drive-thru experience, cold beverages on tap, and flavor-maximizing espresso machines. Very California-like indeed. The significance of Dunkin’s success outside of “fortress markets” in New England and New York underscores the success of the company’s strategy of developing in a disciplined, contiguous direction; growing west; and filling in the landscape with stores is working, according to Bruce Clark, a professor of marketing at Northeastern University’s D’Amore-McKim School of Business. And as California goes, so goes the rest of the U.S. The left coast often sets trends for the rest of the
nation – things like fashion, food, cars, media and technology –so the fact that savvy West Coasters have embraced the distinct smooth, sweet, and easy-to-drink flavor of Dunkin’ coffee says a lot. California’s ability to sniff out trends is one reason Dunkin’ chose to test its shortened moniker and single word sign (Dunkin’) at a store in Pasadena. If to prove the point, one of the first 100 customers at the Santa Ana Dunkin’ was brand first-timer Brian Harrington, a California millennial who described himself as a “multi-hyphenate hipster: entrepreneur, film producer, actor, and consultant.” An avid coffee drinker and gold card member at Starbucks, Harrington has an eye on where his favorite coffee locations are, noting how there are as many as 10 different Dunkin’ shops close to his hometown of Anaheim. He attended the Santa Ana 100th store grand opening because friends and co-workers "had been buzzing about Dunkin’.” Harrington ordered a large Cold Brew, and said he was impressed with the vibe at the new Santa Ana store. “[It’s] more than
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a coffee and donut only place.” The Go2, $2, $4 or $5 food menu also immediately caught his eye. Prior to the 100th store opening, Patel had already opened several Southern California Dunkin' shops, including the state’s first Next Gen concept store in Corona; his network of more than 20 shops includes locations in Maryland and Washington, D.C. He and his father, Harry Patel plan to develop additional standalone Dunkin’ locations in Orange County. “The Southern California community has been more than welcoming,” Patel said in a Dunkin’ press release. His family got into the system more than 30 years ago, and Patel credits his family’s extensive experience in the restaurant industry for their successful west coast expansion. “Each new restaurant we open is just as exciting as the first,” Patel said. When he announced the chain’s return to Southern California in 2015, then CEO Nigel Travis said, “We eventually plan
to have more than 1,000 restaurants throughout the state,” and up to 200 shops in Southern California by 2020. Competition being what it is, it’s unclear whether that number is a moving target. The National DCP’s distribution center in Phoenix continues to expand to support development in California and other states, but even with better logistical support and 100 stores in its pocket, experts say California won’t be easy picking. “It’s not smooth sailing yet,” says Gordon. The current 100 shops are scattered among several major markets, and more shop density is required before certain consumer and marketing efficiencies take hold. “In terms of getting sites, sometimes it is a waiting game, waiting for an older QSR to close and then capturing the lease,” Gordon says, noting other obstacles such as labor costs and access to minimum-wage workers. Flash back to the early 2000s, when the dozen or more shops that had opened in the California were shuttered because of poor sales. The only remaining outposts were in isolated
“ It's a hard won waypoint. The first 50, 100, 500 units are always the most difficult for a popular branded concept like Dunkin’, California is a massive market that will take decades to fully develop.” locations—a marine base in Oceanside, the Embassy Suites in San Diego and a rest stop in Barstow. But in 2015, Travis launched a Dunkin’ expansion, moving from contiguous markets in Phoenix and Las Vegas to southern California. Then the company pushed from San Diego up to Los Angeles, then into Palm Springs and along the coast into the Bay Area. Dunkin’ used its experience with its 464 Baskin-Robbins in California to help push the expansion.
And, having reached this important milepost, Dunkin’ is planning to open 1,000 new locations across the nation next year — 90 percent of which will be located outside of its core markets and west of the Mississippi. Dunkin’s chief marketing officer Tony Weisman even hinted Dunkin' could eventually land in Starbucks' hometown of Seattle, according QSR magazine. With that, the western frontier could be secured. Go west, indeed.
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INDEPENDENT JOE • AUGUST/SEPTEMBER 2019 13
Three New Technologies Aim to Reshape QSR Industry
By Cheryl Alkon
K
iosks, online delivery and license plate recognition technology are three of the latest concepts being rolled out at quick service restaurants across the country. They represent groundbreaking changes in an industry that’s looking to not only maximize efficiency and manage costs, but also appeal to a tech-savvy customer base hungry for innovation. In this issue of Independent Joe, we look at how these ideas are being implemented.
Kiosks vs Counters
As of July, 1, 2019 there were nine Dunkin’ shops across the United States that featured touchscreen kiosks to allow guests to order food and drinks on their own, without ever interacting with another person at the counter. According to Nation’s Restaurant News, kiosks are being tested in Dunkin’s tech-focused Next Generation stores in Massachusetts, New Hampshire, New Jersey and Rhode Island; in June, Dunkin’ opened its 100th California location in Santa Ana, California (see page 11).
Consumer Brand Tracking Survey looked at kiosk usage among different generational groups. It found, 40 percent of Gen Z and Millennial consumers use kiosks at restaurants at least once a month, compared to 31 percent of Gen Xers and 19 percent of Boomers.
“I think we need to have them because that’s where the industry is going,” says Victor Carvalho, who co-owns 10 Dunkin’ shops in Mass., including the company’s first Next Gen store in Quincy. “There’s a whole segment of people who will order at the kiosk and we will see that there’s nobody at the counter.”
Byrne says kiosk users tend to spend more than they would if they ordered at the counter, based on the kiosk’s add-on suggestions. “It has boosted the check, but restaurant owners are dealing with less traffic.” For example, a diner may visit a quick-service restaurant twice a month and typically spend $7 per visit. But Byrne points out, if that same diner uses a kiosk at one visit and pays $10, “they are not going to perceive the value in the same way and that might eliminate a visit.” Restaurant owners love the fact that the check is higher, but they all talk about struggling with traffic.
According to Aaron Allen, the founder of the global restaurant firm Aaron Allen & Associates, Kiosk users are typically “guided through the ordering process, and using kiosks generally increases the check, margin and throughput,” or the number of customers served per hour. Yet kiosks aren’t yet widely embraced, says Robert Byrne, senior manager of consumer insights at Technomic, who notes about 30 percent of all consumers use kiosks at restaurants at least once a month, though that could be related to kiosk availability. Technomic’s Ignite
Photo Courtesy Dunkin Brands
Photo Credit: Nancy Luna
Kiosks allow guests to customize orders and pay using Dunkin’s loyalty app. The process accrues points for future rewards and allows guests to pay via credit card
or a Dunkin’ gift card. Kiosk orders move directly to the location’s point-of-sale system; pending orders are posted on a digital board so guests can see who else is waiting for an order before (or after) them. The entire sequence is meant to make the process as quick and accurate as possible.
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Online Delivery Services While research shows QSR operators appreciate how checks generated through kiosk orders are higher, they don’t make up for slowing guest traffic. The same issue is popping up with online ordering for delivery. “You may have to order enough to reach a minimum for delivery, and a delivery charge may apply. It can amount to a bigger check, but may inversely affect the number of times a customer will order that way,” says Byrne. In June, Dunkin’ introduced delivery services in New York City using GrubHub/Seamless, an online food delivery program. Orders are processed through Dunkin’s Point of Sale (POS) system, and integrate real-time traffic patterns in a process called geofencing to determine which of Dunkin’s
According to Allen, delivery aggregators like GrubHub “get new customers, and they are the bulk of new restaurant growth.” In its recent earnings call, McDonald’s reported delivery “continues to be a meaningful contributor to comp sales in a number of markets.” The burger brand recently expanded delivery options by adding DoorDash to its existing Uber Eats option. Dunkin’ has also indicated it will seek out other partnerships to solidify delivery in markets like Boston, Chicago and Philadelphia. “We want to make a serious push with delivery,” Dunkin’ Vice President of Digital and Loyalty Marketing Stephanie Meltzer-Paul told Yahoo Finance, indicating that DoorDash may soon provide home delivery of Baskin Robbins ice cream too. But, as Allen points out, food delivery is not unlike travel aggregation websites. As hotels and airlines first saw when they first worked with companies like Expedia, “they realized they didn’t want to make their own capital investments, but ultimately realized that they should. Some are realizing they don’t want to rely on the aggregators.” He told us he wouldn’t be surprised to see food brands eventually develop their own delivery systems. “I predict within 36 months we will see more companies deciding to do this.”
License plate recognition
With more than 70 percent of Dunkin’ business coming through the drive-thru,
license plate recognition represents a new opportunity for franchisees to better connect with their customers. As the Los Angeles Times reported, technology to check a license plate against an existing data base of customers and their preferences can help operators “link an individual car with a customer’s credit card and order history — meaning the customers could pay without pulling out their wallets or phones.” As the paper describes it, “Customers who belong to loyalty programs or use restaurants’ apps could add their license plates to their existing profiles; cameras positioned in drive-through lanes would then take photos of cars’ plates, and the analysis software would determine whether they belonged to known customers.” The technology could allow operators to also customize the electronic menu board to better appeal to the customer in the queue. “Why would you not invest in this technology,” asks Allen. “It gives you a fantastic amount of rich data, such as the age of the car, how many times they come through the drive-thru, the speed of the plates moving through the drive-thru, and what locations they go to. All of these, collectively, can be used to learn how to increase speed of service,” he says.
Others have a different perspective, citing privacy concerns. “I think it will likely have to clear an additional hurdle,” says Byrne. “I think a lot will need to be worked out, likely in court cases, because I think this gets into an area where people are saying, ‘It’s too much like facial recognition. It’s too Big Brother.’ I think it’s something that we may [not see until] 20 years into the future.” If there is one thing we can all be sure of, it is that technology will continue to move quickly and reshape the QSR environment—improving and defining the dining experience for guests and franchise owners. “Kiosks, online delivery and license plate recognition are three hot buttons right now, but there will be three new ones in 12 months,” Allen says. But what will those look like? “ “My thought for technology, in the next 10 years or so, will be in the back of the house, not consumer-facing, for increasing efficiency and speed,” says Byrne.
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INDEPENDENT JOE • AUGUST/SEPTEMBER 2019 15
TECHINOLOGY
400-plus New York City locations can deliver a customer’s order the quickest, according to Nation’s Restaurant News.
2019 DDIFO National Conference
Will Feature Insights and Opportunities
A
t 6.7 million square feet, Foxwoods Resort and Casino is larger than the Pentagon. Since it opened – first as a high-stakes bingo hall in 1986 and then as a fullfledged casino in 1992 – Foxwoods has raked in billions of dollars in revenue. This year, Foxwoods again plays host to the DDIFO National Conference, but it comes at a time of heightened competition in the gambling industry and a realization that customers demand a diverse array of entertainment options to go along with a whirl at the slots or blackjack table.
From the U.S. Chess Grand Prix to the World Series of Fighting to the final auditions for the 2019 New England Patriots Cheerleading squad, Foxwoods is offering entertainment options to appeal to customers from across the Northeast. The massive complex also features five different ballrooms – and additional meeting rooms – for groups of all sizes. This year’s DDIFO National Conference will be held inside the Grand Pequot Ballroom, kicking off at 11:00 a.m. on October 28 and wrapping up after the Hall of Fame luncheon on Tuesday October 29. DDIFO is happy to announce Alfredo Ortiz, president & CEO of the Job Creators Network, will deliver the opening keynote address and Northern Bank will once again host the Welcome Reception at the High Rollers Lounge Monday beginning at 5:30 p.m.
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Customer Service Surveys This year, DDIFO is offering franchisees a behind the scenes look at the vitally important Guest Satisfaction Surveys (GSS) that are used to help evaluate your performance as an owner/operator. Service Management Group (SMG) is a new DDIFO business member and will be presenting an important primer on how franchisees can best take advantage of survey metrics to improve their operations, revenue and profits. The company’s approach is to “combine technology and services to collect, analyze, and share feedback and behavioral data—so it’s easier for you to deliver and activate customer insights across your enterprise,” according to the SMG website. SMG provides customer experience surveys for the restaurant, retail, grocery, c-store, travel, entertainment and
healthcare industries. Based on its industry research, SMG says 65 percent of customers will cut ties with a brand over one poor customer service experience.”
Turning a Complaint into a Win If you are looking for ideas on how to handle customer complaints, DDIFO is offering a unique perspective at this year’s National Conference. Bill Greider, who has been a college football referee since the early 1990s, has fielded more complaints than most people ever will. When he’s not in uniform, he shares what he’s learned flagging penalties and resolving disputes for his company called P4 Executive Lean Strategy Coaching. Aside from dispute resolution, Greider talks about continuous improvement and respect for people. As he writes in his blog, “In officiating, we win as a crew and we lose as a crew. (Same with our businesses). For football, our goal is to show up at a game, work the game, and go unnoticed for 3 1/2 hours. Complaints are considered learning opportunities, and will be discussed as a crew when we get the game film the next day. In your business, complaints are the best type of learning opportunity to help us get better and better.”
Cannabis Industry Opportunities As more states legalize marijuana and more foodservice companies look at infusing cannabis or CBD into their food and drink options this year, experts are pegging the “cannabeverages” to become a $1.4 billion market by 2023, according to Zenith Global. Beverage brands like Dunkin’ and Starbucks are not planning any cannabis offerings in the near future, according to brand spokespeople, but opportunities abound for franchise owners who are interested in investing in the fast-growing legal weed business.
DDIFO will have a deep dive on cannabis industry opportunities – and pitfalls – at the upcoming National Conference. More than 30 states now allow the use of marijuana for legal or medicinal purposes and a proliferation of pot shops is now on the drawing board in cities, suburbs and rural communities. Retail operators are looking for investors and locations for their growing enterprises, but because pot is still classified as a Schedule 1 drug by the federal government, business relationships can be complicated. Vicente Sederberg LLP has emerged as a leader among law firms in the cannabis industry, earning a designation as “the country’s first powerhouse marijuana law firm,” according to Rolling Stone magazine. The firm operates in five cities, including Boston, where attorney Brandon Kurtzman is a senior associate. Kurtzman will share his firm’s knowledge of the industry, giving franchisees a big picture view of the rules governing different states and how legal marijuana is impacting your workforce.
hurdles involved with leasing your land to a cannabis company.
DNKN and its Competitors Once again this past quarter, Dunkin’ over-delivered its expectations, posting quarterly earnings of $0.86 per share. Dunkin’ Brands’ revenue has risen from $1.25 billion in 2016 to $1.32 billion in 2018 and is projected to reach $1.38 billion this year. The company’s beverage-led strategy, continued new store openings and enthusiastic embrace of technology are all helping fuel the growth. Competition for coffee sales is hotter than ever. Even as Dunkin’ has strengthened its espresso offerings with new brewers, major coffee chains and convenience stores are also stepping up their game, offering customers more options at more price points. So, what lies ahead?
Kurtzman will be joined by Jason Sidman and James Alex of the firm Sanctuary ATC, which holds cannabis licenses for medical and adult marijuana use in several states. Sidman, the firm’s CEO, will address the tremendous growth and financial opportunities within this new industry. Alex, a former partner at the real estate firm Atlantic Retail Properties, will share his expertise on getting into the business and navigating the
INDEPENDENT JOE • AUGUST/SEPTEMBER 2019 17
Bridging the Generation Gap
For insight, DDIFO will turn to generational expert Meagan Johnson for guidance on how to deal with today’s employees and tomorrow’s customers. Johnson is the author of the best-selling book, “Generations Inc.” and a former employee of Quaker Oats, Kraft Foods and Xerox. A Gen Xer herself, Johnson will share her secrets for navigating generational challenges, debunking myths and avoiding misunderstandings in personal and professional settings. Her highly anticipated talk promises to inform and entertain.
Hall of Fame RA
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Today’s generation gap, fueled by technology and a changing world order, presents a challenge for business owners of all sizes. What are the best methods to motivate and manage different generations in the workforce? How can
those strategies help franchisees connect with customers of all ages?
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DDIFO will present a high-powered panel discussion, “Dunkin’, its Competitors and Wall Street,” examining how investors view the brand’s strong earnings and strategic direction under the leadership of CEO Dave Hoffmann and slipping guest traffic. Panelists include Stephen Anderson, senior vice president and equity research analyst at Maxim Group; Michael Kelter, managing director at First Manhattan Co.; and John Gordon, founder of Pacific Management Consulting Group and DDIFO’s restaurant analyst. Anderson studies 19 different restaurant chains, including Denny’s, Domino’s and Dunkin’, while Kelter’s fund is the sixth largest investor in DNKN stock.
Again this year, DDIFO is pleased to honor franchise owners who have made
lasting impact on the Dunkin’ brand. The 2019 Hall of Fame Luncheon will be held at 12:00 p.m. on October 29 and will recognize Barkat Gillani, Peter Marcovich and Tony Salema. The luncheon is a wonderful opportunity to stop and reflect on how hard-working men and women have built Dunkin’ into one of the most powerhouse brands in the world. This year, the luncheon will also feature a different kind of hall of famer, former New England Patriots lineman Matt Light (Purdue University Athletic Hall of Fame and Patriots Hall of Fame), as a guest speaker. We all look forward to hearing his thoughts on what it means to be a champion recognized for greatness by his peers.
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18 INDEPENDENT JOE • AUGUST/SEPTEMBER 2019
ADGENDA
2019 DDIFO National Conference Monday, October 28
AGENDA
8:30 AM DDIFO Board of Directors Meeting Open to franchisee members of DDIFO*
11:00 AM Making a Difference in Washington How small business owners can make a difference in today’s policy battles Alfredo Ortiz, President and CEO of the Job Creators Network
12:00 Noon Lunch with Exhibitors Franchise Solutions Marketplace 1:00 PM Dunkin’, Its Restaurant Competitors and Wall Street A look at Today and Tomorrow Stephen Anderson, Maxim Restaurant Stock Analyst Michael Kelter, Managing Director, First Manhattan John Gordon, DDIFO Restaurant Analyst, Pacific Management Consulting Group
2:15 PM Refreshment Break Franchise Solutions Marketplace 2:30 PM Cashing in on Cannabis Obstacles and Opportunities in the New Cannabis Industry Jason Sidman, Founder & CEO, Sanctuary ATC James Alex, Partner & Director of Real Estate, Sanctuary Medicinal Attorney Brandon Kurtzman, Senior Assoc., Vicente Sederberg, LLP Joseph Giannino, Principal, Government Relations Group
Tuesday, October 29
8:00 AM Breakfast Franchise Solutions Marketplace 9:00 AM Mastering Customer Complaints Turning A Loss Into a Win William “Bill” Greider, Founder, P4 Executive Strategy Consulting
10:00 AM Refreshment Break Franchise Solutions Marketplace 10:15 AM Bridging the Generation Gap Preparing for Today’s Employees & Tomorrow’s Customers Meagan Johnson, Generational Researcher and Author (Generations, Inc.)
12:30 PM Hall of Fame Luncheon Honoring 2019 Inductees: Tony Salema, Peter Marcovich and Barkat Gillani. Features Matt Light, NE Patriots Hall of Fame
2:30 PM Conference Concludes * Tentative
3:45 PM The Guest Satisfaction Surveys Diving Deeper and Improving Your Scores Nicole Wright, Dir. of Client Services, Service Management Group Madyson Smith, Account Manager, Service Management Group
5:00 PM Welcome Reception in the High RollerS Lounge 7:00 PM Dinner on your own
INDEPENDENT JOE • AUGUST/SEPTEMBER 2019 19
DDIFO Announces 2019 Hall of Fame Honorees For the ninth straight year, DDIFO will recognize those franchisees that have made significant contributions to the brand by inducting them into the DDIFO Hall of Fame. This year’s inductees are Tony Salema, Peter Marcovich and Barkat Gillani.
Tony Salema Dunkin’ is a family affair for Tony Salema who got into the donut business 40 years ago after seeking guidance from his brotherin-law, Carlos Andrade, a Dunkin' Donuts franchisee. Baking donuts and growing his business has provided a much different path for Tony than the factory work he did when his family arrived in the U.S. from the Azores region of Portugal in 1966. At the age of 32, he realized he wanted to do
something different with his life and got into the donut business. “After speaking with Carlos, I learned that a Dunkin’ Donuts store was for sale in New Hampshire, so I moved there from Rhode Island," Salema says. Of those early days, Salema says, “I thought it wouldn’t be as hard as the factory work I did, but I was wrong. It was tough with long hours, but it was worth it.” He says Dunkin’ means a lot to him. It helped him change his life. Today, Salema runs 14 stores throughout New Hampshire, and it continues to be a family affair. Three of his four children – Durval, Shawn ad Isaac – now partner with their father, and they are extremely proud of their dad for receiving this award. When asked why he thought he was chosen, Salema didn’t skip a beat and replied, “Because of my looks.” Actually, this honor came as a huge surprise to him. When Carlos Andrade called to tell him about it, Salema says he truly didn’t know what to say. So after a few moments of saying nothing, he simply replied, “OK.”
Peter Marcovich Peter Marcovich could write a book about his life. At the age of four, he and his parents narrowly escaped the Nazis when Germany ran out of freight cars to round up the Jews in his small Romanian town. He stayed in Romania and got an education, culminating with a Master’s degree in accounting. He eventually left Romania and, after a brief stay in Israel, came to the United States and settled in Rhode Island. He knew no English, only his native language and Russian, but Marcovich got a job in a lollipop factory. Wanting more and knowing that his Master’s degree from Romania meant very little in the States, he enrolled at Bryant College (now Bryant University) with a goal of getting another Master’s degree in accounting. He did, and along the way, mastered the English language during his time at Bryant.
But Tony concedes this honor means the world to him.
In 1976, Marcovich landed a job at an accounting firm that worked with many Dunkin’ Donuts franchisees, many of whom were immigrants like him. He developed a strong relationship with them and by the time he passed the CPA exam and went out on his own in 1982, two of the Dunkin’ franchisees went with him.
After almost 40 years in the system, he is grateful for Dunkin’ and the way it has literally changed his life.
Since that time, his roster of Dunkin’ franchise owners has grown as he began offering a full array of services, such as
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“Since many of my clients were immigrants like me, they didn’t necessarily know the laws of this country,” he says. “My clients were like my family and I wanted to do whatever I could to ensure their success.” As a result, he became a trusted advisor, helping his clients “unleash the possibility for their stores to grow,” as he puts it. He helped in many ways. For instance, identifying how franchisees could control food and payroll costs by looking at their inventory, and securing financing for his clients’ stores based on sales, not fixed assets. Soon, other accountants serving the Dunkin’ franchisee community saw what Marcovich was doing and used a similar model for their clients. As franchisees began banding together to open central manufacturing locations to bake their donuts, Marcovich also secured financing for a group of his clients’ central kitchens. Another group of clients, with guidance from Marcovich, developed a sugar and flour distribution company to give them more flexibility and control over those ingredients. Marcovich says he was speechless and “very humbled” when Hall of Fame Committee Chairman John Motta called to tell him about this honor. Marcovich retired and sold his accounting practice seven years ago, but made sure the new owner would treat his clients and their employees with the same care and respect he did. As a result, all of Marcovich’s clients, who collectively own 360 Dunkin’ locations from Niagara Falls to Florida, made the move to the new owner and are still with him.
Barkat Gillani After 31 years with Dunkin’ Brands, it is fair to say Barkat Gillani has accomplished a lot. He purchased his first store in 1988. He still owns that store, plus 15 others in the Chicago area,
as well as 12 stores in Orlando and Ocala, Florida. But along with his tenure as a Dunkin’ franchisee, Gillani is also known for his leadership and service to other franchisees as well as the brand itself. In fact, he was recognized with the William Rosenberg National Award for Superior Leadership in 1999, the first franchisee in the Chicago market to get that award. “I’ve enjoyed my time serving on the different committees and boards such as the BAC and Regional and National DCP Boards,” he says. “My involvement is the reason I have been able to help other franchisees the way I have.” And he’s helped a lot. He recounts how, in 2007, skilled labor to bake the donuts was hard to find, not just for him but for other franchisees as well. To tackle this problem he joined forces with two other Chicagoland franchisees and opened a large central kitchen to serve the market. Two years later, in 2009 his group opened the first Level 6 Smart Line commissary in the Dunkin’ system, taking manual labor out of making donuts altogether. This fully automated line, which is still running strong, delivers donuts to 250 stores in Illinois, Indiana, Michigan and Wisconsin every night.
pioneer. For instance, he built one of the first Dunkin’ drive-thrus in his market and one of the first few Dunkin’ / Baskin combo stores in the Chicago area. Plus, he was the first in the country to have three brands – Dunkin’, Baskin Robbins and the sandwich purveyor Togo’s – under one roof. Despite so many accomplishments, Gillani says he was completely surprised to learn about his induction into the DDIFO Hall of Fame. “No one told me I was being nominated,” he says. “All of a sudden, I got a call telling me that a group of franchisees nominated me and that I was selected. I was stunned.” In fact, when Gillani saw [Hall of Fame Committee Chairman] John Motta’s name on his caller ID, he picked up the phone and asked, “What did I do wrong today?” And how does he feel about the honor? “I feel really good that fellow franchisees think so highly of me,” he says. “It’s really, really special.”
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“Because of this automation, stores were able to grow,” he says. “This kitchen served as a model and today, there are five of them like it in the Dunkin’ system.” Gillani has other accomplishments under his belt as well and prides himself on being somewhat of a
INDEPENDENT JOE • AUGUST/SEPTEMBER 2019 21
DDIFO HALL OF FAME
paying their bills, preparing their weekly payroll, distributing royalty fees and making sure they didn’t default on their loans.
store. In 1981, he bought his first store at NW 36 and May Avenue in Oklahoma City. Family photos depict a very young Goli, toddling along at his father’s side in the stores. And he was there all the way through high school, working and learning. But, as Goli remembers, things changed significantly when he returned from college and his MBA studies in China. He had a different view and broader insights, which he was eager to share with his Dad and the family.
Growing Up Dunkin’
“My father had done a great job, but we had two different viewpoints. I saw a fresh start, rejuvenation,” Goli reflects. “These stores were his babies. For 28 years, he’d been working on them, from being a baker up to owner of four stores. He had the wisdom, and he’d seen it all. It took some time for us to find balance,” he admits.
By Debbie Swanson
W
hen you grow up in a family business, it’s easy to envision yourself someday taking over operations. But Misha Goli, whose father owned four Dunkin’ Donuts stores in their hometown of Oklahoma City, didn’t see himself following those footsteps. While he was content to work in the stores while growing up, once he went off to college – first to study business at the University of Tulsa, then to embark on an MBA-abroad program in Tianjin, China – returning to Oklahoma and the Dunkin’ brand wasn’t part of his plan. But once Goli completed his education in 2007, his father suggested he return and “try it for a year.” Twelve years and nine stores later, Goli hasn’t looked back. “You think the grass is always greener, but I don’t think I would have appreciated Dunkin’ as much if I didn’t go away and come back,” he says.
Back to the roots The story began in the 1970s, when the senior Goli, Massoud, emigrated to the United States from Iran. He went to work as a baker at a local Dunkin’ shop, which ignited his interest in owning his own
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But today, they represent a seamless integration of the old and the new; the younger Goli often seeking the experiences of his dad, who, in turn, voices his surprise to Misha about how much the brand and customer experience has changed.
Expansion and coming full circle When Misha took over, they had four stores in and around Oklahoma City – a city of about 600,000. Initially all their shops baked donuts on premises, but the family decided to close the original store and set up a Central Manufacturing Location. The three remaining stores were remodeled, and plans to expand were set into motion with the opening of the state’s first Dunkin' / Baskin Robbins combo in Midwest City, about 15 miles east of downtown. Another combo store soon followed in Moore, just south on I-35. One store in which Goli is particularly proud is located in the Uptown area – a region of Oklahoma City not far from where he grew up. Memories of this region conjure up a run-down locale, he describes as “not desirable, and part of why I didn’t think I’d end up living here.” But in 2014, local leaders began efforts to transform Uptown, which was not only home to historic buildings, but plentiful in available space and home to a newly formed merchants’ association which fueled the momentum for new businesses and restaurants to open. Attractions
PROFILE
already in place include the renovated and re-opened Tower Theatre, a movie and performance venue dating 1937, as well as nearby Oklahoma City University.
and encouraging them to remain still for medical interventions. This year, the program placed 11 dogs in various children’s hospitals throughout the U.S.
Looking ahead
Goli saw an opportunity for Dunkin’, and in 2018, he opened a Next Gen store on what was previously a parking lot. The new building, which includes two other tenants, is positioned to thrive on both the bustling day traffic as well as late night patrons. An outdoor patio enables guests to sit and enjoy the vibrancy of the street, and a walk-up window – not yet operative – was installed with the walkable nature of the area in mind.
The stores also take part in other fundraising efforts as needs arise, and frequently hold promotions to solicit donations to the area’s food bank.
“The franchising industry is moving faster than ever, and today there’s an ever-changing workforce,” he says. “Franchisees need to be adaptable and take their employees’ background and experiences and mesh them to create a great organization.”
“I love cities, and the more things that come into Uptown, the better the district will get,” he says. Particularly noteworthy for the locals is the store’s tap system. “Dunkin led the revolution in iced coffee and this tap system – with cold brew, iced tea, green tea, and nitro – will take it to the next level. We’re the only Dunkin’ in the city with nitro,” he says. “It’s a good fit for us to be in this spot.”
Giving back to the community With nine stores humming along, Goli tries to stay mindful of giving back to the community his family has called home for over five decades. One effort is an annual, month-long March of Dimes fundraiser, in which the stores donate 10 cents for every dozen donuts sold. Donuts are a popular menu item in the region, and donations have reached $9000. Adding to the fun is a special, limited-edition purple and white frosted donut, representative of the March of Dimes colors. Goli’s group has also helped to bring some furry companionship to the children at the nearby Children’s Hospital at OU Medicine. As part of the Joy in Childhood Foundation’s Dogs for Joy program, Oklahoma City Dunkin’ stores have helped to secure a grant to fund an in-residence service dog at the hospital. Most children light up with a visit from a canine, but these dogs offer more than just comfort – they’re trained to perform tasks such as helping with medicine distribution, coercing the children to take a walk,
Recognizing the value of employees Content in his role as a franchise owner, Goli recognizes the importance of creating a satisfying workplace for everyone involved. He strives for an open relationship with his employees, aware that the workers, whom he recognizes for being “out in front every day,” are a source of knowledge. “I feel it’s important for me to remain open, even to being challenged. I welcome workers to question me and my ideas; either I’ll convince them why my idea is a good idea, or they’ll convince me that their idea is better. Either way - the best idea wins.”
Goli believes the franchisees who will be most successful in the future will be those who welcome change.
As for products, while donuts remain strong, he views some of the beverages – such as espresso and lattes – as having great potential. “Dunkin’ has barely tapped the market in that area,” he says, noting the brand’s reputation as an approachable, everyday coffee shop offering a great product at a reasonable price point. Goli hopes to take advantage of the room to expand in and around the Oklahoma City area. After all, it’s a place he grew up in.
“We’ve barely scratched the surface here. He fosters an atmosphere in which he There’s plenty of room to grow,” he says. hopes employees are happy to come Quality representation for back to work every Dunkin Franchisees for over 50 years day. Some of his employees have been on board since the early days. Recently, they celebrated the retirement of a Franchise worker who started Corporate & Business working for Dunkin’ Donuts in 1970. Real Estate & Development Pam Gibson was 21 Employment when she took a job Trust & Estate Planning working overnights Litigation as a donut finisher. Later she shifted Lisa & Sousa Ltd. is general counsel for the Dunkin to day shifts and Donuts Independent Franchise Organization (DDIFO) with eventually became a over 50 years of collective experience representing multi generational store manager. Dunkin Donuts franchisees in the acquisition, financing, development,
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We Know Your Business.
structuring, transitions and transfer of franchised and other businesses.
“We still have some long-time employees today that I worked with as a crew member. They’re the first to put me in my place,” Goli jokes.
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INDEPENDENT JOE • AUGUST/SEPTEMBER 2019 23
DDIFO
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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
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Daniel E. Gaudet 781-937-5142 • dgaudet@dgccpa.com 150 Presidential Way, Ste. 510, Woburn, MA 01801 www.dgccpa.com
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Joseph A. Mansour, Jr. 401-334-9099 • jmansour@mm-cpas.net 640 George Washington Hwy. Bldg C Suites 200-201, Lincoln, RI 02865
Persona Signs, Lighting, Image
Susan Koelzer 800-843-9888 x390 • skoelzer@personasigns.com 700 21st Street SW, Watertown, SD 57201 www.personasigns.com
R. Jeffrey & Associates
Jeff Newcorn 847-795-1400 • jeff.newcorn@rjeffrey.com 701 Lee St., Ste. 650, Des Plaines, IL 600165 www.rjeffrey.com
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
Bank of America/Merrill Lynch
Poyant Signs
Kathy Kutz 352-642-1435 • Kathy.Kutz@baml.com 2627 NW 43rd St., Gainesville, FL, 32606 www.bankofamerica.com
Watchfire Signs
Paul Sousa 401-578-1210 • paul.sousa@banknewport.com PO Box 450, Newport, RI 02840 www.banknewport.com
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
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
MS Consultants, LLC
Jeffrey Hiatt 508-878-4846 • jhiatt@costsegstudies.com 100 Corporate Parkway, Ste. 200, Amherst, NY 14226 www.costsegs.com
FINANCE
COMMUNICATIONS T-Mobile
Ashley Welcom 508-523-3213 • Ashley.Welcom@T-Mobile.com 285 Billerica Rd., Chelmsford, MA 01824
COST RECOVERY EF Cost Recovery
Ed Craig 774-263-7388 • ecraig3@efcostrecovery.com 32 William St, New Bedford, MA 02740 www.efcostrecovery.com
ENERGY Secure Energy
Jodi Maurer 413-733-2571 x218 • jmaurer@sesenergy.org 12-14 Somers Rd., East Longmeadow, MA 01028 www.sesenergy.org
BankNewport
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
City National Bank
Subbu Viswanathan 213-673-9028 • Subbu.Viswanathan@cnb.com 555 S. Flower St., 21st Fl, Los Angeles, CA 90071 www.cnb.com
Eastern Bank
Deborah Blondin 603-606-4724 • D.Blondin@Easternbank.com 11 Trafalgar Square, Ste. 105, Nashua, NH 03063 www.easternbank.com
First Franchise Capital
Bill Nicholson 317-428-3835 • bill.nicholson@firstfcc.com 8888 Keystone Crossing, Ste. 1700, Indianapolis, IN 46240 www.firstfranchisecapital.com
Joyal Capital Management Franchise Development
Gary F. Joyal 508-747-2237 • franchise@joycapmgt.com 50 Resnik Road, Plymouth, MA 02360 www.jcmfranchise.com
Northern Bank & Trust Company
Kelley Munsell 781-569-1584 • kmunsell@nbtc.com 275 Mishawum Road, Woburn, MA 01801 www.nbtc.com
TCF Franchise Finance
Tom Bessinger 952-656-3272 • tbessinger@tcfef.com 11100 Wayzata Blvd., Ste. 801, Minnetonka, MN 55305 www.tcfef.com/franchise
Pacific Premier Franchise Capital
Sharon Soltero 402-562-1801 • ssoltero@ppbifranchise.com 3154 18th Avenue, Ste. 3, Columbus, NE 68601 www.ppbifranchise.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.
24 INDEPENDENT JOE • AUGUST/SEPTEMBER 2019
PLEASE VISIT THE DDIFO BUSINESS MEMBER DIRECTORY ONLINE AT WWW.DDIFO.ORG Paycor
Jim Curran 412-721-3404 • jcurran@paycor.com 2009 Mackenzie Way, Cranberry Twp., PA 16066 www.paycor.com/franchise-solutions
Priority Capital
Justin Mario 339-293-6156 • jmario@prioritycapital.com 174 Green St., Melrose, MA 02176 www.prioritycapital.com
Neto Insurance Agency
Stephen Neto 508-678-9068 • steve@netoinsurance.com 1468 Pleasant St, Fall River, MA 02723 www.netoinsurance.com
Starkweather & Shepley Insurance Brokerage, Inc.
Sabrina San Martino 800-854-4625 ext. 1121 • ssanmartino@starshep.com 60 Catamore Boulevard, East Providence, RI 02914 www.starkweathershepley.com
Sterling National Bank
Lindy Baldwin 402-312-2542 • lbaldwin@snb.com 500 7th Ave., 3rd Floor, New York, NY 10018 www.snb.com
TD Bank
Peter J. DiFilippo 401-525-6771 • Peter.DiFilippo@td.com 180 Westminster St, Providence, RI 02903 www.tdbank.com
Unbridled Capital
Tyler Carter 502-205-8227 • tyler@unbridledcapital.com 9320 Old Henry Rd., Louisville, KY 40245 www.unbridledcapital.com
HUMAN RESOURCES
Green Dot/rapid! PayCard
Edward Cole 813-340-3276 • scole@greendotcorp.com 2266 Bascom Way, Clearwater, FL 33764 www.rapidpaycard.com
Harri
Anthony Masek 646-859-0066 • anthony@harri.com 665 Broadway, 402, New York, NY 10012 www.harri.com
HigherMe
Kathleen McDonough 617-447-3155 • Kathleen@higherme.com 77 Franklin St, Suite 510, Boston, MA 02110 www.higherme.com
Paychex
Kathleen Aaskov 207-415-1230 • kaaskov@paychex.com Fax: 877-841-9028 www.paychex.com
ProGroup Contracting
Tamara Kramer 888-393-2992 • Tamara@ProGroupContracting.com 1193 Ashley Blvd., Rear Building, New Bedford, MA 02745 www.progroupcontracting.com
INSURANCE Intrepid Direct Insurance
Nick DiCarlo 913-217-4281 • ndicarlo@intrepiddirect.com 10851 Mastin Blvd, Ste. 200, Overland Park, KS 66210 www.intrepidinsurance.com
Ecolab
Michael Vuolo 800-737-8234 • Michael.Vuolo@ecolab.com 1 Edgewater Dr. Ste. 210, Norwood, MA 02062 www.ecolab.com
Georgia-Pacific
Turk Enustun 317-432-8809 • Turk.Enustun@gapac.com 12425 Buccaneera Dr., Fishers, IN 46037 www.gppro.com
HME Drive-Thru Headsets
Lisa & Sousa Attorneys at Law Ltd.
Brady Campbell 858-535-6034 • bcampbell@hme.com 14110 Stowe Dr, Poway, CA 92064 www.hme.com
Marks & Klein LLP
Emily Wiley 832-925-5283 • Emily.Wiley@us.loomis.com 2500 Citywest Blvd., Ste. 2300, Houston, TX 77042 www.loomis.com
Paris Ackerman LLP
Bill Sullivan 781-771-9861 • bsullivan@mccue.com 13 Centennial Dr., Peabody, MA 01960 www.mccue.com
LEGAL Carl Lisa, Sr. 401-274-0600 • clisa@lisasousa.com 5 Benefit St, Providence, RI 02904 www.lisasousa.com
Justin Klein 732-747-7100 • justin@marksklein.com 63 Riverside Avenue, Red Bank, NJ 07701 www.marksklein.com David Paris 973-228-6667 • dparis@parisackerman.com 103 Eisenhower Parkway, Roseland, NJ 07068 www.parisackerman.com
CertiPay
Jeff Messner 800-422-3782 ext. 1018 • JMessner@certipay.com 130 Bates Ave. SW, Ste. 101, Winter Haven, FL 33880 www.certipay.com
DDIFO
Business Member 2019
OPERATIONS
McCue Corporation
New England Drive-Thru Communications
Angela Bechard 603-475-2046 • angela@nedrivethru.com 999 Candia Rd. Ste. 7, Manchester, NH 03032 www.nedrivethru.com
Parts Town
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
Cardtronics
Tom Spooner 973-452-4131 • tspooner@Cardtronics.com 628 Route 10 - Ste. 8, Whippany, NJ 07981 www.cardtronics.com
DTiQ
Loomis
Mira Diza 800-933-8388 • mdiza@dtiq.com 111 Speen Street, Ste. 550, Framingham, MA 01701 www.dtiq.com
Kenna Crawford 630-338-9210 • kcrawford@partstown.com 1200 Greenbriar Dr., Addison, IL 60101 www.partstown.com/dunkin
Prince Castle/Silver King
Zachary Waas 630-873-0088 • waaz@princecastle.com 355 East Kehoe Blvd., Carol Stream, IL 60188 www.princecastle.com
Service Management Group
Madyson Smith 816-778-8375 • msmith@smg.com 1737 McGee St. Kansas City, Missouri 64108 www.smg.com
SKAL East, Inc
Carl Huerth 781-806-3139 • carl@skaleast.com 131 Padelford St., Berkley MA 02779 www.skaleast.com/index.cfm?keyword=dunkin
Thank You to Our Business Members! INDEPENDENT JOE • AUGUST/SEPTEMBER 2019 25
A LOOK AT THE LAW
BY ERIC H. KARP
Why Changes are Needed in the Franchise Disclosure Rule
T
he original federal Franchise Rule was issued by the United States Federal Trade Commission (FTC) in 1979 and since that time has been amended and updated only once in a revised rule that became effective in 2008. The Franchise Rule requires that any prospective franchisee, including the purchaser of an existing franchise unit or an existing franchisee that opens a new location, receives a comprehensive disclosure document at least 14 calendar days before signing any agreement or paying any money to the franchisor. The disclosure document contains an example of the franchise agreement to be signed and a variety of other disclosures regarding the franchisor. Those include its executives and management personnel, litigation history, fees and charges to be paid by the franchisee, estimated initial investment, history of changes in store counts over three years, financial statements of the franchisor and many other items. Most importantly, the FTC Franchise Rule does not regulate the substance of the relationship between franchisee and franchisor. So-called relationship laws exist in a limited number of states, but not at the federal level. In the past, we have been privileged to work with DDIFO on proposed franchisee protection legislation in Massachusetts, which is significant because the Dunkin’ franchise agreement specifies that Massachusetts law applies. In March 2019, the FTC kicked off a new review of the Franchise Rule by making a request for public comments, posing a number of questions including whether there is a continuing need for the Franchise Rule; whether, and to what extent, the Rule should be modified or changed; and how any such changes would add or subtract to the burden of compliance with the Rule. This request for comment highlighted a divide among the legal
community. Those who primarily represent franchisors argued that the present rule should be retained and, given the current regulatory climate, any proposals for substantial changes might provoke an actual revocation of the entire Rule. Generally speaking, franchisors favor the Franchise Rule because it acts to protect them from liability, by consolidating any and all representations regarding the franchise relationship into a massive document. Franchisee representatives, including this author, reject this analysis and point out that there are many deficiencies in the disclosure regime which acts to the detriment of prospective and existing franchisees. Franchisee representatives also argue that the FTC has the power to enact regulations which promote fairness and balance in the franchise relationship, but thus far it has abdicated that responsibility. It is quite significant that on March 14, 2019, the Australian Joint Parliamentary Committee issued a massive report regarding the state of franchising in that country. Their investigation involved nine public hearings and 406 written submissions. One of the findings of the Committee are that disclosure and transparency alone cannot overcome the imbalance in the typical franchisor/franchisee relationship. Among the Committee’s many recommendations was to enact whistleblower protections, outlaw unfair contract terms and provide efficient and cost-effective resolution of system wide disputes. While space available for this article does not permit a comprehensive review and analysis of the 41 comments that were received by the FTC, it would be appropriate to highlight one proposal which could revolutionize franchise disclosure: the creation of a summary franchise disclosure document similar to one that has been used in the mutual fund industry since at least 2012. The mutual fund rule was based on extensive focus group
26 INDEPENDENT JOE • AUGUST/SEPTEMBER 2019
analysis indicating that investors would benefit from a summary document. This proposal is grounded in the fact that the typical franchise disclosure document is seemingly impenetrable to even the most sophisticated reader. In fact, the most recent Dunkin’ franchise disclosure document (issued on April 2, 2019) is 703 pages. The proposed summary disclosure document would be (1) provided electronically to the prospective franchisee along with and at the same time as the main disclosure document, (2) written in plain English, (3) limited to five pages in length, and no more than 1,500 words using 12 point type, (4) contain simple and straightforward charts to present data in a clear and understandable format, and (5) feature hyperlinks allowing readers toggle back and forth between parallel sections with ease. With this last feature, if the reader was reviewing a section of the summary disclosure document discussing royalty rates, the reader could link directly to the portions of the main disclosure document – as well as the underlying franchise agreement – to read more about that topic. Such changes outlined here would bring franchise disclosure into the 21st century, creating a digestible document allowing the reader to make an informed choice about how best to use their capital. More information regarding this proposal and other comments by franchisor and franchisee advocates can be found on the FTC’s website.
•
Eric H. Karp is a partner in the Boston law firm of Witmer Karp Warner and Ryan LLP. He is the Immediate Past Chair of the American Bar Association Forum on Franchising. Since 1996, he has been a member of the Franchise Project Group of the North American Securities Administrators Association.
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