Independent Joe #34 October/November

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October/November 2015

Award-Winning Magazine

for D D Independent Franchise Owners

A Counterpunch to the NLRB Ruling Zarco Delivers for Franchisees

: ER DnE-PSrIoGfitN V O C T S E B ociation/No A ss



TAKE NOTHING FOR GRANTED For those of you who are not football fans or are perhaps too young to remember Leon Lett and his embarrassment in Super Bowl XXVII (you can Google it for the particulars), the 2015 Track & Field World Championships held this summer in Beijing, China give an updated version of that important life lesson: keep working as hard as you can for as long as you can until your goals have been accomplished. American distance runner Molly Huddle was a favorite to earn a medal in the 10,000 meters and at the top of the stretch, she was in great position to do just that. But, a funny thing happened on the way to the medal stand. Huddle slowed down as she approached the finish and raised her arms in premature celebration just yards from a bronze medal. As she let up in her push to finish – ever so slightly and at the very last second - teammate Emily Infield pushed on and took the third place finish! I believe there’s not only a life lesson about dedication and perseverance in stories such as this, but there may be a valuable business caution there for Dunkin’ franchise owners as well. In the face of some less than stellar results, Dunkin’ is facing some earnings challenges along with volatility in its stock price. Just a few months ago, the report was quite different and the trajectory of the stock price meant that all was well. But things can change, and they often do – quickly, and with little or no warning. Franchise owners are confronting new challenges on a daily basis – whether its minimum wage hikes of close to 70%, paid sick leave mandates or unworkable scheduling prescripts, franchise owners regularly face challenge after challenge – on evershrinking margins – to keep their stores operating efficiently and successfully. But it is just as important that they remain equally diligent in protecting their investment as relates the franchiseefranchisor relationship. Most Dunkin’ owners believe that when they bought into the system, they bought a brand name and a quality product that would be the ticket to their success. That’s still largely true, but it’s qualified by the fact that the corporate parent has a great deal of control over their business decisions in order to protect the integrity of the brand – ostensibly, a win-win proposition so long as there is a mutual respect for the needs of both parties. That respect was evident in recent years, with the creation of a national supply cooperative and the agreement on K-cups, among other things. But will that cooperation continue unabated? Is that same level of respect present today? Will it be there next year, in three years, or with your next renewal? We may be getting close to the finish line – and the medal stand - but is it safe to let up? Elsewhere in this issue you will read more about the current status of the NLRB joint-employer ruling and some different opinions on what that ruling means for franchisees as well as franchisors. The article speculates as to why that ruling may have come about in the first place and whether the result it could yield is beneficial or detrimental to franchisee business interests.

Specifically, as franchisors continue to tighten controls on franchised businesses with the imposition of more rigid and restrictive provisions in the franchise agreement and additional restrictions and mandates being incorporated in the operation manual, the franchise owner “loses” more of the autonomy he perceived he bought when first signing on. Franchise owners in California recently earned a great victory with enactment of the California Franchise Relations Act. They didn’t let up when it looked like they won the issue in 2014 (the Governor vetoed the bill at the last minute), nor did they let up when it looked like they won this year, with unanimous votes in both branches. They remained diligent and fought to the finish line with the Governor finally signing the bill many weeks later – even though things looked good, they took nothing for granted! DDIFO is your independent franchisee association and we’re not letting up until we achieve our goals as well – the best representation we can provide our franchise owner members, and in the most professional manner! In that vein, last month the 2015 Folio: Eddie & Ozzie Awards chose Independent Joe as national winner in the category of Cover Design. Our August/Sept. 2014 cover, “Westward Ho,” which promoted the brand’s western expansion and the 2014 National Conference, was picked by more than 300 judges as the best cover in the association/ non-profit magazine category, beating out Kiwanis magazine, Clinical Laboratory News and Engineering Inc., among others. For more than 20 years, the Eddie & Ozzie Awards have recognized excellence in magazine editorial and design across all sectors of the industry. Although a leader in their field of magazine recognition, they haven’t rested on their laurels and as honored as we are at DDIFO for being included in their 2015 list of winners, we’re not going to either. To the contrary, we’re going to continue our race to best represent the interests of our Dunkin’ franchise owners. I want to especially thank and congratulate our Creative Director, Caroline Barney Cohen, principal of CPDesigns, for her consistently outstanding work not just with the magazine, but with our website and marketing materials as well. We’ve set about remaking the image of DDIFO and enhancing the professionalism of our organization in every regard. Whether we’re nearing that finish line or not, we’re going to keep pushing through until our goals – and those of our members – are achieved! Now, enjoy this issue of the award-winning Independent Joe . . . Ed Shanahan DDIFO Executive Director




From the Executive Director: Take Nothing for Granted • • • • • • • • • • • • • • • • • • • 1 What’s Brewing: Zarco: NLRB Ruling is Good for Franchisees• • • • • • • • • • 5 A Look at State Issues Around the Footprint • • • • • • • • • 9 DDIFO National Conference 2015 Franchisees Share Experiences at the DDIFO National Conference • • • • • • • • • • • • • • • • • • • • • • • • • 10 Cadete and Petrosinelli Honored as DDIFO Hall of Fame Inductees • • • • • • • • • • • • • • • • • • • • • • • • • • 14








18 22

Need an answer? Turn to the DDIFO Member IdeaXchange • • • • • • • • • • 16 Franchisee Profile: Hurricanes Aren’t the Only Things Brewing in the Outer Banks• • • • • • • • • • • • • • • • • 18 Directory of Sponsors • • • • • • • • • • • • • • • • 24 Legal: Employers prevail in medical marijuana case • • • 28 2 INDEPENDENT JOE • OCTOBER/NOVEMBER 2015






KNOWLEDGE Our franchised restaurant lending staff, with decades of experience, will assess your needs quickly and structure a financing solution that matches your ideal loan and funding requirements. 402.562.1800

Independent The Magazine for DD Independent Franchise Owners

October/November 2015 Issue #34 Independent Joe® is published by DD Independent Franchise Owners, Inc. Editors: Edwin Shanahan, Matt Ellis Contributors: Peter Bennett, Stefanie Cloutier, Carl B. Lisa, Esq., Debbie Swanson, Scott Van Voorhis Business Member Coordinator: Joan Gould Creative Director: Caroline Cohen Direct all inquiries to: DDIFO, Inc. 12 First Avenue, Suite 127 – 3, Peabody, MA 01960 978-587-2581 • • 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 © 2015 Printed in the U.S.A.

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NLRB Ruling is Good for Franchisees

By Scott Van Voorhis

Photo Credit: Zoran Dobrijevic


ranchise owners at DDIFO’s national convention in Las Vegas had surely heard all the talk about the end of franchising as we know it. The National Labor Relations Board’s controversial joint-employer decision has triggered a backlash in the franchising world, with the labor board ruling that a big recycling company is responsible for the employees of a staffing firm it hired.

But probably few at the DDIFO’s annual gathering could have predicted renowned franchisee lawyer Robert Zarco’s radically different and eye-opening take on the landmark issue. Zarco argued NLRB’s joint-employer ruling is far from a catastrophe for franchise owners.

The decision comes even as the NLRB weighs this fall whether to declare McDonald’s a joint employer with its franchise owners.

In fact, it could provide key leverage for franchise owners to push for a better deal from their corporate parents.

The two cases have fueled doomsday-like fears that franchise relationships across the quick-service industry could be upended, with the line between franchisor and franchisee suddenly erased.

Instead, it may be the “greatest benefit you guys ever had,” he said.

“You can level the playing field,” Zarco said. “Here is your opportunity to level the playing field on a silver platter.” Distorted picture Zarco’s take is a bit jaw dropping given the

conventional thinking about the NLRB ruling in the franchise world and beyond. In its late August decision, the labor board ruled that Browning-Ferris Industries is a joint employer with a staffing company that provides the employees that operated one of its California recycling centers. However, franchisors and their industry groups have been effective in obscuring the real issues and instead portraying the ruling as an effort by a big federal bureaucracy to undermine small businesses, he argued. The media has joined in, reporting how the NLRB decision is a looming threat poised to wreck the very foundations of franchising across a myriad of brands, including Dunkin’ Donuts.



Franchisors have even hinted that the labor board’s decision, if not reversed, could force them to take drastic action, such as terminating franchise agreements and turning what have been independent businesses into corporate stores.

employees hired by the franchisee.

But such threats are simply a smokescreen, Zarco contends, to disguise the real issue that has the big franchisors pushing the panic button, and that’s liability.

“Franchisors are very upset – it’s like apocalypse is coming or maybe Godzilla,” Zarco said. “It’s not true – franchisors don’t want the liability.”

Up until the NLRB ruling, most franchisors had the best of both worlds. They were able to effectively control everything from hiring to how a tomato is sliced at their franchised locations, yet – at the same time – could claim they were not at fault when injuries or things went wrong at their restaurants, Zarco explained. However, now that quick service chains face the real possibility of being labeled a joint employer, they could find themselves even more of a target for class action suits resulting from injuries or mistreatment of

Zarco says that could prove expensive, since lawyers would seek to go after the deep-pocketed franchisor in a case if they could.

Hence the stiff opposition, including efforts to recruit franchise owners to provide a sympathetic face for the cause amid a fierce lobbying push by the major franchisors. “The franchisors need you to support them on Capitol Hill, to support them in doing what they cannot do themselves,” Zarco said. “This costs franchisors money.” What the ruling really says The fact that few people have actually bothered to read the 55-page NLRB ruling

may be one reason opponents have been so successful in obscuring the real issues behind their campaign to torpedo the ruling, Zarco argued. Shortly after taking the podium in the Augustus Ballroom at Caesars Palace, Zarco asked for a show of hands from DDIFO members who had read the labor board’s decision. Just one hand shot up. In his explanation, Zarco said that far from overturning the time-honored rules of franchising, the NLRB’s decision simply updates rules crafted decades ago when most people worked directly for a company. But, because the economy has undergone a major transformation, with companies relying much more today than ever before on the work of independent contractors, the labor board is recognizing this shift and trying to ensure that companies aren’t shirking their responsibilities to what are effectively employees through subcontracting relationships, he said.

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Many franchisors, in turn, have increasingly blurred this line, mandating in increasing detail what franchise owners should be doing on a day-to-day basis and calling into question their independent status. “Franchisors, many of them have crossed the line,” Zarco said. “They have crossed the line from giving you guidance and recommendations and suggestions to dictating, mandating and requiring what you should do as an independent business owner.” The NLRB lays out criteria for deciding whether a franchisor is in effect acting as a direct employer, rather than a more hands-off corporate parent. That, in turn, means exercising control over key areas that the independent franchise owner should control. He conceded, franchisors are allowed to control franchisees to protect the value of their brand and the quality of their products, but not to control things like

hiring and firing, business hours and other day-to-day operations. “To try and escape liability by planting a middleman is not going to work anymore,” Zarco said. “A true independent contractor status is truly what would work – not calling someone an independent contractor when they are not.” McDonald’s case doesn’t apply The McDonald’s case has also been cited as potentially threatening the foundations of franchising. But the pending NLRB ruling, which could wind up labeling McDonald’s a joint employer, won’t necessarily impact franchise owners in other brands. That’s because the case revolves around allegations that McDonald’s snooped on and harassed employees at its franchises who were involved in protests over the chain’s labor practices. Franchise owners who follow the law

“Franchisors are very upset – it’s like apocalypse is coming or maybe Godzilla. It’s not true – franchisors don’t want the liability.”

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won’t have anything to worry about, Zarco said. “Maybe if you start threatening your employees if they start complaining about their wages and working conditions, you may find yourself in the same situation,” Zarco said. “But if you don’t violate your employees’ rights, you are going to be fine.” What to expect next The prospects of expanded liability and costly lawsuits are what franchisors are most concerned about now, Zarco explained. In fact, many current franchise agreements leave franchisors extremely vulnerable on this front, detailing many requirements and mandates that could be interpreted by the NLRB as evidence of a joint-employer situation. Zarco believes franchise owners should expect to receive calls from their brands in the months ahead, seeking to rewrite their franchise agreements.


Franchisors want to protect themselves from liability by distancing themselves in their new contracts and potentially inserting legal language which puts all liability on the franchise owner. Yet for franchise owners, the demands of their corporate parents and the trade groups that represent them, both for political help and for cooperation rewriting franchise agreements, presents a golden opportunity, Zarco argued. Franchisees should seize the moment and use their newfound leverage to get better terms. “You can use this time, this law, as a bargaining chip to change your contract,” he urged. Propaganda alert As franchise owners consider what, if any steps to take next, Zarco said there is one thing that definitely won’t happen. Despite hints and threats, franchisors will not start terminating franchise agreements and taking them over as

corporate stores. “We are now going to start taking over your day to day operations,” Zarco said, reciting the propaganda coming out of franchisor circles. “Bull! Not happening.” First, such a move would cost franchisors a fortune, requiring the hiring of countless new managers, among other things. Second, Wall Street would go nuts, punishing their stocks, given that franchising has long been at the core of success of these corporations, he said. “Their stock price will crash, their investors will head for the hills,” Zarco said. Last but not least, by taking over restaurants directly, the quick service chains, instead of insulating themselves from liability, will instead put themselves directly on the firing line. “Think outside the box,” Zarco said. “This is your livelihood. Don’t get sucked in by baseless propaganda. Don’t follow like sheep.”


BREWING Pushing Pennsylvania Fair Franchising Last month DDIFO Executive Director Ed Shanahan and Coalition of Franchisee Association (CFA) Chairman Keith Miller were in Harrisburg to testify before a Pennsylvania House Consumer Affairs Committee hearing on House Bill #1620, better known as Fair Franchising.

financial news website, arguing rising costs could “erode some of our value perception.” Some franchisees say they didn’t expect Travis to blame franchisees for recouping costs through modest price increases.

“HB 1620 will require that when terminating a franchising agreement - firing the franchise owner, if you will - there be good cause to do so,” Shanahan told the committee hearing the bill, which was sponsored by Rep. Peter J. Daley (D) District 49. “The provisions of HB 1620 are a sequence of small steps that begin the process of balancing a business relationship that has long been out of balance.”

The Berkeley Labor Commission wants to boost that California city’s minimum wage to $19 an hour by 2020.

Miller characterized the bill as something that will “strengthen franchising, not harm or limit it.” The two are optimistic Pennsylvania will follow California’s lead and enact better protections for franchise owners. The committee heard testimony and is scheduling a follow up meeting to discuss the bill before deciding whether to send it on for consideration. Minimum wage, maximum anxiety Worried that a minimum wage hike could wreck your bottom line? Well, apparently Dunkin’ Brands Chief Executive Nigel Travis thinks you should be. Travis tells The Street that anxiety over minimum wage increases has driven Dunkin’ franchise owners to increase “prices as lot, probably in some cases beyond our recommendation.” The price increases could have a negative impact on the brand, Travis told the

Meanwhile, the tide of minimum wage legislation rolls on across the country.

The Berkeley City Council is slated to vote on the proposal in November. The city’s current minimum wage tops out at $10 an hour. Fair Scheduling Workers advocates are also continuing their press to change the rules governing how employers schedule their employees. Started in San Francisco, the so-called fair scheduling legislation requires workers get at least two-weeks’ notice before their shift is scheduled. The rules went into effect in San Francisco in July. After two months, Ronald Fong, president of the California Grocers Association told the Washington Post, “We’re hearing from members in San Francisco that it really is not working well at all. Stores can’t always predict surges in foot traffic, which might be brought on a sunny day, leaving managers without the option to bring in more staff. That was a problem during the heat wave that swept over San Francisco this summer.” Recently, union-backed protesters marched on the State House in Boston where a legislative committee heard testimony on implementing new scheduling rules. New York State, Maryland, the District of Columbia and the city of Minneapolis are all considering implementing scheduling laws.

By Scott Van Voorhis

Sick leave gaining strength Michigan is poised to become the latest state to debate whether to require employers to provide paid sick leave. A group called a Time to Care recently announced plans to gather the more than 250,000 signatures needed to put a sick leave question on the state ballot for November 2016. The proposed law would require businesses with ten or more employees to offer as much as nine days of paid sick leave, or 72 hours. In businesses fewer than ten employees, workers could accrue sick leave time as they work, up to a total of 40 hours. The proposal would also allow workers to take another four days – or 32 hours – unpaid. If passed, Michigan would join three other states that now mandate paid sick leave, Massachusetts, California and Oregon. Counting calories The Food and Drug Administration has put out a 53-page guidebook to answer all your burning questions about calorie labeling. Restaurant chains with 20 or more locations are on the hook to provide calorie counts on their menus starting December 1, 2016. Calorie labeling had been scheduled to start this year, but was pushed off until 2016 amid pleas by the restaurant industry for more time. Still, the rules aren’t complexly all encompassing. Franchise owners won’t be required to list calories for increasingly popular, limited-time special items, defined as being on the menu for 60 days or less a year.






Franchisees Share Experiences at the DDIFO National Conference

By Matt Ellis

Conversation with franchisees

Dunkin’ Donuts franchise owners face a myriad of challenges. Some are universal, others are specific to the states or regions where owners operate their shops. As


moderator for this year’s “Conversation with Franchisees,” Robert Branca led discussions on multiple topics, seeking opinions and insights from his panel, which was comprised of: Michael Cavallo, a franchise whose network covers Massachusetts and Connecticut; Eric Eskander, a Massachusetts franchisee, Parag Patel, a former securities trader and current franchisee from the Baltimore/Washington, D.C. market who is expanding into Orange County, California; and Alex Smigelski, a graduate of the U.S. Merchant Marine Academy and former Wall Street trader who now operates Dunkin’ Donuts shops in six states. Each member of the panel expressed thoughts on how regulatory pressures are impacting the business. Branca set the stage by characterizing the situation this way: “I see alarming trends.” Smigelski noted how labor costs in New York were rising, as a result of state and

local increases to the minimum wage— particularly for restaurant workers. “When you do the math in the first year, we’re looking at a $1.75 increase. That’s eating at your profits.” Commenting on new regulations for employers to provide paid sick leave, Cavallo said, “We’re not going to change any of our existing policies, cut hours or do these different things. We want [employees] to view it as, if you need it, it’s there. It’s a resource and we figure that with our employees, if they have a problem they’re going to get the time needed to take care of it. Most of the people that are with you day in and day out, those are the people you need to reward anyway.” The panelists all pointed out that in a tight labor market, they may have to sweeten their benefits packages in order to attract and retain good workers. Eskander told the audience that new labor laws not only cost him money but they also require

Photo Credits: Zoran Dobrijevic


unkin’ Donuts franchise owners who attended the 2015 National Conference came to Caesars Palace in Las Vegas with different goals. For some, it was a chance to get away from day-to-day operations and focus on big-picture issues and answers. For others, it was an opportunity to catch up with friends and colleagues, share stories and gain new insights. The two-day conference featured panel discussions with franchisees, legal updates and an examination of the competitive coffee QSR landscape. At a time when the phrase, “content is king,” permeates media and business discussions, DDIFO’s National Conference had content fit for an emperor.

additional paperwork. “Aside from the increased cost that comes with paid sick leave, you’re paying two people to do the job of one. Administratively, it can be a nightmare.” Patel, who’s quickly come up to speed on California’s labor-friendly rules said, “With these new laws, we have to do things differently. If it’s rewarding them for not calling out [sick] or just having a different approach at scheduling, it costs us a lot more than what it seems like on paper.” Smigelski offered the principle that franchise owners who create a culture where workers value their workplace, are better able to keep good employees. That, he said, is accomplished through better communication, “not just by throwing more money at a person.” Cavallo spoke passionately about the importance of hiring store managers who have strong communication skills and a passion for what they do. “Managers who handle the problems and stress of the day, they have the least amount of turnover; people want to work for them,” he said. “When you go into a store and there’s a bad vibe in the store and everyone wants to talk to you, most of the time, it’s about the manager.”

Another of the challenges this panel addressed was managing an ever-complicated menu mix. “We need to get rid of that one percent of products that aren’t generating any income for us. Streamline the operation make it more efficient and focus on the profitable items that we have that are aren’t so complex,” said Eskander. “You have to streamline that menu.” At the same time, panelists agreed innovations are important. Cavallo pointed out everyone wants to find the next bagel or the next beverage that will further separate Dunkin’ Donuts from a multitude of competitors—from Starbucks, to McDonalds, to Tim Hortons to convenience stores and mom-and-pop shops. The question is how, with so many new offerings added to the menu on a limitedtime-only window, can franchisees know what will be sustainable and profitable? “There is a lot of innovation that [exists within] our core products. Macchiato is a great example. That’s definitely part of the business we want to grow, it’s exciting for us and might even be something new for the industry,” Patel said. “That is certainly going to help grow a platform that is what we stand for and is going to be part of our future.” The franchisee community knows the

strength of Dunkin’s beverages will continue to drive profits—particularly as America’s thirst for coffee continues. According to a 2015 coffee trends study conducted by Zagat and Gallup, 82 percent of respondents say they consume coffee drinks every day, and 25 percent of those people get their coffee at a large national chain like Dunkin’ Donuts. Citing the Zagat/Gallup survey, DDIFO Restaurant Analyst John Gordon, principal of Pacific Management Consulting Group, noted that for Dunkin’ Brands coffee sales are not enough to support continued stock growth. “Brand economics are driven by new store openings,” he said. “So, the question is, is there a better way to open new stores more efficiently?” Gordon suggested perhaps franchisees could provide insight to improve efficiency.

Opportunities for diversification

Something new at this year’s National Conference: a conversation of franchisees representing other systems. The panel – franchise owners of Pizza Hut, Maaco, Meineke and Retro Fitness – discussed the benefits of multi-unit franchising as a way to diversify a Dunkin’ Donuts owner’s portfolio, and take advantage of the efficiencies and management structure he/she already has in place.





Sultan Kurani, the nation’s largest Pizza Hut franchisee, who owns 22 Dunkin’ Donuts shops in addition to interests in Long John Silver’s, Wingstop, Meineke and Maaco franchises, told the group that multi-unit franchising not only helps increase profits, it also helps a business owner plan for the inevitable down cycles. “I had a structure in place and that helped me go into a different brand even though the customers are different and final product is different,” he said. “I tell you I did the right thing. Thirty-eight years in the fast food business; this was the best decision I ever made.” Other panelists, Jose Costa, representing Maaco; Greg Brening, representing Meineke; and Jason Mattes, representing Retro fitness, agreed the common denominator in franchising is people. “We’re in the people business. Auto repair


can be a scary industry looking in, but it’s not that different from fast food. The key is connecting your customers to your employees,” said Rivera.

Words to live by

Beyond specific discussions about the challenges and opportunities Dunkin’ Donuts franchise owners face in their business, the 2015 DDIFO National Conference offered something a bit different: a

primer on how to achieve excellence in life (as well as in business). Dr. Sneh Desai, a world renowned expert in the power of the mind, presented his ten secrets, which include: visualization, goal setting, positive mental attitude and excellent relationships. He reminded attendees that it’s important to count our blessings and be “thankful and grateful for what we already have in our life. Life has so much to offer.”

Photo Credits: Zoran Dobrijevic


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By Matt Ellis

Cadete and Petrosinelli honored as DDIFO Hall of Fame inductees J ohn Cadete and Guido Petrosinelli have each been involved with the Dunkin’ Donuts system for decades. Petrosinelli since the 1960s; Cadete since the ‘70s. Throughout their careers as Dunkin’ franchise owners, each has demonstrated a great commitment to hard work, sacrifice and the improvement of the Dunkin’ brand. On September 22 at Caesars Palace in Las Vegas, Petrosinelli and Cadete were officially inducted into the DDIFO Hall of Fame. As part of their acceptance speeches, both men made sure to thank their families for providing the support they needed to accomplish their goals.

Cadete told a story to make sure the guests at the annual Hall of Fame dinner also knew the extent to which his wife supported his initial foray into Dunkin’. Cadete’s brother-in-law, Tony Andrade, suggested the two buy a Dunkin’ Donuts shop in Massachusetts. At the time, Cadete and his wife Tina were living in Bristol, Rhode Island, the town where Cadete settled when, at age 12, he came to America. In order to buy his first shop, Cadete

Photo Credits: Zoran Dobrijevic

“If [our families] didn't jump on board with us, our success story

could be a lot different today. As franchisees, we are the ones in the limelight, but behind the scenes it's the family that makes it work. And for that, we are grateful,” said Petrosinelli, who singled out his wife Marilyn as a staunch supporter of his efforts.


had to sell his home in Bristol and move to an apartment in Massachusetts. The experience, he said, was like “starting over.” “My goal was always to buy a business and give my family a better life. [Selling the house] was a hard decision. I needed my wife’s support.” Cadete recalled how Tina was “all in with the decision,” which he said was “the best decision they ever made.” Cadete and Petrosinelli are now part of a select group of men and women who have been recognized as pioneers who helped build the Dunkin’ brand. In all, 24 franchise owners and others are enshrined in the DDIFO Hall of Fame. The 2015 inductees have deep roots with the Dunkin’ system, having come on board in the early days of the brand’s growth. Petrosinelli was one of the first franchisees in Rhode Island. He tells the story of how, in 1967, he was in the industrial catering business in Providence. When he needed donuts, he bought them from the Dunkin’ shop on Reservoir Avenue in Cranston, RI. Then one day, he saw a sign advertising opportunities as a Dunkin’ Donuts franchise owner; he made the call and landed a meeting with Ralph Gabellieri and Dunkin’ founder Bill Rosenberg. As he grew in the system, Petrosinelli got more involved on different councils and committees. Over the years, he has witnessed the different threats to Dunkin’s success: new competitors, new owners, new rules and regulations. During his acceptance speech in Las Vegas, Petrosinelli said the greatest threat to franchisee success he now sees is the government.

leadership at the BAC, RAC and DAC level, taking on the challenges to keep the brand successful,” he said. “And our franchisee leadership is doing an outstanding job, without being selfish about it.” As the audience applauded Guido Petrosinelli and John Cadete for their accomplishments, it was not lost on any one in the room that these two men embodied the unselfish spirit that has helped Dunkin’ weather the storms of the past and position itself for a sunny future.

“The big elephant in the room, is the government with mandates coming down, and making new laws. It will make it difficult to operate,” he said pivoting the discussion to how DDIFO can continue to play a role in protecting franchisee interests “DDIFO has great experience in government affairs and is gathering info and doing research on behalf of franchisees to give us info we need to fight [mandates] off and protect ourselves. It’s important DDIFO continues to grow.” Both Petrosinelli and Cadete acknowledged the new generation of franchise owners that is helping bring Dunkin’ to the next level—as a truly national brand with an all-day menu that supplements its beverage sales. Cadete said how pleased he was that his two children are involved in the business. “It made Tina and me happy because they wanted to follow my footsteps,” he said. Petrosinelli noted that the next generation will face different challenges than he and his peers did, yet he is confident Dunkin’ will remain a powerful brand. “Since I've been in the system, things have changed, people have changed, customers are changing. We are challenged every day to stay up with needs of customers. We have competition that’s off the charts, more than it’s ever been. Fortunately, we have great partners in Dunkin’ [Brands]. They work with our franchise


Need an answer? By Debbie Swanson

Turn to the DDIFO Member IdeaXchange


one are the days when franchise owners living in opposite corners of the country had to wait for an annual conference or meeting for a chance to share stories and swap solutions. With today’s technology, proximity is no longer a factor in making a professional connection, and soon all Dunkin’ Donut’s franchisees will enjoy the ability to collaborate 24/7 through a new online community, the DDIFO Member IdeaXchange. DDIFO Executive Director Ed Shanahan says he expects the IdeaXchange to be launched “by year end, and ideally, in November.” He sees it becoming an invaluable knowledge base and resource for existing franchisees, as well as for owners in emerging markets. With Dunkin’ continuing to open new markets – and expand existing ones – Shanahan says this is a particularly relevant time to introduce the platform. “Dunkin’ Brands has an aggressive planned expansion, particularly in the west coast; California will be populated with 1000 stores,” he says. “That brings a lot of new franchise owners, who haven’t thought of things that established owners already have in place. Rather than reinvent the wheel, I want to capitalize on the experience of some of our top notch franchise owners, and share their wealth of knowledge.”

The birth of an idea

Shanahan’s inspiration for bringing this collaboration tool to the DDIFO community stemmed in part from his own interactions with forums through other professional associations. “I’ve seen the value of being a participant,” he says. “Many subjects are posted each


day; some that I don’t have interest in, but others that are very relevant.” He began working with Higher Logic, a Virginia-based company with a proven history building online communities for both businesses and professional organizations. Kyle Roberts, Higher Logic’s senior solutions advisor for franchise and commercial organizations, has seen the successful results that these platforms can bring. “It’s like bringing the level of engagement you get at an annual regional conference to the day-to-day level,” she says. “It’s a way to connect people who are doing the same thing, in the same business.” In addition to expanding knowledge, participants also develop deeper alliances. “It builds a sense of familiarity among franchisees. When annual events or meetings come around, members are more likely to go, and are eager to see people they feel they already know, meet up for dinner,” says Roberts.

Learning from each other

One of the biggest gains Shanahan hopes the platform will bring is the ability for members to collaborate on common issues. For example, a universal goal among franchisees is keeping down the drive-thru time. In talking with different owners throughout the country, he’s heard different time-saving strategies that are in use. “In one part of the country, they use an express dozen at the drive-thru. If someone wants to pick out their own flavors, they’re asked to come inside,” he says, adding that the ability to easily share such ideas could benefit all owners.

Illya Berecz, executive director of the North American Association of Subway Franchisees, says they put a similar online platform in place for Subway franchise owners in February of this year, and received an overwhelmingly positive response. “It provides an area in which franchisees can share best practices and innovations. Franchisees in our system have great ideas and are innovators, and we wanted to provide an opportunity to share.” Prior to this mechanism, Berecz says, members had an “old-style” discussion board available on their web site. “It was kind of clunky, but it was all we had back then,” she recalls. With an updated web site came the newer online community. Unsure of how quickly member activity would pick up, twelve of the association’s board members were ready to log on and initiate some conversations. “They each had pre-assigned topics – relevant content and topics we knew people needed and wanted – and they jumped right in. People started participating, and it took off from there,” she says. “I heard feedback from Higher Logic, saying that the Subway community took off faster than many other’s they’ve seen.” “It’s been helpful to our franchise community on so many levels,” says Berecz.

A private community

Recognizing the natural desire to keep communication strictly within the franchisee community, the Member IdeaXchange will be private—open only to DDIFO members. Berecz says the Subway platform was

similarly designed. “While franchisees enjoy a good relationship with the parent company, we recognized the benefit of providing a safe place for members to communicate among themselves. “There’s a level of confidence and peace of mind in knowing that you can talk, and what you’re saying will fall on the right ears,” she says. Roberts of Higher Logic adds that users of the platform can control their own level of privacy; member profiles can be set up to range from anonymous, to sporting their true identify. “(Anonymous) isn’t a best practice, because other community members want to know who they are communicating with,” says Roberts. “But the system does allow for it.” According to Higher Logic, members are more likely to engage with other members who have descriptive profiles; similar to communicating in person, it’s more comfortable if you know to whom

It’s like bringing the level of engagement you get at an annual regional conference to the day-to-day level. It’s a way to connect people who are doing the same thing, in the same business." you are talking.

the membership channel,” he says.

From high-contributing users eager to bounce around topics and answer posts, to those just browsing the day’s chatter while enjoying their morning coffee, the Member IdeaXchange will accommodate every type of user.

Subway has enjoyed a similar ability with their platform, says Berecz. “Board members enjoy the ability to reach out to their regions and stay in touch with their local problems and day-to-day concerns.”

Sharing news, announcements

In addition to collaboration and sharing knowledge, Shanahan also sees the Member IdeaXchange becoming a useful means of communication among the DDIFO community. “It can be an effective vehicle to allow the organization and members to quickly put announcements and information out into

Having experienced the benefits of online collaboration, and witnessed the growth of the Subway platform, Shanahan is optimistic about the potential the Member IdeaXchange brings to the entire DDIFO community. “It will enable new members to tap into the wealth of knowledge that's out there, and give all members a quick way to get answers and share ideas,” he says.

drive thru



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Hurricanes Aren’t the Only Things Brewing in the Outer Banks S

ome people will do just about anything to get their morning cup of Dunkin’ Donuts brew. Gregory Nigro opened his own shop.

And not in an easy location: he opened his Dunkin’ in the Outer Banks of North Carolina, a place known for being buffeted by hurricanes, nor’easters and other foul weather that can make running a business even more challenging.

By Stefanie Cloutier


That may seem a little extreme for most people. But most people aren’t Nigro, a real estate professional and inveterate coffee drinker. “I’m what is known as a three-cupper,” said Nigro. “I need to have a cup of coffee with me at all times.”

And not just any cup: Nigro is a coffee aficionado. And when that perfect cup of coffee proved elusive, he took matters into his own hands.


FRANCHISEE PROFILE: GREGORY NIGRO A Business Opportunity A native New Yorker, Nigro grew up driving to the Outer Banks for family vacations. But it wasn’t until he was making the trip as an adult with his own family that he realized there were no good coffee places on the long, long ride. “There were no Dunkin’ Donuts, only convenience stores,” he explained. “That wasn’t really our cup of tea.” Where others might see disappointment, Nigro saw a business opportunity. He knew Dunkin’ Donuts was expanding, and he figured that North Carolina was ripe for a franchise. So he decided to bring the iconic coffee shop south, moving his family down in the process. “My passion has always been business,” said Nigro, an affable man with a welcoming smile. His first business was real estate, which he began right out of college and spent years learning from the ground up. “I know how to roof a house, sweat pipes, you name it,” he said. “I may not be the best, but I can talk intelligently.”

That experience was the perfect lead-in to life as a franchise owner. It gave him the skills to be able to identify, develop and structure a deal. In the summer of 2008, Nigro opened his first shop, in northeast North Carolina. A hands-on owner, he slept in his car behind the shop as he worked to understand the business from beginning to end. He has since expanded to 17 stores, stretching from Richmond, Virginia, to the bottom of the Outer Banks. Five of his Dunkin’ locations are currently in various stages of construction. Nigro knew from the start that Dunkin’ was the partner he wanted. For one thing, everyone he talked to loved the brand, especially the banks when he went to them to secure financing. “There’s no other coffee purveyor comparable,” said Nigro, adding that their strong brand and leadership position makes them recession-proof. “They have tremendous products and staying power.”

Where others might see disappointment, Nigro saw a business opportunity. He knew Dunkin’ Donuts was expanding, and he figured that North Carolina was ripe for a franchise. So he decided to bring the iconic coffee shop south.



1825 Swarthmore Avenue, Lakewood, NJ 08701 Toll Free 1.800.510.9856 Office 732.905.0957 Fax 732.367.2989


FRANCHISEE PROFILE: GREGORY NIGRO Early on, he identified that 65 percent of visitors to the Outer Banks are from the New England area, where there’s a Dunkin’ Donuts on virtually every corner. “Right out of the box, their experience was the same,” said Nigro. “They wanted their fix in the morning. It’s part of you.” Passion for the brand extends to the people he hires, who get to know customers by the sound of their car, and to his family as well. His wife Danielle works in the business, and he has even conscripted his 10-year-old daughter Allie, who began working in the office this summer. Jackson, 3, is the only one not pulling a paycheck. Yet.

A Challenge to Weather But passion alone can’t protect the business from the challenges of an unusual location; that’s where hard work and planning take over. The Outer Banks are a long, narrow chain of barrier islands that curve along the coast of North Carolina. They are a vacation destination with white sand beaches, warm weather and a laid back lifestyle. The year-round population of 30,000 swells to 300,000 in the summer months; local businesses have nine weeks in which to make the bulk of their money. Few regional businesses are based here. Nigro has six shops in the Outer Banks, four of them on the water. Staffing is “interesting,” he said, given the seasonal nature of the area. He hires college students and foreign exchange students in addition to

having some long-term staff. He succeeds by balancing the seasonality of his Outer Banks stores with the year-round stability of his stores on the mainland and in Virginia. “I’m blessed to have built up a local following; I work on that daily,” he said. But the geography of the area poses another unique challenge: hurricanes. With the open ocean on one side and the more protected sound on the other, the islands are perfectly situated to bear the brunt of strong tropical storms, nor’easters and fullblown hurricanes. These storms are strong enough to carve away swaths of land and deposit sand in new locations, changing the topography of the Outer Banks regularly. And the weather can shift quickly, giving residents only a few hours to prepare. So planning for storms requires military-like precision. “Hurricanes impact our business weekly,” said Nigro. Throughout the summer season, he tunes into the weather channel regularly to see what’s on the horizon. When a storm is forecast, it’s all hands on deck, preparing to board up windows and tie

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down outdoor furniture. “It doesn’t happen overnight,” he said, “it’s a number of days’ process.” It’s not just the buildings he needs to keep safe. Nigro also takes care of his staff, making sure that the college student with no family nearby has a place to stay, or that he has checked in with the foreign exchange student. Nigro himself rides out storms on the island. With only two bridges linking the Outer Banks to the mainland, it can take days to get people back after a mandatory evacuation. “You lose one week and it’s a huge loss,” he said. “Getting back up to speed can be a several day situation.” He stays to make sure everything keeps running, saying he’s always felt safe. But he questioned that decision in 2011, when Hurricane Irene came to town. The storm devastated the area, hitting the more vulnerable part of the island. The island was locked down for three days, with a mandatory evacuation. Nigro and his family stayed. It was one of the worst storms he had ever seen. “The entire Sound was empty, all the water went out to sea,” he said. “You could walk from the Outer Banks to Curatuck (on the mainland). Then we saw the water rushing back in like a tidal wave – it was crazy intense.” The storm caused significant damage, flooding the beach road and taking out houses. Still, Nigro and his family came through it with unflagging

enthusiasm for the area. They love the people, the atmosphere, the laid-back feeling of life in a vacation destination. “People come down here and comment on how different it is from what you expect,” said Nigro. And despite inevitable future storms, he remains on the lookout for new opportunities, gearing up to continue bringing Dunkin’ brew to locals and visitors alike. “Someone once told me it’s the most expensive cup of coffee I ever bought,” said Nigro. But he wouldn’t have it any other way.

Learn more at




Directory of Business Members Please Visit The DDIFO Business Member Directory online at


Adrian A. Gaspar & Company, LLP, CPAs

Robert Costello 617-621-0500 • 1035 Cambridge Street, Ste. 14, Cambridge, MA 02141

Cynthia A. Capobianco, CPA

Cynthia Capobianco 401-822-1990 • 60 Quaker Lane, Ste. 61, Warwick, RI 02886-0114

Marcovich, Mansour & Assoc. Inc.

Joseph Mansour 401-334-9099 • 640 George Washington Hwy., Lincoln, RI 02865

Neovision Consulting Inc.

Nish Parekh 609-531-4444 • 1246 South River Road, Ste. 101 Cranbury, NJ 08512

Nimble Accounting Software

Subbu Krishnan 480-434-9936 • 200 Motor Parkway, Suite D-26, Hauppauge, NY 11788

Sansiveri, Kimball & Co., LLP

Michael A. DeCataldo 401-331-0500 • 55 Dorrance Street, Providence, RI 02903

Thomas Colitsas and Associates, CPA

Tom Colitsas 609-452-0889 • 103 Carnegie Center, Ste. 309, Princeton, NJ 08540


Jera Concepts

Wynne Barrett 508-686-8786 • 17 Fruit Street, Hopkinton, MA 01748


WatchFire Signs

Alex Foreman • 217-442-0611 1015 Maple Street, Danville, IL

BUSINESS BROKER National Franchise Sales

Ellen Hui 949-428-0498 • 1601 Dove Street, Ste. 150, Newport Beach CA 92660

Homeland Builders

Trivanta, LLC

Steven & Brian Ribeiro 465 Sykes Rd, Fall River, MA 02720 508-677-0401 •

Mark Wheeler 512-473-8322 • 807 Nueces St., Austin, Texas 78701

Persona Signs, Lighting, Image


Susan Koelzer 700 21st Street SW, Watertown, SD 57201 800-843-9888 x390 •

Poyant Signs

Bill Gavigan 125 Samuel Barnet Blvd, New Bedford, MA 02745 508-717-4930 •

AT&T Corporate Business Solutions

Sophy Englund 954 383-8133 • SE1885@ATT.COM 13450 W Sunrise Blvd, Ste. 602, Sunrise FL 33323

Comcast Business Services

Comcast National Sales • 866-407-6338 500 South Gravers Road, Plymouth Meeting, PA 19462


Heath Stone 603-793-2129 • 3 Van De Graaff Drive, Burlington, MA 01803

Time Warner Cable Business Class

Tricia Petway 919-654-4115 • 4200 Paramount Parkway, Morrisville, NC 27560


Ed Craig 774-263-7388 • PO Box 79361 North Dartmouth, MA 02747

DDIFO® does not endorse or recommend commercial products, processes, or services. A DDIFO® Business Member is paying to advertise, and it is not to be considered a product or service endorsement by DDIFO®. Furthermore DDIFO® does not control or guarantee the currency, accuracy, relevance or completeness of information provided by sponsors in their advertising.


Photo Credits: Zoran Dobrijevic

Performance Business Solutions, LLC

Jeff Hiatt 508-878-4846 • 87 Lafayette Road, Ste. 11, Hampton Falls, NH 03844


Directory of Business Members



Plotwatt, Inc.

Adam Gardiner 401-297-5439 • 1715 Six Gables Road, Durham, NC 27712


Analytix Solutions

Satish Patel 781-503-9000 • 80 West Cummings Park Ste. 2000, Woburn, MA 01801

Bank of America/Merrill Lynch

Earl Meyers 585-546-9162 • 1 East Ave., Rochester, NY 14450

Bank RI

Tom Fitzgerald 401-574-1119 • One Turks Head, Providence, RI 02903

BMO Harris Bank N.A.

Angelo Maragos 949-293-0152 • 7700 Irvine Center Drive, Ste. 510, Irvine, CA 92618

Business Financial Services

GE Capital, Franchise Finance

TCF Franchise Finance

Scott Kantor • 954-509-8019 3111 N. University Dr, Ste. 800 Coral Springs, FL 33065

Christine Keating 203-229-1804 • 201 Merritt 7, 2nd Floor, Norwalk, CT 06851

Bill Johnson & Brittney Weber 952-656-3268 • 11100 Wayzata Blvd., Ste. 801, Minnetonka, MN 55305

City National Bank

Joyal Capital Management Franchise Development

Michael Vallorosi 201-962-5187 • 535 East Crescent Avenue, Ramsey, NJ 07446

Direct Capital Franchise Group

Richard Henderson 603-433-9434 • 155 Commerce Way, Portsmouth, NH 03823

Marlin Franchise Finance Group

Josh Rouswell 856-505-4450 • 300 Fellowship Rd, Mount Laurel, NJ 08054

Mark McGwin 508-793-8342 • 33 Waldo St., Worcester, MA 01642

Eastern Bank

Pacific Premier Franchise Capital

William Wildman 844-848-4739 • 101 W. Ohio Street, Suite 2000, Indianapolis, IN 46204

Dave Skinner 425-468-2851 • 10900 NE 4th St. Suite 1920, Bellevue, WA 98004

Daniel Connelly 508-747-2237 • 50 Resnik Road, Plymouth, MA 02360

Deborah Blondin 603-606-4724 • 11 Trafalgar Square, Suite 105, Nashua, NH 03063

Sharon Soltero 402-562-1801 • 3154 18th Avenue, Ste. 3, Columbus, NE 68601

Fidelity Bank

Santander Bank

Sally Buffum 508-762-3604 • 465 Shrewsbury Street, Worcester, MA 01604

First Franchise Capital

Richard Riecker 201-326-4021 • 2715 13th Street, Columbus, NE 68601

Michael DiSandro 401-752-1037 • One Financial Plaza, Providence, RI 02903

TD Bank

United Bank

United Capital Business Lending


Quaker Oats A Division of PepsiCo

Ed Bowes 610-948-8309 • 402 Kilarney Way, Royersford, PA 19468

Susquehanna Commercial Finance Inc.

Brian Colburn 443-966-1792 • 2 Country View Road, Ste. 300, Malvern, PA 19355




Directory of Business Members Please Visit The DDIFO Business Members Directory online at LEGAL

Lisa & Sousa Attorneys at Law Ltd.

Carl Lisa, Sr. 401-274-0600 • 5 Benefit Street, Providence, RI 02904

Paris Ackerman & Schmierer LLP

David Paris 973-228-6667 • 101 Eisenhower Parkway, Roseland, NJ 07068


3M Company

Bill Muenkel 952-484-4875 • 3M Center, 220-12E-04, St. Paul, MN 55144

Alarm Grid

Joshua Unseth 954-933-5095 • 2510 NE 47th St, Lighthouse Point, FL 33064

Bunn-O-Matic Corporation


John Stefko 908-625-7966 • 99 Jefferson Rd. MS 322, Parsippany, NJ 07054

First Advantage

Suzanne Cormier 317-245-1665 • 9800 Crosspoint Blvd., Ste. 300 Indianapolis, IN

Granite Payroll Associates

Marco Schiappa 401-263-7921 • 176 Granite Street, Qunicy, MA 02169


Chris Wirt 804-433-2761 • 4851 Lake Brook Drive, Glen Allen, VA 23060


Insurance World Agency Inc.

Doug Falcone 973-599-0600 • 628 Route 10 - Ste. 8, Whippany, NJ 07981

Starkweather & Shepley Insurance Brokerage, Inc.

Bob Eckweiler 973-222-6742 • 3 Hollyhock Way, Newton, NJ 07860


Anil K. Sharma 630-654-6067 • 100 E Ogden Avenue Ste. 203, Westmont, IL 60559 Sabrina San Martino 800-854-4625 ext. 1121 • 60 Catamore Boulevard, East Providence, RI 02914

Carrier Corp

Davis Bancorp

Wells Fargo Insurance Services

Richard Davis 847-998-9000 X4466 • P.O. Box 1690, Barrington, IL 60010

Jim Ferreira 203-530-3512 • 90 Linden Oaks Ste. 110, Rochester, NY 14625

Mark Stokes 813-636-5301 • 2502 North Rocky Point Drive, #400, Tampa, FL 33607


York Risk Services Group

Mike Pierce 714-850-1320 • 3500 West Moore Ave., Ste. M, Santa Ana, CA 92704

Heartland Ovation Payroll

Diana Devivo 212-239-9400 x5142182 • 911 Panorama Trail South, Rochester, NY 14625

Lori Ross • 337-230-5437 99 Cherry Hill Road, Suite 102, Parsippany, NJ 07054

Delphi/Fast Track 2+2 Drive-Thru Timer

DTT Surveillance

Mira Diza 800-933-8388 • 1755 North Main Street, Los Angeles, CA 90031

DDIFO® does not endorse or recommend commercial products, processes, or services. A DDIFO® Business Member is paying to advertise, and it is not to be considered a product or service endorsement by DDIFO®. Furthermore DDIFO® does not control or guarantee the currency, accuracy, relevance or completeness of information provided by sponsors in their advertising.


Photo Credits: Zoran Dobrijevic


Todd Rouse 800-637-8606 • 1400 Stevenson Drive, Springfield, IL 62703


Directory of Business Members


Dunbar Security Products

Dustin Gosewisch • 800-766-9145 8525 Kelso Drive, #L, Baltimore, MD 21221


Arliene Bird 8300 Capital Drive, Greensboro, NC 27409

Green Turtle Americas

Eric Hancock 704-295-1733 • 2709 Water Ridge Pkwy Charlotte NC 28217

Hi-Tech Sound

Gary Hanna 508-624-7479 • 19 Brigham Street, Unit 10, Marlboro, MA 01752

HME Drive-Thru Headsets

Brady Campbell 858-535-6034 • 14110 Stowe Drive, Poway, CA 92064


Tom Schrack Jr. 402-609-5111 • 7002 F St., Omaha, NE 68117

KD Kanopy

John Behrens 303-650-4707 • 1921 E. 68th Ave. Denver, CO 80229

Magna Industries, Inc.

Jeff Simmons 914-388-1949 • 1825 Swarthmore Ave., Lakewood, NJ 08701

MCD Innovations

Will Knieper 214-883-5656 • 3303 N.McDonald St., McKinney, TX 75071

New England Drive-Thru Communications

Angela Bechard 603-475-2046 • 999 Candia Rd. Suite 7, Manchester, NH 03032

OnsiteRIS, Inc.

Joey Agee 404-952-2745 • 2010 Avalon Pkwy, Ste 400, McDonough, GA 30253

Pentair Filtration & Process

Jeannine Gaine 630-240-1298 • 1040 Muirfield Dr., Hanover Park, IL 60133

R.F. Technologies

SKAL East, Inc

Kevin Huerth 781-806-3139 • PO Box 303, 31 Eastman Street, Easton, MA 02334

Staples Advantage

Michael Murdock 847-495-7350 • 330 Lexington Drive, Buffalo Grove, IL 60089

Joe Shea 508-238-0106 • 31 Commercial St. Sharon, MA 02067



Becky Dubose 800-643-2980 • 7400 28th Street, Fort Smith, Arkansas, 72906

safeTstep by Payless Shoesource

Kyle Clendennen 785-295-6664 • 3231 Southeast Sixth Ave, Topeka, KS 66607


Zary Lahouti 800-279-3101 ext. 475 • 685 Cochran St, #200, Simi Valley, Ca 93065

Shoes For Crews

Rebecca Tharp 877-437-6176 • 250 S. Australian Ave. West Palm Beach FL 33401

Dana Glaze 770-220-5113 • 3600 Mansell Road, Ste 500, Alpharetta, GA 30022

Thank You to Our Busin ess M embers!




Employers Prevail in Medical Marijuana Case R

ecently, the Colorado Supreme Court unanimously held that employers are still allowed to prohibit employee marijuana use and terminate employees who test positive for cannabis despite state law permitting its recreational and medicinal use. In Coats v Dish Network, the Court issued an employer-friendly opinion that could have wide-ranging implications for employers around the country. Brandon Coats was a customer service representative for Dish Network who was fired in 2010 for using medical marijuana to treat debilitating muscle spasms while off duty. Brandon was sixteen years old when he was in a horrible car accident where he lost the use of 80% of his body. As many quadriplegics do, he has ongoing complications from the spinal cord injuries. His mother, Donna, said her son cannot get out of bed in the morning without a treatment the night before. "He’s rigid in the morning, his back is rigid, his whole body below his injury is as stiff as a board,” she said. At first, Coats used prescription drugs to combat the spasms, but over time he built up a tolerance and their efficacy waned. His doctors eventually recommended that he start using medical marijuana. Coats joined Colorado’s medical marijuana registry in 2009, hoping that the cannabis would alleviate the persistent spasms. He stated that using medical marijuana changed his life. Smoking a small amount of cannabis each evening proved effective treatment, enabling him to go to work without discomfort the next day. Coats’ condition following the car accident made finding steady work a challenge. In 2007, Colorado-based Dish Network hired him to work in their customer service division as a telephone operator and by all accounts he did very well. Coats said he was ranked in the top


5 percent of his fellow telephone customer service representatives. He was eventually moved into a more prestigious commercial section of his department. "We have the proof that he was [a top performer] in his evaluations," his lawyer said. "I think he was late twice, and that was the extent of any discipline.” Three years after being hired, Coats was selected for a random employee drug test. It was the first time he was tested since working there. Before taking the test, Coats immediately and voluntarily told his examiner that it would come back positive for marijuana, explaining he was a patient on the state registry and had been for about a year. He emphasized he was never under the influence at work. Dish Network admits that prior to the testing, Coats had been a model employee but their zero-tolerance drug policy prohibits marijuana use, even for medical reasons. Because marijuana remains illegal on the federal level, employers can fire a medical marijuana patient who fails a drug test, even in states where it is legal for medical use. Coats explained to Human Resources how and when he used the medical marijuana, which was always off company hours. Coats challenged his dismissal under a law called the Colorado Lawful Off-Duty Activities Statute. Coats sued Dish Network alleging that he had been illegally fired. His attorney argued that the THC found in Coats’ body during the drug test did not prove that he was intoxicated at work. He added that Coats never used marijuana on the job, never requested special accommodations for his medical marijuana use, never exhibited poor job performance and never endangered the health or well being of any person at Dish. In February 2012, the Arapahoe County trial court dismissed the complaint on the

“ The judge ruled that when it comes to marijuana, federal law trumps state law.” grounds that use of medical marijuana is not a "lawful activity," even when in full compliance with Colorado’s Amendment 20, which legalized marijuana for medical use in 2000. Coats appealed the decision but the appellate court upheld the trial court’s decision in favor of Dish in July 2013. The judge ruled that when it comes to marijuana, federal law trumps state law. Finally, on June 15, 2015, the Colorado Supreme Court held that because medical marijuana use is unlawful under federal law, a Colorado employee who uses medical marijuana cannot seek protection under Colorado's Lawful Off-Duty Activities statute, and his/her employment can be terminated if the employee violates the employer's drug policies. Throughout the country, where state medical marijuana laws do not explicitly provide protected status to patients, state supreme courts have upheld companies’ decisions to fire employees for their cannabis use outside the office. The highest courts in California, Montana, Washington, Oregon and now Colorado have heard these cases and consistently ruled in favor of the employers. The judges have said that medical cannabis laws only protect patients from criminal penalties, not from termination by their employers.

Peter Bennett is president of the Bennett Law Firm. His practice areas include Labor and Employment Relations.

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