Independent Joe Magazine Issue #13

April 2012 • Issue 13

We Communicate, We Educate, We Advocate!

Neighborhood Approach Clayton Turnbull Meets His New Challenge as BAC Co-Chair Head On

by Matt Ellis

also isnue Not-So-Dumb Blonde by Linda Formichelli this is What does Starbucks’ new Blonde Roast mean for Dunkin’ Donuts?

Is Late Night the Right Time for Brewing Coffee?

by Matt Ellis

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2012 CFA Day Forum Speakers and Program Announced

by Matt Ellis

The 2012 CFA Day Forum will be held July 25-27 at the Gaylord National Resort and Convention Center in National Harbor, MD. Once again CFA (the Coalition of Franchisee Associations) will provide a dynamic forum for franchise owners, association leaders and others to share best practices; discuss pending legal and regulatory issues; and visit with lawmakers on Capitol Hill.

According to Misty Chally, deputy executive director of the CFA, health care reform remains an important topic of discussion for the franchisee community. “There is a lot of action on both sides of the aisle regarding health care reform and what ultimately happens is going to greatly impact franchise owners across the board.”

Another important topic of discussion will be the Universal Franchisee Bill of Rights, which was first unveiled at the 2011 CFA Day Forum. CK Patel, a member of the Asian American Hotel Owners Association (AAHOA) and coChairman of the CFA Fair Franchising subcommittee, told last year’s attendees why the landmark document is so critical to the future of franchising.

“This Universal Franchisee Bill of Rights is all about fairness in franchising. It has been developed by franchisees in multiple systems and industries to identify the basic terms of fairness that are missing in their franchise agreements and must be restored to ensure the success and growth of the franchise systems,” he said.

In the year since it was first unveiled, the Universal Franchisee Bill of Rights has received over 600 endorsements and ratifications. You can read the entire document and endorse it here: http://www.franchiseebillofrights.org/.

Over the last year, CFA has more than doubled its membership and now

represents 17 different franchisee associations. CFA Chairman Keith Miller says this growth will allow the organization to be an even stronger voice for all franchisees.

“I feel that much of this growth is due to the fact that this association is led by franchisees, on behalf of franchisees. Every board member has either been elected by their fellow

franchisees to serve on their brand's independent association board, or been hired by that franchisee elected board.”

Noted franchise attorney Robert Zarco, who will address the forum on franchise industry trends and recent case law impacting franchisees operating businesses during a down economy, says the organization has done a tremendous job of bringing together industry experts to talk on issues of relevance to all franchisees.

“Because it is not industry or system specific, you are exposed to a broader scope of franchising industry issues, concerns and trends,” said Zarco. “It is highly beneficial to everyone involved.”

Other featured speakers at this year’s CFA Day Forum include Federal Trade Commission Franchise Rule Coordinator Craig Tregillus and former United States Senator George Allen of Virginia, who is running for re-election against incumbent Democrat Jim Webb.

Also on the political docket, there will be a fundraiser for the CFA PAC featuring Senator Kelly Ayotte (RNH). Ayotte is a member of the U.S. Senate Committee on Small Business

03 05 07 08 11 13 14 18 27

2012 CFA Day Forum Matt Ellis

What Has the DDIFO Done for Me Lately?

Mark Dubinsky

The Key to Becoming a Profit Improvement Guru Perry Ludy

DDIFO Directory of Sponsors Is Late Night the RIght Time for Brewing Coffee?

Matt Ellis

Not-So-Dumb Blonde Linda Formichelli

Neighborhood Approach Matt Ellis

Dunkin' Donuts Franchises Serve the Military Cheré Coen

Index of Advertisers

and Entrepreneurship and is working to defeat the controversial Employee Free Choice Act—also known as Card Check.

Robert Branca, a Dunkin’ Donuts franchise owner and vice chairman of the CFA, says the power of the collective voice of the association is a powerful force that lawmakers are starting to recognize.

“When we go to Capitol Hill, it’s not just me representing my Dunkin’ franchises,” said Branca. “Instead, we are received as representatives of the owners of tens of thousands of small businesses that employ over a million people. It never ceases to amaze me how powerful that is and how well it is received by Congressional members with whom we meet.”

For more information about the 2012 CFA Day Forum, visit www.thecfainc.com.

APRIL 2012 • INDEPENDENT JOE

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INDEPENDENT JOE • APRIL 2012

What Has the DDIFO Done for Me Lately?

by Mark Dubinsky From time to time, DDIFO members and Non-DDIFO members alike ask me two questions: “What is the DDIFO up to?” and “What has the DDIFO done for me lately?” I am pleased to report we have done and continue to do an amazing amount of good for our members.

Please allow me to elaborate:

 The DDIFO offers our members topnotch legal advice and business research. Dunkin’ Donuts franchisees have almost $10 billion invested in the Dunkin’ Donuts brand. DDIFO members deserve the best legal counsel and business research to support Advisory Council members with the information they need to support the franchisee community.

 The DDIFO is dedicated to an active

and proactive Government Relations program. We strive to have a strong voice in legislation that can enhance the value of your business.

We are promoting Fair Franchising legislation in Massachusetts. This is important because Dunkin’ Brands is a Massachusetts company and if the law is changed in Massachusetts, it will impact all franchise agreements.

see Associations (CFA) in Washington DC. This association promotes the Universal Franchisee Bill of Rights, a document seeking to even the playing field and regain the rights that have been stripped away by onerous and one-sided franchise agreements.

 The DDIFO assisted the DCP with

its “get out the vote” effort for the recent merger. The franchisees took action and voted to endorse the new National DCP.

 DDIFO conducts regular regional

and national meetings which feature relevant, thought-provoking speakers. We provide the opportunity for members to become better informed business owners and discuss issues that are central to the success of their businesses. And we do that in a safe, supportive environment.

 DDIFO has created and funded a

Franchisee Equity Fund. The Board of Directors has supported bankrolling a substantial sum of money to be utilized whenever necessary to enhance, defend and protect the equity you, our members, have worked so hard to create.

 The DDIFO has established a Hall

of Fame to recognize, honor, and celebrate the people that have dedicated their careers to building the Dunkin’ Donuts Brand. I am happy to report that we have established

DDIFO and You continued on page 20

 We are actively trying to change the

tip-pooling law in Massachusetts. As you may know, under current law, supervisors are excluded from participation in tip pools. In the press, we recently published an opinion article that was carried in several Massachusetts weekly newspapers fully explaining the inequity and injustice of the current law, particularly as it relates to Dunkin’ Donuts employees. Very recently, Rhode Island also filed a tip-pooling bill. We are taking action to try to make sure that that the RI legislators do not fundamentally change the way tipping must be handled for our Rhode Island members.

 We are an influential and active

member of the Coalition of Franchi-

April 2012 • Issue #13

Independent Joe is published by DD Independent Franchise Owners, Inc. ®

Editors: Jim Coen, Matt Ellis Contributors: Cheré Coen, Mark Dubinsky, Linda Formichelli, Perry Ludy Advertising: Joan Gould • Graphic Design/Production: Susan Petersen Direct all inquiries to:

DDIFO, Inc. • 150 Depot Street • Bellingham, MA 02019 508-422-1160 • 800-732-2706 • info@ddifo.org • www.ddifo.org DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners.

INDEPENDENT JOE®, INDY 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 © 2012 • Printed in the U.S.A. APRIL 2012 • INDEPENDENT JOE

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INDEPENDENT JOE • APRIL 2012

The Key to Becoming a Profit Improvement Guru By the author of Profit Building: Cutting Costs without Cutting People

Improving profits is one of the main objectives of business, yet in my 25 years as a senior-level executive, author and business consultant, I have observed that most managers do not truly understand how to move beyond the basics.

And it’s no wonder. When you consider the challenges managers face including turnover, overloaded menus and changes in direction from leadership, improving profit becomes harder to achieve. Successful franchise owners face the difficult task of developing and executing profit strategies to stay ahead of the competition.

The Guru Report is a highly successful approach to resolving the profit improvement paradox. Prepared monthly, the Guru Report shows the ranking of your shops based on performance against 10 business-critical focus areas. Once your managers become familiar with it, the Guru Report will develop into an excellent tool for communication and performance improvement.

The following is an example of the categories used in a Guru Report based on a

42-store operation: A. Sales Growth Positive to Last Year (20 points): Using your standard reports for tracking revenue performance over the previous year, list the percentage of sales growth. A store would receive 20 points for having any amount of positive sales growth for the month or period.

B. Attachments or Add-on Sales (5 points): Based on sales reports, calculate add-on sales to beverages.

Sometimes guest check averages can be substituted in this category. In that case, 5 points are awarded if a particular store has surpassed the company average in this category.

C. Excellence Evaluation/Store Scored Inspections (10 points): This is based on the ROR scores received during the report period. You can average the scores if two or more inspections were conducted. If the Brand conducted the ROR, that score would be used. Shops receive 10 points if they score 80% or better.

D. Labor Better than Plan (10 points): Use your labor reports to measure each shop’s performance against its labor plan and goals. If a store performs better than its plan it would be awarded 10-points. If the store performs worse than plan no points are awarded.

E. COGS Plus or Minus .3% of Target (10 points): Use your COGS or food cost reports to determine if a shop has performed within a plus or minus .3% of target. If so, award 10 points.

F. Offsite Revenue 4% of Net Sales (15 points): Track LSM or offsite sales to determine what percentage of your business was sold through catering, fundraising, school programs, etc.

Establish a percentage goal. If that goal is met the shop is awarded 15 points.

Perry Ludy continued on page 10

APRIL 2012 • INDEPENDENT JOE

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Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org

Accounting Adrian A. Gaspar & Company, LLP, CPAs 1035 Cambridge Street, Suite 14, Cambridge, MA 02141 Robert Costello • cpas@gasparco.com 617-621-0500 • www.gasparco.com Bederson & Company LLP - CPAs and Consultants 405 Northfield Avenue, West Orange, NJ 07052 Steven Bortnick, CPA • sbortnick@bederson.com 973-736-3333 • www.bederson.com

Duro-Last Roofing 525 Morley Drive, Saginaw, MI 48601 Jim Schriber • jschribe@duro-last.com 800-248-0280 • www.duro-last.com ViewPoint Sign and Awning 35 Lyman Street, Northboro, MA 01532 Bill Gavigan • billg@viewpointsign.com 508-393-8200 • www.viewpointsign.com

Business Broker

Bedford Cost Segregation 60 State Street, Suite 700, Boston, MA 02109 Bill Cusato • bcusato@bedfordcostseg.com 978-263-5055 • www.bedfordcostseg.com/who_we_serve/ddifo.asp

Kensington Company & Affiliates 185 Roslyn Road, Roslyn Heights, NY 11577 David Stein • kstein@kensingtoncompany.com W: 516-626-2211 • M: 718-490-2218 • www.kensingtoncompany.com

Cynthia A. Capobianco, CPA 60 Quaker Lane, Suite 61, Warwick, RI 02886-0114 Cynthia Capobianco • 401-822-1990 cynthia@capobianco.necoxmail.com

Finance

James P. Ventriglia, CPA, Inc. 145 Phenix Avenue, 2nd Floor, Cranston, RI 02920 Jim Ventriglia • jimv@jpvcpa.com 401-942-0008 • www.jpvcpa.com Gray, Gray & Gray, CPA 34 Southwest Park, Westwood, MA 02090 Paul Gerry, CPA • pgerry@gggcpas.com 781-407-0300 • www.gggcpas.com Performance Business Solutions, LLC 87 Lafayette Road, Suite 11, Hampton Falls, NH 03844 Jeff Hiatt • jdh@revenuebanking.com 508-878-4846 • www.revenuebanking.com Rubiano & Company, CPA’s 5 Austin Avenue, Suite 1, Greenville, RI 02828 Daniel J. Rubiano, CPA • dan@rubianocpa.com 401-949-2600 • www.rubianocpa.com Sansiveri, Kimball & Co., LLP 55 Dorrance Street, Providence, RI 02903 Joseph Mansour • jmansour@sansiveri.com 401-331-0500 • www.sansiveri.com Thomas Colitsas and Associates, CPA 103 Carnegie Center, Suite 309, Princeton, NJ 08540 Tom Colitsas • tcolitsas@tcacpa.com • 609-452-0889 “A Member of Franchise Pros”

Advertising

Business Financial Services 3111 N. University Drive, Suite 800, Coral Springs, FL 33065 Scott Kantor • skantor@businessfinancialsservices.com 954-509-8019 • www.businessfinancialservices.com Capital One Bank 499 Thornall Street, 11th Floor, Edison, NJ 08837 George Ziminski •george.ziminski@capitalone.com 732-767-4115 • www.capitalone.com Centrix Bank & Trust 1 Atwood Lane, Bedford, NH 03110 Deborah Blondin • dblondin@centrixbank.com 603-589-4071 • www.centrixbank.com Direct Capital Franchise Group 155 Commerce Way, Portsmouth, NH 03823 Robyn Gault • rgault@directcapital.com 603-433-9476 • www.franchise.lendedge.com Fidelity Bank 465 Shrewsbury Street, Worcester, MA 01604 Sally Buffum • sbuffum@fidelitybankonline.com 508-762-3604 • www.fidelitybankonline.com GE Capital, Franchise Finance 201 Merritt 7, 2nd Floor, Norwalk, CT 06851 Ab Igram • ab.igram@ge.com 203-229-1885 • www.gefranchisefinance.com Joyal Capital Management Franchise Development 50 Resnik Road, Plymouth, MA 02360 Daniel Connelly • dconnelly@joycapmgt.com 508-747-2237 • www.jcmfranchise.com

Access Rewards 1012 W Beardsley Place, Salt Lake City, UT 84119 Doug Jentzsch • dougj@accesscashrewards.com 866-681-2427 • www.accesscashrewards.com

Merchant Cash & Capital 450 Park Avenue South, 11th Floor, New York, NY 10016 Seth Broman • sethb@merchantcashandcapital.com 212-545-3185 • www.merchantcashandcapital.com

Back Office

Priority Capital 174 Green Street, Melrose, MA 02176 Brian Gallucci • bgallucci@priotiycapital.com 800-761-2118 Ext 14 • www.prioritycapital.com

IKMS Group, Inc. PO Box 6221, Manchester, NH 03108 Cliff Pratt • ctp@ikmsgroup.com 603-644-4683 • www.ikmsgroup.com

Building Absolut Contracting 4346 Route 27, Princeton, NJ 08540 William Lako • blako@absolutlycan.com • 609-655-0800 “A Member of Franchise Pros”

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INDEPENDENT JOE • APRIL 2012

Susquehanna Commercial Finance 2 Country View Road, Suite 300, Malvern, PA 19355 Brian Colburn • brian.colburn@susquehanna.net 443-996-1792 • www.susquehanna.com Trust Capital Funding 132 Adams Street, Suite 1, Newton, MA 02458 Mark Wesalowski • Mwesalowski@trustcapitalfunding.com 800-LENDER1 • www.trustcapitalfunding.com

Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org United Capital Business Lending 215 Schilling Circle Suite 100, Hunt Valley, MD 21031 Trey Grimm • tgrimm@ucbl-inc.com 410-771-9600 • www.unitedcapitalbusinesslending.com

Food Products CSM Bakery Products 1901 Montreal Road, Suite 121, Tucker, GA 30084 Marla Cushing • marla.cushing@csmglobal.com 770-723-2083 • www.csmbakeryproducts.com PepsiCo 315 Norwood Park South, Norwood, MA 02062 Bryan Gruttadauria • bryan.gruttadauria@pepsi.com 781-255-2663 • www.pepsico.com

Human Resources CareerBuilder.Com 400 Crown Colony Drive, Suite 301, Quincy, MA 02169 Maureen O’Neill • maureen.oneill@careerbuilder.com 781-453-3570 • www.careerbuilder.com Diversified Solutions, Inc. 412 Long Pond Road, Plymouth, MA 02360 Chrishelle Gavoni • jkerchgavoni@comcast.net 508-746-6995 • www.diversified-solutions.com/dsi_dd.html Employers Reference Source 1587 Hamilton Avenue, Waterbury, CT 06706 Sandra Fabrizio • sandra@employersreference.com 888-512-2525 • www.employersreference.com Gecko Hospitality 1415 West 22nd Street, Tower Floor Oakbrook, IL 60523 Robert Krzak • robert@geckohospitality.com 630-390-1000 • www.geckohospitality.com The PCI Group 303 Molner Drive, Elmwood Park, NJ 07407 Robert Boffa, Sr. • rgb@pcihr.com 201-797-8000 ext. 223 • www.pcihr.com

Insurance The Hill Agency 5 Washington Avenue, Endicott, NY 13760 Rita Frailey • rfrailey.hilla01@insuremail.net 800-446-1775 • www.thehillagencyinc.org KK Insurance Agency 541 Broadway, Long Branch, NJ 07740 Ashish Vadya • ashish@kkinsuranceagency.com 866-554-6799 • www.kkquote.com Paris-Kirwan Insurance 1040 University Avenue, Rochester, NY 14607 John Mulcahy • johnm@paris-kirwan.com 585-473-8000 • www.paris-kirwan.com RMS Insurance Brokerage, LLC 575 Jericho Tpke, Suite 102, Jericho, NY 11753 John Rojas • jrojas@rmsinsurance.com 516-742-8585 • www.rmsrestaurants.com Sinclair Insurance Group - Risk Management 4 Tower Drive, Wallingford, CT 06492 Matt Ottaviano • mottaviano@sinclair-insurance.com 203-284-3235 • www.srfm.com

Starkweather & Shepley Insurance Brokerage, Inc. 60 Catamore Boulevard, East Providence, RI 02914 Sabrina San Martino • ssanmartino@starshep.com 800-854-4625 ext. 1121 • www.starkweathershepley.com

Legal Law Office of Carmen D. Caruso, PC 77 West Wacker Drive, Suite 4800, Chicago, IL 60601 Carmen D. Caruso • cdc@cdcaruso.com 312-606-8640 • www.cdcaruso.com Lisa & Sousa Attorneys at Law 5 Benefit Street, Providence, RI 02904 Carl Lisa, Sr. • clisa@lisasousa.com 401-274-0600 • www.lisasousa.com Paris Ackerman & Schmierer LLP 101 Eisenhower Parkway, Roseland, NJ 07068 David Paris • david@paslawfirm.com • 973-228-6667 www.paslawfirm.com “A Member of Franchise Pros” Zarco, Einhorn, Salkowski & Brito, PA 100 SE 2nd Street, 27th Floor, Miami, FL 33131 Robert Zarco, Esq. • rzarco@zarcolaw.com Robert Salkowski, Esq. • rsalkowski@zarcolaw.com 305-374-5418 • www.zarcolaw.com

Operations Access to Money, Inc. 628 Route 10 - Suite 8, Whippany, NJ 07981 Doug Falcone • dougf@accesstomoney.com 973-599-0600 • www.accesstomoney.com Belshaw Adamatic Bakery Group 814 44th Street NW, Suite 103, Auburn, WA 98001 Fran Kauth • fran_kauth@belshaw.com 206-718-3573 • www.belshaw-adamatic.com Bunn-O-Matic Corporation 1400 Stevenson Drive, Springfield, IL 62703 Todd Rouse • Todd.Rouse@bunn.com 800-637-8606 • www.bunn.com Cashmaster Cash Solutions 2108 Trving Blvd., Dallas, TX 75207 Jayson Dunston • jdunston@cashmaster-us.com 214-747-1982 ext. 2 • www.cashmaster-us.com Comcast Business Services 500 South Gravers Road, Plymouth Meeting, PA 19462 Comcast National Sales • Dunkin_National_Sales@comcast.com 866-407-6338 • www.business.comcast.com/internet/index.aspx Delphi/Fast Track 2+2 Drive-Thru Timer 3500 West Moore Avenue, Suite M, Santa Ana, CA 92704 Mike Pierce • mike@phaseresearch.com 714-850-1320 • www.fasttracktimer.com DTT Surveillance 1755 North Main Street, Los Angeles, CA 90031 Mira Diza • mdiza@dttusa.com 800-933-8388 ext. 1441 • www.dttusa.com Ecolab 8300 Capital Drive, Greensboro, NC 27409 Arliene Bird • arliene.bird@ecolab.com www.ecolab.com/Businesses/

Thank You to Our Sponsors!

Sponsors continued on page 17 APRIL 2012 • INDEPENDENT JOE

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Perry Ludy continued from page 7 G. Customer Service Score (10 points): Check GSS customer survey scores during the period. If a shop has better than the average score for the operation, 10 points are awarded. Obviously you can establish an internal target or threshold a shop must meet in order to earn points.

H. Cash Management/Cash Over and Short (10 points): Use financial reports as the basis for establishing a goal for cash shortage. For example, the goal is $10.00 short or less for the period or $.33 cents per day. If a shop performs better than the goal it is awarded the points.

I. Manager Comps 1% or lower (5 points): The Loss Prevention Report can help determine if a shop has performed less than the target. If so, award the points.

J. Voids 1% or lower (5 points): The Loss Prevention Report can help determine if a particular shop has performed better than the goal. Award the points accordingly.

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INDEPENDENT JOE • APRIL 2012

K. Bonus Category (5 points): Shops that have an employee on board who is trained and ready for a promotion to the GM or Manager level are awarded 5 bonus points. Promotion candidates must be interviewed and approved before the bonus points can be awarded.

Obviously your Guru Report can take many shapes and sizes depending on your strategies and focus areas. The targets can be established and changed as the performance of your organization improves.

Publish the report ranking each of your shops from highest to lowest total score as shown in the table on page 7. For example, if you have a 20-shop organization, rank each shop from 1-20. Require each shop to post the report and leave it up until it is replaced with the next report, and so on. When distributing the report, include an executive overview written by a manager who is one or two levels above the store manager which summarizes the results and recognizes both the top and bottom performers.

Perhaps the most important aspect of the Guru Report concept is the executive

overview. This is an excellent opportunity to recognize the five to ten top performing stores. Highlighting these top performers and their scores encourages consistent top performance. Similarly, singling out bottom performers can motivate them to raise their level of performance in the next period.

Additionally, the Guru Report can be used in performance appraisals since it represents a cross-section of a restaurant manager’s duties. And, the report can be used as a basis for merit increases, or conversely, as documentation of poor performance.

The Guru Report is a simple and effective way to keep your organization continuously focused on key business drivers.

Ranking your shops on a monthly basis in critical areas of performance and posting it for all employees to see will energize your organization. As a result, your profit performance will improve and you will have earned guru status.

Perry Ludy is a senior executive, business consultant, and author of business books. He is president of LudyCo International. Contact Perry at perryludy@earthlink.net.

Is Late Night the Right Time for Brewing Coffee?

by Matt Ellis

Franchisees Disagree on Benefits of 24 Hour Operations If you ask Mo Khalid, who owns a network of 12 Dunkin’ Donuts shops in Essex County, New Jersey – including five in the city of Newark— staying open 24 hours is vital to his business. He doesn’t look at whether the revenue covers the cost of staying open between midnight and 4am: sometimes it doesn’t. But, for Khalid, staying open round-the-clock protects his property from vandals, gives his staff a head start preparing for the morning rush and gives him a competitive edge in his market.

“My stores sell a lot of sandwiches in the morning and a lot of stuff needs to be prepped for morning shifts – rolls, bagels, croissants. If you’re not open at night you have to pay someone to come in and do it. It makes sense from a business perspective to stay open,” he said.

a 24/7 Economy: Challenges for American Families, “one out of five employed Americans work most of their hours outside the range of 8am to 4pm, or have a regularly rotating schedule that includes overnight hours.”

“A central factor is the remarkable growth of the service economy – particularly in the food, recreation, travel and medical care industries,” writes Presser. “Consumers are clamoring for continuously available services as well. We see these trends in the newly common phrase 24/7.”

Chief Marketing and Innovation Officer John Costello recently told the Wall Street Journal, “I think we really have moved to a clockless day.

People are working longer hours, in many cases multiple jobs, and more time-starved than ever before and they want the flexibility to have a full variety of products that aren’t limited by time of day.”

According to the Journal approximately one third of Dunkin’ Donuts stores are now open 24 hours; that’s double what it was 10 years ago. But, according to a number of franchise

Of course, many franchise owners will tell you that Khalid’s situation is unique to shops located in busy, urban areas.

Newark, for example, has over 600 police officers on staff, with approximately 200 working the third shift. If just 20 stopped in to one of Khalid’s stores for a latenight cup of coffee, he would come close to covering his labor costs for the night.

“In many suburban towns, staying open 24 hours may make no sense because street traffic and activity drop to zero,” said Ronald C. Curhan, Professor Emeritus at the Boston University School of Management.

This 24 hour Dunkin’ shop in Waukegan, IL is close to a local hospital and police station.

“Where it can make sense is in Its owner says the shop generates enough cash overnight to justify staying open. areas where people are passing through like along busy highways, Ten years ago, less than one percent or where people can use the location owners we talked to, only in certain of all McDonald’s restaurants were as a destination.” circumstances is there enough busiopen around the clock; today it’s ness to justify staying open between According to University of Maryland nearly 40 percent. Perhaps feeling the hours of midnight and 4am.

Sociology Professor Harriet Presser the competition for late-night coffee Late Night Brew continued on page 22 who wrote the book, Working in and snack dollars, Dunkin’ Brands APRIL 2012 • INDEPENDENT JOE

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INDEPENDENT JOE • APRIL 2012

Not-So-Dumb Blonde What does Starbucks’ new Blonde Roast mean for Dunkin’ Donuts?

by Linda Formichelli

Starbucks recently introduced their Blonde Roast, a lighter roast for those coffee drinkers who don’t like the original roast’s intense -- some would say burned -- flavor.

Dunkin’ Donuts has always had a lighter roast -- so what does Starbucks’ foray into the light mean for the company? Independent Joe posed this and other questions to Matthew Swenson, director of the coffee consulting company Swensonian Coffee Professionals and Lead Instructor for the Specialty Coffee Association of America, and Andrew Hetzel, owner of Cafemakers, LLC, which assists with the assessment, creation, improvement, and expansion of coffee businesses and coffee brands worldwide.

IJ: What does the new Blonde Roast say about consumer preferences?

MS: Through their own studies, Starbucks Consumer Research found that 54 million coffee drinkers in the U.S. prefer a lighter roast coffee.

While the Starbucks brand was built on darker and more intense roasts, they have turned away a large percentage of the coffee drinking community whose tastes lie in the lighter blends.

AH: Consumers are beginning to appreciate the flavor of better quality coffee, which is often homogenized by darker roasts -- and incidentally, [darker roasts are] also a convenient way to hide defects in inferior coffee.

Over the past five or six years there’s been a very strong trend towards lighter roasted coffees, which I think

is directly connected to better quality coffees finding their way into not just the North American market, but lots of other places around the world.

Lighter roasts allow roasters to really highlight the peak characteristics in coffees, which historically have been roasted quite a bit darker because it tends to homogenize those coffees and hide any imperfections. As we get better and better coffee, there’s less of a reason to hide them.

This may -- though I have no data to support -- also point to consumers moving away from heavier, jumbo milk drinks where the carbon in darker roasts is used to give consumers a perception of coffee flavor through the dense dairy.

IJ: Who introduced those higherquality coffees to the U.S. market in the first place?

AH: There are very popular micro roasters in markets [like Los Angeles and New York] that use higher quality coffees as their strategic advantage because they’re just not available to large-scale café chains. There’s only so much of it there. Now, because more consumers are going more local and focusing on smaller lots of higher quality coffees, they’ve been educated to taste some of those different flavors that are in the coffee.

Coffee is one of the world’s largest commodities. Until recently there really hasn’t been much of an emphasis on treating it as a specialty food product. It’s been looked at more like ore or oil or cotton, something that all looks pretty much the same, but

really the opportunity for producers to make more money is to increase the quality to a higher level.

IJ: So how has Starbucks done so well, based on that dark roast that less than half of people prefer?

MS: Brand loyalty. They have an incredibly strong brand, and even their dark roasted coffee is better coffee than most people are exposed to on a regular basis. Therefore people are kind of looking at it with blinders on, thinking that’s the best. And Starbucks tells them it’s the best, and because their brand is incredibly strong, that’s what people are following.

IJ: Are there other reasons besides consumer preferences that Starbucks may have introduced this lighter roast?

AH: Starbucks has historically relied on heavy, low-acid -- sometimes musty -- Indonesian coffees, mostly Sumatra, for their signature flavor profile. Indonesian coffees are prized for their earthy, syrupy, chocolaty characteristics that are often best developed with darker roasts.

Unfortunately, last year was particularly bad for buyers of Indonesian coffees -- in short, low yields, political problems, and a skyrocketing ‘c’ commodity market sent Indonesian prices through the roof faster and at rates higher than other origins.

Profiteering Indonesian exporters took advantage of these conditions, booking more business than they could handle and, politely put, using Blonde Coffee continued on page 24 APRIL 2012 • INDEPENDENT JOE

13

Neighborhood Approach

by Matt Ellis

Clayton Turnbull Meets His New Challenge as BAC Co-Chair Head On It takes only eight minutes to get from the offices of the Waldwin Group in Boston to Logan Airport. When he was scouting for buildings to house his growing Dunkin’ Donuts franchise business and his central kitchen, Clayton Turnbull wanted a spot that would not only accommodate trips to his eight locations at Logan Airport, but also to his 10 other shops which are located in Boston’s inner city neighborhoods.

They were going outside to get it, on the way to work or school or shopping,” Clayton remembers. “So I knew if we brought Dunkin’ Donuts into the neighborhood, folks would embrace it and we could make a run for it.”

Clayton says Dunkin’ Brands was already interested in establishing a footprint in these neighborhoods but hadn’t found the right partner—until then. “No one wanted to take on the challenge,” he says.

Indeed, Clayton’s mettle was tested almost immediately when an arsonist torched his shop only six weeks after it opened. But, he persevered—rebuilding and reopening the shop in less than a year.

“At that time, rank and file franchisees didn’t want to open stores in danger-

These neighborhoods have always been a focal point for Clayton Waldwin Turnbull. When he was nine, he migrated here with his family from Jamaica. He grew up in the city, attended college at the University of Massachusetts Boston campus—three miles from the Waldwin Group’s offices—and built his businesses here. He and his family have never moved outside the city limits. Boston is known as a city of neighborhoods and Clayton feels comfortable in all of them.

Before the mid 1990s Dunkin’ Donuts was not a ubiquitous sight in Boston’s inner city neighborhoods. At the time, Clayton knew Dunkin’ Donuts was an extremely popular brand in Boston.

The commercial cleaning company he started in college had contracts servicing City Hall and all garages and offices owned by the Massachusetts Bay Transportation Authority (MBTA). In both places, Dunkin’ cups were everywhere.

“I knew people in my neighborhood drank Dunkin’ Donuts coffee but they couldn’t buy it in the neighborhood.

14

INDEPENDENT JOE • APRIL 2012

Clayton Turnbull opened his first Dunkin' Donuts shop in 1992. Today he operates 18 shops in Boston's inner city and at Logan International Airport.

Going it alone Clayton sold his stake in the cleaning company to his partner and started to put together his bid to open a Dunkin’ Donuts in Boston’s Mattapan neighborhood; the year was 1992.

“This was right when Boston had its highest crime rate ever,” says Clayton. “It was my familiarity with the neighborhoods that allowed me to overcome what others were afraid of.”

ous neighborhoods. But, Clayton was someone who saw the opportunity and knew how to get it done,” according to Steve Gabellieri, a Rhode Island franchise owner who was a vice president with Dunkin’ Brands when Clayton was getting started.

Gabellieri says Clayton was good for Dunkin’ at the time. “He saw the opportunity and had the willingness and the guts to do it.”

Clayton Turnbull continued on next page

Clayton Turnbull continued from page 14 As the newly elected Co-Chair of the Brand Advisory Council, Clayton says he feels the responsibility of representing all Dunkin’ Donuts franchise owners.

“I’ve been told by a lot of franchisees from other parts of the country how much they rely on BAC leadership to make sure they can take care of their family’s future. That is a lot of weight on my shoulders.”

“He captures attention because of how he communicates,” says Scott Campbell, a Brand Advisory Council member who co-chairs the Steering Committee, the Restaurant Excellence Subcommittee and the Channel Subcommittee. “Franchisees have different perspectives—we’re not all aligned 100 percent and he has ability to capture the essence of an issue and bring it to the forefront so it brings everyone along on the journey, and that’s key.”

Unlike many Dunkin’ franchise owners in and around Boston, Clayton had no early experience working the counter or baking donuts. None of his

family members were in the business.

“I came into Dunkin’ cold. I didn’t have any connections. I wasn’t part of the local network of franchisees. I had a focus on surviving the business and didn’t pay attention to the social aspect and the relationships. I was focused on day to day.”

Clayton says at the time he didn’t realize how going it alone was prob-

Six weeks after opening in Mattapan Square, this shop was set afire. At the time Boston's crime rate was at an all-time high. ably not the strongest approach but, without the connections, he used his “business sense to make things happen.”

“He had it a lot differently from me and other people. “I was around it my whole life,” says Gabellieri. “The only support he got was from the brand as he transitioned from Dunkin’ Donuts University into his store.”

Public Partnerships Ascension to franchisee leadership was not on Clayton’s mind in those early days of business development.

After getting the first two neighborhood shops up and running, Clayton had a new challenge: opening a Dunkin’ Donuts in Boston’s newest MBTA station called Ruggles Station, which serves subway riders between the inner city neighborhoods and Boston’s commercial center. In this process, he also became better acquainted with leaders from Boston’s business and civic communi-

ties. Even before getting started as a franchise owner, Clayton had developed a strong relationship with a city councilman named Thomas Menino who would go on to be elected Mayor of Boston and promote an agenda to improve and empower Boston’s neighborhoods.

Train stations were not like standalone stores on busy neighborhood blocks, but Clayton saw this as a great opportunity to sell a quality product that people wanted and be a part of their daily routine. The lessons he learned serving commuters would prove valuable when the Waldwin Clayton Turnbull continued on page 26 APRIL 2012 • INDEPENDENT JOE

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Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org

Sponsors continued from page 9 eCube 5 Cold Hill Road, Building 20, Mendham, NJ 07945 Cardie Saunders • cardie.saunders@getecube.com 888-99-ECUBE • www.getecube.com Energy Gateway, Inc. 451 Worcester Road, Charlton, MA 01507 Christopher Tremblay • Chris@energygateway.org 508-207-9740 • www.energygateway.com ePOS Solutions, Inc. 1910 Smith Street, North Providence, RI 02911 Robert Marcello • bobm@epossolutions.net 401-354-6500 • www.epossolutions.net FireKing Security Group 101 Security Parkway, New Albany, IN 47150 Rick Uren • ricku@fireking.com 800-457-2424 • www.Fireking.com Glacial Energy 24 Route 6A, Sandwich, MA 02563 Kristy Solt • kristy.solt@glacialenergy.com 340-201-4323 • www.glacialsales.com/dunkindonuts Hi-Tech Sound 53 Brigham Street, Unit 8, Marlborough, MA 01752 Gary Hanna • gary@hitechsound.com 508-624-7479 • www.hitechsound.com HME Drive-Thru Headsets 14110 Stowe Drive, Poway, CA 92064 Brady Campbell • bcampbell@hme.com 858-535-6034 • www.hme.com HS Brands International 500 Myles Standish Boulevard, Taunton, MA 02780 Michael Mershimer • mike@mershimer.com 800-723-1150 • www.hsbrands.com iTech Digital 4287 West 96th Street, Indianapolis, IN 46268 Natalie Himmel • natalie@itechdigital.com 317-704-0440 ext. 104 • www.itechdigital.com Jarrett Services ATM, Inc. 1315 Stelton Road, Piscataway, NJ 08832 Eric Johnston • ej@jarrettforcash.com 732-572-0706 • www.jarrettforcash.com Jera Concepts - Order and Production Management Software 17 Fruit Street, Hopkinton, MA 01748 Wynne Barrett • wynne@jeraconcepts.com 508-686-8786 • www.jeraconcepts.com Macdonald Restaurant Repair Service, Inc. PO Box 61, 83 Pond Street, Norfolk, MA 02056 Mark & Debi Macdonald • debi@macdonaldcompany.com 508-384-9361 • www.macdonaldcompany.com Metromedia Energy 200 West Park Avenue, Suite 125, Westborough, MA 01581 Scott Werman • swerman@mmenergy.com 508-329-0186 • www.mmenergy.com

Muzak 3318 Lakemont Boulevard, Fort Mill, SC 29708 Joanna Barrett • joanna_barrett@muzak.com 803-396-1656 • www.muzak.com New England Acquisitions 7 Babcock Street, Pawcatuck, CT 06379 Jim Calash • mrpapijim2002@comcast.net 860-235-1344 New England Drive-Thru Communications 12 Wildwood Road, Auburn, NH 03032 Angela Bechard • angela@nedrivethru.com 888-966-6337 • www.nedrivethru.com New England Repair Service - a div. of New England Coffee Co. 100 Charles Street, Malden, MA 02148 Jerry Brown • jerry.brown@necoffeeco.com 781-873-1536 • www.nerepairservice.com Payless Shoe Source 3231 SE 6th Avenue, Topeka, KS 66607 Matt Lemke • matt.lemke@payless.com 785-368-7530 • www.payless.com R.F. Technologies 542 South Prairie Street, Bethalto, IL 62010 Jennifer Morales • jenm@rftechno.com 618-377-4063 ext. 121 • www.rftechno.com Secure Energy Solutions, LLC 12-14 Somers Road, East Longmeadow, MA 01028 Mike Schmidt • mschmidt@sesenergy.org 413-733-2571 ext. 223 • www.sesenergysolutions.org SKAL East, Inc PO Box 303, 31 Eastman Street, Easton, MA 02334 Jim Zafirson • jim@skaleast.com 800-966-0106 • www.skaleast.com/index.cfm?keyword=dunkin Sprint 3 Van De Graaff Drive, Burlington, MA 01803 Caroline Fedele • caroline.fedele@sprint.com 781-367-1057 • www.sprint.com/ddifomembers SureShot Dispensing Systems 100 Dispensing Way, Lower Sackville, NS Canada B4C 4H2 Steve Robert • srobert@sureshotdispensing.com 905-827-4415 • www.sureshotdispensing.com TredSafe/WalMart 450 West 33rd Street, New York, NY 10001 Ted Travis • ttravis@esoriginals.com 909-949-0495 • www.walmart.com Waste Management 107 Silvia Street, Ewing, NJ 08628 JoAnn Bradbury • jbradbury@wm.com 215-378-1417 • www.wm.com

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APRIL 2012 • INDEPENDENT JOE

17

Dunkin' Donuts Franchises Serve the Military United States Army Major Mike White served as a test pilot for 34 years.

When it came time to retire from the military the last thing he wanted was a job that took him far from his Atlanta home.

“I didn’t want to leave home again,” White said.

He started researching local franchises but narrowed down his search when his father-in-law reminded him of an important fact.

“I was visiting Dunkin’ Donuts literally every day in Fayetteville,” White said.

He also purchases coffee and bagels after church at a Dunkin’ Donuts store in Peachtree City, he added.

“I truly believe you have to believe in what you sell,” White insisted. “I was already a customer.”

Commander Peter Turner—a US Navy pilot—was getting his master’s degree at the Naval War College in Newport, Rhode Island, when he was first introduced to the Dunkin’ Donuts brand.

“I saw officers walking in with Dunkin’ Donuts’ coffee every day,” Turner recalled. “I knew it had to be good.”

When it was Turner’s time to retire, he contemplated owning a fast food or fast casual franchise. One fast food concept he considered only offered existing stores due to his lack of restaurant experience, he said.

Then he remembered the popularity of Dunkin’ Donuts in Rhode Island.

“They were expanding into 17 states at that time, and most in the South, and my wife and I really like North Carolina,” Turner explained.

“The problem with existing businesses is the lack of upside with profits,” Turner further added, “but there is, of course, less risk. That is the reason I went with Dunkin'.”

White opened his first store in 2002, then four more. He is planning on 18

INDEPENDENT JOE • APRIL 2012

by Cheré Coen

opening three more in the Atlanta area and he and a partner are discussing plans for 30 stores in the near future, with White as director of operations.

Military veterans Mike White (top) and Peter Turner (lower right), owners of numerous Dunkin’ Donuts stores, offer the following advice for veterans considering a Dunkin’ Donuts franchise: • Do the homework. “Talk to at least three franchisees, spend time in stores,” Turner suggested. Find a mentor to guide you through the process.

• Get exclusive territory, competing against other concepts but not another Dunkin’ Donuts, White said.

Look for new territories opening up, especially west of the Mississippi where Dunkin’ Donuts is expanding.

• Use a pension as an annuity, advised Turner. “Most franchisors have fairly high asset requirements which at first may seem insurmountable,” he said.

“For example, they might require cash assets of $750,000 to open four stores. Vets can meet that gate by treating a current pension or one that starts at age 62 as an annuity. The cash value of an E-7 retirement varies, but can easily be valued at $900,000. Voila.

That E-7 just qualified despite not having deep pockets.”

• “Love the product. It’s difficult to sell a product you don’t enjoy yourself,” White said.

Turner left the Navy in 2007 and opened a Dunkin’ Donuts in 2008 in north Raleigh. Since then, he has opened six more stores. He’s developing five more locations for a total of 12 Dunkin’ Donuts restaurants in Raleigh.

Opportunities for veterans Dunkin’ Donuts offers military veterans a discount on their franchising fee, in addition to training and support. White found the company “very responsive” and the application process quick.

Military continued on next page

Military continued from page 18 Before he made his decision, however, he approached an existing Dunkin’ Donuts store and offered to work there for free, much to the surprise of the owner. At first, White baked from 11pm to 3am for weeks while continuing to work as a test pilot with the Federal Aviation Administration. Then he moved to the store’s counter and customer service.

“Restaurants are the number one selling business in the world,” White said. “You’re getting an established concept (with Dunkin’ Donuts).”

franchises because they are mature, disciplined, train easily and like to follow pre-set procedures.

Buying into a Dunkin' Donuts franchise, veterans will receive more than 60 years of Dunkin' Donuts history, a well-known product and an established marketing plan, White said. In addition, veterans are good candidates for

“It’s leadership and management,” Turner concluded. “Most veterans have a proven track record of that.

Service personnel have leadership and management skills that exceed what they need to run a restaurant or a network of them.”

“My whole life was like that so it’s an easy transition,” White said.

When it came time to open his own Dunkin’ Donuts franchise, White felt confident he made the right move and knew what to do. Still, he worked every day from 4am to midnight for weeks at his first store, losing 26 pounds in the process, something his friends found ironic for a donut shop owner.

“I was 52 at the time,” he explained.

“I’m now 62. That was my last hurrah. There was not an option to fail.”

White advises other veterans to do their homework before opening a franchise.

“Go get a job in a Dunkin’ Donuts and try it,” he said. “Get a look on the inside. You have to believe in what you sell. If you don’t like coffee, don’t get in the coffee business.”

Finding a mentor for training, support and avoiding costly mistakes is Turner’s advice to veterans hoping to enter the business.

“You learn a ton and I would recommend finding a mentor to help you along as you develop your first few stores,” Turner said. “Everything is easier the second or third time and there’s no reason to make the same mistake your mentor did previously.”

Turner believes franchises are a good fit for veterans because financing is based on a proven business plan.

“A franchise greatly facilitates finances,” Turner explained. “If you open your own (restaurant), banks laugh.

If you open a proven Dunkin’ Donuts brand, offers come in.”

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19

DDIFO and You continued from page 5 a Hall of Fame Committee and are actively working on our new election class of 2012 that will be inducted at our DDIFO Annual Meeting in September 2012.

 We fully embrace the words of

Dunkin’ Donuts Founder, Bill Rosenberg, “In order to have a healthy franchise System, you have to have a healthy franchisor and healthy franchisees.” To that end, DDIFO serves as a watchdog monitoring those issues affecting the franchisee community, the franchisor and its private equity owners. We carefully monitor operational and legal developments within other franchise and QSR systems, which may impact DDIFO members. And, when necessary, we act appropriately to protect our members.

 We provide up-to-date, relevant

content on www.ddifo.org and in our Independent Joe magazine. We are also active in social media such as Twitter.

 We continue to expand our DDIFO

sponsor program. Increased sponsor revenue provides capital that can be added to our Franchisee Equity Fund.

It’s a fact that DDIFO membership has nearly doubled in the last three years.

Today we are stronger and more vibrant than ever before in our history. Importantly, the more we grow, the more value we can provide our members.

We are constantly looking for new and better ways to serve our members and welcome your input in the process.

DDIFO has to remain vibrant, relevant and ready to take action!

Recently, a longstanding DDIFO member asked me, “Mark, things are pretty good right now between the franchisor and the franchisees. Do we really need the DDIFO now?”

It’s Not The Moon Landing.

My answer: “Absolutely YES!” It wasn’t so long ago when the franchisor was not nearly as “peaceful” as it is today.

Don’t forget, under previous leadership, this brand was the most litigious of all QSR brands, filing hundreds of lawsuits against its franchisees.

While the brand’s new management team has worked hard to improve relations, Dunkin’ is now a publicly-traded company—albeit still under the control of the same private equity trio. In my opinion, the worst thing DDIFO can do is let this period of peace lull us into a false sense of security that things will always remain this peaceful. No! DDIFO has to remain vibrant, relevant and ready to take action if the tide turned and the antagonistic, litigious attitude in Canton ever reverted back to the dreaded “Dark Days.”

One thing which has changed is the key provision in the Franchise Agreement which said, “Obey all laws.” DDIFO DDIFO and You continued on next page

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INDEPENDENT JOE • APRIL 2012

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DDIFO and You continued from page 20 had considerable influence in fixing that overly broad-reaching clause in the Franchise Agreement. We have devoted considerable legal, financial and human capital to help improve the agreement to increase the fairness to franchisees. While not perfect, the new Franchise Agreement is certainly better and DDIFO is committed to ensuring all future agreements protect the interests of Dunkin’ franchisees.

Perhaps the most important point that I would like to leave you with is this: The DDIFO is the one organization in the Dunkin’ Donuts system that is all about its members. While we seek to work with the franchisor (as appropriate) and we support and work with your elected Advisory Council representatives, we remain keenly aware that neither of those entities is exclusively centered on the issues most important to franchisees. The DDIFO is not financially supported by the franchisor; we manage our own finances. The Franchisor does not create the agendas

for our meetings; we manage our own meeting agendas. That is why we are INDEPENDENT and always seek to act in the enlightened, long-term best interests of our members.

While I personally appreciate the dedication of the franchisee representatives who serve on the Advisory Council, let’s please never forget, the Advisory Council was never designed to be exclusively about franchisees. In my 20+ years as a franchisee, I learned that the Advisory Council adheres closely to the agenda of the franchisor (which financially supports it).

Please allow me to conclude this article with a request: If you are satisfied with the direction in which your DDIFO is heading please tell your non-member franchisee friends that they should and join and support us. If you are not happy with our direction, please, by all means, let us know. Come to our meetings, call or email us, and tell us what we need to do better.

It’s Not Peary Reaching The North Pole.

We look forward to working with and serving our members to create an even more successful independent franchisee association. We know well the monumental sacrifices you have made and continue to make to achieve success in your business. We get it - we know it’s all about you, your family, your business and your equity. Who else besides DDIFO could say that?

Mark Dubinsky is President of Methuen CPL and a member of the DDIFO Board of Directors. A former franchise owner and CEO of The Dubinsky Group, Mark served as Treasurer and President of DDIFO as well as on the Board of the Northeast DCP and the franchisee advisory council. Mark is an Executive Coach working with CEOs and business owners. You can contact him at, markdubinsky@aol.com.

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21

Late Night Brew continued from page 11 “I have not been able to grow my overnight sales in years. They’ve actually been declining,” said Tom Mascia, a franchise owner with 36 stores in Somerset County and Bergen County, New Jersey. Mascia says he keeps 12 stores open all night in areas where there is a need, but has closed seven stores near manufacturing facilities that cancelled their third shifts. “We went from having 100 customers overnight to maybe having 40.

It’s not like you’re doing something wrong and you just need to improve service. With those jobs gone, you just can’t grow sales.”

“The only stores I keep open overnight are the ones that have traffic and night life or are located near the university,” said Karim Khoja, a franchise owner with 31 stores in Chicago. Khoja says 60 percent of his stores are open all night. But, in the cases where stores did not have enough business to justify staying open, Khoja says he sought the permission of his Operations Manager to close.

“He [the OM] told me it was okay to close if it didn’t make financial sense,” said Khoja.

But, as McDonald’s and other QSRs tout the benefits of all night operations—McDonald’s sys the hours of midnight to 5am are the fastest growing time segment in its U.S. business—some franchise owners are concerned Dunkin’s pressure to demonstrate quarter-to-quarter earnings growth will create an expectation that all stores should be open all night.

echoes that sentiment. Recently he represented a Burger King franchisee who disputed the company’s assertion that he had to extend his hours of operation from midnight to 2am.

in bed, making money at no risk. The risk is all borne by the franchisee,” he said.

In this case, Zarco was able to argue that the provision governing hours of operation was not clearly set forth in the franchise agreement. In his opinion, the franchisor was trying to generate greater top-line gross revenue and was not concerned that the franchise owner was spending $100 to generate $40 in sales.

costs of staying open all night versus closing for four or six hours. Specifically, he says, a franchisee should look at whether insurance costs increase if the store is closed at night, or if the store would be more vulnerable to property vandalism or whether staff needs to be on site to bake muffins and bagels in time for the morning rush and would also be able to serve customers as they trickle in.

Sales and top line revenue are critical metrics for Dunkin’ Brands now that it is a publicly traded company. But, “The franchisor has to be cognizant for some franchisees, when sales that not every business concept – no total just $50 between midnight and matter how great – is well suited for 4am, it doesn’t make good business extended hours of operation in a sense to pay two employees $8 per given market or location,” said Zarco. hour to work the drive-thru. And, it’s “When franchisor has to require you even worse, if those employees are working “I think we really have moved to a overtime to cover the night shift because, as clockless day.” DBI Chief Marketing one franchise owner and Innovation Officer John Costello. put it, “You can’t get enough people to do these shifts.” it’s because there isn’t an appropriate According to Professor Curhan at business case made for the situaBoston University, franchise owners tion.” need to closely examine the marginal

“When that store is open in the middle of the night, the franchisor is

Late Night Brew continued on next page

A Dunkin’ Donuts Approved Vendor

“Our research and feedback from franchisees indicates we’re seeing very strong growth in the evening hours,” Costello told the Journal, though he declined to break out specific sales trend information.

Increase customer traffic and generate a new revenue stream

“There has to be criteria for which stores should be open and that has to be determined by sales,” said one franchise owner who wished to remain anonymous. “There should not be a blanket rule; it makes sense in some places but not others.”

Merchant Own / Merchant Fill

Franchise attorney Robert Zarco 22

INDEPENDENT JOE • APRIL 2012

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Late Night Brew continued from page 22 “Someone has to look at this and find the true marginal cost and the true contribution gain and then analyze the revenue against the cost. You have to compare apples to apples.”

Khoja, for example, says one of his stores is closed from 11pm to 4am but he schedules an employee to come in at 3am to begin baking and ready the store for opening. He admits even though that person is on-site, there is not enough customer traffic at that hour to justify bringing him in earlier or adding another employee so the store can remain open.

Yet, for Mo Khalid in Newark, it is a different story.

“I’m a big fan of staying open 24 hours. We have people counting on us to be open all night when they are working. It’s not right to expect them to go somewhere else during the night when they want something to eat or drink.”

According to Khalid, because the New York market has so many stores in densely populated, high-traffic areas, those stores should stay open all night. “I think 80 percent of the stores in this market should be open 24 hours,” he said.

Because overnight business is so dependent on the traffic flow near a location and the concentration of all-night stores in the area, franchise

owners believe strongly that Dunkin’ Brands should decide on a case by case basis which stores should keep overnight hours. But, sometimes the determination is a foregone conclusion based on the terms of a franchise owner’s lease.

“A lot of owners have it in their lease that they can’t stay open after 11 or midnight so that it doesn’t even come up for discussion with the Brand,” according to one unnamed franchise owner. “And that’s good because, if you’re on the edge now, those overnight costs could bankrupt you. whether

A franchisee should look at insurance costs increase if the store is closed at night.

Ronald C. Curhan, Professor Emeritus at the Boston University School of Management, says shops like this one on a busy state highway are good candidates for a 24 hour operation.

APRIL 2012 • INDEPENDENT JOE

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Blonde Coffee continued from page 13 bait and switch tactics to dupe buyers worldwide -- even the big guys -- into paying for unusable coffee or defaulting on contracts that would never be delivered. I estimate that Starbucks was hit particularly hard by these conditions and is looking to reduce reliance on the origin.

Some combination of the two probably inspired purchases of coffees better consumed at lighter roast degrees and the new light roast campaign.

I suspect that production drove the introduction of the product and not entirely demand as marketers spin.

since lighter roasts tend to have different flavors depending on where they come from?

MS: It’s something that they’ve taken very seriously over the last couple of years, and they’ve found the proper sources and the right channels to get a consistent blend. It’s a very modest and conservative blend, also. You can definitely taste a lot of Central America in there, where there’s a much bigger supply. So you can kind of give and take a little bit with the taste and have a pretty similar profile.

IJ: It’s easy to have a consistent flavor with dark roasts since many of the more delicate flavors are roasted out. How does Starbucks keep a consistent flavor with the Blonde Roast,

Matthew Swenson: As a trainer and consultant for a national chain, Matthew has been instrumental in developing, authoring, and executing one of the most comprehensive corporate coffee training programs in the industry. With the experience of opening coffee shops and cafes in 15+ states, Matthew has trained hundreds of new baristas on the art, appreciation and techniques associated with phenomenal coffee. His barista certification from the International Academy of Specialty Coffee (IASC) as well as being certified as a Lead Instructor and Cupping Judge for the Specialty Coffee Association of America (SCAA) has led Matthew to regularly volunteer at the Annual SCAA conferences to instruct classes on espresso. As a licensed ‘Q grader’ from the Coffee Quality Institute (CQI), and as a former roaster, he has extensive experience in the art and science of coffee cupping. Matthew started Swensonian Coffee Professionals after realizing that so many people are jumping into the coffee industry without a proper understanding of the product they are selling or how the business works. The company was started on the principal of helping new or aspiring coffee shops get off the ground with a full and proper understanding of the industry prior to opening their doors.

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INDEPENDENT JOE • APRIL 2012

IJ: Dunkin' Donuts has always had a lighter roast. Do you think the Starbucks Blonde Roast poses any competition the company?

AH: There’s a lot of marketing clash that goes on between Starbucks and Dunkin’ Donuts, but from the perspective of someone in the industry, it’s pretty well known that Dunkin’ Donuts uses better coffee.

MS: I don’t think it’s going to affect Dunkin’ Donuts sales in the least.

[Dunkin’ and Starbucks] are incredibly brand-driven, and have loyal customer bases. So I really don’t think that this new offering is going to convert someone from a Dunkin’ customer to a Starbucks customer.

IJ: Does the Starbucks Blonde Roast validate Dunkin’ Donuts’ original lighter roast?

MS: I think it might do that, because it actually tastes like coffee, and not so much like the carbonized sugars within the bean like the darker roasts.

IJ: What can Dunkin’ Donuts do to capitalize on the fact that they’ve always had a roast that more consumers prefer?

AH: I see the opportunity as being one to develop a market, not necessarily to respond to the market. So, really you just have to get in there and do it -- build it and they will Blonde Coffee continued on page 25

Blonde Coffee continued from page 20 come. Emphasize coffee sales over the other products, which Dunkin’ has always been very good at doing. The consumers will then familiarize themselves with the flavor profile that Dunkin' is offering and find others less preferable. It’s going to be very difficult for those consumers to go to a lower quality or a different taste.

IJ: How do you think all this is going to play out -- big changes in the marketplace or business as usual?

MS: To be honest, I think it’s business as usual. Four to six weeks ago there was a lot of buzz about the Blonde Roast, because it had just been released, but in recent weeks I haven’t seen too much about it. So I think it’s one of these things that’s going to fizzle down and, like you said, be business as usual.

Andrew Hetzel: Andrew Hetzel is the founder of CafeMakers, a specialty coffee roasting and agriculture consultancy based on the Island of Hawaii. At CafeMakers, Hetzel provides strategic guidance, facilities design, green coffee buying and quality assurance services worldwide, with a focus on emerging consumer markets in Russia, India, Asia and the Middle East.

Andrew is a coffee Q Grader licensed by the CQI and board member of World Coffee Events Ltd., which oversees the work’s preeminent coffee competitions in 60 countries including the World Barista Championship and World Brewers Cup. In recent years, he has judged numerous competitive events, including national-level championships in the USA, India, Russia, Sweden, Singapore, U.A.E. and Brazil, where he participated as a member that country’s Cup of Excellence Jury.

Andrew has been quoted in press coverage by international business and consumer media and was profiled by the James Beard Foundation for his work as a coffee taster and buyer.

APRIL 2012 • INDEPENDENT JOE

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Clayton Turnbull continued from page 15 Group took its most challenging step yet—to Logan Airport.

We knew normal was over In 2000, travelers at Boston’s international airport could only purchase a Dunkin’ Donuts coffee in one of the five terminals, Terminal A. According to Gabellieri, the airport was a challenging place to do business and its rents made it difficult to make money.

The Terminal A franchise was not succeeding and Clayton had the opportunity to step in and turn it around. He was up for the challenge and was confident about his chances. But, he never anticipated how events beyond his control would impact his business.

“When I visited the shop at Logan, I saw a lot of opportunities that attracted me.

It wasn’t being run properly and I saw the upside,” he recalls. “Going to Logan was part of my plan to diversify my economic footprint.”

Both Dunkin’ Brands and the Massachusetts Port Authority (Massport)

believed eventually Dunkin’ franchises could be placed in every terminal. They saw the potential and were waiting to see how Clayton would do at Terminal A. Everything changed on the morning of September 11, 2001. After the disastrous events that defined that day, airline travel was halted in the United States for three days. Airports were closed, travelers were stuck and airport businesses were shut down. Clayton’s rebounding franchise became one of many moving parts that ground to a halt that fall.

“We closed for two days. We knew normal was over and we were waiting to hear what Massport’s plans would be.”

Clayton remembers that by September 12, the losses started mounting. “At Logan you find out quickly if you’re winning or losing and in this scenario the red ink was piling up.”

The post 9/11 period was one of transition for the Waldwin Group. Not long after the terrorist attacks, Massport

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closed Terminal A for renovation. Again his franchise was shuttered. But by that time, Clayton was opening five other Dunkin’s at the airport. He had learned how to make the numbers work. Perhaps his most proud accomplishment at Logan Airport was not inside the terminals but, rather, at a gas station along the airport’s ring road where they installed a drive-thru.

“It may be the only fast food drive-thru on any airport in the country,” says Clayton. “We worked on the concept for four years before it happened. We had to convince everyone that this would work.”

The Gulf Station-Dunkin’ combo at Logan has become well known to airport regulars who roll through there on their way to the terminals to pick up a passenger, or on the way out of the airport once they’ve retrieved their car and luggage. Like many of his other successes, the airport drive-thru validated Clayton’s vision.

Clayton Turnbull continued on next page

Clayton Turnbull continued from page 26

A measured approach Scott Campbell says Clayton has always had strong leadership skills.

“He confronts issues, he doesn’t deflect them. He stands his ground even if it’s not popular.” These traits served Clayton early in his Dunkin’ Donuts career when he was building the Waldwin Group into a successful business, and they are front and center in his new role as BAC co-Chair.

ness model between the brand, the franchisees and the world; continue to strengthen the relationship with franchisees and franchisor; and continue to have marksmanship with our consumer providing them what they want at the right place and right time.

These are three large, challenging buckets.”

“He has been effective in organizing the co-chairs of different committees to be sure we are on the same page. He has empowered the group to think independently and come up with agendas and priorities. He’s been able to bring that together so we operate from the same template. He’s very measured in the way he approaches the agenda.”

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“Advocating for people isn’t something new to me. These are franchisees— business people with their money on the line,” he says. “I think franchisees trust my leadership, that whatever I represent will be done as objectively as possible on their behalf.”

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Clayton credits Dunkin’ Donuts management with the company’s strength in the market, positioning it, “in the upper tier of the best franchise systems in the U.S.”

He specifically credits Dunkin’ Brands Chief, Nigel Travis, as well as franchisee leaders on the BAC, regional advisory councils and district councils for company’s current market strength.

He wants to keep that ball rolling.

“Franchisees who asked me if I would consider running did so not because of my individual accomplishments, but so we could keep progress moving forward. I feel honored to be thought of and to be elected,” he says. “I want to continue doing what’s working at the BAC, which is to improve the busi-

It’s the reason why he moved his organization eight minutes from Logan Airport. It’s why he’s never strayed far from the neighborhoods where he feels the most comfortable.

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Clayton will tell you it is the same approach he learned to use with politicians and community leaders.

“To concede that we just need the coffee and donuts and everything else will happen is a fallacy. Any company in America that’s successful—look at the leadership,” he says.

It may sound like a grand challenge but Clayton sees it differently. “Life is simple. Keep it simple.”

index ®

27 25 16 2 6 19

Independent Joe Advertisers Access to Money, Inc. Adrian A. Gaspar & Company, LLP Bunn-O-Matic Comcast Business Services Direct Capital Franchise Group Exchange Authority

26 20 21 22 28

Fidelity Bank Hyperactive Technologies Hyperactive Technologies Jarrett Services ATM, Inc. Joyal Capital Management, LLC

4 16 10 12 26

Kensington Company & Affiliates Performance Business Solutions, LLC RF Technologies Sprint Starkweather & Shepley Insurance

APRIL 2012 • INDEPENDENT JOE

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