The Dunkin’ Donuts franchisee community has had almost 30 days to review and discuss Dunkin Brands flip incentive. I have researched the program and have also had numerous conversations, emails and comments from the Dunkin’ Donuts Franchisee community. Many expressed serious concerns about the program from a number of different perspectives.
The decision to flip is complicated and depends on the technology status at each of your shops – do they have Sharp, Radiant, March or another video surveillance system; and where do they stand in the remodeling cycle? Based on your circumstances a flip may or may not make sense. DDIFO hopes that this message can shed some light on this important matter.
The DDIFO recognizes that Dunkin’ Brands is taking a collaborative approach with regard to this very important issue. It must be stated clearly that DDIFO applauds this approach and we must highlight its superiority to heavy-handed mandates that destroy morale. Collaboration allows the system to better move forward. Moreover, we appreciate the franchisee leaders on the BAC and DCP IT Subcommittees that have worked so hard for so long to structure incentives that can ease the burden of flipping. We also recognize the advantages to the system of having a single IT platform. However, we are most concerned with the decision faced by each franchise owner to determine what is best for his or her individual business. It is one of our roles to present the issues we see for your consideration, objectively:
1. Cost: The cost to flip will be a financial burden. Many franchise owners are still reeling from the expense of the NGSS system and do not see where the money will come from to flip. For them, and many others, flipping does not improve their financial condition. Some say it will actually make things worse. Use of ad fund monies to defray this cost is also of concern. Many franchisees have told us that these funds are better spent in beating the competition in the war for the guest.
2. Lack of choice: Franchisees want choice and many resent the possibility that they will have to deal with single source vendors, particularly when other vendors offer systems similar to March Networks for a lot less money. It was clear that Dunkin’ stacked the deck against all competitors when it chose to make March Networks the only one that could directly connect into your site controller. That hindered the ability to innovate and deliver even more options to franchisees.
3. The back door: We all know that the March Networks system enables the Brand to have a “back door” into your store by providing them the opportunity to scan your data without your knowledge. Based on the litigious history of Dunkin’ Donuts and its Loss Prevention department, it’s no wonder franchisees are concerned. Even though current management has restructured its LP department, there is no guarantee that the next owners will be as cooperative. In my opinion, any plan that makes March Networks the only approved vendor must come with a written guarantee that the data, on its own, cannot be used to terminate a franchise. Members have told us that they do not believe the current video use policy offered by Dunkin’ Brands does this to their satisfaction. In fairness, there is reasonable disagreement about it. We firmly believe that access to your store’s raw video needs to be closely monitored and controlled.
4. Remodel Schedule. If you have remodels scheduled during the installation phase of the flip program, your decision to flip is simpler. While still not an inexpensive proposition, it is a vastly better place to be than if you do not have remodels due the next two years and you are still on the Sharp system. DDIFO cannot see the business case for this, unless the savings that you enjoy from not having to operate on multiple POS and back of the house systems outweighs the costs of flipping long before your remodel.
5. Profitability Subcommittee review: Franchisees worked hard with Dunkin’ Brands and the Brand Advisory Council to establish the BAC Profitability Subcommittee to ensure that franchisees have the ability to vet and investigate programs that directly impact their profitability. To date, the flip program has not been reviewed by the BAC Profitability Subcommittee.
Unfortunately, despite our enthusiasm for the collaborative approach taken by Dunkin Brands in making an important system wide change, DDIFO is unable to endorse the flip program until it has been vetted by the BAC Profitability Subcommittee, and, if appropriate, endorsed. That is a major control on the costs faced by our members and we fully support iniatives being reviewed by this committee. We will continue to monitor this situation and discuss all aspects with our membership, board of directors and industry experts. Thank you for the opportunity to address this issue.