February 2014
The Magazine for D D
Independent Franchise Owners
Issue 24
A Franchisee’s
Challenge
Selling more coffee in an emerging market
Missouri River
What’s Brewing
•
25 Years of Advertising
FIRST CLASS US POSTAGE PAID BOSTON MA PERMIT NO 59949
P lu s
HELP YOUR BUSINESS RUN FASTER... WITH COMCAST BUSINESS CLASS.
Get Internet service that’s faster than DSL and T1 so you can work more efficiently and be more productive. Plus a reliable business phone service for better voice communications.
BOTH AVAILABLE AT A SPECIAL RATE FOR DUNKIN’ DONUTS® FRANCHISEES! BUSINESS CLASS INTERNET • Downloads up to 12Mbps, uploads up to 2Mbps • Static IP address available at $4.95 per month • Priority 24/7 Business Class Support
BUSINESS CLASS VOICE • Rated best in call clarity • Advanced call management tools • Reliable and dependable • Keep your existing number and equipment
INTERNET JUST
$44.95
PER MONTH
wITh A 2-yEAR AGREEMENT.
PLUS FREE STANDARD INSTALLATION! (A $250 VALUE)
PHONE JUST
$29.95
PER MONTH
wITh A 2-yEAR AGREEMENT.
CONTACT YOUR DUNKIN’ DONUTS DEDICATED NATIONAL ACCOUNT TEAM TODAY!
®
COMCAST NATIONAL SALES
866-407-6338 Dunkin_NationalSales@cable.comcast.com
Limited time offer. Not available in all areas. Limited to Starter Internet and Business Class Voice service and service to a single outlet. Minimum 2 year contract required. Early termination fee applies. Custom installation charges may apply. Equipment, installation, taxes, franchise fees, the Regulatory Recovery Fee and other applicable charges (e.g., per-call or international charges) extra. May not be combined with other offers. Equipment required ($5/month). Internet: Actual speeds vary and are not guaranteed. Voice: $24.95 activation fee (per line, up to 4 lines) fee applies. Service (including 911/ emergency services) may not function after an extended power outage. Call clarity claim based upon August 2010 call clarity analysis by Tektronix. Call for restrictions and complete details. Comcast © 2012. All rights reserved.
THINKING ABOUT SUCCESS: IN SOCHI AND AT HOME As I write this message, the XXII Olympic Winter Games are just getting underway in Sochi, Russia; as you read this, the games will have already concluded. You know which teams have been successful in their quest for Olympic Gold; I can only guess.
common objective. In our model, there could be times when certain members of the Dunkin’ team are competing against others. Still, that doesn’t change the objective; we all want Dunkin’ Donuts to be as successful as possible.
There is a component of the Olympic Games however, that is anything but guesswork, and that is the indisputable value of the team—how the strengths of one member can mask the weakness of another, or how the skills of one member can actually enhance the different strengths of another. Therefore, the team is a collection of individuals with different skill sets who put aside their differences to work together for their common goal: winning.
In the quest for success, we all encounter hurdles. During my 18-month tenure as Executive Director of DDIFO, I have witnessed one challenge after another: from bans on polystyrene foam, to discriminatory sales tax policies, to the implementation of national health insurance. DDIFO is actively working to protect franchisee interests in each of these cases—lobbying lawmakers and using the power of public relations to influence public opinion. In some cases, other members of the team are able to contribute to the effort. In other cases, they can’t. And then, in other cases, they won’t.
If you’ll allow me the latitude, I believe what we see in the Olympics relates to the environment in which DDIFO operates. We are part of a team that includes franchisees (both members and non-members), the National DCP, the vendor community and Dunkin’ Brands. Each member of this team has a different skill set and a different focus but the same ultimate goal: the success of that Dunkin’ Donuts trademark. For DDIFO, success means our members are empowered to reach their profit potential; for the National DCP, success means rewarding its members with not just a competitive cost of goods, but also a supply chain that is unrivaled in the industry; for the vendors, success means building lasting relationships with the franchisees; and for Dunkin’ Brands, success is tied directly to the stock price. That we share a common objective is not a surprise. What is surprising, however, is that we don’t always work together to achieve our common goal. Let’s look more closely at the Olympic model for a moment. An Olympic hockey team, for example, has some players with great speed, others with agility or a shooting touch. Still others might be strong and more aggressive. Yet, regardless of their individual skills, they share a single-mindedness of purpose. So, even though few members of the team actually score goals, they all do their part to ensure that enough goals are scored to achieve the
Still, we plug ahead because DDIFO’s mission is to protect the interest of its members. We are honest in our intentions and welcome participation whenever or wherever it is possible. We are committed to help other members of the team in their endeavors. And, most importantly, we remain focused on the common goal. Part of being on a team is knowing how and when to put differences aside. Over time a franchisor and franchisee can be on different sides of an issue; that’s business. But, when there is cooperation, and we function as effective members of the same team, we forge ahead because we are focused on our common goal. I don’t know now which nation will top the medal count when the Sochi Games conclude, whether it was the U.S., Norway - or for that matter, Jamaica or Zimbabwe – I can’t say. But I do know this, it is a nation whose athletes functioned as a team, with the right parts working together to overcome the challenges of Olympic competition – not one that fought against itself because the skiers didn’t want the bob-sledders to participate!. If we’re all intent on participating, then let’s do so together - and bring home the gold. Ed Shanahan DDIFO Executive Director
INDEPENDENT JOE
•
FEBRUARY 2014
1
SUB HEADLINE
CONTENTS From the Executive Director: Thinking About Success - in Sochi and at Home• 1 What’s Brewing: A Look at State Issues Around the Footprint • • • • 5 Advertising Boosts Dunkin’s Success• • • • 8
8
2
INDEPENDENT JOE
•
FEBRUARY 2014
13 A Franchisee’s Challenge Selling more coffee in an emerging market • • • • 13 Tax Policies and Economic Outlook How does your state rate?• • • • • • • • • • • • • • • • 16 My Perspective Listening to the Community • • • • • • • • • • • • • • • 18 Directory of Sponsors • • • • • • • • • • • • • • • 20 Lisa on the Law: Interchange Fee Settlement• • • • • • • • • • • • • • • 24
18
24
INDEPENDENT JOE
•
FEBRUARY 2014
3
Independent
The key is understanding the value of your business before making any decisions regarding the sale or transfer of your business.
The Magazine for DD Independent Franchise Owners
The first step in determining your options is getting a competent assessment of what your business will bring in the open market.
February 2014 Issue #24 Independent JoeÂŽ is published by DD Independent Franchise Owners, Inc.
Call or email Barry or Ellen today to explore your exit plan. We look forward to hearing from you.
Editors: Edwin Shanahan, Matt Ellis Contributors: Cathy Cassata, Cindy Atoji, Adam Goldman, Carl B. Lisa, Esq.
Joe
Independent
•
Advertising: Joan Gould Graphic Design: Caroline Cohen
Direct all inquiries to: DDIFO, Inc. 10 First Avenue, Suite 20, Peabody, MA 01960 978-587-2581 info@ddifo.org • www.ddifo.org
DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners. INDEPENDENT JOEŽ, INDY JOEŽ, and DDIFOŽ are registered trademarks of DD Independent Franchise Owners, Inc. Any reproduction, in whole or in part, of the contents of this publication is prohibited without prior written consent of DD Independent Franchise Owners, Inc. All Rights Reserved. Copyright Š 2013 Printed in the U.S.A.
www.lisasousa.com
5 Benefit Street, Providence, Rhode Island, 02904 Tel: 401-274-0600 Fax: 401-421-6117 e: clisa@lisasousa.com
We Know your Business. Franchise Corporate & Business Real Estate & Development Employment Trust & Estate Planning Litigation
The Rhode Island Supreme Court licenses all lawyers in general practice of law. The Court does not license or certify any lawyer as an expert or specialist in any field of practice.
Carl B. Lisa Sr. & Louis A. Sousa named Legal Eagles 2009 & 2010
AVÂŽ Rated by Martindale-Hubbell Signifying the highest standards of legal proficiency and ethics.
4
INDEPENDENT JOE
•
FEBRUARY 2014
Pleas note theat w e h ave moved
Lisa & Sousa Ltd. is a firm with over 50 years of collective experience representing multi generational Dunkin Donuts franchisees in the acquisition, financing, development, structuring, transitions and transfer of franchised and other businesses. Specific example include: transfer of ownership of 100 locations in Northeast, Southeast and other parts of the United States; sale of 48 locations in NY; purchase of 15 stores in the Northeast; acquisition of multi-shop networks in Florida (18), Vermont (20) and Cape Cod, MA (20); Store Development Agreements (SDA’s) throughout the country; and formation of cooperative Central Production Locations (CPL’s). Lisa & Sousa Ltd. is general counsel for the Dunkin Donuts Independent Franchise Organization (DDIFO) with a membership of approximately 2000 Dunkin Donuts franchise units nationwide. Our clients have chosen to have an on-going relationship with Lisa & Sousa Ltd. because of experience, proficiency, determination and attention to detail.
WHAT’S BREWING A LOOK AT STATE ISSUES
AROUND THE FOOTPRINT By Cathy Cassata
W
ith midterm elections coming up in November, a lot of attention will be focused on small business owners. Lawmakers – and candidates – are interested in knowing how tax policies, regulation and confusion in the marketplace impact your bottom line. We know you’re interested too, that’s why we round up what’s brewing across the nation. Take a look. Minimum wage is all the rage As 2014 is well underway, so are minimum wage increases in several states. On January 1, increases took effect in Arizona, Colorado, Connecticut, Florida, Missouri, Montana, New Jersey, Ohio, Oregon, Rhode Island, Vermont and Washington. New Jersey made the biggest change by upping its wage an entire dollar. “Anytime you raise the price of something, people buy less of it. That’s true of watermelons and it’s true of workers. Raising the minimum wage typically lowers hiring,” according to Steven C. Michael, professor of Business Administration at the University of Illinois. Despite arguments like Michael’s, more
increases are on the way. On July 1, 2014, California’s minimum wage will increase by one dollar to $9.00, and on December 31 of this year, New York will jump from $8.00 to $8.75 with another increase to $9.00 on December 31, 2015. Effective January 1, 2015, Connecticut will increase again from $8.70 to $9.00. The Massachusetts State Senate voted to raise the minimum wage from $8.00 an hour to $11.00 an hour over three years. If approved by the House and Governor, the first increase to $9.00 would take place on July 1, 2014. The next increase to $10.00 will take effect on July 1, 2015, followed by a jump to $11.00 on July 1, 2016. Maryland might follow Massachusetts’ lead if Governor Martin O’Malley has his way. O’Malley, who is leaving the state house after 8 years but has not publicly announced his future intentions, is
expected to run for President in 2016 and may want a state minimum wage increase on his resume, according to the Baltimore Business Journal. The federal government is also examining the minimum wage paid to workers who receive tips. Since 1991, the hourly tipped minimum wage has stood at $2.13. President Barack Obama has called for increasing that wage which affects 2.3 million waiters, bartenders, hotel employees and parking valets. “While these increases can often be observed as a benefit to the low-wage worker, by making the entry level more costly for small business owners, it puts off that first raise for the new hire a little bit longer, and that’s an important rung to climb on the ladder of opportunity for people joining the workforce,” says Michael.
“Anytime you raise the price of something, people buy less of it. That’s true of watermelons and it’s true of workers. Raising the minimum wage typically lowers hiring.” INDEPENDENT JOE
•
FEBRUARY 2014
5
More Styrofoam bans in New York Albany County Executive Daniel McCoy signed a Styrofoam ban, to take effect in New York’s capitol city in June. The ban only applies to food establishments with at least 15 locations nationwide and bans polystyrene foam food containers from being used in chain food establishments. Businesses using disposable food service ware must use a “suitable, alternative product” that is compostable or biodegradable. Escalating penalties for each offense will take place, starting at a maximum fine of $250 for the first offense and increase to a $1,000 maximum fine for the third and any following offenses. An ordinance setting up the likely ban of polystyrene foam was passed last December by the New York City Council. The bill allows lawmakers to ban Styrofoam if New York City’s Sanitation Department discovers after a year-long study that polystyrene can’t be recycled effectively. “Reducing the solid waste stream of any community is desirable, of course. But I wonder if this was done after careful consideration of costs and benefits, and if removing cups and carryout boxes is going to make a big enough impact to warrant the change and trouble this will cause,” states Michael. “Certainly there seems to be no consideration of the customer’s preference, or the cost and inconvenience this imposes on small business owners.” Fair franchising in play Legislators have filed fair franchising legislation in several states including California, New Hampshire, Maine, Massachusetts and Pennsylvania with the goal of leveling the playing field for all systems—ensuring franchisors don’t have unfair advantages over their franchisees. “The entire notion of the fair franchising movement as it moves across the country stems from a number of years of imbalance in the franchisor-franchisee relationship. Franchising, although it’s been around for quite a while, is still a relatively young industry, and when you see a young industry begin to grow and start to spread, inevitably there are imbalances and inequities that cause harm to one side or the other, in this case the individual franchisees,” says DDIFO Executive Director Ed Shanahan.
6
INDEPENDENT JOE
•
FEBRUARY 2014
While fair franchising supporters re-tool their strategy for introducing a new bill, many states are currently holding hearings. Pennsylvania’s House Consumer Affairs Committee has listened to testimony. In Maine, the Small Business Investment Protection Act was heard by committee and sent for further study. Notwithstanding that vote, Maine’s legislative rules require the bill to be reported to the floor of the House where it, and the Committee’s recommendations, will be subject to open floor debate. Consequently, a bill regarding increasing franchisee rights will be debated in the Maine House of Representatives soon. By press time, we did not have a date for the debate. In New Hampshire, fair franchising legislation was also the subject of a committee hearing this month. The House Committee on Commerce and Consumer Affairs heard the bill on February 4, 2014 and referred it immediately to a sub-committee to refine the bill and report its recommendations back to the full committee. The sub-committee scheduled its first working session for February 14 and invited DDIFO to participate in those deliberations. “DDIFO certainly understands that there is a real fear of retribution from the franchisor and that fear can keep our franchisees quiet. However, we can help alleviate that fear or better yet protect against the reasons of that fear by having a stronger and more effective independent franchisee organization with the help of franchisees. We need their input, their testimony and courage to stand up, and indeed be counted and let their story be known,” says Shanahan. “The overwhelming majority of the fair franchising filing that has occurred in different states has come from franchisees recognizing that they have been on the short end of the stick for years and they are trying to exercise their prerogative to do something about that. It hasn’t been an organized effort to see those initiatives filed rather it’s been a case where legislation has been filed and people have reached out to DDIFO to see how they can and should refine it or get some help to get it passed,” states Shanahan. Business tax cuts in New York New York Governor Andrew Cuomo has announced he will support a $1 billion business tax cut across New York State, by reducing the corporate income tax rate from 7.1 to 6.5 percent, and eliminating the tax completely for upstate New York manufacturers. The Tax Relief Commission finalized and submitted the recommendations to the governor last December. At the same time, the New York State Senate Majority Coalition has identified over 2,000 different regulations that it says are putting New York businesses at a competitive disadvantage. (You can read how low taxation policies are defining the economic outlook for different U.S. states on page 16.) Illinois franchisees tackle high sales tax If you walk into a grocery store in Illinois and buy any amount of donuts, you’re taxed at a low rate, yet if you buy that same amount of donuts at a Dunkin’ Donuts in Illinois, you’re taxed
Photo Credit: Eva Walsh
FDA trans-fat ban still under consideration The Food and Drug Administration (FDA) has extended its 60-day comment period for gathering information on trans-fats in order to determine whether or not to institute a national ban on trans-fats in food. Last November, the FDA published a Federal Register notice stating that partially hydrogenated oils should no longer be considered safe for use in food and should be removed from its list of ingredients that are “generally recognized as safe.” If finalized, the regulation will ban trans-fats from all foods. The extended period expires on March 8, 2014. About a dozen localities and the state of California have passed a ban on artificial trans-fat in restaurants.
WHAT’S BREWING at a high rate. “Why should a Jewel grocery store get away with a low tax item yet a Dunkin’ Donuts can’t? This puts Dunkin’ at a clear disadvantage,” says Amjad Kadwani, a CPA who works with several Chicago franchisees. According to Vishal Shah, who owns several Dunkin’ Donuts in the Chicagoland area, “Laws in Illinois are so vague and it’s difficult to understand what is considered a low tax item. So we’re forced to collect and pay the higher tax in order to stay in line with the tax laws.” When Independent Joe looked into the statue that outlines low versus high rate items, we, like Shah, became concerned. With the help of DDIFO General Counsel Carl B. Lisa, we discovered that all coffee prepared by a retailer for individual consumption and sold through the drive-thru or in the store should be taxed at the higher rate. Bulk coffee is taxed at the low rate. However, the rule on donuts isn’t as clear. The law states that food prepared for immediate consumption is taxed at the high rate while food prepared for consumption off the premises is taxed at the low rate. Certain foods are presumed to be for immediate consumption, and in fact the statute says that if retailers provide premises for consumption of food, all food is considered for immediate consumption. However, there are two distinct factors that are
relevant in rebutting the presumption of food that is immediately sold for consumption: 1) is the premises for immediate consumption physically separated or in a distinguishable area; and; 2) is there a separate means of recording and accounting for collection of receipts? “This is where the biggest clarification is needed. The law states that if the retailer selling the food provides premises for consumption of the food, (like most Dunkin’ Donuts do) all sales of food should be taxed at the high rate, unless the franchisee can prove that the area for on-premises consumption is physically separated or otherwise distinguishable from the area where food not for immediate consumption is sold,” says Lisa. “One question for the Illinois Department of Revenue is what does physical separation mean? Does it mean a separate room? A separate counter? If you don’t have the answer to that then you can’t move on to the next criteria for rebuttable, which says you have to have a way to record and account for collection of receipts from sales of both high and low rate foods,” adds Lisa. Both Kadwani and Lisa suggest that the best way to protect franchisees is for DDIFO to request a letter with legal ruling from the Illinois Department of Revenue stating specifics about when donuts should be taxed at which rate. “This will give them something to fall back on if they’re ever audited,” says Kadwani. DDIFO agrees, and plans to seek help from legal counsel in Illinois to pursue the matter further.
Increase Profits
•
COST SEGREGATION STUDIES • Improved Cash Flow • Accelerated Depreciation • New Construction/Remodels
ENERGY MANAGEMENT
Lower Rates, Aggregated Purchasing & Online Reverse Auctions. All Utilities - Gas, Electric, Water and Sewer CT US CONTA AY! TOD
AUDITED AND TRACKED! Call Jeff Hiatt at 508-878-4846 jdh@revenuebanking.com
www.revenuebanking.com
PERFORMANCE BUSINESS SOLUTIONS, LLC INDEPENDENT JOE
•
FEBRUARY 2014
7
Adver tising
Boosts Dunkin’s
Success
Franchisees as partners in developing ad strategies By Matt Ellis
8
INDEPENDENT JOE
•
FEBRUARY 2014
Photo Credit: Torrado Architects
B
ob Rosenberg remembers “The Pledge.” The year was 1964, Rosenberg had taken over the day to day operations of the food companies his father founded and was dismayed to learn that some Dunkin’ Donuts restaurants served stale coffee and donuts. He hired a New York ad firm, Daniel & Charles, to develop a commercial in which Dunkin’ promised to brew fresh coffee every 18 minutes and bake fresh donuts every four hours. The campaign, Rosenberg remembers, was for an inside audience. He wanted to change behavior within the company; brand building and customer loyalty, he says, would come later. Advertising has always been an important part of Dunkin’ Donuts success. Regardless of whether the company was privately held or publicly traded, money has always been allocated to local and national advertising. Whether it was printing coupons in local newspapers, buying ads on national broadcast networks or placing signs at major sports arenas, Dunkin’ has run on advertising. “Advertising has definitely paid off,” says Joe Prazeres, a long-time Rhode Island franchise and chairman of his local Ad Committee. He ticks off the strategies that have worked in his market: coupons, local TV ads, local radio ads, signs at
McCoy Stadium, home to Minor League Baseball’s Pawtucket Red Sox and naming rights at the old Providence Civic Center, now the Dunkin’ Donuts Center, affectionately known as “The Dunk.” Prazeres is quick to point out that the Rhode Island market is somewhat different than newer, less concentrated markets, but he sticks by his belief that advertising works. Decisions on how to spend advertising dollars rest with the local ad committees, comprised of franchisees and marketing experts from Dunkin’ Brands. Five percent of a shop’s total sales are put into the ad fund—with at least two percent earmarked for local spending. Rosenberg remembers the skirmishes that ensued when the company tried spending more on national advertising and less locally. He felt, at the time, that outlying markets were withering while “fortress markets,” as he categorized Boston and Providence, were thriving because of an abundance of local ad spending. “It was hard to advertise outside of the local marketplace and it was hard to wrestle money away from local committees to spend on national cable ads,” he says. To this day, Rosenberg believes Dunkin’ Donuts would have developed into a national brand before he retired from the business in 1998 had the company pursued a consistent national ad strategy. He cites Domino’s Pizza and Sonic Restaurants – two companies for which he
INDEPENDENT JOE
•
FEBRUARY 2014
9
DDIFO SPONSOR ADVERTORIAL
Watchfire Signs has worked with Dunkin’ Donuts franchise owners nationwide for more than five years, and 2014 marks its third year as a proud DDIFO sponsor. All Watchfire products are Made in America—designed and manufactured in Danville, Illinois for 82 years. The company’s outdoor full-color LED-based electronic message displays come in a variety of sizes and resolutions to fit any application and budget. Plus, they’re certified safe and eco-friendly. Watchfire offers a library of custom content created and routinely updated specifically for Dunkin’ franchisees. A Watchfire sign boosts success by increasing customer traffic. It’s a communication device that allows franchisees to daypart advertising, speak directly to customers, and even reflect community involvement. Signs can be controlled from the store or remotely. “The sign clearly works. Customers read it and react to it,” said Ken Blum, a Dunkin’ Donuts franchise owner in Ohio. “We’ve obviously been very pleased. We’re a repeat customer, and we’ve recommended Watchfire to countless fellow franchisees.” For more information, visit www.WatchfireSigns.com or contact Director of National Accounts David Watson at 877-446-4731 or David. Watson@WatchfireSigns.com.
The experTs OTher experTs Turn TO Tax Deferred Exchange for Income & Investment Property 9 Leominster Connector, Suite 1 P (978) 433-6061 Leominster, MA 01453 F (978) 443-6261 www.exchangeauthority.com 1031@exchangeauthority.com 10 INDEPENDENT JOE
•
FEBRUARY 2014
sat on the board of directors – as examples of what could have been with Dunkin’. Still, it’s hard to argue with success. As Dunkin’ Brands continues its march westward, filling in the white space on the map and promoting the phrase, “America Runs on Dunkin’,” the company’s valuation remains strong and franchisees in many local markets report growing unit level sales.
Additional Percentages
“For a little company we were pretty sophisticated way back then,” Rosenberg remembers proudly. The Dunkin’ Donuts brand evolved in major markets along the east coast, Midwest and Southeast after franchisees followed through on the Pledge to make fresh coffee and baked goods. National advertising drove brand awareness while local advertising built customer loyalty. Then another evolution helped impact how Dunkin’ franchisees would allocate funds for future advertising. In 1974, as a result of the Arab oil embargo and surging commodity prices for coffee, sugar, beef and grains, the average market basket cost of goods rose dramatically for Dunkin’ Donuts franchisees. Rosenberg and his team decided Dunkin’ Donuts should raise its prices to compensate. Consumers responded by cutting back and sales fell. That prompted the company to explore new ways of procuring and distributing its goods. The Distribution Commitment Program (DCP) enabled Dunkin’ to cut out the middleman and procure goods directly from the distributor. It proved successful and Dunkin’ Donuts franchise owners saved almost 10 percent on their cost of goods and boosted sales by three percent. Rosenberg saw the opportunity to use that money
to enhance the brand building effort through additional advertising. Franchisees agreed. That was the beginning of the two percent national advertising allocation. Rosenberg credits the franchisees for reinvesting their money. “A small-minded guy would have taken the money and run with it,” he says. “They could have played small ball, but they played big.” Prazeres remembers local franchise leaders like Manny Andrade and John Henderson discussing the benefits of reinvesting the DCP savings in national advertising. “They said we could build sales and fend off competition,” says Prazeres. “Franchisees always like to spend money in their own market but they realized they could buy media at a better price by purchasing nationally.” “We wanted to be on TV nationally at least 26 weeks of the year,” Rosenberg says. “It was clear when we had more ad weight, it translated into higher sales per store.”
All they needed then was a great ad campaign.
The Accidental Pitchman
Rosenberg and his team developed a new campaign with their New York ad firm, complete with a voice-over from acclaimed actor Hal Holbrook. No one knows if that campaign would have been truly successful for Dunkin’ Donuts because, at the same time, they also experimented with a new spot featuring a character known as Fred the Baker. Michael Vale had a solid acting resume by the time he came to the audition for Dunkin’ Donuts. He had appeared on TV and on stage and was currently featured as Sam Breakstone, the fictional owner of Kraft Foods’ Breakstone Sour Cream and Cottage Cheese. As the story goes, the ad agency was keen on actor Lou Jacobi for the role as Fred, but once Vale spoke the line, “It’s time to make the donuts, time to make the donuts,” the agency flipped and Vale wound up with the role that would change his life and redefine Dunkin’ Donuts forever. “Time to Make the Donuts” won national awards and gave
INDEPENDENT JOE
•
FEBRUARY 2014 11
Dunkin’ Donuts a personality it retains today. “Dunkin’ Donuts has a personality and it’s one I want to be connected to. It’s as if Dunkin’ is a friend of mine,” says Deborah Utter, a senior lecturer on advertising and marketing at Boston University’s School of Management.
Banking Designed Around Your Business
Dunkin’ made hundreds of commercials with Fred the Baker. He was synonymous with the brand and people loved him. When Dunkin’ shifted into a beverage strategy, there was Fred saying, “It’s time to make the coffee.” He introduced bagels and muffins and even a Dunkin’ breakfast cereal.
Our Financial Designers understand the complexities of today’s business environment. Using our unique LifeDesign® approach, we get to know you and your business to gain a clearer picture of your financial situation and to help you turn obstacles into opportunities.
“You would see Fred in a commercial for a new product and almost immediately we would see a jump in sales. It was great,” says Prazeres.
An Evolution in Advertising
Call today to speak with one of our Financial Designers. 800.581.5363 fidelitybankonline.com
Equal Housing Lender. Member FDIC. Member SIF.
Insurance...Solutions...Integrity
14_013_DDIFO_B
Since 1879
Starkweather & Shepley Insurance Brokerage, Inc. Contact
Sabrina San Martino Vice President
1-800-854-4625 Ext. 1121 Over 30 Years Experience in Dunkin’ Donuts Franchise Providing Unparalleled Coverage’s, Pricing & Service
Proud Sponsor of...
Dunkin’ Donuts Independent Franchise Owners 12 INDEPENDENT JOE
•
FEBRUARY 2014
The media landscape is a lot different today than it was when Fred the Baker burst onto the scene and that can present challenges for companies looking to saturate the public consciousness with messages about their brand. According to the Poynter Institute, one third of adults under 30 get their news from social media. That means reaching beyond traditional means to generate brand awareness and build a new generation of loyal consumers. Dunkin’ Brands has successfully navigated the social media landscape to reach those customers who watch TV on Netflix and get their news from Facebook. “Dunkin’ Donuts is one of a handful of national brands that’s trying, engaging, and getting it mostly right,” says Utter. But, she is quick to point out that local advertising still matters, especially in emerging markets. “There is a certain excitement when a brand comes to a new community and local advertising helps build that excitement. It can get consumers interested in trying something new, which gives franchisees a chance to build loyalty.” Prazeres agrees building customer loyalty – even in mature markets like Providence – is important. “We don’t have the lowest prices and we have a lot of competition trying to steal business with cheaper coffee. The only way to fight them is through loyalty,” which is why, he says, franchisees spend some of their local ad money sponsoring local sports teams, schools and charities, along with other community organizations. In this digital age, where advertising is everywhere, local sponsorships matter more than ever. As Deborah Utter at Boston University points out, “The goals of advertising include building awareness, getting people involved with the brand, and keeping them involved over time.” Sometimes that means buying an ad in the Super Bowl, sometimes it means buying the uniforms for a local youth soccer team. Both strategies are hard-wired into the Dunkin’ system. Franchisees provide the money and Dunkin’ Brands provides the expertise. It’s a recipe that’s worked for decades.
•
A Franchisee’s
Challenge Selling more coffee in an emerging market By Cindy Atoji
W
hile the Boston Crème, jelly-filled and glazed ring donuts fly out the door at the Dunkin’ Donuts in St. Joseph, Missouri, cups of fresh brewed coffee are still a slow seller. It’s the ongoing challenge for franchisee Dave Riggs, who opened the restaurant in 2012. “Making Midwest customers more aware of the high quality of the beverages we offer is the hurdle I face – and Dunkin’ Brands faces – as they expand westward,” says Riggs, a longtime businessman and Missouri native who is proud of being a local owner in this quiet community located on the Missouri River. Although Dunkin’ is primarily known as a coffee shop in the Northeast, donuts are more of a draw in the Midwest, says Riggs. Riggs runs the Dunkin’ Donuts at 1206 N. Belt Highway and admits things are off to a smooth start, even though his sales mix still weighs heavily in favor of baked goods. Located on a busy commercial thoroughfare between a Walgreens and Burger King, the restaurant is a major upgrade from what St. Joseph previously had—an old-fashioned, 1970’s era donut shop with no drive-thru. That location – St. Joseph’s only Dunkin’ – closed three years ago. “We saw an opportunity to buy the license and change it into a modern-day Dunkin’ Donuts,” says Riggs, who flew out to Boston, visited different Dunkin’ locations and talked with various franchisees and managers before returning to Missouri for his grand opening. He felt a re-energized Dunkin’ Donuts – open 24 hours – would do well in St. Joseph. There were few coffee and donut shops in town, none with expanded hours and none offering the product mix of his Dunkin’. The local Starbucks was popular but Riggs felt the Dunkin’ coffee program was a competitive offering. “Dunkin’ is a professional, well-run franchise organization,” says Riggs, who also owns a tanning salon and an Arby’s, and has run other local businesses including a full-service restaurant and nightclub.
This Dunkin’ Donuts in St. Joseph is an ideal case study for what franchisees face as the brand moves into middleAmerica. Once named an “All American City” by the National Civic League, today St. Joseph is home to 76,000 people and Missouri Western State University. According to the St. Joseph Chamber of Commerce, “St. Joseph is a city capturing national and global attention for success in multiple industries, including skilled manufacturing, agricultural sciences and health care. Some of our top employers fall into the education, manufacturing and health fields – but our city stands out for its diverse and innovative range of business clusters, more than most national cities of our size.” After the previous franchisee shuttered his Dunkin’ Donuts shop, Riggs scouted a location near the busiest intersection in town; the small parcel of ground was one of the few undeveloped sites in this retail district. Space was limited, but it was enough for
INDEPENDENT JOE
•
FEBRUARY 2014 13
DDIFO SPONSOR ADVERTORIAL
First Franchise Capital Corporation (FFCC) has been a national lender to Dunkin’ Donuts franchisees for more than 16 years and, throughout those years, has been a DDIFO sponsor. With a strong parent company in First Financial Bancorp, FFCC is backed by a stable financial organization that is structured for growth and success. FFCC is solely focused on lending to franchised restaurants. Its experienced team knows the industry, including the ups and downs and daily challenges of running the business. FFCC provides financing for equipment purchases, real estate or leasehold improvements, new store development, remodeling or re-imaging, and store acquisition as well as debt refinancing and line of credit development. “Our clients consistently tell us that our personal service and prompt response is what sets us apart from the competition,” said Director of Sales Karen Johnson. “We combine world-class expertise with professional service in order to build lifelong relationships with Dunkin’ Donuts franchisees. We are proud to be a franchisee’s trusted partner.” For more information, visit www.firstfranchisecapital.com or contact Karen Johnson at 402-562-5111 or karen.johnson@firstfcc.com.
14 INDEPENDENT JOE
•
FEBRUARY 2014
Riggs and his business partners to build a bright, attractive restaurant with a drivethru and tables with 30 seats—including comfortable, soft-seating. With its colorful orange awnings and eye-catching exterior graphics showing a steaming, tantalizing cup of joe, Riggs says his Dunkin’ Donuts fits right in. “The Dunkin’ look is generic enough to look appealing in virtually any area,” says Riggs. “It will be changed from time to time to keep it fresh and timely. That is consistent with most quick service concepts.” Since Riggs’ Dunkin’ opened in November 2012, the business climate has improved in Missouri and customers have been streaming through the doors. The cash register rings steadily until noon. Beverage sales are growing, and sandwich sales are consistent. But it’s still the donuts (and munchkins) that bring home the bacon—in excess of 50 percent of sales. “We are probably the
munchkin king of Dunkin’ Donuts,” jokes Riggs. Customers love munchkins for kids’ birthday parties, soccer games, cookouts and family get-togethers and Riggs carries a wide variety. Franchisees in the Missouri, Kansas, Iowa, Nebraska district have a goal to increase beverages to 40 percent of sales. Riggs says his number is in the mid-30s. “It’s not like the East coast, where 50-60 percent of sales is beverages.” Riggs says educating people that “we have coffee, too is a chore we have to accomplish, but it’s tough.” He’s advertising aggressively and offering various promotions designed to get new coffee customers in the door. One example: National Coffee Day last September, when Riggs gave away hot and iced beverages and discounted bulk coffee. “A lot of people who had never been here before came in to get a free cup of coffee. Once they try it, they like it, but breaking habits is
EMERGING MARKET
difficult. When they convert, they come to us on a regular basis.” He adds, “Starbucks does not have a stranglehold on the coffee business here like they do on the coasts. Dunkin’ coffee also seems to be more appealing to the Midwest palate.”
a close eye on food costs and labor, trying to manage hours without sacrificing service. “Those are the two largest costs to restaurants and the ones you have the most control over,” says Riggs.
Riggs has owned his Arby’s Roast Beef franchise since 1984 and believes the keys to being successful in the quick service industry are the same from concept to concept. “Fast, friendly, accurate customer service is the primary key to success,” says Riggs. “If customers completely enjoy their visit, they will come back more often and tell others about their positive experience.” He keeps
His franchise agreement calls for developing three units in the area and Riggs is also looking into other nearby cities, but in the meantime, this new Dunkin’ franchisee is proud of his St. Joseph shop. He is quick to tell you that Dunkin’ will succeed here, but he’s not so quick to admit he doesn’t even drink coffee. “I do like the vanilla chai, though,” he says.
drive thru
•
solutions
systems
|
parts
|
repair
SINCE 1989 R. F. TECHNOLOGIES, INC. 24 Hour Customer Service & Technical Support
800.598.2370
www.rftechno.com
Para realizar su pedido en espanol, por favor llame al 1-847-495-7370
1:29 Drive Thru Communication Sytems
DDIFO_JAN2013.indd 1
Digital Surveillance Solutions
Replacement Parts
Nationwide Repair Service / Installation
Drive-Thru Timers
PLACE ORDER HERE
Music / TV Entertainment
Server / Guest Paging Systems
INDEPENDENT JOE
•
FEBRUARY 15 1/7/13 2014 1:25 PM
Tax Policies and Economic Outlook How does your state rate? W By Cindy Atoji
hy does Utah rank on top in U.S. economic outlook, while Vermont is on the bottom? When you examine the tax policies of the United States, you can draw certain conclusions about how taxes and regulations impact small business owners. According to a recent study from the American Legislative Exchange Council (ALEC), a pro-business partnership of state legislators and the private sector, the top five states achieving impressive levels of growth – Utah, North Dakota, South Dakota, Wyoming, and Virginia – also embraced low taxation polices last year. The study, “Rich States, Poor States: ALEC-Laffer Economic Competitiveness Index,” points to the lowest achieving states – Minnesota, California, Illinois, New York and Vermont – and finds they all demonstrated lackluster progress. “A state tax system can boost or harm a state’s friendliness to business,” said Benjamin C. Litalien, founder and principal of Franchisewell and a professor at Georgetown University. And as Dunkin’ Donuts expands, it’s important to remember that states’ stiffest and most direct competition can come from other states. This means that business owners must be aware of the business climate in other regions, as well as in their own neighborhoods. The good news for Dunkin’ franchisees is that 18 states cut taxes in the last legislative year, with some states such as Arkansas, Florida, Idaho, Indiana, Iowa, and Kansas cutting taxes and others modifying their tax code, according to ALEC. Litalin says these state tax policy changes reflect an emphasis on pro-growth reforms that encourage economic expansion and competition. While it may have been difficult to find states that actually reduced sales taxes, ALEC cites many states which cut personal and corporate income taxes as well as other state-specific tax categories. States, of course, do not enact tax changes in a vacuum and the trickle-down effect on franchisees can be immediate. One clear example of that impact is in Nebraska, one of 24 states that comprise the “Streamlined Sales Tax Project”, a cooperative that seeks to simplify sales and use tax collection. Nebraska recently altered its sales tax policies relating to certain products (including donuts) and now collects different tax percentages for the same product—based on the retail operation selling the product. “The new law is anticompetitive because it allows gas/convenience and grocery stores to sell donuts tax free while we, in most instances, are required to collect sales tax,” says Nebraska franchisee Bryce Bares, who is developing nine Dunkin’ Donuts in the Omaha market over the next five years. But, while Bares believes the inconsistency in that tax policy frustrates and confuses customers, he says many recent tax changes have been
16 INDEPENDENT JOE
•
FEBRUARY 2014
positive. “Any dollar returned to a franchisee is a dollar that can be reinvested in expansion,” he says. This, of course, is just one of a multitude of examples of how state taxes affect the long-term health of small businesses, affecting everything from choice of franchise location to job creation. Each state is a microcosm of economic progress, ultimately affecting its standing as a place to live and do business. How do the different states stack up? Three states – Nebraska, North Carolina and Vermont– serve as barometers of economic competiveness as Dunkin’ Donuts expands west in markets across the country with a long-term goal of having more than 15,000 Dunkin’ Donuts restaurants in the United States alone.
Nebraska Nebraska ranks near the bottom (#37) in the “Rich States, Poor States” report, in large part because of its high-tax burden. Other challenges for Nebraska include dividend taxes on individuals, relatively high corporate income and capital gains taxes, high property taxes and the imposition of a state death tax. But there’s momentum for pro-growth tax reform, as policymakers consider phasing out the income tax or repealing it entirely. As a commission studies options for fundamental tax reform, the state moved ahead with incremental tax cuts, such as eliminating the Alternative Minimum Tax (AMT), allowing business losses to be carried over 20 years rather than the five years it has been and expanding a capital gains tax exclusion for companies that establish employee stock option programs. And according to Forbes, states in the Heartland currently have a better business climate compared to those on the East and West coasts. To underscore that point, it noted that Lincoln, Nebraska’s capital, has the lowest unemployment rate in the U.S. at 3.5 percent; and mortgage delinquency rates there were third lowest in the country in 2011 at 2.8 percent. These positive factors were all incentives for Dunkin’ Donuts’ return to Nebraska last year, with new store development in
Omaha, Columbus, and Norfolk. While donut shops are no stranger to Omaha – Winchell’s, Donut Professor and Krispy Kreme are all familiar faces here – Dunkin’ sees a competitive opportunity in the state.
North Carolina North Carolina seemingly faces a challenging path to tax reform, given its heavy reliance on personal income tax (27.9 percent) and corporate income tax (4.0 percent). But in January 2014, some relief materialized when a new tax law took effect replacing the former three-tiered income tax rate structure of 6.0, 7.0 and 7.75 percent with a flat rate of 5.8 percent, an interim rate which will fall further – to 5.7 percent – in 2015. Other changes include a cut in the corporate tax rate; an elimination of the estate tax on estates with assets in excess of $5 million, an end to the earned-income tax credit and a further tax break designed to help the working poor. Further, the North Carolina state legislature is also weighing a plan to eliminate the income tax. According to the Raleigh News Observer, “The proposal would eliminate personal and corporate income taxes in exchange for higher state sales taxes levied against groceries, medical expenses and other currently tax-free services.” In light of the fact that North Carolina’s business climate has generally lagged behind its regional competitors, this reform could catapult the state’s competitiveness and put it on a path to earn the status of one of the nation’s best state tax jurisdictions. According to the “Rich State, Poor States” report, these reforms would cut taxes by more than $500 million in the first two years alone, and more than $650 million annually by the 2017-2018 fiscal year. The reforms are among the most significant tax relief proposals any state has passed in the last decade. Dunkin’ Donuts has been aggressively expanding in North Carolina and now has nearly 300 restaurants throughout the state. To help fuel the growth here and in other southern markets, Dunkin’ Brands has offered special development incentives, including reduced royalty fees for three years and up to an extra $10,000 in local store marketing for restaurants that open on time. While Winston-Salem-based Krispy Kreme once dominated the donut industry here, Dunkin’ Donuts is targeting locations like the highly desirable Charlotte market, home to nearly three million people. As the region continues to grow, the state of North Carolina becomes increasingly more attractive with employment increasing key development areas. “Dunkin’ Donuts is looking for qualified candidates with foodservice, operations and real estate experience to join our team to help expand the brand’s footprint in Charlotte, Greensboro, Raleigh-Durham, Wilmington and Winston-Salem,” said Grant Benson, vice president of Franchising and Business Development for Dunkin’ Brands in a press release.
Vermont Vermont ranks dead last in “Rich States, Poor States” ALEC report. Vermont’s anti-business reputation is legendary and has
earned the Green Mountain State a well-earned negative business reputation with rankings from Kiplinger’s, Forbes, the Tax Foundation and other groups. Vermont is consistently ranked somewhere between 40th and 50th worst in the nation as a place to do business. “It if moves in Vermont, tax it,” the authors of the ALEC report quip. Vermont has increased the personal income tax for high-income earners and capped itemized deductions. What’s more, the Vermont House of Representatives recently expanded the meals tax to cover certain foods purchased in vending machines and removed the tax exemption on bottled water, candy and dietary supplements. Damartin Quadros, a franchisee with restaurants in Barre, Berlin and Montpelier – the only state capital in the U.S. without a single McDonald’s within its city limits – says the level of taxation is infuriating. “We already have one of the highest meals taxes at nine percent, but still some towns in the Burlington area charging an additional point on top of that. It will impact some of our locations more than others.” Small business owners often cite Vermont’s tax policies, strict land development regulations, high housing and utility costs as impediments to earning profits. The unfriendly business climate has led Quadros to wonder what it would be like to run a franchise somewhere else. “I don’t have any experience with any other states, but all I see in Vermont are more challenges in the future,” he says.
•
FREE ATMs! dunkin’ bRAnds AppRovEd pRogRAM suRchARgE FREE ATMs nEw REvEnuE souRcE REducE cREdiT cARd cosTs build TRAFFic And cusToMER loyAlTy All AT no cosT To you!
973-599-0600 x14240 www.dunkindough.coM INDEPENDENT JOE
•
FEBRUARY 2014 17
DDIFO SPONSOR ADVERTORIAL
Cynthia A. Capobianco, CPA For more than 30 years, Cynthia A. Capobianco, CPA has been providing services to Dunkin’ Donuts franchise owners. Capobianco’s practice is focused nearly exclusively on Dunkin’ businesses. The firm has worked with franchisees across the country, but largely in Southern New England and New York. The staff aim to provide “one-stop shopping,” including payroll, accounts payable, financial statement preparation and expense analysis, tax preparation and tax planning. They also work with franchisees’ lenders, lessors, legal advisors, insurance professionals and investment advisors. In addition, Capobianco informs and advises clients on pertinent legislation. The firm offers a fixed monthly fee structure that covers most of the necessary weekly and monthly services. “I believe the greatest value we offer is the all-inclusive nature of our services combined with a deep knowledge base of the Dunkin’ system,” said Capobianco. “Clients say that we remove much of their worry as they know we are taking care of the ‘details.’ Most have been with us for 20 or more years, which I believe attests the quality of our services.” For more information, contact Cindy Capobianco at 401-822-1990 or cynthia@ capobianco.necoxmail.com.
18 INDEPENDENT JOE
•
FEBRUARY 2014
My Perspective: Listening to the Community Before You Develop that New Store By Adam Goldman
I
t seems many towns are slowly turning back the clocks to recapture the days when everyone knew their neighbors, when block parties and pot luck dinners were the norm and, most importantly, when local stores were locally owned. Perhaps it’s society’s backlash to the proliferation of social media, online shopping and big-box retailing. West Orange, NJ – where I have called home for 20 years and where my wife has spent her entire life – is one of these towns seeing a resurgence in community spirit. In the 19th century, Thomas Edison invented the incandescent bulb in West Orange. In the 20th century, West Orange was home to Carole King when she wrote her iconic song, “Pleasant Valley Sunday,” which the Monkees famously recorded and which makes reference to the community as “status symbol land.” From the song’s heyday in 1967 to now, West Orange has managed to retain a sense of its old fashioned Main Street, while also sprouting chain stores and shopping centers. But, I can tell you, this is a place where local ownership is making a comeback. As a local business owner who has kept a keen eye on the changes in my hometown, I’ve discovered lessons that can impact all franchisees—especially those who are moving into new communities. Like most of you, I’m under the impression that everyone loves Dunkin’ Donuts and there is no one who wouldn’t benefit from the convenience of having one right in town. But, after watching what occurred recently when a national convenience store chain tried moving here, I realized we should never assume a community will automatically roll out the red carpet for any business—locally-owned or not. In the case of the convenience store chain, while the parent company quietly identified two locations and the architects drew up plans for the planning and zoning boards, a negative undercurrent – fed by social media and highlighted in community meetings – created a divisiveness that, ultimately, cost the company millions of dollars to curb. Yes, they got their locations approved but, even after two years, they haven’t broken ground. It’s not always easy to get that red carpet rolled out. One thing I learned watching the convenience store saga is that it’s better to involve the townspeople and its leaders at the very beginning of the permitting and building process, so they understand your vision for the business and they feel invested in your success.
Photo Credits: Caroline Cohen
So, when the opportunity arose to purchase a vacant restaurant location and move my existing shop to a spot that could accommodate a drive-thru, my wife and I thought long and hard about how to succeed where the convenience story guys failed. We did not have the money – or the stomach – to fight it out with town leaders and neighbors over building a new Dunkin’ Donuts we knew would be a bigger draw than our current West Orange location.
and by repurposing it we could incorporate environmentallyfriendly elements like LED lighting, energy efficient HVAC units, and reusable materials. We informed the PTA we would create a seating section that would allow high school music students to hold jazz or acoustic nights. And, we discussed our internship program with the high school principal so he understood students could gain real-world retail or culinary experience at our Dunkin’ Donuts shop.
So, we decided to take the upfront approach. I invited the Mayor to join me for coffee and discuss the opportunity. I asked him if our concept could fit with the Township Council’s long term plan and I listened to his counsel; I did not pretend to have all the answers. He gave me great insight and offered to introduce me to key influencers and decision makers in town. I met with the Chamber of Commerce, the president of the PTA and civic leaders. I also asked the opinions of my customers who live in the community.
We sought input from the fire department, town planning board and town engineer and we received several suggestions that would improve operations and the customer experience. What’s more, these suggestions were cost-neutral. We even asked for suggestions on our signage so our final plan could be in synch with what the town thought could look best.
Response was mixed. Many recognized the benefit of replacing a boarded-up eyesore with a bright, new Dunkin’ Donuts; others were concerned the 24-hour drive-thru would impact traffic and possibly increase crime. They were also concerned that Dunkin’ Donuts was a big, national company—not a locally-owned business. I was able to explain how franchises were locally-owned businesses and I looked at how to address their concerns before we began putting plans on paper. We explained that the building would not be a tear-down
The final hearing and presentation to the town will take place while this magazine article is being published and we are confident we will receive approval, not just because we have a good track record as business owners in the community but, more importantly, because we actively sought the opinions of the leaders and citizens who make up this community. I’ve learned over the years that people love to talk and they appreciate someone who is willing to listen. A franchisee who offers the opportunity to engage in a discussion about how their business will impact the community – and offers to provide the coffee to fuel the conversation – has a better chance at seeing that red carpet rolled out.
•
Better Together Growth is good whether you are a franchisee or a lender. Infinity Franchise Capital is now Pacific Premier Franchise Capital. Our growth means we have a greater capacity to lend to more franchisees in more brands with even more competitive terms.
Let’s Talk.
tm
Call us. 402.562.1800 www.ppbifranchise.com
INDEPENDENT JOE
•
FEBRUARY 2014 19
Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at www.DDIFO.org ViewPoint Sign and Awning
EF Cost Recovery
Adrian A. Gaspar & Company, LLP, CPAs
Bill Gavigan 508-393-8200 • billg@viewpointsign.com 35 Lyman Street, Northboro, MA 01532 www.viewpointsign.com
Bederson LLP - CPAs and Consultants
Devon Mourer 217-442-0611 • devon.mourer@watchfiresigns.com 1015 Maple Street, Danville, IL wwwwatchfiresigns.com
Jeff Hiatt 508-878-4846 • jdh@revenuebanking.com 87 Lafayette Road, Suite 11, Hampton Falls, NH 03844 www.revenuebanking.com
BUSINESS BROKER
ENERGY
David Stein • kstein@kensingtoncompany.com W: 516-626-2211 • M: 718-490-2218 185 Roslyn Road, Roslyn Heights, NY 11577 www.kensingtoncompany.com
Lourilynn Throgmorton • 340-201-4323 Lourilynn.throgmorton@glacialenergy.com 24 Route 6A, Sandwich, MA 02563 www.glacialenergy.com
ACCOUNTING
Robert Costello 617-621-0500 • cpas@gasparco.com 1035 Cambridge Street, Suite 14, Cambridge, MA 02141 www.gasparco.com Robert Fischbein, CPA 973-530-9100 • rfischbein@bederson.com 100 Passaic Avenue, Fairfield, NJ 07004 www.bederson.com
Cynthia A. Capobianco, CPA
Cynthia Capobianco 401-822-1990 • cynthia@capobianco.necoxmail.com 60 Quaker Lane, Suite 61, Warwick, RI 02886-0114
Neovision Consulting Inc.
Nish Parekh 609-531-4444 • info@neovisioncpa.com 1246 South River Road, Suite 101 Cranbury, NJ 08512 www.neovisioninc.com
Rubiano & Company, CPA’s
WatchFire Signs
Kensington Company & Affiliates
National Franchise Sales
Ellen Hui 949-428-0498 • eh@Nationalfranchisesales.com 1601 Dove Street, Suite 150, Newport Beach CA 92660 www.nationalfranchisesales.com
COMMUNICATIONS
Ed Craig 774-263-7388 • ecraig3@efcostrecovery.com PO Box 79361 North Dartmouth, MA 02747 www.efcostrecovery.com
Performance Business Solutions, LLC
Glacial Energy
Plotwatt, Inc.
Marc Bodner 919-614-2293 • marc@plotwatt.com 1715 Six Gables Road, Durham, NC 27712 www.plotwatt.com
FINANCE Bank RI
Daniel J. Rubiano, CPA 401-949-2600 • dan@rubianocpa.com 5 Austin Avenue, Suite 1, Greenville, RI 02828 www.rubianocpa.com
Charter Business
Mary Ewals • 303-267-9964 • mary.ewals@charter.com 6399 South Fiddlers Green Circle Suite 600 Greenwood Village, CO 80111 www.charter.com
Tom Fitzgerald 401-574-1119 • tfitzgerald@bankri.com One Turks Head, Providence, RI 02903 www.bankri.com
Sansiveri, Kimball & Co., LLP
Michael A. DeCataldo 401-331-0500 • mdeca@sansiveri.com 55 Dorrance Street, Providence, RI 02903 www.sansiveri.com
Comcast Business Services
Comcast National Sales • 866-407-6338 Dunkin_National_Sales@comcast.com 500 South Gravers Road, Plymouth Meeting, PA 19462 www.business.comcast.com/internet
Jeffrey Kotch 732-681-4800 • jkotch@brendonpierson.com 6333 North State Highway 161, 4th Fl., Irving TX 75038 www.brendonpierson.com
Thomas Colitsas and Associates, CPA
Sprint
Scott Kantor • 954-509-8019 skantor@businessfinancialsservices.com 3111 N. University Dr, Suite 800 Coral Springs, FL 33065 www.businessfinancialservices.com
Time Warner Cable Business Class
Deborah Blondin 603-589-4071 • dblondin@centrixbank.com 1 Atwood Lane, Bedford, NH 03110 www.centrixbank.com
Tom Colitsas 609-452-0889 • tcolitsas@tcacpa.com 103 Carnegie Center, Suite 309, Princeton, NJ 08540
BACK OFFICE
Jera Concepts
Heath Stone 603-793-2129 • heath.h.stone@sprint.com 3 Van De Graaff Drive, Burlington, MA 01803 www.sprint.com/ddifomembers
Wynne Barrett 508-686-8786 • wynne@jeraconcepts.com 17 Fruit Street, Hopkinton, MA 01748 www.jeraconcepts.com
Tricia Petway (919) 654-4115 • tricia.petway@twcable.com 4200 Paramount Parkway, Morrisville, NC 27560 www.twc.com/business
BUILDING
COST RECOVERY
Jonathan Ralys 225 Woldwood Avenue, Woburn, MA 01801 781-305-1335 • Jonathan.Ralys@Trane.com www.Trane.com/commercial
Bill Cusato 978-263-5055 • bcusato@bedfordcostseg.com 60 State Street, Suite 700, Boston, MA 02109 www.bedfordcostseg.com/who_we_serve/ddifo.asp
Trane HVAC
Bedford Cost Segregation, CPAs
DDIFO® does not endorse or recommend commercial products, processes, or services. A DDIFO® sponsor is paying to advertise, and it is not to be considered a product or service endorsement by DDIFO®. Furthermore DDIFO® does not control or guarantee the currency, accuracy, relevance or completeness of information provided by sponsors in their advertising.
20 INDEPENDENT JOE
•
FEBRUARY 2014
Brendon Pierson
Business Financial Services
Centrix Bank & Trust
Direct Capital Franchise Group
Robyn Gault 603-433-9476 • rgault@directcapital.com 155 Commerce Way, Portsmouth, NH 03823 www.franchise.lendedge.com
Fidelity Bank
Sally Buffum 508-762-3604 • sbuffum@fidelitybankonline.com 465 Shrewsbury Street, Worcester, MA 01604 www.fidelitybankonline.com
Photo Credits: Ken Parry
Directory of Sponsors First Franchise Capital
Karen Johnson 402-562-5111 • karen.johnson@firstfcc.com 2715 13th Street, Columbus, NE 68601 www.firstfranchisecapital.com
GE Capital, Franchise Finance
Christine Keating 203-229-1804 • christine.keating@ge.com 201 Merritt 7, 2nd Floor, Norwalk, CT 06851 www.gefranchisefinance.com
Joyal Capital Management Franchise Development Daniel Connelly 508-747-2237 • dconnelly@joycapmgt.com 50 Resnik Road, Plymouth, MA 02360 www.jcmfranchise.com
NFA Restaurant Finance
Larry Howard 205-871-8450 • lhoward@nfaloans.com 400 E. 22nd Street, Suite A, Lombard, IL 66148 www.nfaloans.com
Pacific Premier Franchise Capital
Sharon Soltero 402-562-1801 • ssoltero@ppbifranchise.com 3154 18th Avenue, Suite 3, Columbus, NE 68601 www.ppbifranchise.com
Priority Capital
Brian Gallucci 800-761-2118 ext. 14 • bgallucci@priotiycapital.com 174 Green Street, Melrose, MA 02176 www.prioritycapital.com
Sovereign Bank
Mark E. McGwin 508-890-6880 • mmcgwin@sovereignbank.com 446 Main St., Worcester, MA 01608 www.sovereignbank.com
TCF Franchise Finance
Mike Vallorosi 201-818-2700 • mvallorosi@tcfef.com 300A Lake Street, Suite B, Ramsey, NJ 07446 www.tcfef.com
TD Bank
Brian Frank 203-761-3818 • brian.frank@td.com 40 Danbury Road, Wilton, CT 06857 www.tdbank.com
United Capital Business Lending
Trey Grimm 410-771-9600 • tgrimm@ucbl-inc.com 215 Schilling Circle Suite 100, Hunt Valley, MD 21031 www.unitedcapitalbusinesslending.com
FOOD PRODUCTS CSM Bakery Products
Marla Cushing 770-723-2083 • marla.cushing@csmglobal.com 1901 Montreal Road, Suite 121, Tucker, GA 30084 www.csmbakeryproducts.com
Quaker Oats A Division of PepsiCo
Ed Bowes 610-948-8309 • Ed.bowes@pepsico.com 402 Kilarney Way, Royersford, PA 19468 www.pepsico.com
HUMAN RESOURCES ADP
John Stefko 908-625-7966 • john.stefko@adp.com 99 Jefferson Rd. MS 322, Parsippany, NJ 07054 www.adp.com
Bill.com
Becky Riffis 650-353-3301 • briffis@hq.bill.com 3200 Ash Street, Palo Alto, CA www.bill.com
Employers Reference Source
Sandra Fabrizio 888-512-2525 • sandraf@employersreference.com 1587 Hamilton Avenue, Waterbury, CT 06706 www.employersreference.com
Granite Payroll Associates
Marco Schiappa 401-263-7921 • marco@granitepayroll.com 176 Granite Street, Qunicy, MA 02169 www.granitepayroll.com
Gulpfish.com
Ilya Reikhrud 800-974-4514 ext. 101 • ceo@gulpfish.com 1005 Main Street, Pawtucket, RI 02860 www.gulpfish.com
Heartland Ovation Payroll
Jim Ferreira 203-530-3512 • jferreira@ovationpayroll.com 90 Linden Oaks Suite 110, Rochester, NY 14625 www.ovationpayroll.com
HK Payroll Services, Inc.
Laurie Fleming 563-556-0123 ext.1190 • lfleming@honkamp.com 2345 JFK Rd, PO Box 3310,Dubuque, IA 52004 www.hkpayroll.com
INSURANCE
Insurance World Agency Inc.
Anil K. Sharma 630-654-6067 • info@iwainsurance.com 100 E Ogden Avenue Suite 203, Westmont, IL 60559 www.iwainsurance.com
KK Insurance Agency
Ashish Vadya 866-554-6799 • ashish@kkinsuranceagency.com 541 Broadway, Long Branch, NJ 07740 www.kkquote.com
Sinclair Insurance Group - Risk Management
Matt Ottaviano 203-284-3235 • mottaviano@sinclair-insurance.com 4 Tower Drive, Wallingford, CT 06492 www.srfm.com
INDEPENDENT JOE
•
FEBRUARY 2014 21
Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at www.DDIFO.org Ecolab
Arliene Bird arliene.bird@ecolab.com 8300 Capital Drive, Greensboro, NC 27409 www.ecolab.com/Businesses
eTemp
James O’Neill 800-974-1006 x326 • james.oneill@getetemp.com 5 Cold Hill Road, Building 20, Mendham, NJ 07945 www.getetemp.com
Green Turtle Americas
Eric Hancock 704-295-3964 • ehancock@greenturtletech.com 2709 Water Ridge Pkwy Charlotte NC 28217 www.greenturtletech.com
Hi-Tech Sound
Starkweather & Shepley Insurance Brokerage, Inc.
Sabrina San Martino 800-854-4625 ext. 1121 • ssanmartino@starshep.com 60 Catamore Boulevard, East Providence, RI 02914 www.starkweathershepley.com
Wells Fargo Insurance Services
3 Wire Group, Inc.
Gary Hanna 508-624-7479 • gary@hitechsound.com 19 Brigham Street, Unit 10, Marlboro, MA 01752 www.hitechsound.com
Access to Money ATM, Inc./Cardtronics
Brady Campbell 858-535-6034 • bcampbell@hme.com 14110 Stowe Drive, Poway, CA 92064 www.hme.com
Derek Knapp 518-563-3200 • derek.knapp@3wire.com 101 Broadway Street West, Osseo, MN 55369 www.3wire.com
HME Drive-Thru Headsets
Mark Stokes 813-636-5301 • mark.stokes1@wellsfargo.com 2502 North Rocky Point Drive, #400, Tampa, FL 33607 wfis.wellsfargo.com
Doug Falcone 973-599-0600 • dougf@accesstomoney.com 628 Route 10 - Suite 8, Whippany, NJ 07981 www.accesstomoney.com
LEGAL
Belshaw Adamatic Bakery Group
Eric Johnston 732-572-0706 • ej@jarrettforcash.com 1315 Stelton Road, Piscataway, NJ 08832 www.jarrettforcash.com
Bunn-O-Matic Corporation
Mark & Debi Macdonald 508-384-9361 • debi@macdonaldcompany.com PO Box 61, 83 Pond Street, Norfolk, MA 02056 www.macdonaldcompany.com
Delphi/Fast Track 2+2 Drive-Thru Timer
Amie Yee 877-646-8224 • ayee@mint-x.com 2048 119th Street, College Point, NY 11356 www.mint-x.com
DTT Surveillance
Angela Bechard 888-966-6337 • angela@nedrivethru.com 12 Wildwood Road, Auburn, NH 03032 www.nedrivethru.com
Dunbar Security Products
Jerry Brown • A Division of New England Coffee Co. 781-873-1536 • jerry.brown@necoffeeco.com 100 Charles Street, Malden, MA 02148 www.nerepairservice.com
Lisa & Sousa Attorneys at Law Ltd.
Carl Lisa, Sr. 401-274-0600 • clisa@lisasousa.com 5 Benefit Street, Providence, RI 02904 www.lisasousa.com
Paris Ackerman & Schmierer LLP
David Paris 973-228-6667 • david@paslawfirm.com 101 Eisenhower Parkway, Roseland, NJ 07068 www.paslawfirm.com
Vernis & Bowling of Palm Beach, P.A.
Tammy Bouker • 561-775-9822 • 561-775-9822 tbouker@national-law.com 884 US Highway One, North Palm Beach, FL 33408 www.national-law.com
Zarco, Einhorn, Salkowski & Brito, PA
Robert Salkowski, Esq 305-374-5418 • rsalkowski@zarcolaw.com 100 SE 2nd Street, 27th Floor, Miami, FL 33131 www.zarcolaw.com
OPERATIONS
3M Company
Bill Muenkel 952-484-4875 • wemuenkel@mmm.com Bldg. 223-2N-20 St. Paul, MN 55144 www.3M.com/communications
Fran Kauth 206-718-3573 • fran_kauth@belshaw.com 814 44th Street NW, Suite 103, Auburn, WA 98001 www.belshaw-adamatic.com Todd Rouse 800-637-8606 • Todd.Rouse@bunn.com 1400 Stevenson Drive, Springfield, IL 62703 www.bunn.com Mike Pierce 714-850-1320 • mike@phaseresearch.com 3500 West Moore Ave., Suite M, Santa Ana, CA 92704 www.fasttracktimer.com Mira Diza 800-933-8388 • mdiza@dttusa.com 1755 North Main Street, Los Angeles, CA 90031 www.dttusa.com Dustin Gosewisch • 800-766-9145 dustin.gosewisch@dunbararmored.com 8525 Kelso Drive, #L, Baltimore, MD 21221 www.dunbarsecurityproducts.com
Jarrett Services ATM, Inc.
Macdonald Restaurant Repair Service, Inc.
Mint-X Corporation
New England Drive-Thru Communications
New England Repair Service
DDIFO® does not endorse or recommend commercial products, processes, or services. A DDIFO® sponsor is paying to advertise, and it is not to be considered a product or service endorsement by DDIFO®. Furthermore DDIFO® does not control or guarantee the currency, accuracy, relevance or completeness of information provided by sponsors in their advertising.
22 INDEPENDENT JOE
•
FEBRUARY 2014
Directory of Sponsors
Thank You to Our Sponsors! Paramount Restaurant Supply Corp.
Jeffrey Cartier 401-247-6500 • jcartier@pararest.com 101 Main Street, Warren, RI 02885 www.pararest.com
Payless Shoe Source
Matt Lemke 785-368-7530 • matt.lemke@payless.com 3231 SE 6th Avenue, Topeka, KS 66607 www.payless.com
Pentair Filtration & Process
Jeannine Gaine 630-240-1298 • jeannine.gaine@pentair.com 1040 Muirfield Dr., Hanover Park, IL 60133 www.everpure.com
Pier Cleaners
QualServ
Becky Dubose 800-643-2980 ext. 256 • bdubose@qualservcorp.com 7400 28th Street, Fort Smith, Arkansas, 72906 www.qualservcorp.com
Shoes For Crews
Shanita Vickers 877-677-3630 • shanitav@shoesforcrews.com 250 S. Australian Ave. West Palm Beach Fl 33401 www.shoesforcrews.com
SKAL East, Inc
Kevin Huerth 508-238-0106 • kevin@skaleast.com PO Box 303, 31 Eastman Street, Easton, MA 02334 www.skaleast.com/index.cfm?keyword=dunkin
TredSafe/WalMart
Larry Fish 401-789-2333 • piercleaners@piercleanersri.com 50 High St. Wakefield, RI 02879 www.piercleanersri.com
Ted Travis 909-949-0495 • ttravis@esoriginals.com 450 West 33rd Street, New York, NY 10001 www.walmart.com
R.F. Technologies
UAS Security Systems
Jennifer Morales 618-377-4063 ext. 121 • jenm@rftechno.com 542 South Prairie Street, Bethalto, IL 62010 www.rftechno.com
Chris McGurk 800-421-6661 • chris.mcgurk@uas.com 700 Abbott Drive, Broomall, PA 19008 www.uas.com
Wentworth Technology
Lisa Keslar 207-571-9744 • jlisakeslar@wentworthtechnology.com 77 Industrial Park Road Saco Me 04072 www.speedthruheadsets.com
The Wifi Company
John J. Bailey 877-949-9434 • jbailey@thewificompany.com 190 Pine Rd., Golden, CO 80403 www.thewificompany.com
TAX DEFERRED EXCHANGE Exchange Authority
Marie Dias 978-433-6061 • mdias@exchangeauthority.com 9 Leominster Connector, Suite 1, Leominster, MA 01453 www.exchangeauthority.com
INDEPENDENT JOE
•
FEBRUARY 2014 23
Lisa on the Law
While fairly new to the Dunkin’ Donuts system, Trane’s origin dates back more than a century. Today, Trane HVAC equipment and systems can be found in more than half of all commercial buildings in North America and countless locations worldwide. Trane’s National Account with Dunkin’ offers franchisees access to otherwise restricted services. Some of these include direct equipment purchase, leveraged pricing, energy rebates, engineering support, nationwide warehouse access, and a centralized order and fulfillment group. Trane provides all types of HVAC equipment—rooftop air conditioning/heating, heat pumps, fan coils and more. The company takes pride in its 101 years of experience and top-notch customer service and availability. It has warehouses coast-to-coast and, if production is necessary, its manufacturing turnaround is typically two weeks. “Mechanical contractors working for Dunkin’ franchisees say our production times and equipment availability are better than what they typically experience,” said Program Manager Jonathan Ralys. “They love the dependability of the Trane equipment and say our customer service goes above and beyond the norm.” For more information, contact Jonathan Ralys at 978-737-3814 or Jonathan.Ralys@Trane.com.
24 INDEPENDENT JOE
•
FEBRUARY 2014
By Carl B. Lisa, Esq., Lisa & Sousa, Ltd. DDIFO General Counsel
Franchisees Could Receive Money from Interchange Fee Settlement
I
n what was billed as the largest private antitrust settlement in American history, credit card giants Visa and MasterCard have agreed to a $5.7 billion dollar settlement to a class action lawsuit brought by retailers who claimed the companies conspired to fix the interchange fees retailers are charged when customers pay with credit cards. The case, which had been litigated for eight years, means any merchant that accepted Visa or MasterCard credit or debit cards in the U.S. at any time between January 1, 2004 and July 29, 2013 may be eligible to receive payment from one of two funds established as part of the settlement. Under the terms of the settlement, Visa and MasterCard must alter the contracts they have with merchants to remove restrictions on how merchants can promote other cards with lower transaction fees or cards from other networks. And, it means retailers can charge customers one price for cash or debit card purchases and another – higher – price for credit purchases. In his ruling, Judge John Gleeson of the United States District Court wrote, “For the first time, merchants will be empowered to expose hidden bank fees to their customers, educate them about those fees and use that information to influence their customers’ choices of payment methods.”
The settlement is equal to 2.5% of the fees paid by merchants during the nine and a half year period identified in the class action suit. The case included testimony from more than 400 depositions and 32 days of expert testimony. During the litigation, the parties – led by retail giants like Wal-Mart, Amazon.com and 7-Eleven – entered into mediation which, ultimately brought about the final settlement. According to Mallory Duncan, general counsel of the National Retail Federation, retailers really want lower transaction fees and more competition in the payments market. “Our members have no interest in surcharging generally,” he said. “It’s too complex and it’s consumer unfriendly.” All Dunkin’ Donuts and Baskin Robins merchants who paid interchange fees are included in the settlement, unless you previously chose to opt out, or opt out and object. You must fill out a claim form to be eligible for payment. As of this writing, the court has not yet approved a deadline for class members to file or a claim form. Once forms are approved they will be posted at the official court-authorized website, www.paymentcardsettlement.com. The website has an excellent Frequently Asked Questions page and links to access court documents. You can also call the toll free number for additional information: 1-800-625-6440. Any distribution of payments may be delayed as the court considers appeals. According to the New York Law Journal, “The case docket is peppered with notices of appeal filed by small retailers challenging the settlement and the fee.”
•
This publication is not intended to constitute legal advice. If legal advice is required the services of a competent legal professional should be obtained.
Photo Credits: Josh Kenzer via photopin cc
SUB HEADLINE DDIFO SPONSOR ADVERTORIAL
STRENGTH in numbers
With QTimer , the industry’s leading drive-thru management system only from HyperActive Technologies , you will strengthen your drivethru’s throughput and profitability. And, the real-time, actionable data helps make your bottom line stronger, too. ®
®
The time is now to improve your drive-thru.
Call 1-877-33HYPER today.
D N NOW APPROVE POS INTEGRATIO
QTimer
®
The World’s Most Reliable Drive-thru Technology. Scan the QR Code and lets make your QSR strong.
Order Confirmation Displays Drive-thru Management Systems www.gohyper.com • dunkin@gohyper.com • 1-877-33HYPER
Total Plan Integration and
Commitment to Client Service Since 1990 we have enjoyed amazing personal relationships with Dunkin’ Donuts Franchisees.
$6 Billion
OUR EXPERtIsE JoyaL CapitaL ManageMent, LLC
in assets under ManageMent
EstAtE PlANNING, PRIVAtE ClIENt GROUP
500 2,000 $100
private CLient group MeMbers
JCM advisory serviCes, LLC
BUsINEss VAlUAtION/ CONsUltING sERVICEs, RIA
dunkin’ donuts stores
JCM FranChise deveLopMent, LLC
MiLLion M&a
MERGERs & ACQUIsItIONs
$300 18
MiLLion debt pLaCeMent
JCM Mortgage Co., LLC
BANKING
states
Find out how JCM can help you grow and plan today. We have helped many Dunkin’ Donuts franchisees and we can do it for you.
BOSTOn
•
B O C a R aT O n
•
B e v e R ly H I l l S
Start a Relationship Today: 1-800-56-JOYAL Gary F. Joyal
Richard P. Joyal, Jr.
Stephen M. Stabile
Managing Partner gjoyal@joycapmgt.com
Managing Director rjoyal@joycapmgt.com
President ss12@att.blackberry.net
Daniel F. Connelly
Kathy Rebello
Sean O’ Brien
Managing Director dconnelly@joycapmgt.com
Managing Director krebello@joycapmgt.com
Chief Financial Officer sobrien@joycapmgt.com
PROUD TO Be:
Watch client testimonials at: www.JoyCapMgt.com OR www. JCMFranchise.com