1. Rhode Island Fair Dealership Act
One of the more important DDIFO accomplishments in 2008 was to defeat the challenge by Dunkin Brands and the IFA to rescind the Rhode Island Fair Dealership Act.
The Rhode Island Fair Dealership Act, initially passed into law in June 2007, protects franchisees from unfair practices by franchisors. Prior to this legislation, in Rhode Island, the Dunkin Donuts franchise agreement could be hastily and easily terminated without giving franchisees an opportunity to rectify problems.
It was the intent of Dunkin Brands to institute a moratorium on franchise development in Rhode Island unless the law was rescinded. Through a DDIFO supported lobbyist we were able to craft a revision that Dunkin Brands, IFA and DDIFO, were able to mutually support and endorse that upholds the safeguards afforded by the act.
Through DDIFO members and DDIFO supported counsel, we were able to dissuade Dunkin’ Brands from ceasing the development of franchises that members had in development, saving them untold damages.
2. Franchise Contract Negotiations
Through the efforts of DDIFO General Counsel Carl Lisa, we successfully turned back the new franchise agreement being imposed on franchisees and brought the franchisor to a collaborative negotiation of its terms. Did DDIFO get all of its requests? Not yet, but it did help bring out a new dynamic of collaboration between franchisor and franchisee that has been lost in recent years. We are hopeful that collaboration will continue
3. Profitability Subcommittee Charter
The long and sometimes frustrating franchise contract negotiations produced a substantial benefit. From the negotiations, Will Kussell and the franchisee negotiating team (financially supported by DDIFO) agreed to reorganize the long-standing Profitability Subcommittee and give it new powers to endorse all new initiatives before they are presented to the Brand Advisory Council.
According to its charter, the Profitability Subcommittee’s objective is to “provide leadership, oversight and counsel on products, programs and brand initiatives with the overriding premise to protect and enhance franchisee profitability.”
From now on all Dunkin Brand initiatives will get a substantive review by franchisee operators that possess financial and operational savvy who will understand what the store level costs and effects will be. Since implementation this has been huge for both Dunkin Brands and the franchisees. It doesn’t get better than this.
Both sides deserve enormous amounts of credit. Both Dunkin’ Brands and its franchisees’ collaborative focus on unit profitability will keep Dunkin’ Donuts well positioned in the marketplace to win the battle with other QSR chains.
4. Moratorium on Strategic Partners
While at this point Dunkin’ Brands does not officially recognize DDIFO, its Brand President, Will Kussell, made the welcome gesture of speaking directly to franchisees at a DDIFO Member Meeting. Mr. Kussell deserves credit for dispensing with trivial formalities to work together to address our core business concerns. Will was able to lay out his agenda for the system and took direct, sometimes hard questions from DDIFO Members. Mr. Kussell answered the questions honestly and forthrightly. DDIFO and Dunkin Brands won’t always agree on everything, but it’s important that we communicate directly. We would like to congratulate Mr. Kussell for reaching out, particularly in the wake of the contentious Hess and Proctor & Gamble issues that weighed on the minds of DDIFO members.
A survey conducted by DDIFO in January 2008 revealed that an overwhelming majority of DDIFO members opposed the partnerships between Dunkin’ Brands, Sara Lee Foods, Procter & Gamble and Hess Gas Stations. Will Kussell announced at the May DDIFO Members Meeting that Dunkin’ Brands would have a moratorium on additional partners for at least three years. This was met with somber appreciation from franchisees who feel Dunkin’ Brands partnership agreements have already contributed to devalue the iconic Dunkin’ coffee brand.