Jim Coen, the president and chief operating officer of Dunkin’ Donuts Independent Franchise Owners, discusses the importance of franchisee associations, Dunkin’ Brands and its future initiatives.
Mr. Coen was interviewed by Don Sniegowski of Blue MauMau
BMM: How big is your independent franchisee association in comparison to the Dunkin’ Donuts network?
Coen: There are approximately 8,000 Dunkin’ Donut stores worldwide. But in New England plus upstate New York, which is the geographic area of DDIFO members, I think there’s something like 2500 stores. DDIFO has over 60 percent of those stores participating right now.
Let me explain.
Dunkin’ Donuts has a national distribution system cooperative, owned by franchise owners. That is referred to as a Distribution Commitment Partnership or DCP. All franchise owners purchase products from the DCP — all the tools, goods and services that are needed to operate a Dunkin’ Donuts. They are regional DCP’s in the Dunkin’ distribution system. The DDIFO office is located at the NEDCP in Bellingham, MA which services New England and upstate NY.
The DCP meets the specifications of the brand. So the brand is involved, but it has no investment or ownership, because Dunkin’ Brands operates no company stores. Now in other brands the coop is owned mutually, such as in Burger King and Kentucky Fried Chicken. Both brands operate company stores so they have an interest in the buying coop. A coop helps those firms to utilize the strength of franchise owners and the company owned stores – increasing buying power to produce the best possible product at the best possible price at the fairest cost of distribution.
BMM: That’s interesting. So the cooperative provides the product and the franchise system provides the business model. But where does DDIFO, or any franchise association, fit into that equation?
Coen: Franchise owners often are committed by contract to be franchisees for ten to twenty years. Hired management and executives of a franchise system are not necessarily as committed. Management changes. Franchisors are bought and sold. So a franchisee association’s number one mission is to protect the franchisee’s interest in the trademark for whatever may happen down the line. You never know when that trademark may be put up for sale or be part and parcel of a bankruptcy. There isn’t a franchise system out there that should not have an independent franchisee association, if only for that one reason: to have a structure when and if that brand goes up for play, whether it be sold, IPO or bankruptcy.
Actually the reason DDIFO was created in 1989 was because of a hostile takeover bid that came from a gentleman out of Canada. At that time Dunkin’s was a public company. He was attempting to buy stock to release the hidden value of the real estate. That’s why the franchisor and franchise owners created DDIFO. And eventually the hostile takeover was blocked.
DDIFO is an organization whose sole purpose is to help and protect the franchisee’s business and interests. We have no other purpose than to protect that significant asset.
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