When the DDIFO first reported on the Dunkin’ Brand’s Compliance Team in March many franchise owners expressed concerns about how the process was implemented. “Insulting and unprofessional” was how several operators we interviewed described the methods.
Since then, Dunkin’ Brands has not only changed the process, it has also changed the name. It is now called Operations Compliance and according to Bill Bode, Vice President, US Compliance & Business Development for Dunkin’ Brands, it was “created to dramatically improve store level operations of those stores where the ‘width of the gap’ between the day-to-day operations and Dunkin’s standards is the greatest.”
As part of the change, the BAC established a subcommittee to ensure proper structure was put into the process and to ensure franchise owners had a voice among the franchise community regarding issues arising from participation in Operations Compliance. In our reporting of the concerns surrounding compliance team earlier this year, DDIFO President Jim Coen called for the creation of the subcommittee modeled after the profitability subcommittee created in early 2009.
Scott Campbell is a BAC representative and co-chairman of the Operations Compliance subcommittee. He said, “We wanted to identify the structural elements, communication and function of compliance. In reality it was the basic discipline of operating the business: Food, safety, guest service, product quality, shop cleanliness and coffee. We were looking to engage franchise networks about these issues—not about their financial performance or other business functions—just about operations. This was important to me and BAC members because we wanted brand to strictly focus on those issues and it was more clearly defined.”
Campbell said the process continues to evolve which is why in July Dunkin’ Brands held a webinar to explain the new processes and engage franchise owners in direct discussion. One franchise owner with whom we spoke said it’s clear the Brand is trying to change the perception by changing the name and saying it’s a good process. (Editor’s note: Franchise owners interviewed for this article have asked to remain anonymous).
“There’s still some fear there,” according to one operator who spent over a year on the compliance team and emerged just as the Brand was changing the process. “They walked in the door and said, ‘this won’t cost you a lot of money,’ but I paid over $30,000 for retraining, cleaning, painting and maintenance.” This franchise owner described himself as a “stickler for cleanliness”. He said he agrees that the Brand has to make sure stores are clean and food and coffee are up to standards but described his experience as “frightening”.
Another franchise owner interviewed for this article said this reaction stems from the history of litigation and termination of franchisees adopted by the Brand over the years. That, he said, created a perception within the franchise community that the compliance process was a tool the Brand could use to prepare a case to remove an owner from the system. But, he believes the creation of the BAC subcommittee was an important step towards improving communication and creating buy-in among franchise owners.
According to Campbell, a franchise owner is chosen to go into the Operations Compliance program because their Operations Manager decides there are “opportunities to improve in these areas and that additional support will help you move forward.”
Many of the complaints about compliance team centered on the duration a franchise owner can spend in the program—several have told us their term was a year or longer. As part of the change to Operations Compliance, the program is broken into two phases and, according to Campbell, franchise owners will spend no more than 180 days in Phase 1 Operations Compliance.
“Franchise owners have a conversation 30 days prior to starting the Operations Compliance program to give them a chance to cure any problems within 30 days, so before you are officially selected you have the opportunity to fix problems and gain the proper level of compliance with basic standards. That’s one of the things I pushed for because I heard franchisees had trouble with their selection and the breakdown of communication with regard to their selection,” Campbell said.
If the Brand determines there are still issues after 6 months in phase 1, the franchise owner would be placed into phase 2—described by Campbell as a “more defined, more focused program.”
According to a franchise owner interviewed for this article, phase 2 is a “scary situation” because if your franchise agreement comes up for renewal during that time you would be considered “non-renewable”.
During an operator’s time in the Operations Compliance program they are assigned a different Operations Manager (OM) to oversee their progress. It is up to that person to decide when the term is over and if the operator needs to seek outside training assistance at their own cost.
According to Campbell the response to the new program has been generally well received and has alleviated much of the concerns that existed in the previous program. “We’ve heard fewer concerns because we are meeting with people as they go through the process. I believe franchisees have faith and confidence in their peer group to look out for their interests,” he said.
Since the Operations Compliance program has only been in place a couple of months it’s still too early to gauge the response of a large group of franchise owners. DDIFO will continue to monitor reaction from operators and report its findings to the community.