As if the daily tasks of running your Dunkin’ Donuts aren’t enough to keep you busier than busy, ever-changing laws and regulations can add more stress to your days. From attempted bans on soda products and successful bans on foam cups to calls for increased minimum wage and fees on worker immigration programs, it pays to stay updated on what’s brewing. That’s why DDIFO is here to keep you in the know.
New York City soda ban rejected again
In March, New York Supreme Court Judge Milton Tingling rejected a ban on sugar-sweetened beverages larger than 16 ounces in size, deeming the ban “unlawful, arbitrary and capricious.” In June, New York City Mayor Michael Bloomberg appealed Judge Milton’s decision yet the First Division of the State Supreme Court’s Appellate Division knocked it down again, stating the ban was unconstitutional.
If the ban was upheld, it would have prohibited restaurants, delis, stadiums and arenas, concession stands and food carts from selling sugar-sweetened beverages in containers 16 ounces or greater. The Department of Health & Mental Hygiene approved the ban in 2012 with the goal of helping to fight obesity in New York City. Despite rejection from two courts, Bloomberg’s administration says it will appeal yet again.
Foam bans force new cups
A ban on the use of Styrofoam in packaging for food and beverages at food service establishments will take effect on December 1, 2013 in Brookline, Mass. To prepare for the ban, five Dunkin’ Donuts in Brookline are testing a double-walled paper cup. The test cup was chosen for its price point and because it was rated the best choice in consumer surveys. And, according to Mitzi Lawlor, whose family operates two restaurants in the town, customers love them.
“The week we switched over customers were saying, ‘Where’s my paper cup? I don’t want the polystyrene anymore.’ So, especially in Brookline where they are savvy and educated about the issue they want the paper cup.”
According to published reports, one New York Dunkin’ shop and two in Maine are using the new cups.
But, Lawlor says, price is an issue. “It’s double the cost.” So, any hope of making it cost-effective may lie with more communities instituting bans.
There are other concerns about how effective the bans will be environmentally. Both foam and paper cups can be recycled, but usually aren’t. Additionally, some recycling centers have trouble breaking down the plastic lining of the paper cups.
San Jose recently became the largest city to institute a ban; the phase-put of polystyrene will begin on January 1, 2014. The California Restaurant Association helped fight the measure.
“Foam is recyclable, and cities all over California are taking advantage of this by setting up foam recycling programs,” Javier Gonzalez, government affairs director for the California Restaurant Association, said in a statement.
In Portland, Maine, the city council bowed to pressure from the public and withdrew a Styrofoam ban last month. Some in Maine’s largest city called it a business tax that would hike the cost of paper and other alternative packaging. While expansive – it would have prevented local retailers from selling plastic foam cups, plates and other food containers intended for personal use and banned the use of Styrofoam for prepared foods and fresh meats, fish, eggs and other produce packaged in the city – it failed to exempt plastic foam boxes used by seafood shippers. One councilor expressed optimism that “we can put together a better ordinance and pass it.”
Minimum wage walkout
On August 29, thousands of fast-food workers in 60 cities across the country walked off their jobs in an effort to raise the minimum wage to $15 an hour, as well as seek paid sick leave and the right to unionize the restaurant industry. The walkouts were organized by workers from eight cities who have staged previous walkouts throughout the year and who deliberately chose the walkout date in correlation with the 50th anniversary of the March on Washington for Jobs and Freedom where Martin Luther King, Jr. called for civil and economic rights.
Although President Obama has not commented on the walkouts, days before the nationwide event he tweeted, “Raising the minimum wage will benefit the economy as a whole…”
Those looking out for small business owners see it differently. “One of the most important attributes of offerings from any quick service operation is reasonable cost to the consumer. Since the profitability of franchisees depends not only on sales, but also on food and labor costs, a significant increase in the wages paid to employees would force franchisees to raise retail prices, since it would be impossible for them to absorb these kind of cost increases. Raising retail prices would, in all likelihood result in a decrease in sales, thereby further eroding profit,” says Burton D. Cohen, managing partner of Burton D. Cohen & Associates, LLC, former chief franchising officer of McDonald’s Corporation, and lecturer of management and strategy at the Kellogg School of Management at Northwestern University.
“Plus, this would be detrimental to the economy as a whole because franchisees would also be forced to cut their work force in an attempt to control labor costs,” adds Cohen.
Costly work-travel program
Buried in the immigration reform bill that the U.S. Senate passed in June are a couple of paragraphs that could affect the J1-Visa Exchange Visitor Program. As part of a clause in the new Border Security, Economic Opportunity and Immigration Modernization Act of 2013, sponsoring organizations of foreign student workers who come to the United States for seasonal work under the J1-Visa program are now required to pay a $750 fee.
Bert Jimenez, a New Jersey franchise owner says he has been pleased with the program as a way to find new hires, especially in cities where competition for unskilled labor can be an issue. And, he appreciates the opportunity to help new immigrants.
“We are all immigrants, right? So, we are opening the door to new immigrants, especially if they will do unskilled work.”
The J-1 program was established at the height of the Cold War by the Fulbright-Hays Act of 1961 (also known as the Mutual Educational and Cultural Exchange Act of 1961) to strengthen relations between the U.S. and other counties. As a work-travel program, students and professionals from other countries work in the U.S. for a short period of time and then return home.
“The best thing franchisees can do is to attend meet-and-greets—when they visit their districts and tell them about how outdated the laws for franchising are.”
Push for Fair Franchising Continues
Despite passing the California Senate and the Assembly Judiciary Committee in June, California Senate Bill 610 was put on hold until next year, when it is anticipated to come back to the committee with the same status. If passed and signed by California Governor Jerry Brown, the bill would revise the California Franchise Relations Act to explicitly require that franchisors and franchisees deal with each other in good faith as defined in the performance and enforcement of a franchise agreement. Franchisees would have the right of legal remedy, just as franchisors do now via the contracts. It would also prohibit a franchisor from restricting the right of a franchisee to join or participate in an association of franchisees. Good faith is already part of franchising law in Washington, Hawaii and Iowa.
“Right now, the contracts and legal interpretation have become one-sided in favor of franchisors,” says John. A Gordon, founder and principal of Pacific Management Consulting Group and DDIFO’s Restaurant Analyst. “The duty in law of good faith, a well-established common law legal doctrine, would be specifically added.”
Similar efforts for franchisee rights are underway in Massachusetts, Maine and Pennsylvania. “For an extended period of time, franchisee associations like DDIFO have led the way with this topic in Congress, but our efforts tended to get locked up because of political gridlock, so it occurred to the franchisee community that if we are going to do anything to help out franchisees, we have to do it in the states,” says Gordon.
This approach gives franchisees a chance to make an impact too, according to Gordon. “It’s hard for franchisees because they work in store so much, but to win over their assembly member or state senator, the best thing franchisees can do is to attend meet-and-greets—when they visit their districts and tell them about how outdated the laws for franchising are.”
Speaking out can make a difference, and DDIFO is here to help you get heard. Together, we can stay informed on legislation that might affect your bottom line and ways you run your business.