With its playbook identifying the four basic pillars of successful Dunkin’ Donuts operations, the Brand’s new Compliance Team is moving through each region within the system “devoting additional resources to focus on closing the gap between day-to-day performance and Dunkin’ Donuts standards.” DDIFO interviewed a number of franchisees who have received the Compliance Letter.
Many Dunkin Donuts’ franchisees expressed concerns over the tone of the document and the implementation of subsequent action plans. An editor’s note: Franchisees who agreed to be quoted here were guaranteed anonymity.
In response to DDIFO’s questions about Compliance Team, Dunkin’ Brands Chief Global Communications & Public Affairs Officer Steve Caldeira provided a statement in which he said, “The Dunkin’ Donuts compliance team’s core purpose is to ensure that Dunkin’ Donuts’ national operational standards are consistently met by all franchisees. The team, which has received positive reviews from franchisees who have been in the compliance program, does not differentiate between small and large operator networks when determining which stores or networks are noncompliant.”
Every franchisee the DDIFO interviewed for this article agreed with the notion that compliance is important for protecting brand standards.
DDIFO President Jim Coen agrees but points out, “The issue is not whether the Brand has the right to zero in on a shop that is not in compliance with established standards; they do. Dunkin Brands, does not operate stores, franchisees should have a say in the process by reviewing standards and reviewing which stores are not meeting standards.”
Several franchisees we interviewed said their concern centered on the Compliance Team’s approach, which they called “insulting and unprofessional”. Two franchisees specifically said managers who entered their stores were rude to employees and customers.
One, who has been in the system for 30 years said, “We should have professional treatment; they have to recognize this is my place of business; they should be congenial with staff and customers and provide a written understanding of what’s being sought.” Another franchisee admitted he demanded an Operations Compliance Manager (OCM) leave his store because he believed the manager was acting abusive.
But, according to Caldeira, “All compliance team members know the importance of fairness and conduct their business with the Dunkin’ Brands core values in mind.” In a statement to the DDIFO he also said, “Raising the level of compliance across the organization will increase the profitability of our entire franchisee community, while also reinforcing the strong consumer perception of our brand.”
One franchisee with seven years in the system agreed that his experience with Compliance Team has increased his profitability although he said the process forced his stores to go through some growing pains. “The end result of working with the Compliance Team is that we have a better cup of coffee and better product leaving our stores every single day and our revenue has increased. But, I think if the Brand had provided better oversight in our stores when we first opened there wouldn’t be the need for such a large Compliance Team effort.”
The process, according to another operator who has been a franchise owner for 29 years and was recently visited by his new Operations Regional Manager (ORM), involves an inspection which is followed by a letter and itemized report. “It’s a generic type of report that includes opportunities to fix and a timetable for making those fixes before you’d be dropped into a lower category,” he said. “I thought the idea of this was to approach fixing problems with a milder, less confrontational tone. But the report I received read like a warning and I feel it had a negative impact.”
According to BAC Co-Chairman Jim Allen, the challenge for franchisees is to “make sure we are focusing on key drivers of business: Coffee excellence, sanitation and food safety and speed of service-utilizing team service in the right day-parts where it’s needed.”
Once a franchisee is placed on Compliance Team and given his inspection report he is then provided with a specific action plan to fix what’s been identified. One franchisee described his action plan as being pretty straight forward. It included the back case, team service, coffee standards/coffee excellence, cleanliness, speed of service and maintenance. But, it also included the statement, “No golfing this summer,” which the owner took to mean he would be too busy fixing problems to even consider a few hours on the golf course.
Among the steps a franchise must take to get back into compliance is retraining for their managers and staff. Jerry Marks, a New Jersey attorney who works with several Dunkin’ Donuts franchise owners said such retaining is not always necessary with veteran operators and it is expensive-especially in light of today’s economic conditions.
“Normally if there was something wrong, a minor infraction, they’d have several days to fix it. Now they’re forcing owners to pay for people to be retrained. They’re trying to extract another fee from franchisees at a period of time when dollars are very dear-it’s abusive in the way that Loss Prevention has been abusive. This is something that looks good on paper but, in fact, it is being used as a harassment tool.”
Because the DDIFO encourages all franchisees to maintain compliance with Brand standards, President Jim Coen favors the creation of a new franchisee committee, similar to the recently created Profitability Subcommittee, which would help determine which standards are benchmarked and which stores belong on in the compliance process.
Boston attorney Eric Karp, who works with a number of franchise owners in the Dunkin’ system and others, pointed out that good franchisees are typically as tough as franchisors when it comes to maintaining standards. “At the end of the day it’s about franchisee buy-in. The way to get someone to implement a decision is to give them ownership of the decision and the solution,” he said. “When brand standards and procedures are created in a collaborative fashion there is greater assurance the standards will be applied in a non-discriminatory, non-punitive fashion with the goal of lifting the brand and not punishing operators.”