When you stop and think about it, the amount of change we have endured over the last 15 months is astonishing. Without warning, virtually every aspect of our lives changed. But, at the same time, certain fundamental principles remained the same. Among those, that franchise owners have to protect themselves from uncertainty and unfair practices. Allow me a moment to step us through the history, and connect the dots to the future.
In February of 2020, the American economy was setting records with the lowest unemployment rate (3.5%) in many decades and the lowest ethnic unemployment rates ever recorded. (Black unemployment at 5.8%, Hispanic unemployment at 4.4%, and women at 3.1%.) Notwithstanding such a tight labor market, the Dow Jones Industrial Average was volatile to say the least with daily swings in excess of over 2,000 points, but setting positive records as well – cracking 28,000 for the first time in history just one month prior. Joe Biden had still not won a primary contest in a presidential campaign as he pursued the Democratic nomination against 10 younger contenders. Meanwhile, President Donald Trump was seemingly riding a historically strong economy to a sure reelection victory and a second four-year term in the White House. Closer to home, DNKN stock was hovering around $75 a share as the brand was thriving under the leadership of Dave Hoffmann. Having just wrapped up a successful meeting in Tampa Bay, DDIFO was busy preparing its annual calendar of member meetings around the Dunkin’ footprint.
Then March brought a global pandemic, the likes of which had not been seen since the Spanish Flu over a century ago. On March 13, 2020, the President declared a public health emergency; he invoked the Stafford and National Emergency Acts, then the Defense Production Act. He shut down travel into the United States. Governors shut their states down, allowing only essential businesses to remain open. Even as its stock price dropped below $40 a share, Dunkin’ Brands worked cooperatively with its franchisee community to mitigate the damage as much as possible. DDIFO postponed several of its planned meetings, but still hoped to welcome franchisees to our annual National Conference in Nashville, Tennessee later in the fall.
As we now know, none of those meetings happened while scores of Dunkin’ shops around the country were forced to close – some temporarily, others for good. DDIFO shifted gears to create virtual programming—ultimately providing a regular flow of webinars. And, while we were all adjusting to a new reality, Dunkin’ executives were engaging in acquisition talks with Inspire Brands, culminating in the December blockbuster announcement that Dunkin’ was selling itself to Inspire for more than $11 billion. Amid the turmoil brought on by the pandemic, Dunkin’ franchisees had to wonder, “Now what? Will our new private equity owners work with franchisees openly and collaboratively? Or, will Dunkin’s ugly history repeat itself?”
At the same time Dunkin’ franchisees were wondering what their future would hold, franchisees at McDonald’s were wondering if their relationship with the corporation had hit rock bottom. As we detail in this issue, McDonald’s franchisees organized a revolt against the brand after it announced a major fee increase. The news spread like wildfire. McDonald’s franchise owners leaned on their newly created independent franchisee association to tell their story to the news media and demonstrate to the corporation they were willing to fight for fair and honest dealing. Without the National Owners Association (NOA) supporting their interests, who knows whether these franchisees would have had the commitment or the organization necessary to fight for their interests.
And it is important to note that McDonald’s franchisees bypassed their internal franchisee group, the National Franchisee Leadership Alliance (NFLA), in order to have their independent association carry the weight. After all the NFLA is funded and managed by the franchisor—just like the Brand Advisory Council (BAC), in the Dunkin’ system.
The takeaway from all this was encapsulated hundreds of years ago when Benjamin Franklin wrote, “An ounce of prevention is worth a pound of cure.” Of course, Franklin was referencing fire protection in his beloved city of Philadelphia in the year 1735, but he could have just as accurately been referencing the importance of independent representation for franchisees in 2021.
Ed Shanahan
DDIFO Executive Director
