WHAT’S
BREWING
CICELY SIMPSON SODA TAX •
•
ROBERT CRESANTI
•
JOINT-EMPLOYER RULES
October/November 2017
Award-Winning Magazine
for D D Independent Franchise Owners
HOW TO MEASURE TIGHTENING SUCCESS T H E B E LT JUST ONE OF MANY KEY TOPICS EXAMINED AT THE 2017 DDIFO NATIONAL CONFERENCE
COMMUNITY CORNER
Jimmy Fund Golf Tournament
FEATURE
How Technology and Automation are Changing QSRs
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IT’S THE ECONOMY… With cable and online news outfits reporting on events 24/7/365, it should be easy for the viewing American public to find the really meaningful stories at any hour of the day or night. But the sheer volume of “news,” often offered without any filter or verification, is making it more difficult to separate the journalistic wheat from the chaff. A quarter of a century ago, during the presidential campaign of 1992, we first heard a phrase that resonates today just as loudly as it did in the days before social media: “It’s the economy, stupid!” Created for the presidential campaign of Governor Bill Clinton by campaign manager James Carville, the phrase served as a constant reminder for campaign officials to stay on message. The Clinton camp wanted to keep the focus on the anemic economy America was enduring under the presidency of incumbent President George H.W. Bush. The strategy worked. The campaign stayed on message with a drumbeat of bad economic news and Bill Clinton was elected America’s 42nd President. The Clinton presidency coincided with a decade-long economic expansion that currently stands as the longest boom in U.S. history. During Clinton’s eight-years in the White House, America added over 20 million jobs. Today, as Republicans attempt to pass a tax reform bill the GOP and President Trump believe will reignite America’s economic flame, people need to sift through other news and noise that drowns out the primary message: “It’s the economy…” Wall Street continues its upward drive— gaining over 30 percent in value since Trump took office. And, even as the nation has demonstrated its resilience in the wake of two devastating hurricanes that hit major
economic centers of the American South, anti-business regulations and tax policies in many states and local municipalities sit like speed bumps slowing economic growth. Elsewhere in this magazine, you can read about a litany of legislative proposals that seek to elevate the lowest on the economic ladder by holding back – and in some cases, punishing – those at a higher level of success. Whether it’s a “millionaire’s tax,” more mandates for additional employee benefits, or a “robot tax” on companies that seek the efficiencies of automation, high taxes and onerous regulations pose a significant threat to innovation and initiative, choking the entrepreneurial spirit that feeds a solid and growing economy. For an example, let’s look at the differing results from two recent soda tax experiments, one in Chicago and another in Philadelphia. The initial result was the same in both municipalities, as consumers who could easily travel, went outside the tax boundaries to purchase their sugary drinks, while those who couldn’t, paid the price. Consequently, small business (and in this instance larger businesses such as Pepsi Co.) felt the brunt and did what they had to do to stay solvent. They laid off workers and raised prices. In Chicago, disenchantment with the tax quickly gave birth to a formal repeal effort which succeeded on an almost unanimous county-wide vote. On the other side of the coin, Philadelphia held firm with the tax and as a result, nearly half of the business in that city reported a greater than 10 percent drop in sales. In a similar vein, let’s think about the so-called “Millionaire’s Tax,” some version of which is in place in six states and under consideration in a host of others. Couched in terms
of “getting the wealthy to pay their fair share,” the additional taxes are generally applied not just to earners of $1 million or more, but to whomever government powers deem to be wealthy. In New York, wealthy equals $1,077,500 and if an earner makes that much, he or she pays an additional 2 percentage points in taxes. The District of Columbia applies a local income surcharge on income of $1 million or more. But wealthy is in the eye of the beholder as far as tax burdens go – New Jersey applies its millionaire’s tax on incomes over $500,000 (2.6 percent surcharge), while Maine applies an additional 3 percent surcharge on incomes over $200,000. With tax reform likely in the coming months, we can only hope for more more common sense in our tax system, where those who contribute to economic growth – like Dunkin' Donuts franchise owners who invest in real estate, equipment and people – won't be penalized under a system that doesn't seem to recognize the importance of making the economy work for everyone. If not, that 1992 campaign phrase may wind up morphing into something new: "It's the stupid economy." Ed Shanahan DDIFO Executive Director
INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
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SUB HEADLINE
CONTENTS
From the Executive Director It’s the Economy…• • • • • • • • • • • • • • • • • 3 What’s Brewing: From the National Conference• • • • • • • • • • • • • • • • • • • • • • 7 Community Corner: Jimmy Fund Golf Tournament Brings NDCP and Dunkin’ Together for Cancer Research• • • • • • • • • • 10 Press Here to Order: How Technology and Automation are Changing QSRs................12
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7 16 Franchisees Consider How to Measure Success: The 2017 DDIFO National Conference • • • • • • • • • • • • • • • 16 A First for the DDIFO Hall of Fame • • • • • • • • • • • • • • 19 Franchisee Profile: Trading Finance for Franchising• • • • • • • • • • • • • • • 22 Coping with Catastrophe: Franchisees reflect on impact of Hurricanes Harvey & Irma • • • • • • • • • • • • • • • • • • • • • • • • 24 Directory of Sponsors• • • • • • • • • • • • • • • 27 A Look at the Law: Protecting Yourself From Lawsuits Involves Many Shades of Gray• • • • • • • • • • • • • • • • • • • • • • • 20 4
INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
19 22 27
INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
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Independent The Magazine for DD Independent Franchise Owners
•
October/November 2017 Issue #46 Independent Joe® is published by DD Independent Franchise Owners, Inc. Editors: Edwin Shanahan, Matt Ellis Contributors: Cindy Atoji Keene, Cathy Cassata, Debbie Swanson, Scott Van Voorhis Business Member Coordinator: Joan Gould Creative Director: Caroline Cohen Direct all inquiries to: DDIFO, Inc. 2 First Avenue, Ste. 127 – 3, 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 JOE® and DDIFO® 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 © 2017 Printed in the U.S.A.
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INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
WHAT’S
BREWING FROM THE 2017 DDIFO By Scott Van Voorhis
NATIONAL CONFERENCE “ I can’t express enough how important it is for people to put a face with the issue" —Rep. Themis Klarides
Don’t look now but the dreaded sugary beverage tax is back. That’s the word from Cicely Simpson, executive vice president for public affairs at the National Restaurant Association. Health activists around the country are now pushing a new crop of initiatives that would slap taxes on soda and other drinks. “This is coming back up with a very big momentum,” Simpson said. Simpson was one of a panel of experts on regulatory and legislative issues that spoke to Dunkin’ Donuts franchise owners at the DDIFO National Conference, held Oct. 30-31 at Foxwoods Resort Casino. A good-news, bad-news theme emerged
during the wide-ranging discussion by the panel, which featured Rep. Themis Klarides, the Republican minority leader in the Connecticut House of Representatives, Joseph Giannino, DDIFO’s Massachusetts lobbyist and the principal of Government Relations Group, and Robert Branca, who is co-chair of the Government Affairs Committee for the Brand Advisory Council. Franchise owners and their representatives are enjoying impressive access to the new and more business-friendly Trump Administration, with progress being made on some key issues important to Dunkin’ and other franchise owners. Yet lobbyists for the restaurant and franchise industry are increasingly focusing their efforts on the state and
local level, where activists are pushing an array of new laws and regulations, from scheduling rules to sick leave, the panelists noted. Possibly the most surprising development is the reemergence of the sugary beverage tax, which fizzled out a few years ago after a major defeat in New York. Michael Bloomberg saw his plan to slap a tax on large sugary drinks of 16 ounces and up go down to defeat when New York State’s highest court shot it down in 2014. But the billionaire and former Big Apple mayor is back, spending millions of his own money to back proposals for taxes on sugary drinks in cities and states across the country. Bloomberg has reportedly pumped money into initiatives and elections in New Mexico and Cook County in
INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
7
WHAT’S
BREWING Illinois where the beverage tax is being debated.
country as part of its “kitchen cabinet” initiative, according to Simpson.
in business or an understanding of the day-to-day issues franchise owners face.
Other hotspots include Colorado and California, Simpson said.
“The last five or six years it has all been local advocacy,” she said. “This industry has had to flip a little bit – it is now city councils, it is now showing up and talking to your aldermen.”
“I can’t express enough how important it is for people to put a face with the issue,” Klarides said.
While it may be tempting to call it a soda tax, the issue is wider than that, noted Simpson, since many of these proposals would affect tea as well, recommending it be labeled as a “sugary beverage tax.” “We expect anywhere from eight to 10 states to have ballot issues on the sugary beverage tax,” she said. In order to effectively battle sugary beverage tax and similar proposals targeting franchised restaurants, the National Restaurant Association and similar groups have had to shift the focus of a significant part of their lobbying to the city and state level. The restaurant association has been reaching out and holding meetings with mayors and city councilors across the
8
“Yes, Congress is still important but not everything is happening in Washington,” Simpson added. Two other key players in the Connecticut and Massachusetts legislative scene seconded the need for vigilance at the state level by franchise owners and their representatives. Rep. Klarides, who is widely viewed as a strong candidate to be Connecticut’s next Governor, advised franchise owners to take the direct approach when there is a bill or issue they are concerned about. She urged business owners to set up face-toface meetings with their representatives, noting many may not have a background
INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
Joseph Giannino, a former elected official who has led lobbying efforts in Dunkin’s home state for several years, also stressed the ongoing need to educate lawmakers on the realities of running a business. For example, Giannino said one of the next big mandates he expects to see in the next few years is a proposal for sick leave for workers with pets. “They talk about the importance of small business, but then they make this really idiotic legislation,” he said. “I apologize for using such a harsh term, but it is.” If there are continued storm clouds on the state and local level for Dunkin’ franchise owners, prospects in Washington are brightening as the new Republican
administration starts to take charge of the government’s regulatory apparatus. Simpson, who formerly held the job of government affairs chief for Dunkin’ Brands, said the Trump Administration has made it a point of working closely with restaurant and franchise groups, seeking their input on efforts to scale back regulation or craft new initiatives. It is a departure from the more aloof Obama Administration, where such meetings just didn’t happen, she said. “It is great to have an administration that will sit down and talk to you,” Simpson said. “We did not have that opportunity to go in and make our case.” One example is a new “apprenticeship” program the Department of Labor is developing to help businesses find the workers they need in a tight market. “Not only do we like it, we are going to do an executive order on it,” Simpson said
she and other business leaders were told by Department of Labor officials. “‘You guys from the business community, come tell us how you want it done,’” she quoted from a recent meeting. “We wrote a lot of that executive order.” Robert Cresanti, president and CEO of the International Franchise Association, lauded business-friendly moves by the Trump Administration. (Cresanti’s speech was moved up after a call came in from Washington for the IFA chief to meet directly with Trump the next day.) These include a shift away from efforts to aggressively enforce new joint-employer rules that made franchisors liable for pay and other working conditions that franchise owners have traditionally been in charge of, as well reviewing the Obama Administration’s plans to dramatically expand the number of workers, including managers, eligible for overtime. “Sometimes the bedlam overshadows the
No room to grow with
?
activity that is happening,” Cresanti said. Still, franchise owners hoping to solve their labor woes by bringing in more foreign workers through the H2B visa program aren’t likely to see their wishes fulfilled. “Compromise immigration reform is not going to happen,” Simpson said. In Dunkin’ circles, that development will be closely watched – as will other labor-related issues coming down the pike – because franchisees across the Dunkin’ footprint are concerned about a shallow labor pool. It was the issue that elicited the most questions from attendees at the DDIFO National Conference.
•
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INDEPENDENT JOE • OCTOBER/NOVEMBER 2017 9
COMMUNITY CORNER
Jimmy Fund Golf Tournament Brings NDCP and Dunkin’ Together for Cancer Research
National DCP is proud to be part of a cherished, 20-year tradition in Massachusetts: the annual Dunkin’ Donuts Jimmy Fund Golf Tournament, which has raised $13.6 million for cancer research at New England’s premier cancer center, the Dana-Farber Cancer Institute. This year’s event was held on August 14 at The International Golf Resort in Bolton, Mass. It raised $800,000 for the Dunkin’ Donuts Right Treatments Rid Cancer Research Fund, which supports cancer research teams at Dana-Farber. NDCP thanks its members for their continued, tremendous support of this worthy cause.
Marvin Weiner, Gail Stewart, John McLaughlin, James McLaughlin
Terrance Durham, Steve Stern, Clayton Turnbull, Stephen DiPrete
Seated Keith Cadette, Blane Colacchio; standing Marco, Joe Cadette
Volunteers: Jackie Finn, Stephanie Smith, Kelly Estes, Laura Magnani
10 INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
Roland Ornelas, Regina Chin, Carlos Andrade, John Pruett, Melanie King (Carlos & John both received the John Henderson Award at this year's tournament)
Ralph DíAlelio
Dr. Lee Nadler, Carlos Andrade
Erik Lania, Sean Sullivan, Lillian La Rosa, Don Marcogliese
INDEPENDENT JOE • OCTOBER/NOVEMBER 2017 11
FEATURE
PRESS HERE TO ORDER
How Technology and Automation are Changing QSRs
By Debbie Swanson
W
hether it's using self-check out at major department and grocery stores or forgoing the cashier to order from a digital menu, today’s consumers have come to accept – and even prefer – interacting with automated features as they purchase goods and services. “[Automation is] a positive direction for the QSR industry,” says Erik Thoresen, principal at Technomic, a foodservice research and analysis company. “It has always been a part of the innovation process of QSRs, which have always looked for ways to integrate digital tools and interfaces.” While automation brings many benefits to both the customer and the franchise owner, technological advances always introduce new questions and challenges. Just how much reach will automation have in the QSR landscape, and how will it impact the labor force?
12 INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
Press Enter to Continue
Tomorrow’s generation of consumers may seldom interact with a human to order food. Instead, we are seeing how a completely digital interaction – either on a device at home, or via an in-store kiosk – is becoming more prevalent with each day and could soon be the norm. Dedicated mobile apps have enabled a major boost in on-the-go ordering throughout the industry. Customers quickly adapted to the convenience of reaching for their phone to place an order, or to easily re-order a favorite item. Papa Gino’s and Domino’s were among the first to push the concept of mobile ordering, with both brands advancing their online ordering capabilities in the mid-90s. At the end of 2016, Domino’s reported that 60 percent of its sales originated online. Over the past several years, dedicated apps quickly became widespread: Dunkin’ Donuts released its mobile app in 2012, and Panera, Chipotle, and Subway all have added online apps. And, even though mobile ordering has been well received, Thoresen expects it to become even easier. “Dedicated apps [may become] less relevant, with the technology being replicated on a web site. That’s easier [for the customer] than having to download an app to place your order. We have the technology to do this, it’s just a matter of adoption,” he says. In-store ordering is also becoming less dependent upon a customer-employee interaction. Kiosks placed in stores permit customers to enter and pay for their order via touch-screen devices. According to a study from the POS software firm Toast, 65 percent of consumers will use a kiosk when one is available, with 55 percent saying they'll use it sometimes, and 10 percent saying they'll use it every time. Already popular in Europe and Canada, kiosks are making their way into the domestic QSR industry, with a successful presence at major brands like McDonald’s, Wendy’s and Panera. According to
Wendy's Chief Information Officer David Trimm, customers and franchisees have taken a liking to their kiosks. “You will see customers deliberately going to those kiosks directly, bypassing lines," Trimm told The Los Angeles Times. “Some customers clearly prefer to use the kiosks.”
A look to the future
Expediting the ordering process isn’t the only way technology is changing the industry; automating food prep or delivery has been a longtime dream of those in the business. As early as1964, McDonald’s executives envisioned automating the burger prep process. At the time, they enlisted the American Machine & Foundry Company (AMF), which created a series of connected machines boasting the ability to automate 16 different menu items. While that technology did not become widespread and was eventually abandoned, the concept of automated food delivery remains strong. More recently, Domino’s – a brand dependent upon its ability to deliver fresh, hot pizzas in a timely fashion – has been creating a delivery robot. Domino’s Robotic Unit, fondly known as DRU, is a four-wheeled, temperature controlled delivery vehicle that uses sensors and a GPS to embark on short-range, sidewalkaccessible deliveries. Under development in Australia, DRU is still being tweaked to withstand potential issues, such as vandalism or theft. At the extreme end of the futuristic spectrum is Eatsa, a California fast-casual restaurant that was named 2016 Tech Accelerator of the Year by Restaurant Business magazine. Eatsa, which opened in 2015, automates all its customer interactions. Patrons choose quinoa-based meals on a kiosk, watch for their name to appear on a screen, then retrieve their meal through a labeled cubby. Other innovations in place or under exploration include fully automated coffee bars and baristas, drones to assist with home delivery, and automated burger flippers.
DID YOU PAY YOUR ROBOT TAX? Technology continues racing forward, giving robots more and more human qualities. But some politicians have a uniquely human element they’d like to bestow upon these machines – the obligation to pay taxes. Of course, it’s not the robot responsible for the paying – we’re not quite there yet. But some lawmakers are looking to levy a tax on companies that transition to an automated workforce. One advocate is San Francisco City Supervisor Jane Kim, whose proposed "Jobs of the Future Fund" suggests such a tax, earmarking funds for educating and re-training displaced workers, and supporting jobs hard to replace by automation. While Kim’s initiative may seem futuristic, many business leaders think it’s a rotten idea. Steve Cousins, the founder and CEO of the robotics company Savioke, called the tax an “innovation penalty.” Ulrich Spiesshofer, the CEO of multinational robotics and automation corporation ABB Group, was a bit more blunt in an interview on CNBC: “Taxing robotics is as intelligent as taxing software.” Microsoft founder Bill Gates, has been an outspoken supporter of the robot tax, claiming since the robots are taking work from humans their companies should pay a penalty for improving efficiency. U.S. Commerce Secretary Wilbur Ross has a different view: Forcing companies to pay a tax will not mitigate the impact of job automation. “I’m not in favor of trying to hold back technological advance,” Ross said in a broadcast interview. “And if we don’t employ robots, the Chinese will, the Vietnamese will, the Europeans will, the Japanese will. Everyone will.”
INDEPENDENT JOE • OCTOBER/NOVEMBER 2017 13
AUTOMATION Why not take the leap?
As every franchisee knows, time and efficiency are things of value, each of which can be improved by automation. But while digital equipment and ordering have been successfully woven into many operations, Thoresen says he doesn’t foresee a major futuristic jump just yet. “There’s a lot of buzz around robots these days, but I don’t expect to see true robots in the front of the house anytime soon,” he says, citing barriers such as prohibitive costs and versatility. Kiosks are not cheap. In his interview with the LA Times article, Trimm said Wendy’s purchased three self-ordering machines for $15,000, assuming its costs would be recouped in less than two years. Thoresen notes one concern of franchise operators may be the acceleration of change. “Franchisees may be hesitant to purchase, fearing something better may come out next year.” One example might be kiosks with operating systems that can be upgraded, so entire machines don’t have to be replaced.
Versatility is another potential roadblock, and something where human workers have an edge. “The more general-purpose a robot can become, the higher utility it has and can contribute more to the operation,” Thoresen says, using the example of chopping vegetables to make his point. He notes that chopping is a task a worker may perform for only a small portion of his shift, before he moves on to other tasks, but a machine that chops vegetables may not be able to do any other tasks.
Panera, which first introduced a kiosk in 2012 at one of their busiest locations in Boston, Mass., now has approximately 400 kiosks in place at various locations. Panera has reported that restaurants with kiosks are spending more on labor than stores without them, because automation is increasing the volume of online ordering, which requires more employees to keep up with orders.
Finally there’s the human element, which he says can never be replaced by a machine. “There’s an element of hospitality to going out for food - you don’t want to take this away completely, but complement it.”
Chipotle has reported a similar outcome since it implemented its online app. Chipotle operators, rather than decreasing staff, are running two lines to keep up with online orders. Plus, operators have learned they need employees on the floor to assist with the proper use of a kiosk or answer questions at the point of ordering.
The impact on staffing
Data: Another benefit
In an industry with high staffing needs, automation sounds like a great idea – particularly in regions where the employers are now forced to pay a minimum wage as high as $15 an hour – but early results from QSR chains do not show automation reducing labor costs.
Even as kiosks and online ordering apps give customers an efficient, automated ordering experience, the data that is collected through their purchases can help create a better overall customer experience. Technology captures all sorts of user data, which operators and brands
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can analyze to make quick service restaurants more responsive to the consumers’ needs. “You always want to use your customer data to get to know your customers, and to make the customer’s experience better,” says Thoresen. “I expect the industry will start to see more uses of creative ways that technology can support this effort.” Technology is already helping customers determine where they want to go for a cup of coffee, sandwich or snack. The National Restaurant Association’s 2015 Restaurant Industry Forecast, found more than 40 percent of millennials, and a third of all adults, rated the availability of technological options an important factor in choosing a restaurant. For Dunkin’ Donuts franchise owners, online ordering is already a reality and future automation is right around the corner. If the experience of other chains is any indication, automation will need to be tested and evaluated before any direct benefits to the franchisee’s labor costs can be considered.
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All Conference Photos by Gary J. Thibeault of Tebo Photography
2017 NATIONAL CONFERENCE
FRANCHISEES CONSIDER HOW TO MEASURE SUCCESS
JUST ONE OF MANY KEY TOPICS EXAMINED AT THE 2017 DDIFO NATIONAL CONFERENCE
By Scott Van Voorhis
S
ure, the franchise world is tough, but measuring success isn’t all that complicated, according to Don Fox, chief executive of Firehouse Subs. “Growth is not an option,” Fox told Dunkin’s franchise owners gathered at the DDIFO National Conference, held this year at Foxwoods Resort Casino on Oct. 30-31. “In business as in most things in life, you are growing or you are dying.” It’s a lesson about success that Fox has clearly embraced with Firehouse Subs, known for its “hearty and flavorful fare” and support of public safety workers, having rolled out 1,050 shops and growing fast across the country. The keynote address by Fox, who rose to the top ranks at Burger King before propelling Firehouse Subs into one of the fastest growing franchised brands
in the country, was one of the highlights of the two-day National Conference. Other highlights included a discussion by Wall Street experts on the opportunities and challenges facing Dunkin’ Brands (DBI), the latest information regarding a new form franchise agreement offered by DDIFO’s legal team, and an insightful government relations panel featuring the Republican leader in the Connecticut House of Representatives – who is also the party’s likely nominee to be Governor – as well as DBI’s former VP of Government Affairs (see What’s Brewing on Page 7). For his part, Fox told Dunkin’ franchise owners that inculcating your brand’s values should start at the beginning, before a new employee walks onto the job. He offered the example of a new employee who arrives sharply dressed for the first day of work, only to walk past a pair of straw wrappers on the floor.
16 INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
“If I am a customer and I see that happen, what does that tell me about your location?” Fox asked. “It tells me that’s acceptable. They just walked in, passed the trash on the floor and said it a perfectly OK.” “Culture gets put on display in many, many ways,” he added. “If you are waiting for employees to grasp your culture after they go to work for you, it’s too late.” Fox says he can walk into any of his chain’s restaurants – or for that matter any business – and know “within ten seconds if the culture is good or not.” Fox looks at body language, tone of voice and a sense that employees behind the counter love their work and treat their customers right. “Nor it is just employees who should be
spreading the good vibes – it’s advice that franchise owners above all should heed,” Fox told Dunkin’ franchise owners. “Have fun,” Fox urged. “At the end of the day it’s a tough business. I’ve been at it for 44 years and if you get up every day and you are not having fun, you are probably in the wrong business.” Fox also spoke of other values he believes are crucial to successful franchising – great leadership, giving back to the community and frugality. Leadership, Fox says, starts with leading by example and not asking your employees to do anything you wouldn’t consider doing yourself. “I have not told you how many toilets I have cleaned over the years,” Fox said. “People are watching your every move
– you have to always be mindful of that,” Fox said. Don’t micromanage either, he warned. Managers and employees need the latitude to come up with their own solutions. “If you are going more than one level down you are going too far,” Fox said. “You are really undermining folks on your team.” Accountability is also crucial for ensuring that some employees aren’t coasting on the coattails of their more hardworking colleagues. And so is encouraging optimism, which Fox contends starts at the top. “If there is not optimistic leadership at the top, that gets snuffed out,” he said. "It just dies." Frugality is crucial as well, Fox noted,
telling the story of a new franchise owner who spent his profits on a $60,000 Hummer and had no reserve to deal with the inevitable down times. But while living within your means is important, giving back is vital as well, Fox said. Supporting the community is at the core of the Firehouse brand. A portion of every sale in 2017 goes to the Firehouse Subs Public Safety Foundation, which over several years has raised over $29.5 million for equipment and training for first responders around the country. But there is also a bottom line benefit to doing good as well, since the restaurants with the best records of raising money also have the best sales, a link that has been backed up by the stats over the years, Fox said.
INDEPENDENT JOE • OCTOBER/NOVEMBER 2017 17
2017 NATIONAL CONFERENCE
While the sub business is growing, so is the demand for coffee, a fact that should help drive sales and profits at Dunkin' Donuts for years to come, a panel of Wall Street experts told DDIFO members. Total sales to consumers at Dunkin’ franchises are up 80 percent since 2007, while coffee now represents 8 percent of all McDonald’s sales, said Michael Kelter, an analyst with First Manhattan Co. The panel discussed the competitive landscape in the coffee business. John Gordon, DDIFO’s restaurant analyst and the principal of Pacific Management Consulting Group, said unequivocably that convenience stores pose a real threat on a cost of coffee basis. “Cumberland Farms has put a lot of money into drinks and food,” Gordon noted. “I do believe that McDonald’s is much more of a direct competitor for this brand,” he said. Still, while the business press has focused on competition for coffee addicts, especially the supposed Dunkin’ versus Starbucks duel, there is enough business to keep everyone’s sales growing, Kelter contends. “Coffee out of home is an expanding business,” Kelter said. “The profit pie is expanding and everyone seems to be participating and that could go on for a long time.” The panel of Wall Street experts also addressed ongoing speculation that Dunkin’ Brands could be a takeover
target. The Street recently reported that JAB Holding, a privately held firm that has gobbled up Panera Bread and Keurig, may also have set its sights on publicly-traded Dunkin’. “JAB has taken out Peet’s Coffee, Krispy Kreme, Panera, they have been very aggressive, said Michael Halen, restaurant analyst at Bloomberg Intelligence. “To me it makes a lot of sense – because it is franchises they can get a deal for a smaller cap.” The narrative changed after the conference had ended when JAB announced it was buying Au Bon Pan, a small coffee and bakery chain. Regardless of the latest acquisition talk, the longer-term trend is clear, said First Manhattan’s Kelter. “The likelihood of Dunkin’ being a standalone public company in five years is 50 percent,” Kelter said. “A larger company can do a better job with IT and marketing.” Meanwhile, DDIFO’s legal panel provided members with an update on the latest developments in negotiations with Dunkin’ Brands over the franchise agreement and other issues. Attorneys Carl Lisa, Jr. and Christopher Menihan of Lisa & Sousa noted there were upcoming changes to the CML Agreement that governs the central kitchens supplying donuts and baked goods to most Dunkin’ franchises, but were not at liberty to discuss them. “There are some extensive and very
18 INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
good changes that are very well thought out,” Lisa said. However, Lisa and Menihan were able to discuss negotiations over the Franchise Agreement and successful efforts by DDIFO’s legal team to head off potential changes by Dunkin’ Brands. DBI's legal team had added provisions that would have given Dunkin’ Brands the right to relocate a franchise at the end of its term and the right of first refusal should it come up for sale. Both would have generated more money for the franchisor at the expense of Dunkin’ franchise owners, the attorneys argued. After a couple of false starts – including one in 2016 when Dunkin’ Brands began circulating a new agreement that had not been viewed by the Brand Advisory Council – DBI was convinced to revert to earlier language in the 2015 agreement, which did not include the new wording. “When it comes to changes in the franchise agreement, you really have to read between the lines,” Lisa said. “It tells a story and the story is the direction the brand wants to take everyone.” That was a message that resonated with the crowd of franchisees that came from across the brand’s footprint to be informed and entertained, and consider how they measure success in an environment that was free of brand input and away from their day-to-day grind.
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HALL OF FAME
N C HISE O W NE
RS
F
RA
A FIRST FOR THE DDIFO HALL OF FAME By Matt Ellis
T
he first thing people may have noticed when they walked into the ballroom for this year’s DDIFO Franchisee Owners Hall of Fame luncheon was the Secret Service agents guarding the door. They were joined by members of the Connecticut State Police and the Mashantucket Pequot Tribal Police Department. The heavy law enforcement presence was in place to guard the event’s special guest: Eric Trump, the second son of the President of the United States. This was the 7th year DDIFO has held a celebration honoring the achievements of franchisees (and others close to the
Dunkin’ Donuts system) who have left a lasting impression on the brand, and it marked the first time a member of the nation’s First Family was present for the festivities. This year’s honorees, Carl Andrade, Jim Cain and Joe White are all well-established, admired and well-respected within the Dunkin’ community The Cain family operates a network in New York and Connecticut, and Shaun Cain, Jim’s younger son, has a longstanding friendship with Eric Trump, who welcomed guests and posed for photos before making remarks to kickoff the event.
INDEPENDENT JOE • OCTOBER/NOVEMBER 2017 19
“It’s an honor to be here. I actually brought my better half,” said Trump, the Executive Vice President of The Trump Organization, who was joined by his wife Lara. Through his foundation, Trump is a major supporter of the St. Jude Children’s Research Hospital in Tennessee. Since 2007, the Eric Trump Foundation has raised over $7 million to support the Memphis-based pediatric facility that cares for the sickest children in the world, often waiving the costs to families that are unable to pay. In addition to acknowledging the contribution Dunkin’ Donuts franchisees make to the national economy,
“Look at the amount of jobs this group has created, the career opportunities you have all given to so many people,” Trump also wanted to highlight the support the Cain family has provided to St. Jude’s, which began with a “Give to Live’ initiative Cain started at his New York DD shops and raised $50,000 in its first year. The Cains later broadened the fundraising effort to include hundreds of New York and Connecticut Dunkin’ shops. The effort earned Shaun Cain Dunkin’s Philanthropist of the Year Award. “I want to say thank you to a family I love tremendously, and that’s the Cain
family. And I also want to say thank you to you and your organization for doing everything that you’ve done for sick children,” Trump said. When it was time for Jim Cain to step up and receive his Hall of Fame award, he joked that he was “at a loss for words,” an ironic twist given that those who know Jim Cain, know him to be comfortably talkative. “Being honored by my peer group is the ultimate honor because I am you and you are me, and we are together,” Cain said. “We come from same narrative. We come from nothing. Some from Portugal, some from India, some from different parts of the world. I came from Providence, RI; my dad was a cop. [We had] six kids in the family, so I came from nothing too.” Carl Andrade came from a family of Dunkin’ Donuts franchisees. By the time he was old enough to have a job, he knew it would be in a family Dunkin’. In 1975, he got his first job at his brother Tony’s shop in Holbrook, Mass. and bought his first shop in Manchester, NH in 1977. Carl was 24. Like many of the franchisees in the Hall of Fame, including Carl’s brother Manuel, he has made a name for himself in the system as a hard worker, a supporter of his community and a volunteer on advisory committees and subcommittees. “I’m proud to be up here and to be part of this great organization. It shows everybody – especially for young guys out there – that hard work pays off,” Andrade said as his voice cracked, visibly impacted by the emotion of the event. Joe White came with his family from Ohio to be recognized for his excellence in the Dunkin’ Donuts system. White first got into the donut and coffee business when he bought a Mister Donut shop in 1978. Later, when Dunkin’ Donuts absorbed the Mister Donut chain, White stayed in and expanded his network. Over the years, White has been actively involved in franchisee business and served two years on the board of the Joy in Childhood
20 INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
HALL OF FAME
Foundation when it was known as the “Community Fund.” “Dunkin’ Donuts buying Mister Donut—we went through all that. That was the best thing that ever happened to me. I didn’t realize it at the time. [Dunkin’] was a far more vibrant company with far more vibrant advertising and it allowed us to grow,” White remembered. “We went from one store to 23 now and [my son] has probably doubled it in the last 5-6 years. I’m very happy to pass the baton on to him. “I am very honored that my peers have chosen me to be in the Hall of Fame,” he said. There are now 29 men and women enshrined in the DDIFO Franchise Owners Hall of Fame, a testament to the hard work, dedication and commitment that has made the Dunkin’ brand renowned the world over. And now that’s something that America’s First Family knows firsthand.
•
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INDEPENDENT JOE • OCTOBER/NOVEMBER 2017 21
FRANCHISEE PROFILE
Trading Finance for Franchising:
George Ross moved from Times Square to the Carolinas and never looked back By Cathy Cassata
F
or 16 years, George Ross worked in Times Square for Morgan Stanley as an Institutional Equity Trader. Day in and day out he traded technology stocks worldwide to institutions and hedge funds. "I was tied to 6 screens from 6 a.m. to 6 p.m. every day," Ross says. But it was his job, and he anticipated sticking it out for the long haul. That was until late 2006, when his old college classmate Dan Connelly, chairman of the DDIFO board of directors, told him about some opportunities within Dunkin'. "One thing led to another and in December 2007, we ended up acquiring four stores in Charleston, South Carolina," Ross says. "I left Morgan Stanley and became the CEO [of Coastal Franchising] and the person running the business from the day we started." He signed a 24 store development agreement with Dunkin’ Brands, opening five new shops in 2008. "The plan was always that we wanted to build a larger franchise network. We got in with the thought of having a lot of stores. However, as the recession hit and things slowed down we made adjustments, and waited to make sure that our investments would pay off," Ross says. "We definitely picked a very challenging time to launch a new business as the 2008-09 recession hit the Carolinas very hard. We had challenges on the sales side because of the economy and on the credit
side because of bank lending, as well as just being new to the brand.” Ross knew a lot about business, but little about restaurant franchising, which caused some worries and concerns. "You hope you get it right. Becoming a new franchisee at Dunkin’ is a monumental challenge. We all know how complex it is for our crew and managers, and it's even more complex for franchisees," he says. "But all we can do is work hard every day trying to improve our business and our skill sets. Integrity and hard work are keys to the success of any business."
22 INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
Ross rode out the recession and in 2010 jumpstarted his development. Today, he has stores in five markets: Charleston and Florence, South Carolina and Charlotte, Wilmington, and Raleigh, North Carolina, where Ross recently signed on to develop seven new stores in the Research Triangle region. "We're acquiring four before the end of the year and we have six stores under construction, so certainly by end of Q1, we'll have about 50 stores." Ross says the first restaurant under this agreement is on target to open in 2018.
Ross’s development timeline has been on the fast track. We asked this former equities trader what he has learned about operating a large network of restaurants. "It's about allocating your time and being able to communicate and delegate. You have to give people a title and the power to do things," Ross says. "From that perspective, there isn't that much of a difference [between owning five stores and 25 stores]. You're just managing more and more people." For his 40 existing stores, Ross employs 1,200 people, including several senior managers in charge of Finance, Construction, Training, Operations, Accounting and Human Resources in addition to seven district managers. "You can't do it all, so as you grow, it's an evolving structure. It's never static. You have to have a team behind you, with honest, committed people that have the same core values that you have and you must have systems in place," Ross says. "People and systems equal success at any level.” While many franchisees will say profits improve once they have at least five stores, Ross says it’s not so cut and dried. "There are times when we benefit from economies of scale, and others when we have too much overhead and not enough stores. For instance, if you have two stores, it's hard to have a district manager, but when you have 10 stores, one district manager isn't enough. As you grow, you get to a certain number of stores and you have to keep adding people," he says.
Beyond Donuts and Coffee A part of the business Ross says he particularly enjoys is community involvement. For the last decade, Ross has been active with the Dunkin’ Donuts Joy in Childhood Foundation and currently serves as the co-chair of the Southeast Chapter. In Charleston, his stores have partnered with the Medical University of South Carolina (MUSC). "We are one of the major benefactors to the new children's hospital that is under construction. We are part of that building, and we'll have a store in the new hospital," Ross says.
" The interaction between the brand and the local charities is literally the fabric that ties us to our communities and makes it a special brand. It's the most rewarding thing we do." In Charlotte, Ross and the Dunkin Foundation have partnered with the Bring it 4 Braylon Foundation, which helps alleviate the burden associated with pediatric cancer by providing comprehensive support to families and individuals who are fighting the disease. Additionally, Ross supports local food banks and hospitals with all his stores participating in charity events year-round. "The interaction between the brand and the local charities is literally the fabric that ties us to our communities and makes it a special brand. It's the most rewarding thing we do. It's very near and dear to me and something we work on every day," Ross says. When Hurricane Irma struck, Ross says his stores were able to reach out to communities in a unique way. While some of his locations are near the water and were affected by the storm, his inland stores in the Florence, Charlotte and Raleigh markets experienced a large influx of people who had evacuated from Florida, Georgia and the Carolina coast, looking to relocate for a period of time. "Our managers were trying to make sure that besides providing service, they welcomed customers to their new Dunkin' for a week before they could return to their communities," Ross says. "Customers have an unbelievable bond with the brand and their stores. They often say, 'That's my Dunkin',' and we made sure to let them know in those markets that they could make our stores their Dunkin' for the week. Many people appreciated it and we put some normalcy in their life. Even if it was just for 15 minutes, it allowed them to feel comfortable in a place they're
familiar with. That's what this business is all about."
A balancing act familiar to all franchisees Like many franchisees, Ross talks about the need for balance, both at work and with his family. "On a daily basis, I'm involved with trying to run the overall business from a planning and strategic perspective down to reviewing contracts and renegotiating contracts, to attending a RAC, CML, or an Ad Committee meeting," notes Ross. "There's always issues at every corner that need attention at work as well as at home." Ross and his wife Liz, have four sons ranging from a freshman in college down to a 5th grader. "They all play competitive lacrosse and travel a lot for the sport, so I'm always trying to make it to their games. I try not to be Dunkin' all the time at home, but the reality is I may be driving them somewhere while on a conference call. Their impression of my work ethic is definitely ‘Dad is always working.’" From his days at the equity trading desk, to his time behind the counter at a Dunkin’, Ross has learned the importance of recognizing what's working and what's not. It’s a skill he applies at home. "You have to be able to search for the answer and solution, if something isn't working. A great skill I've learned in my careers is the ability to look at things quickly and determine what's working and what's not, and not be afraid to change direction," he says.
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INDEPENDENT JOE • OCTOBER/NOVEMBER 2017 23
FEATURE
Coping with Catastrophe: Franchisees reflect on impact of Hurricanes Harvey & Irma By Cathy Cassata
F
irst Harvey, and then Irma. When these two hurricanes made landfall in the continental U.S. this fall, it marked the first time in recorded history two Category 4 storms landed in the same season. This has been one of the most active seasons on record. (Hurricane season officially ends Nov 30.)
“It certainly was a disaster,” says Shaw Darwish, who is still reeling from Harvey’s impact in Houston. Darwish owns two Baskin Robbin shops in the Houston Metro. Even before Harvey hit, Darwish decided to close before the storm's arrival. He remained closed for three days before getting one of his shops open in the wake of the storm. He says he sustained significant flood damage, estimated at $300,000 and lost approximately $10,000 in sales. Harvey’s relentless rainfall, as much as 50 inches in two days, flooded sections of the city that had been spared significant damage from prior hurricanes.
24 INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
Editorial credit: Felix Mizioznikov / Shutterstock.com
Harvey ravaged Houston and the Gulf Coast; Irma slammed Florida, and devastated the Caribbean. The size and scope of these two hurricanes – which pounded the states within two weeks of each other – affected everything from energy refineries and airlines to hoteliers and freight. Moody's Analytics estimates damage from Irma and Harvey at close to $200 billion; the economy may have suffered another $20 billion to $30 billion in lost output. For small business owners, the impact from these storms has been particularly severe.
“When you’re managing a bakery, you know every screw, bolt and nut in the place; there’s a lot of moving pieces in dealing with an emergency, and it’s important to stay on top of it all.”
Harvey was Darwish’s third hurricane, but it was absolutely the worst. When roads became impassable, his people had to hunker down. Even as rain water was falling and flood waters were rising, Darwish was focused first on the safety of his employees and fellow franchisees. “We stayed in contact and checked on one another, and that provided moral and emotional support,” says Darwish. Once the storm passed, he was able to assess the damage. Once power came back and floodwaters receded, he reopened. Then, as the weather cleared and people began to venture out, Darwish found many were thrilled to have access to the comfort food his Baskin Robbins and Dunkin’ Donuts shops could provide. Days after newspaper headlines declared Hurricane Harvey the “Costliest natural disaster in U.S. history,” Florida braced for Hurricane Irma, which forecasters were calling a “Category 6 monster,” and a “buzz saw” that leveled several Caribbean islands. Originally targeting Florida’s east coast, Irma took a turn to the west, threatening the homes and businesses of Gulf Coast residents. Dunkin’ Donuts franchisee David Daly says he felt like he “dodged a bullet” when Irma veered inland rolling over Fort Myers. Daly, who owns 14 restaurants in southwest Florida suffered minimal damage to his restaurants. Signs were blown away and power was knocked out. Daly lost some product from the shelves and sales from the register. Daly was also spared disaster at the Central Manufacturing Location (CML) he operates, which supplies baked goods to 45 nearby Dunkin’ Donuts shops. The CML's delivery trucks were parked in a protective location away from the wind and against the building. The facility did lose power, but was able to keep operations running thanks to a gaspowered generator. Before the storm, the CML has stockpiled a week’s worth of product, and as soon as the roads were cleared, deliveries were on their way again. “When you’re managing a bakery, you know every screw, bolt and nut in the place; there’s a lot of moving pieces in dealing with an emergency, and it’s important to stay on top of it all.” The biggest disruption, says Daly, was maintaining a work force. An evacuation order scattered his workers everywhere, and it took three to four days before he could assemble even a skeleton crew. But he didn’t want to rush people back to work. Daly took a cautious approach, encouraging everyone to take care of themselves and their families before reporting to work. “Communication is utmost; I tried to anticipate what could go wrong; make sure I had enough product, and work out personnel needs.” He had a checklist and plan in place, whether it pertained to power interruptions, disrupted communications or transportation challenges. “By the time the hurricane hit, we were as well-organized as we could get, so we hunkered down, then took stock of what damage was done, and got right back to work,” he says.
INDEPENDENT JOE • OCTOBER/NOVEMBER 2017 25
HURRICANES HARVEY & IRMA Daly, like many franchisees, helped coordinate relief efforts--delivering coffee and snacks to first responders and other crisis workers. and other organizations to deliver coffee and snacks to first responders and other crisis workers. Not far away, in Tampa, Dunkin’ franchisee Nick Apostoleres nervously watched the storm’s track as well. After whipsawing through the Caribbean Islands, Irma was steering its way towards the Florida Keys. Apostoleres says his workers wanted to seek safe refuge, but the storm wasn’t due to make landfall in Florida for three or four more days and he wasn’t prepared to close down just yet. “It’s tough to balance your responsibilities,” he recalls. Apostoleres closed his shops on Saturday at noon, about 24 hours before Irma was expected to hit. Almost all of his 15 Tampa stores lost power, one location was vandalized, and three stores remained without power for more than a week. All perishables were lost in those locations, and financially, “you take a pretty big hit on that,” he says.
“When the power finally turns back on, it’s important to have a plan not just for closing but reopening. There’s an awful lot of clean up, whether it’s changing water filters, cleaning up branches and leaves in the parking lot, or cleaning any food lost out of the coolers,” Apostoleres says. But it was hard to carry out the advanced plans because many of his workers had evacuated the area, seeking safer accommodations for the storm. Others that had stayed behind couldn’t come right back to work because they had to get their homes stabilized. The solution was to spread the employees who were available across the many stores. Many worked extra shifts as necessary to get things back to normal. Back in Houston, Kitty Wong, who owns two Baskin Robbins, lost all the ice cream
26 INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
Carlos Andrade is shown offloading supplies to the Red Cross in this photo from Dunkin' Brands.
in her shops; Harvey kept her businesses shuttered for two weeks. “There was nothing we could do to prepare when the products start melting,” says Wong. Harvey had left a trail of heartache and worry, but like so many of the hurricane victims who survived, Wong kept her priorities straight. The business took a hit, but she noted, “Compared with so many people who lost everything, we are lucky.”
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ACCOUNTING Adrian A. Gaspar & Company, LLP, CPAs Robert Costello 617-621-0500 • cpas@gasparco.com 6 Kimball Lane, Ste. 150, Lynnfield, MA 01940 www.gasparco.com
Employers Unity LLC
Mike Grammel 303-895-4514 • mgrammel@employersunity.com PO Box 173836, Denver, CO 80217 www.employersunity.com
Marcovich, Mansour & Capobianco, LLC
BUILDING Duro-Last Roofing
Samantha Pickelman (989) 758-1048 • spickelm@duro-last.com 525 Morley Dr., Saginaw, Mi 48601 www.duro-last.com
Persona Signs, Lighting, Image
Susan Koelzer 800-843-9888 x390 • skoelzer@personasigns.com 700 21st Street SW, Watertown, SD 57201 www.personasigns.com
Poyant Signs
2017
Directory of Business Members
BUSINESS MEMBER
Daryl Chelo 401-334-3176 • dchelo@granitenet.com 1 Albion Rd., Lincoln, RI 02865 www.granitenet.com
Sprint
Joe Duhaime 617-504-0059 • Joe.r.duhaime@sprint.com 3 Van de Graaff Dr, Burlington, MA 01903 www.sprint.com
Verizon
Dustin Ray 207-317-1406 • Dustin.Ray@vzw.com 352 Center St, Auburn, ME 04210 www.verizon.com
Joseph A. Mansour, Jr. 401-334-9099 • jmansour@mm-cpas.net 640 George Washington Hwy. Bldg C Suites 200-201, Lincoln, RI 02865
Jackie Linhares 508-207-1273 • jlinhares@poyantsigns.com 125 Samuel Barnet Blvd, New Bedford, MA 02745 www.poyantsigns.com
MFA - Moody, Famiglietti & Andronico, LLP
Restroom Remodels Company
Ed Craig 774-263-7388 • ecraig3@efcostrecovery.com 32 William St, New Bedford, MA 02740 www.efcostrecovery.com
Trane Commercial Systems
Jeff Hiatt 508-878-4846 • jdh@revenuebanking.com 87 Lafayette Road, Ste. 11, Hampton Falls, NH 03844 www.revenuebanking.com
David Fisher 978-569-2944 • dfisher@mfa-cpa.com 1 Highwood Dr., Tewksbury, MA 01876 www.mfa-cpa.com
Neovision Consulting Inc.
Nish Parekh 609-531-4444 • info@neovisioncpa.com 1246 South River Road, Ste. 101 Cranbury, NJ 08512 www.neovisioncpa.com
Sansiveri, Kimball & Co., LLP
Michael A. DeCataldo 401-331-0500 • mdeca@sansiveri.com 55 Dorrance St, Providence, RI 02903 www.sansiveri.com
BACK OFFICE BlumShapiro Consulting
David Fionda 781-610-1206 • dfionda@blumshapiro.com 2 Battermarch Pk.;1 Pine Hill Dr Ste. 301, Quincy, MA 02169 consulting.blumshapiro.com
Jera Concepts
Wynne Barrett 508-686-8786 • wynne@jeraconcepts.com 17 Fruit St, Hopkinton, MA 01748 www.jeraconcepts.com
Keith Vanderbilt 617-500-2554 • keith@restroomremodels.com 15 Hammatt St, Ipswich, MA 01938 www.restroomremodels.com Jonathan Ralys 978-737-3814 • Jonathan.Ralys@Trane.com 181 Ballardvale St, Wilmington, Ma 01887 www.trane.com
Watchfire Signs
David Watson 205-542-7881 • David.Watson@watchfiresigns.com 1015 Maple St, Danville, IL www.watchfiresigns.com
BUSINESS BROKER National Franchise Sales
Ellen Hui 949-428-0498 • eh@Nationalfranchisesales.com 1601 Dove Street, Ste. 150, Newport Beach CA 92660 www.nationalfranchisesales.com
COMMUNICATIONS Charter Business
Bernadette Vidal 212-5980-1707 • Bernadette.Vidal@charter.com 477 Congress St. Portland, ME 04102 www.charter.com
Granite Telecommunications
COST RECOVERY EF Cost Recovery
Performance Business Solutions, LLC
ENERGY Secure Energy
Jodi Maurer 413-733-2571 x218 • jmaurer@sesenergy.org 12-14 Somers Rd., East Longmeadow, MA 01028 www.sesenergy.org
FINANCE Bank of America/Merrill Lynch
Earl Meyers 585-546-9162 • earl.w.meyers@baml.com 1 East Ave., Rochester, NY 14450 www.bankofamerica.com
Bank RI
Tom Fitzgerald 401-574-1119 • tfitzgerald@bankri.com One Turks Head, Providence, RI 02903 www.bankri.com
Beirne Wealth Consulting Services, LLC
Thank You to Our Business Members! INDEPENDENT JOE • OCTOBER/NOVEMBER 2017 27
2017
BUSINESS MEMBER
Directory Business Members Directory ofof Business Members
Jeff Bradanini 203-951-5917 • jbradanini@beirnewealth.com 3 Enterprise Drive, Ste. 410, Shelton, CT 06484 http://beirnewealth.com
Trey Grimm 410-419-7107 • tgrimm@signatureny.com 502 Club Ln., Towson, MD 21286 www.signatureny.com
Malak Mansour 281-558-7100 • mmansour@hiretech.com 200 Westlake Park Blvd., Suite 501, Houston, TX 77079 www.hiretech.com
Bridge Funding Group, Inc.
Sterling National Bank
Paychex
Rick Riecker 800-928-8537 • Franchise@BankUnited.com 215 Schilling Circle, Suite 100, Hunt Valley, MD 21031 www.bridgefundinggroupinc.com
Lindy Baldwin 402-312-2542 • lbaldwin@snb.com 500 7th Ave., 3rd Floor, New York, NY 10018 www.snb.com
Ryan Birtles 843-576-9337 • rbirtles1@paychex.com 7204 Copperfield Ct, Wilmington, NC 28411 www.paychex.com
CIT
TCF Franchise Finance
TalentReef
Douglas Solomon 603-433-9413 • DSolomon@cit.com 155 Commerce Way, Portsmouth, NH 03823 www.cit.com
Bill Johnson 952-656-3268 • wjohnson@tcfef.com 11100 Wayzata Blvd., Ste. 801, Minnetonka, MN 55305 www.tcfef.com/franchise
Abby Sandbach 720-399-2494 • asandbach@talentreef.com 210 University Ste. 300, Denver, CO 80206 www.talentreef.com
Eastern Bank
TD Bank
INSURANCE
Deborah Blondin 603-606-4724 • D.Blondin@Easternbank.com 11 Trafalgar Square, Ste. 105, Nashua, NH 03063 www.easternbank.com
Fidelity Bank
Peter J. DiFilippo 401-525-6771 • Peter.DiFilippo@td.com 180 Westminster St, Providence, RI 02903 www.tdbank.com
United Bank
Sally Buffum 508-762-3604 • sbuffum@fidelitybankonline.com 465 Shrewsbury St, Worcester, MA 01604 www.fidelitybankonline.com
Mark McGwin 508-793-8342 • mmcgwin@bankatunited.com One Mercantile St, 7th Flr, Ste. 760, Worcester, MA 01608 www.bankatunited.com
Joyal Capital Management Franchise Development
Wintrust Franchise Finance
Daniel Connelly 508-747-2237 • dconnelly@joycapmgt.com 50 Resnik Road, Plymouth, MA 02360 www.jcmfranchise.com
Sandra McCraren 847-432-2488 • smccraren@wintrust.com 9700 W. Higgins Road, 1st Flr, Rosemont, IL 60018 franchise.wintrust.com
LCR Franchise Finance
Robert Obolewicz 203-644-8481 • robolewicz@lcrcapital.com 315 Post Road West, Suite 200, Westport, CT 06880 www.lcrfinance.com
Northern Bank & Trust Company
Kelley Munsell 781-569-1584 • kmunsell@nbtc.com 275 Mishawum Road, Woburn, MA 01801 www.nbtc.com
Pacific Premier Franchise Capital
Sharon Soltero 402-562-1801 • ssoltero@ppbifranchise.com 3154 18th Avenue, Ste. 3, Columbus, NE 68601 www.ppbifranchise.com
Pinncale Commercial Capital
Mylan Dawson 317-472-2828 • dawson@pincomcap.com 101 W. Ohio St, Suite 2000, Indianapolis, IN 46204 www.pincomcap.com
Signature Financial
HUMAN RESOURCES CertiPay
Danielle Post 813-300-6953 • dpost@certipay.com 130 Bates Ave. SW, Ste. 101, Winter Haven, FL 33880 www.certipay.com
Employers Reference Source
Sandra Fabrizio 888-512-2525 • sandraf@employersreference.com 1587 Hamilton Avenue, Waterbury, CT 06706 www.employersreference.com
HigherMe
Shannon Cassidy 617-890-6476 • shannon@higherme.com 77 Franklin St, Suite 510, Boston, MA 02110 www.higherme.com
HIRETech
Intrepid Direct Insurance
Bill Strout 913-217-4252 • bstrout@intrepidinsurance.com 10851 Mastin Blvd, Ste. 200, Overland Park, KS 66210 www.intrepidinsurance.com
Regions Insurance
Dennis McClelland 770-274-2914 • dennis.mcclelland@regions.com 12725 Morris Rd. Ext. Bldg. 100 Ste. 200 Alpharetta, GA 30007 www.regionsinsurance.com
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
LEGAL Constangy, Brooks, Smith & Prophete, LLP
Jeffery Rosin 617-849-7882 • jrosin@constangy.com 535 Boylston St, Ste. 902, Boston, MA 02116 www.constangy.com
Lisa & Sousa Attorneys at Law Ltd.
Carl Lisa, Sr. 401-274-0600 • clisa@lisasousa.com 5 Benefit St, Providence, RI 02904 www.lisasousa.com
Marks & Klein LLP
Justin Klein 732-747-7100 • justin@marksklein.com 63 Riverside Avenue, Red Bank, NJ 07701 www.marksklein.com
Paris Ackerman & Schmierer LLP
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28 INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
David Paris 973-228-6667 • david@paslawfirm.com 103 Eisenhower Parkway, Roseland, NJ 07068 www.paslawfirm.com
OPERATIONS
Brady Campbell 858-535-6034 • bcampbell@hme.com 14110 Stowe Dr, Poway, CA 92064 www.hme.com
Carl Huerth 781-806-3139 • carl@skaleast.com 131 Padelford St., Berkley MA 02779 www.skaleast.com/index.cfm?keyword=dunkin
Jarrett Services ATM, Inc.
Squadle
3M Company
Alexander Pezzolla 732-572.0706 ex 202 • alex@jarrettforcash.com 1315 Stelton Road, Piscataway, NJ 08832
Brink's Inc.
Shawn Dearden 978-408-0282 • shawn.dearden@Kronos.com 900 Chelmsford St, Lowell MA 01851 www.kronos.com
Bill Muenkel 952-484-4875 • wemuenkel@mmm.com 3M Center, 220-12E-04, St. Paul, MN 55144 www.3M.com/communications
Shawn O'Sullivan 617-653-8462 • shawn.osullivan@brinksinc.com 46 Sprague St., Boston, MA 02136 www.brinks.com
Bunn-O-Matic Corporation
Todd Rouse 800-637-8606 • Todd.Rouse@bunn.com 1400 Stevenson Dr., Springfield, IL 62703 www.bunn.com
Cardtronics
Tom Spooner 973-452-4131 • tspooner@Cardtronics.com 628 Route 10 - Ste. 8, Whippany, NJ 07981 www.cardtronics.com
Carrier Corp
Bob Eckweiler 973-222-6742 • Bob.Eckweiler@carrier.utc.com 3 Hollyhock Way, Newton, NJ 07860 www.carrier.com
Crane Payment Innovations
Ray Picard 603-809-3584 • ray.picard@cranepi.com 1 Executive Pk. Dr. #202, Bedford, NH 03110 www.CranePI.com
DTT
Mira Diza 800-933-8388 • mdiza@dttusa.com 1755 North Main St, Los Angeles, CA 90031 www.dttusa.com
Ecolab
Michael Quate 215-287-6953 • michael.quate@ecolab.com 8300 Capital Dr, Greensboro, NC 27409 www.ecolab.com/Businesses
HME Drive-Thru Headsets
2017
PLEASE VISIT THE DDIFO BUSINESS MEMBER DIRECTORY ONLINE AT WWW.DDIFO.ORG
Kronos
MCD Innovations — Airxcel, Inc.
Christina Trammell 972-548-1850 • christina@mcdinnovations.com 3303 N. McDonald St. McKinney, TX 75071 www.mcdshades.com
Nano Safety Solutions
Jim Muldoon 978-273-1847 • jim.muldoon21@gmail.com 6 Argyle St, Andover, MA 01810 www.nanosafetysolutions.com
New England Drive-Thru Communications
Angela Bechard 603-475-2046 • angela@nedrivethru.com 999 Candia Rd. Ste. 7, Manchester, NH 03032 www.nedrivethru.com
Torrco Everpure
Chris Williams 651-503-4763 • christopherJ.Williams@pentair.com 1040 Muirfield Dr., Hanover Park, IL 60133 www.everpure.com
Prince Castle/Silver King
Zachary Waas 630-873-0088 • waaz@princecastle.com 355 East Kehoe Blvd., Carol Stream, IL 60188 www.princecastle.com
BUSINESS MEMBER
Brendan Bencharit 818-590-4483 • brendan@squadle.com One Broadway, Floor 14, Cambridge, MA 02142 www.squadle.com
Staples Advantage
Joe Shea 781-806-3139 • joseph.shea@staples.com 31 Commercial St. Sharon, MA 02067 www.staplesadvantage.com
Tellermate
Kyle Anthony 770-220-5113 • kyle.anthony@tellermate-us.com 3600 Mansell Road, Ste 500, Alpharetta, GA 30022 www.tellermate-us.com
Wind River Environmental
Samantha Kelley 978-344-0926 • skelley@wrenvironmental.com 46 Lizotte Dr., Ste. 1000, Marlborough, MA 01752 www.wrenvironmental.com
Workpulse, LLC
Tej Guthalagowda 301-775-5046 • tej.guthalagowda@workpulse.com 2 Eastwick Dr., Suite 200, Gibbsborro, NJ 08026 www.workpulse.com
TAX DEFERRED EXCHANGE Exchange Authority
Robert J. Charland, Esq. 978-433-6061 • rcharland@exchangeauthority.com 9 Leominster Connector, Suite 1, Leominster, MA 01453 www.exchangeauthority.com
R.F. Technologies, Inc.
Michael Murdock 847-495-7350 • michaelm@rftechno.com 330 Lexington Dr, Buffalo Grove, IL 60089 www.rftechno.com
safeTstep by Payless Shoesource
Kyle Clendennen 785-295-6664 • kyle.clendennen@safetstep.com 3231 Southeast Sixth Ave, Topeka, KS 66607 www.payless.com/safetstep-1/
SKAL East, Inc
Thank You to Our Business Members!
INDEPENDENT JOE • OCTOBER/NOVEMBER 2017 29
A LOOK ON THE LAW
BY SETH ELLIS
Protecting Yourself From Lawsuits Involves Many Shades of Gray A mericans file 15 million lawsuits each year. Not every lawsuit has merit. Not every lawsuit has issues that are clearly defined in black and white. But there are many hungry lawyers eager to represent a plaintiff on a contingencyfee basis, which means you have to defend yourself.
One reason entrepreneurs are so vulnerable is because they wear so many hats. As the owner of a commercial property, you could have a tenant who claims an injury and decides to sue the landlord. As an employer, you can be sued by your employee for harassment, fraud, unlawful termination, age or sex bias, or some other perceived injury. As a homeowner, you can be sued for an injury that occurs on your premises. As a parent, you can be sued if your child causes injury or damage while driving a car you own, and so on. Win or lose, you've lost. So, what can you do to avoid or mitigate such lawsuits? First, let’s recognize that there is no such thing as being completely “bullet proof.” Asset protection involves shades of gray. The greater the distance your assets are from a potential creditor, the greater the likelihood you will be able to settle your lawsuit at a zero cost or substantial discount. Any solid asset protection plan should accomplish these three goals: 1. Isolate and compartmentalize risky assets or activities through legal structures which insulate the owner's other assets; 2. Position part of an owner's net worth in investments that enjoy special protection under the law (e.g., a homestead, qualified retirement plans or cash value life insurance); 3. Build obstacles that make it more
difficult for creditors to reach assets.
Other than their operating business, the largest asset franchise owners hold is typically their real estate. Most of our Dunkin’ Donuts clients expect to sell their operations someday, but retain their real estate holdings. They recognize that some of their best investment opportunities are the triple net leases under the operating business. In order to insulate and isolate your real estate holdings, we typically use a real estate holding company (RHC), because it serves a variety of tax and non-tax purposes. The RHC will permit you to own multiple properties under one corporate umbrella, but will permit you to segregate each asset for asset protection purposes. Typically, the RHC will be structured as a limited liability company (LLC) or a limited partnership (LP) and will own multiple single member limited liability companies (SMLLC) that own individual properties. Although corporations are often used as holding companies, entities treated as partnerships or proprietorships can have preferable income tax considerations. Generally, money or property that is held in a single member LLC cannot be taken by creditors to pay off the personal debts or liabilities of the LLC’s owners. Even though creditors cannot collect directly from an LLC for an owner’s personal debts, there are other ways creditors might try to go after the LLC for the owner’s personal debt. These include: • Obtaining a charging order which requires the LLC pay the creditor all the money distributed to the debtor-owner; • Foreclosing on the debtor-owner’s LLC ownership interest; or
30 INDEPENDENT JOE • OCTOBER/NOVEMBER 2017
• Getting a court to order the LLC to be dissolved and all its assets sold.
Our recommendation is that each Dunkin’ Donuts franchisee owns his or her property through a SMLLC, which is owned by the RHC. The RHC will be a multi-member LLC or family limited partnership (see diagram below).
CLIENT REAL ESTATE HOLDING, LP
Property 1, LLC
Property 2, LLC
While there are shades of gray involved in how a lawsuit is filed, argued, settled or tried, certain legal structures are simple black and white. Proper holding structures, like the ones discussed here, are the best type of asset protection you can own—and the sooner you create the right structure for your assets, the better protected you will be against claims from a future creditor. Seth E. Ellis is a Director with the Floridabased law firm Tripp Scott, P.A. His practice focuses on asset protection and estate planning.
Focused Solutions for
The Franchise Industry Tax Strategies
Audited Financials
Business Growth
Monetizing Equity
Improve Profitability and Stimulate Growth with Tax Mitigation Strategies that Shift Your Capital from the U.S. Treasury Back to You
Create Competitive Advantage by Optimizing Your Financing Arrangements and Your Ability to Compete for Capital
Fuel Growth Through the Design and Execution of Strategic Roadmaps for Acquisition and Expansion
Build a Sound Business Transition Plan for the Eventual Monetization of Your Business and Maximization of Shareholder Value
We have extensive experience serving franchising entities and are dedicated to helping companies and their owners strategize, plan and implement organizational and financial strategies in alignment with both their business and personal objectives. Day-in and day-out you will find our team working handin-hand with our franchisee clients on a wide variety of strategic matters all with an eye toward helping them to create an economic platform that fosters competitive advantage, stimulates growth and increases profitability. Carl Famiglietti
Managing Partner The MFA Companies
Helping Businesses Succeed Since 1981
1 Highwood Drive, Tewksbury, MA 01876
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(978) 557.5300
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www.mfa-cpa.com
Exceptional An
Family OfďŹ ce Experience JCM PRIVATE CLIENT GROUP Joyal Capital Management is a leader in providing very sophisticated deliverables for every client on demand. With more than fifteen companies and thirty years of experience, JCM provides solutions for Proprietary Estate Planning, Growth Financing, Franchise Development, Mergers and Acquisitions, Strategic Recapitalization, Business Advisory Services and Private Equity Investments.
FOR MORE INFORMATION CONTACT PRINCIPAL RICHARD P. JOYAL AT 508.283.1434 OR VISIT WWW.JOYCAPMGT.COM.