Dunkin’ Donut franchise owners who attended the members’ meeting at the DCU Center in Worcester, MA on September 22 learned about plans to double the size of the group’s membership, were exhorted to get involved with the government legislative process for their own benefit and heard a battle cry to fight against apparantly aggressive legal tactics by the brand against the franchise owners.

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Among the influential speakers at the meeting of about 100 franchise owners were the Speaker of the Massachusetts House of Representatives, a leading conservative lobbyist in Washington, D.C. and a nationally recognized attorney who specializes in franchise business law.

“It was worth the trip,” Mike Imperato, a franchise owner from Long Island, said of his six-hour drive.
Several other attendees echoed Imperato’s sentiments. “It was a good meeting, well attended. The agenda was intriguing and insightful. I think everyone was glad they went,” said Ken Blum, who owns shops in suburban Cleveland.

Arun Mandi, a New Jersey franchise owner, said, “It is exciting to see the organization gaining momentum.  There were good insights at the meeting.  DDIFO is going in the right direction, but there is a lot of work to do.”

The franchise owners were impressed with the speakers, particularly Robert Zarco, the franchise business lawyer, and Massachusetts House Speaker Robert DeLeo. The franchise owners said they also enjoyed having the vendors at the meeting to showcase new equipment, like the new espresso machine by Macdonald Restaurant Repair.

Jim Coen, DDIFO president, outlined new developments in the organizations, primarily the merger with the Chicago franchisee organization. The new DDIFO now represents 1,900 shops.  Coen said the goal is to double the membership, which would give DDIFO far more clout with government agencies and the brand. “Taking DDIFO from its current membership of 1,800 shops to 4,000 shops we can influence the relationship with the brand more than you can ever imagine,” Coen said.

Imperato said Coen’s message about growth and inclusion of other areas of the country in the DDIFO leadership was the most important thing he learned at the meeting. He was impressed with the new policy that if an area signs up 200 shops, they get a seat at the DDIFO roundtable, and if they sign up 400 shops, they get a seat on the board.

Coen said the brand is in an “interesting position.” It is facing a tough economy and within the next few years the Dunkin’ corporate owners will have to secure financing of $1.6 billion. Its market securitization notes will be due in 2013, he said.

Coen challenged the brand to respond to the grading report by the American Association of Franchisees and Dealers (AAFD). He noted it has been more than 135 days since DDIFO asked Dunkin’ Brands to comment on the report.

Massachusetts House Speaker DeLeo praised the franchise owners for their continued contribution to the commonwealth’s economy. He noted that the Massachusetts franchises pay $67 million in sales tax revenues annually.

Introduced by Joe Giannino, DDIFO’s government relations liaison, DeLeo promised the members that he would look carefully that any piece of legislation that DDIFO supports.  That included a bill regulating tip pooling.
“I have an open-door policy to Joe,” whom he called a long-time friend, DeLeo said.

DeLeo outlined the challenges state government is facing with the worst two-year decline in state revenues since World War II. He explained that the recent increase in sales tax was the “fairest option” available. He predicted that it will take more than a year for revenues to bounce back. For that reason, he said he is supporting expanded gaming in Massachusetts. Gaming, he said, will generate more revenue and create more jobs for the commonwealth.

Rick Berman with Berman and Company, a Washington D.C.-based public affairs firm, strongly urged the DDIFO members to get involved in the government relations process.  “You have an obligation to yourself to be involved,” Berman said. “You can make a difference.” Berman predicted that labor unions may win more unionization rights with the Democrats in Congress and in the White House. A modified version of the “Employee Free Choice Act”–better known as the Card Check bill — could pass, he said. That legislation, favored by labor unions, would make it easier for unions to organize Dunkin’ workers, he said.

Zarco with the law firm, Zarco, Einhorn, Salkowski & Brito in Miami, FL, told the DDIFO members that Dunkin’ Donuts “under the pretext of protecting the brand is getting more aggressive with the franchise owners.”  His firm has represented several franchise owners against the brand. He said Dunkin’ Donuts is now the most litigious of any franchise in the U.S., having filed more than 350 law suits in recent years. He warned that the Canton-based coffee chain has turned its loss prevention department into a “profit center’’ and gone after franchisees for infractions that include improper tax filings, unauthorized transfers of the business, the employment of undocumented workers and cracked floor tiles to increase revenues during the economic slowdown.

He advised the franchise owners, who get an audit letter from the loss prevention department, “not to go it alone.” The CPAs, the MBAs and financial analysts come in all smiles, but they are gathering documents to make a case against the franchise owner, he said.

Several franchise owners said Zarco was “captivating” in describing the brand’s aggressive tactics. “I don’t think one person left his seat while he was speaking,” Ken Blum said.  “It was an insightful speech, something people needed to hear. He spoke from his personal experience.”

Blum noted that no one has contested Zarco’s statement that the brand has filed more than 350 law suits against its franchisees. “I would have expected a strong response from the brand if that statement was not true,” he said.

One New York franchise owner, who asked to remain anonymous, said Zarco “was talking about a matter that everyone in the room needs to know. They need to know how to protect themselves. I think there was a lot of value in hearing him for those who did not know him before.” Zarco complimented DDIFO on its growth and said “the stupidest thing a franchisor can do is ignore a franchisee association.”

Also on the program were several corporate sponsors, whose support paid for the meeting. Coen said he was pleased at the number of sponsors at the meeting and predicted that revenue from sponsorships would increase significantly in coming years.

Jeff Hiatt with Performance Business Solutions told the members that there were several ways his company could help the franchise owners save money.  Primarily he advocated their adopting an aggressive depreciation schedule, writing off all of the equipment in five years rather than 29.

Other sponsors included Aflac, Air Ad Promotions, Century Products, Construction Art, Duro-Last, IKMS Group, iTech, Jera Concepts, Macdonald Restaurant Repair, NITCO, Paris-Kirwan, Paros Technologies, Projex Unlimited, RF Technologies, Royston, LLC, Secure Energy Solutions, Source4, Starkweather & Shepley, TD Banknorth, Tuck’s Trucks and USA Today.