#49 Independent Joe

WHAT’S

BREWING

JOINT-EMPLOYER

•

MENU LABELING

•

$15 MINIMUM WAGE April/May 2018

Award-Winning Magazine

KEYNOTE SPEAKER

Outspoken QSR CEO Andy Puzder DUNKIN’S HOME CITY

The First Generation and the Next Generation

for D D Independent Franchise Owners

•

SODA TAX

Having a reliable lender is so refreshing

FRANCHISEE FINANCING FOR Remodeling Lines of Credit Real Estate Restructuring Refinance Building and Acquiring Stores

ppbifranchise.com

402.562.1800

SOLE OF A STORY When I read about Dunkin’ Brands partnering with Saucony footwear to create a Dunkin’ running shoe in time for the Boston Marathon, I thought what a great marketing opportunity. At the same time, I was also reminded of the old joke about two friends who were out camping in the woods. They were both barefoot when they were startled by a bear charging them, at which point they both took off running. A short way off, friend No. 1 was surprised when with the bear still in hot pursuit, friend No. 2 stopped and began to put on his sneakers. At this point, friend No. 1 asked, “Why are you putting on your sneakers, you won’t outrun the bear?” To which friend No. 2, looking up from lacing his sneakers, said, “I don’t have to outrun the bear, I only have to outrun you!”

One has to wonder if the new Dunkin’themed running shoe is a sign that the brand is eager to expand its reach to consumers, or that it is a metaphor for a company rushing to keep its distance from a challenging marketplace. Its premiere comes at a time when franchisees – and investors of the DNKN stock – are expressing concern over same store sales figures and the ability of the coffee-and-snack purveyor to successfully position itself as a mid-priced alternative in Western and Southern markets—far from its enthusiastic base of “Dunks” lovers in the Northeast. It also comes at a time when the brand is strongly considering changing its name. Maybe the idea is that a first name like “Dunkin’” can be paired with any of a list of last names like “Beverages” or “Running Shoes.”

Far from the brand’s testing labs and marketing offices where theories for corporate growth are put on the table, the franchisees who provide the capital and sweat equity to drive the business forward find themselves facing real-world struggles to increase sales with another menu reboot and an increasingly fickle customer base. Those everyday challenges are heightened by new legal challenges

that many franchisees are facing without their brand providing backup.

Case in point: the Butter vs. Margarine issue in Massachusetts. As many franchisees are already aware, Dunkin’ requires that franchisees use margarine instead of butter since it can be stored at room temperature. But, we all know that customers ask for butter – not a “butter-like spread” or substitute on their bagels. Angered that they haven’t gotten what they wanted – or ordered –, customers have filed lawsuits against franchisees and received financial settlements. Instead of providing support for franchisees being sued for what some have called “a grand deception,” the brand has stayed on the sidelines.

Another example can be found in Illinois, where a customer is claiming Dunkin’ Donuts misled him by using blueberry filling in the blueberry donuts, instead of real blueberries. Now aside from the fact that no one in their right mind expects a blueberry donut to be filled with fresh blueberries, Dunkin’ dictates what can and cannot be used as donut fulling.

When the blueberries hit the proverbial fan however, Dunkin’ was nowhere to be found and the franchise owner was left to face the consequences. In each of these instances, Dunkin’ could have laced up those branded sneakers and ran to defend its targeted franchisees from frivolous litigation.

Dunkin’ Brands and its franchisees are facing significant competition from C-stores these days. Circle K, Cumberland Farms, 7-Eleven and Wawa stores are deeply discounting coffee prices and cutting into Dunkin’ business throughout all day-parts. These challengers have been closing the “coffee quality gap” and are luring new customers each day. Likewise, McDonald’s has also undertaken a concerted effort to increase its competition with Dunkin’ by significantly improving its coffee quality and pricing – again, directly impacting same store sales in Dunkin’ shops. These are the realities

facing Dunkin’ franchise owners.

What’s more, Dunkin’ operators are challenged trying to hire and retain quality employees, even as labor costs – fueled at least in part by government mandates – continue to escalate. In new markets, like LA and San Francisco, franchisees are challenged to find available Grade A locations (that will allow drive-thrus) so franchisees can truly compete in emerging markets.

Growth is the one metric that Wall Street investors want to see from Dunkin’ Brands. Growth in same store sales; growth in new store openings and growth in the use of its mobile applications. Few investors will look at a branded sneaker as a true sign that Dunkin’ Brands has its focus on what is important for future growth and sustainability. Branded sneakers are definitely not something that franchisees can count on to drive profits at the store level. It makes you wonder if the brand is really acting in its own best interest, or is being distracted by something shiny in the corner. It would be a shame if its distractions are the result of a brand running away from what is important, because as we all know, that bear is still charging Ed Shanahan DDIFO Executive Director

INDEPENDENT JOE • APRIL/MAY 2018

3

SUB HEADLINE

CONTENTS

From the Executive Director Sole of a Story• • • • • • • • • • • • • • • • • • • • 3 What’s Brewing: A Look at State Issues Around the Footprint• • • • • • • • • • • 7 Motta Will Take as New CFA Chair• • • • • • 10 Photo Story: Dunkin’s Home City• • • • • • • • • • 12

16

A New Venue and a Fresh Perspective..........16 Outspoken QSR CEO will headline National Conference . . . . . . . . . 18 National Conference Agenda . . . . . . . . . . . . . 20 Time Out to the Big Easy. . . . . . . . . . . . . 22 The Big Easy Boasts a Bustling Restaurant Economy. . . . . . . . . . . 24 Harrahs New Orleans . . . . . . . 27 4

INDEPENDENT JOE • APRIL/MAY 2018

7 10

7

12

18

Welcoming Dunkin' to My Hometown. . . . . . . 28

27

Dunkin’ Donuts and Dale Carnegie. . . . 30 Directory of Sponsors . . . . . . . . . . . . . . . . . 31 Look at the Law: Misclassifying Employees . . . . . . . . . . . . . . . 34

Increase Profits COST SEGREGATION STUDIES • Improved Cash Flow • Accelerated Depreciation • New Construction/Remodels

ENERGY MANAGEMENT

Lower Rates, Aggregated Purchasing & Online Reverse Auctions.

All Utilities - Gas, Electric, Water and Sewer CT US CONTA AY! TOD

AUDITED AND TRACKED! Call Jeff Hiatt at 508-878-4846 jdh@revenuebanking.com

www.revenuebanking.com

PERFORMANCE BUSINESS SOLUTIONS, LLC INDEPENDENT JOE • APRIL/MAY 2018

5

Independent The Magazine for DD Independent Franchise Owners April/May 2018 • Issue #49 Independent Joe® is published

by DD Independent Franchise Owners, Inc. Editors: Edwin Shanahan, Matt Ellis Contributors: Cheryl Alkon, Cathy Cassata, Stefanie Cloutier, Michael Hoban, Scott Van Voorhis Business Member Coordinator: Joan Gould Creative Director: Caroline Cohen Direct all inquiries to: DDIFO, Inc. 2 First Avenue, Ste. 127 – 3, Peabody, MA 01960 978-587-2705 • info@ddifo.org • www.ddifo.org DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners.

INDEPENDENT JOE® and DDIFO® are registered trademarks of DD Independent Franchise Owners, Inc. Any reproduction, in whole or in part, of the contents of this publication is prohibited without prior written consent of DD Independent Franchise Owners, Inc. All Rights Reserved. Copyright © 2018 Printed in the U.S.A.

Bridge Funding Group is proud to finance franchisees of some of the most recognized brands in the United States. Our experience makes the franchise financing process easy, informative and timely. If you are a franchise owner who needs financing for acquisition, refinance, remodel or equipment purchases, contact Bridge Funding Group today.

Let’s talk. Call us at (800) 928-8537 Email: franchise@BankUnited.com

NEW DEVELOPMENT | ACQUISITION | REFINANCE REMODEL | SHAREHOLDER BUYOUT

www.bridgefundinggroupinc.com This is not a commitment to lend. All loans are subject to credit and collateral approval.

6

INDEPENDENT JOE • APRIL/MAY 2018

WHAT’S

BREWING A LOOK AT STATE ISSUES

By Scott Van Voorhis

AROUND THE FOOTPRINT

The more things change the more they stay the same.

Read on for the latest scoop on these and other key issues.

That’s the theme when it comes to a couple of critical federal regulations that have the potential to have a big impact on the bottom line of the quick service industry.

Joint-employer proving hard to kill Well that was quick.

Victory celebrations over the rollback of the joint-employer rule turned out to be short-lived, with the now Republicanmajority National Labor Relations Board recently forced to reinstall the Obama-era rule.

And menu labeling, which got its start with Obamacare, is still on track to take effect on May 7th, though Congress is pushing to rein in some of the rules before they go live.

On the state level, key legislative battles are also looming on issues that could hit the wallets of Dunkin’ and other quick service franchise owners.

Maryland business owners are pushing back hard against a proposal to raise the minimum wage to $15 an hour while the beverage industry in Philadelphia has taken its case against the city’s controversial soda tax to the state’s highest court.

Just when it looked like joint-employer rules that dramatically expanded legal liability for major restaurant chains were dead and gone, they’re back.

The National Labor Relations Board in mid-December rescinded its 2015 ruling that put franchisors on the hook for a range of issues, from pay to hours, traditionally left up to franchise owners.

For franchisors like Dunkin’ Brands or McDonald’s, the NLRB’s December ruling was a big win and came after years of lobbying by the restaurant industry.

Restaurant chains large and small could no longer be held responsible for the pay and treatment of the employees of independent franchise owners unless they exerted direct control over them.

But NLRB Inspector General David Berry said not so fast.

On Feb. 9, Berry unveiled a report that took aim at the December vote and

argued that a Trump Administration appointee to the NLRB should have recused himself from the 3-2 vote that axed the joint-employer rule.

Board member Bill Emanuel’s law firm had represented one of the clients in the landmark Browning Ferris-case, which, in turn, formed the basis of the Obama administration’s joint-employer mandate, Berry ruled.

The report – and the NLRB’s decision to take back its December vote that scrapped the joint-employer rule – came after a big push by Massachusetts Sen. Elizabeth Warren and other Democratic senators, according to QSR Magazine.

As a result of the NLRB’s latest vote, franchisors once again could be on the hook for pay and working conditions at locally operated franchises even if the control was indirect.

Worse yet, the board’s political dynamics could leave the joint-employer rule in place for some time to come.

The NLRB was able to previously push forward with its bid to scrap the joint-employer rule after the Trump

INDEPENDENT JOE • APRIL/MAY 2018

7

WHAT’S

BREWING Administration appointed a new member to the board, giving Republicans a 3-2 majority.

However, if Emanuel, one of three Republican’s on the five-member NLRB board, is forced to recuse himself from future joint-employer votes, it will leave the board deadlocked, with a 2-2 Republican/ Democrat split, QSR reports. And, that will likely remain the case at least until another democratic vacancy occurs.

Slim evidence on menu labeling The Trump administration took the restaurant industry by surprise when it opted to move ahead with menu labeling.

After all, forcing restaurants to list calorie counts on menu boards got its start as a provision in Obamacare, and we all know the president’s thoughts on that.

Now, along comes the latest study questioning whether menu labeling actually does anything more than make customers feel guilty as they order their favorite treats.

A survey of studies on calorie labeling led

by Dr. Jason Black, an assistant professor at Harvard, “finds little evidence of menu labeling shifting fast-food purchases, there are more promising findings that it may influence consumers at certain

types of restaurants and in other types of establishments such as cafeterias.”

Block blames, what he calls the “unclear” findings on a lack of “well-powered studies with strong designs” on calorie labeling.

That said, Block and his fellow researchers reviewed 53 different studies.

Meanwhile, the U.S. House of Representatives recently passed legislation that would modify menu labeling requirements, though it does not appear that will alter the scheduled rollout on May 7, 2018.

The House proposal would allow restaurants to list calories on a “per serving” basis rather than based on the total item for sale, a particular issue for items meant to be shared with more than one person, such as an appetizer or a pizza. Restaurants with a big carry-out business, where orders are placed online or on the phone, could simply post calorie information online and skip having to modify menu boards, under the bill.

Whether the proposal will pass remains unclear, with menu labeling critics having pushed similar legislation since 2012. The bill is now with the Senate.

Pushback on $15 minimum wage A top Maryland business group is

warning that a proposal to boost the state’s minimum wage to $15 an hour could wipe out tens of thousands of jobs— many at small businesses.

A recent study by the Maryland chapter of the National Federation of Independent Business (NFIB) warns that an increase to $15 an hour could cost the state 99,000 jobs, with about a quarter resulting at businesses with less than 20 employees.

Mike O'Halloran, state director for NFIB, offered up the warning as Maryland lawmakers debate whether to hike the state’s minimum wage to $15 an hour by 2023, the Herald-Mail reports.

State Sen. Richard Madaleno (D-Montgomery) and State Delegate Shelly Hettleman (D-Baltimore) are championing the wage hike proposal, which has broad support among democrats in the Maryland Legislature, the paper notes.

Maryland’s minimum wage is set to increase to $10.10 in July, but supporters continue to press for a $15 minimum, even as critics predict a net loss of jobs and hours.

NFIB’s O’Halloran points to a recent study which found that when the minimum wage rose to $13 an hour in Seattle – on the way to $15 –, it led to a situation where “jobs and hours disappeared and wages actually dropped.”

Other states are also joining the $15 an hour debate.

Ohio lawmakers in both chambers have filed bills to hike the state’s minimum wage to $15 an hour, with proposals now active as well in Rhode Island, Massachusetts and Hawaii.

California and New York have already passed $15 an hour bills, with higher wages set to be phased in over the next few years.

Soda tax fizzles in Arizona, Philadelphia and Chicago A House bill in Arizona that would bar local governments from slapping taxes on specific foods has passed a clear hurdle in the state Senate.

8

INDEPENDENT JOE • APRIL/MAY 2018

The Senate Finance Committee unanimously reported out a bill that would not just stop cities and towns from taxing soda, but all food items, according to Arizona Public Media.

“Taxing sugar beverages is discriminatory and could easily be a gateway to several of the other 45,000 items carried in today's grocery stores. Where does it stop? Chocolate milk at 1 percent won't be taxed but chocolate milk at 2 percent will?” asked Tim McCabe, president of the Arizona Food Marketing Alliance, according to a story on the website of the public news website.

The move comes even as statewide polling shows majority support for some sort of soda tax to support Arizona schools.

In Philadelphia, the American Beverage Association as well as distributors and small retailers are leading a legal challenge to the city’s soda tax.

The Pennsylvania Supreme Court has

agreed to hear the challenge by the industry groups, which contend the city’s soda tax violates state law by effectively being a second sales tax.

There has also been bitter infighting among Philly pols over how the new revenue - $79 million - is being spent and whether it is going to the causes it had originally been dedicated to.

And Cook County, which covers Chicago, ditched a short-lived soda tax last fall after furious opposition from residents and local businesses.

Summing up As we’ve seen, rules and regulations have a way of eating away at profit margins for

small business owners. The unexpected revival of the joint-employer rule and efforts to rein in menu labeling requirements bears watching. So does the battle against the soda tax in Philadelphia and Arizona, the outcome of which could have a big impact on whether soda tax proposals begin to multiply in other cities and states. One needs look no further than the ongoing efforts by activists and lawmakers to raise the minimum wage to $15 an hour, which have spread to a multitude of cities and states. Independent Joe will continue to monitor the issues, rules and regulations that will impact how you operate your business and profit from it, and it will be a major topic of discussion at the upcoming National Conference in New Orleans.

•

GROW YOUR SALES

10% OR MORE “One day we advertised our 99 cent breakfast oatmeal.

That morning the manager called me to say that we sold out all of our oatmeal. I noticed that whatever we advertise on the LED sign sells fast and usually sells out.”

GIANNA D’ANGELO Dunkin’ Donuts®, Everett, MA

Learn more at watchfiresigns.com/donuts

INDEPENDENT JOE • APRIL/MAY 2018 9

FEATURE

W

hen Keith Miller, the outgoing Chairman of the Coalition of Franchisee Associations (CFA), posted his farewell address on the franchisee website Blue Mau Mau, he welcomed his successor by stating that he looked forward to “working with new Chairman, John Motta, to elevate the CFA during his term.”

Motta, who has been a Dunkin’ Donuts franchisee for 37 years (he currently owns 28 Dunkin’ Donuts franchises in New Hampshire and Virginia), and has been a CFA board member since 2012, aims to do just that.

“CFA is a good organization, but it needs to be a great organization,” Motta told Independent Joe during a recent interview. “We meet twice a year, we go to Washington, we talk to our representatives, but I don’t think we make the impact that we are capable of. I believe that the CFA is a sleeping giant, and that it can be woken up.”

The CFA represents more than 41,000 franchisees who own over 86,000 businesses that employ over 1.4 million people.

It is the largest franchisee-only association in the country, but Motta feels the organization needs to be pushed to reach its full potential. “When I tell people about the CFA and who we represent, they listen.

But I don’t think we’ve taken it to the level we can. The more influence that the CFA can have, the better it is for all franchisees,” he asserts.

Motta is no stranger to taking charge,

Motta Will Take Proactive Role as New CFA Chair a skill which should be invaluable in elevating the profile of the organization.

He’s demonstrated his ability to lead as a board member with the CFA, as well as a member of the Dunkin’ Brand Advisory Council and co-chairman of the Development Subcommittee. He is also president of the United States Adult Soccer Association (USASA), a national organization for amateur soccer which boasts over 250,000 adult members within its leagues and teams.

At the time of interview, Motta had been on the job for barely a month, but his experience with the organization had already shaped his early priorities. His first action will be to “reevaluate the role of the CFA on the whole,” beginning with determining how its various committees can be more effective. He is now soliciting input among the membership to more clearly define the goals of the individual committees, and the roles of the committee members. And he says he would also like to see committees provide more comprehensive reporting on their progress achieving established goals at all the board meetings.

That is something which has not been done consistently in the past, and Motta concedes he himself is guilty of having once belonged to a committee and given less than his full effort. “We rarely met or did anything, and even though I know I’ve been at fault myself, as chairman, I want to change the way we do things.”

A second priority will be to increase the social media presence of the CFA via

10 INDEPENDENT JOE • APRIL/MAY 2018

their Facebook page and Twitter feed.

And while he recognizes that doing so involves a lot of hard work for both he and CFA Executive Director Misty Chally, he also knows that it pays dividends. “We really need to get more information out via those social media outlets, because in today’s world, that’s where all the power is – on social media.”

Motta knows that for a social media strategy to be successful it has to be active.

That means generating more content.

Motta feels that can be achieved in part by publishing the CFA’s stances on legislative proposals that impact franchisees, as well as reacting more swiftly when a measure is passed or defeated. He cited the recent passage in the House of the ADA Education and Reform Act of 2017 – which protects franchisees from fraudulent, drive-by lawsuits – as an example.

“We were very strong on that, and had made it one of our priorities. And when it passed the House, we should have been on the forefront by having a position paper ready to go to move it through the Senate,” he says. “I don’t think we’ve taken the lead on a lot of these things in the past, and that’s something I’d like to [change].”

Another priority will be to strengthen the influence of the organization, by both boosting membership and increasing the level of participation by its members. He cited the annual CFA Day Forum held in Washington D.C. as an event where franchisee participation could make a significant impact. CFA Day, which will be held on May 9, 2018, brings franchisees

together to learn about pressing legislative issues from subject matter experts.

After the briefings, franchisees attend a reception where they meet with members of Congress to advocate for their issues.

But Motta says it’s been difficult to get franchisees to attend, and believes strongly that the effort would be more impactful if 500 franchisees were on hand for CFA Day. The event typically draws one-tenth that number.

“CFA can go to Washington to meet with legislators all day long, but if one of their voters shows up, and they speak to their Congressperson one-on-one, they can have a lot more impact,” Motta explains.

“And it can’t be just the same few of us going in to fight for the franchisees. We’ve done well, but we need participation from a lot more franchisees.”

In addition to the internal issues he will be addressing, Motta says there are a number of challenges that all franchisees face, chief among them a tightening labor market affected by lower unemployment and stricter immigration laws. “It’s the number one issue that I hear from all Dunkin’ Donuts franchisees as well as other franchises,” he affirms. “There’s just no-one to hire.”

He and Rob Branca, who chairs the BAC’s Government Affairs Committee and was a former CFA vice chairman, recently traveled to Washington D.C. to meet with Secretary of Labor Alexander Acosta. According to Motta, the secretary acknowledged that a lack of workers is one of the most pressing issues of the day.

Any solution would have to involve immigration reform, says Motta, and the CFA is strongly advocating for the expansion of the J-1 visa program. “I know when they talk about the visa program, they want highly skilled workers, but I think we need workers from both ends of the spectrum. We need doctors and engineers but we also need people to work in restaurants and to clean hotels and to do farm work.”

Motta also says that passage of the CFA’s “Universal Franchisee Bill of Rights” (designed to create balance

between franchisees and franchisors) is still “very much on the front burner.” A CFA committee is working towards its passage. While there are some federal bills being considered, they haven’t gained any real momentum. “We’d like to see something happen at the federal level, but we feel that if we could get a few key states like California and Florida to pass it, then it would be

easier to pass nationally,” Motta says.

“We’re very excited to have John as the new chair. He’s been very active with the CFA for years, he attends every board meeting and he always has a fresh perspective on things,” says Chally, the association’s executive director. “He’s really focused on making CFA better in every way.”

•

INDEPENDENT JOE • APRIL/MAY 2018 11

PHOTO STORY

In Dunkin’s Home City, a Contrast of the Ages

The First Generation and the Next Generation

12 INDEPENDENT JOE • APRIL/MAY 2018

They’re the purveyors of Dunkin’s past and its future.

Brothers Victor and Octavio Carvalho offer a unique perspective on the Dunkin’ experience: running the world’s original Dunkin’ Donuts shop in Quincy, Mass., as well as the first of the chain’s Next Generation shops. Together, in this historic city that spawned two U.S. Presidents and the first signer of the Declaration of Independence, the siblings offer something for any Dunkin’ guest: at one, a neighborhood place to enjoy a cup of coffee and local chat; at the other, an efficient and modern stop to fuel up on drinks and snacks before heading off to work.

The brothers started working at the original Dunkin’ Donuts location, at 543 Southern Artery in Quincy in 1979, when their father Jose took over the business from Bertha Schwartz, the sister of Dunkin’ founder Bill Rosenberg, who opened the store in 1950. When Jose retired in 1994, the brothers took over. In January, 2018, Victor and Octavio launched the country’s first Next Generation Dunkin’ shop, at 588 Washington Street, just about a mile and a half away from the original location.

“It was like the perfect storm, to have the opportunity to open this new Dunkin’ near the original Dunkin’ Donuts and bring the new experience to the city where it all began,” Victor Carvalho said during the celebration of his Next Generation store’s opening this past January.

Meeting Customer Demands The new location – which, among other things, is known only by the name Dunkin’ – is designed to deliver what guests order as quickly and conveniently as possible, according to Dan Wheeler, the vice president of strategic initiatives for Dunkin’ Brands. These include an interior design featuring an open layout and plenty of natural light to charge the spirit and tableside charging stations for mobile devices.

Guests can order beverages and snacks in several ways. They can select what they want before even entering the parking lot through the Dunkin’ mobile app, then pick up their order inside the store at the dedicated pick up area, which features a digital screen that indicates when orders are ready. Guests can also choose to order through the app and pick up through a dedicated drive-thru lane. And, guests can order the old-fashioned ways, by walking up to the counter in person or driving up to the traditional drive-thru lane.

INDEPENDENT JOE • APRIL/MAY 2018 13

SUB HEADLINE

Streamlined Food and Beverage Options Once inside the store, donuts and other baked goods are visible from a front-facing glass display right near the cashier. A larger “Grab & Go” case offers healthier snacks such as bananas, oranges, grapes, Gogo Squeez apple sauce, Yoplait yogurt with Nature Valley granola, as well as beef jerky and nut butter packs.

The counter features an eight-tap cold beverage system, which looks a lot like what you might see at your local tavern, except here the taps pour traditional coffee, iced teas, and nitrogen-infused cold brew coffee. According to Wheeler, the Next Gen counter offers “a more expressive experience, drinks served at the correct temperature every time, and a better guest experience and a more efficient crew experience.”

At the grand opening, Mathias Piercy, the director of combo operations for Dunkin’ Brands, demonstrated how Dunkin’ has taken the science of beverages to a new level, with innovations like a fully digital high-volume brew system for hot coffee that produces beverages with a consistent taste profile; a single-cup coffee brew machine for decaf and dark roast drinks, which keeps drinks fresh and minimizes waste; and an espresso machine with two dispensers and two steam vents to double the output and fill orders faster.

While the Carvalhos were the first to open a Next Generation store, they aren’t alone. Franchisee Pareg Patel opened his new concept store in Corona County, California in late March and, according to Dunkin’ Brands, 50 Next Gen stores will be open throughout the country this year. The Quincy location is also home to an innovative test lab that will evaluate early-stage options and technologies such as using facial recognition when placing orders, implementing 3-dimensional elements such as a donut hologram on a digital menu rather than 2-dimensional images, and creating custom donuts with images of a customer’s face imprinted on icing.

Still Offering a Traditional Experience Head down the street in this seaside community south of Boston and it is as if you stepped back in time. High above the original Dunkin’ Donuts location, which has been operating 24 hours a day since 1950, is a classic Dunkin’ Donuts sign—one of many touches designed to help the shop retain its mid-20th century feel. It’s an image so many Dunkin’ franchisees are accustomed to seeing since a framed photograph of the location has been hung in Dunkin’ shops across America.

Originally, the shop was outfitted with a pink and white countertop and matching stools that filled the length of the shop’s interior. Reflecting the society of

14 INDEPENDENT JOE • APRIL/MAY 2018

SUB HEADLINE the 1950s, the counter was covered with china mugs for coffee, soft drinks served in glasses, metal spoons, napkin dispensers, and lots of ashtrays—covered with burn marks—for people to use as they sat, snacked, smoked, and schmoozed.

As the calendar changed, people’s habits changed with the times. In the 1980s, the long counter and stools were replaced with a short counter at which customers could order their drinks and snacks and take them to go or to sit at a small table. “At that point, it was no longer about snacking and having a cigarette at the counter and hanging with friends,” says Carvalho.

The store’s footprint remains the same as when it was built. There is no drive-thru because there was never room to build one. And the kitchen, which used to be visible through a large window inside the store, got smaller as two bathrooms were added in the 1990s to comply with Americans with Disabilities Act. In 2011, as the brand entered its 7th decade, the decision was made to restore some of the original features of the Quincy shop. A replica of the vintage Dunkin’ Donuts sign was placed atop the building, a smaller counter with six stools in signature pink and orange Dunkin’ colors were added, and vintage lighting was installed to shine down on the countertop. The back of the store has a stainless steel covering, giving the shop a retro diner feel, says Carvalho.

But above all, the original shop still maintains its original focus on providing a quality of service for guests, though, “I don’t believe in 1950 they offered digital menu boards,” Carvalho says. “We have been here so long and we have a core group of guests who have been coming in for years. Our base are our regular customers and they let us know when something is off.”

Back up the street, on-the-go customers are ordering ahead on their mobile apps and picking up their beverages and treats at their designated drive-thru lane. It is a great innovation, notes Carvalho, since Dunkin’ serves a large commuter crowd. So far, the old and the new are attracting approximately the same number of customers each day, though one could argue the patrons at the original location are in less of a hurry.

So which establishment does Victor prefer? It’s an impossible choice, this long-time franchisee says.

“It’s like trying to pick who is your favorite child. You have the baby with all this new stuff, but then there’s the older one who grew up in the back room. How they [behave] is somewhat different, but you love them both equally,” Carvalho says.

•

INDEPENDENT JOE • APRIL/MAY 2018 15

.org/2018national FO DI .D w w w er st gi Re d an e or M Learn

16 INDEPENDENT JOE • APRIL/MAY 2018

a d n a e u n e V w e AN e iv t c e p s r e P h s e Fr

fr o m DDIF O

By Matt Ellis

O

f the millions of people who travel to New Orleans every year, you might be surprised to learn that less than 15 percent visit for a conference, convention or trade show.

While the influx of business travelers continues to swell, along with all other visitors to this fun-loving and historic city, so do the vacation travelers. You might also be interested to know that in a city known for its restaurants, operators of quick service establishments face serious obstacles to success, (learn more on page 20).

In selecting New Orleans as the destination for the 2018 National Conference and Franchisee Hall of Fame luncheon, DDIFO wanted to provide its members with a new venue in which it could offer high-level insight into issues of importance to franchisees across the country.

It also wanted members and guests to have a great time.

Now in its 8th year, the DDIFO National Conference has established itself as a place where Dunkin’ Donuts franchise owners can gain new perspective on the QSR industry in general, and the Dunkin’ business in particular. Unlike brand-sponsored events, the DDIFO

National Conference provides franchisees cover from the eyes and ears of the brand and offers a chance to dive deep into topics that may or may not be on the agenda for brand advisory council meetings.

This year, DDIFO will again provide new perspective on the QSR business with insight from Andrew Puzder former CEO of CKE Restaurants, parent company of Hardee’s and Carl’s Jr. Puzder, whose second book was just released in April, will be closing the DDIFO conference with a keynote address. Nominated for Secretary of Labor by then president-elect Trump, he still speaks as a media spokesman for the White House.

2018 marks the year Dunkin’ Brands launched its “next generation” shop, designed to tap into technology and alter the customer experience. DDIFO wants to provide an unvarnished view of these new developments and will feature a conversation with franchisees that have opened – or will soon open – a Next Gen location.

Over the years, the association has closely examined the legal and regulatory

issues that impact Dunkin’ Donuts franchise owners. This year, there are several legal cases that directly affect Dunkin' Donuts Franchisees. One of them, which was detailed in an earlier issue of this magazine, zeroes in on concerns familiar to all franchisees: encroachment and cannibalization. The case of El Pollo Loco, a Mexican-themed restaurant, and its efforts to develop corporate stores in the backyard of a franchisee’s territory, demonstrated that courts recognize the need for a level playing field among franchisees and franchisors. Attorney Robert Zarco, who successfully defended El Pollo Loco franchisees in their landmark California case, will be one of the speakers at this year’s DDIFO National Conference.

DDIFO is always hopeful executives from Dunkin’ Brands will agree to speak at the National Conference, but, again this year, our invitation was not accepted. Nevertheless, talks are ongoing with other notable and knowledgeable business experts who will provide insight to nourish what promises to be a fun and memorable gathering in the Big Easy. We invite you to read more in these pages about New Orleans.

•

INDEPENDENT JOE • APRIL/MAY 2018 17

Outspoken QSR

CEO will headline e c n e r e f n o C l a n io t a N

By Matt Ellis

A

ndy Puzder is widely credited with turning around the troubled quick service restaurant chains of Hardee’s and Carl’s Jr. By the time he left his position last year – and was being considered for the position of U.S. Labor Secretary – Puzder had earned a reputation as a smart restaurant operator who understands the challenges government regulations create for small business owners. Dunkin’ Donuts franchisees will be interested to hear Puzder’s views on politics, business and food when he takes the stage as the keynote speaker at the 2018 DDIFO National Conference in New Orleans this June.

Puzder started his career as a trial lawyer in St. Louis and, in 1986, became the personal attorney for Carl Karcher, the founder of the Carl’s Jr. chain. In 1997 CKE, the parent company of Carl’s Jr., made a strategic move and purchased Hardee’s restaurants. The deal burdened CKE with $700 million in debt and led to a tumbling market capitalization. That led its board of directors to tap Puzder to run the newly combined company.

Puzder is credited with engineering a turnaround at Hardee’s, which many had seen as a distressed brand, and delivering solid returns for CKE. In fiscal year 2016, CKE’s company-owned and franchised restaurants generated $4.3 billion and employed over 75,000 people domestically and over 115,000 worldwide.

18 INDEPENDENT JOE • APRIL/MAY 2018

In 2010, Puzder co-authored the book, Job Creation: How It Really Works and Why Government Doesn’t Understand It. His second book, The Capitalist Comeback: The Trump Boom and the Left's Plot to Stop It, was released in April. Pudzer is a frequent commentator on CNBC, MSNBC and Fox News and writes for The Wall Street Journal, Forbes and Investors’ Business Daily, among others.

He believes the joint employer rule and the push to increase both the minimum wage and overtime pay would have a negative impact on the service industry and its employees.

“With government driving up the cost of labor, it's driving down the number of jobs," he told Business Insider in 2016.

"You're going to see automation not just in airports and grocery stores, but in restaurants.”

Puzder has said he isn’t sure he could have engineered the CKE comeback today because of today’s government regulations. In a 2016 article in Franchise Times he said, there are a number of factors working against the restaurant industry. Restaurants are labor-intensive, and therefore, while other industries such as grocery stores are benefiting from lower food costs, restaurant margins tend not to improve because of the extra cost of employees. Government regulations punish businesses that hire the most workers, and reward the ones who hire the least, he added. The result of higher

the strength of on ts gh ou th e m so g in ar sh to d " I’m looking forwar the minds of a on t’s ha w g in ar he d an y om on ec our free market the front lines of on ng di ee cc su e ar ho w rs eu en group of entrepr ay.” our free market economy everyd labor costs is fewer jobs, he said.

Having left the corner office at CKE and moved into the world of politics and punditry, Puzder echoes many of the same sentiments shared by the Dunkin’ franchisee community.

“I'm not saying the government should disappear or I hate the government,” he recently told CNBC. “We need a government. We have a good government, but the government's gotten overzealous with respect to what it thinks it should do...The government needs to get out of the way.”

Since President Trump took office last year, as media spokesperson for the White House, Puzder has been very supportive of the President’s successful efforts to shrink the size of government, reduce regulations and cut taxes.

Puzder is looking forward to speaking at the DDIFO conference this summer.

“I’m always happy to speak with entrepreneurs but speaking to the Dunkin' franchisees will be a particular honor” he said. “There isn’t a more respected group of operators in the industry.

I’m looking forward to sharing some thoughts on the strength of our free market economy and hearing what’s on the minds of a group of entrepreneurs who are succeeding on the front lines of our free market economy everyday.”

•

INDEPENDENT JOE • APRIL/MAY 2018 19

Monday, June 11

8:30 am DDIFO Board of Directors Meeting 10:30 am The View From DC – Up Close & Personal Honorable US Representative Steve Scalise (R-LA), House Majority Whip (invited) 11:15 am A 2-Career Conversation Q & A with Ty Law, Founder, Launch Trampoline Parks; 3-Time Super Bowl Champion 11:45 am Lunch in the Franchise Solutions Marketplace 1:15 pm Encroachment, Impact of Private Equity & Other Legal Trends Impacting Your Business Attorney Robert Zarco - Zarco, Einhorn, Salkowski & Brito, P.A. 2:15 pm Refreshment Break in the Franchise Solutions Marketplace 2:30 pm Delivering The Goods – A Supply Chain Discussion Attorney Sarah Walters, Special Counsel, Foley Gardere, Foley & Lardner LLP 3:30 pm The Next Generation Store: A Cautionary Tale Panel Discussion of franchisees who’ve opened Next Generation Stores including: John Motta, Dunkin’ Franchisee, New Hampshire and Virginia Ari Souliotis, Dunkin’ Franchisee, Vermont 5:00 pm Welcome Reception in the Ultra VIP Lounge, Masquerade Club 7:00 pm Dinner on your own

20 INDEPENDENT JOE • APRIL/MAY 2018

Tuesday, June 12

8:00 am Complete Hot Breakfast in the Franchise Solutions Marketplace 9:00 am A 3-Dimensional Look at Dunkin’ Panel Discussion featuring: Nicole Miller Regan, Managing Director/Sell-Side Analyst, Piper Jaffray Michael Kelter, Vice President/Investment Manager, First Manhattan John Gordon, Principal, Pacific Management Consulting & DDIFO Restaurant Analyst Moderated by: Matt Ellis, Principal, Ellis Strategies 10:00am Navigating Class Action Lawsuits: Butter v Margarine, Blueberries v Filling, and others 11:00 am Refreshment Break in the Franchise Solutions Marketplace 11:30 am Closing Keynote Address Andrew Puzder, former CEO, CKE Restaurants 12:30 pm Hall of Fame Luncheon Honoring 2018 Inductees, Franchise Owners Hall of Fame 2:30 pm Conference Concludes

Presentation times & speakers are subject to change

INDEPENDENT JOE • APRIL/MAY 2018 21

y o j n E o t t u O e Tim

The Big Easy

By Stefanie Cloutier

G

et ready for some spicy Cajun food and toe-tapping jazz – this year’s DDIFO National Conference is taking it south to New Orleans.

This might be one of the best years to visit: It’s the city’s 300th birthday. And this is a city that knows how to party.

“It’s more than just Mardi Gras,” says local resident David Cariello. “We have a festival for everything.”

Cariello, who grew up on Long Island in New York, came here for college and never left. “I liked the feel of it, the ambiance, the architecture,” he says. “In New York, people on the street ignore you. Here, they smile and wave.”

It’s a natural draw for conference attendees, who can bring their families and mix business with pleasure.

“We’re a ‘little big city’,” Cariello explained. “We’re a major city, but we’re not huge like New York or LA. Everything downtown is walkable, or accessible by streetcar. Every time they have the Super Bowl here, people say we should have it here every year, because the Superdome is right downtown. It’s so easy to get around.”

A Little Background First thing attendees should know is how to pronounce it. According to the city’s major daily newspaper, The Times-Picayune, the proper pronunciation is “New OAR-linz," not "New Or-LEENZ."

22 INDEPENDENT JOE • APRIL/MAY 2018

The city sits on a triangle of land surrounded by three major bodies of water: Lake Pontchartrain, the Mississippi River and the Gulf of Mexico. And while it is perhaps best known for its annual raucous Mardi Gras celebration and partying in the streets, New Orleans is a surprisingly welcoming place to those who enjoy art, architecture and a bit of history.

That history is not just a “founding of our country” history, though there’s that, too. It’s the history of an untamed land riddled with Wild West gold hunters and deported galley slaves. First settled by the French, it was handed to the Spanish before being sold to the United States. Throughout it all, an amalgamation of wildly different people – Africans, Americans, French Creoles and Haitians – blended together to create a multicultural tapestry. Many describe New Orleans as having the unique feel of a European city with the warmth of the south and a dollop of Caribbean flavoring tossed in.

Big Easy Attractions The National Conference is being held at Harrah’s New Orleans, a luxury hotel and casino (see page 23). Close to the waterfront of the Mississippi River, the area boasts easy access to popular attractions, many of which are within a 2.5 mile radius.

“You can easily walk along the waterfront, hit a Saints (football) or Pelicans (basketball) game, grab a Po-Boy (overstuffed sandwich) and listen to the buskers (street musicians), or go to a five-star restaurant,” says Tara Letort, public relations director for the New Orleans Convention and Visitors Bureau. “It’s why we’re a natural draw for conference attendees and visitors.”

Along the riverfront is Woldenberg Park, whose wide brick pathway invites walking or biking, and is the jumping off point for steamboat and river cruises. For those looking for aquatic life, the Audubon Aquarium is a few blocks away.

Nearby is the French Quarter, the oldest section of New Orleans, and the place most people picture when they think of the city. Because it is built on higher ground, the French Quarter was largely spared the flooding that came from Hurricane Katrina. The buildings here boast original Spanish architecture and are home to the bars and restaurants of Bourbon Street, as well as Preservation Hall, a paean to traditional New Orleans jazz.

Within the French Quarter is Jackson Square, which has an open-air artist colony and the Café du Monde. Here one can get café au lait and beignets, deepfried pastries sprinkled with powdered sugar. “They always say don’t wear black if you eat a beignet,” says Letort, who believes spreading the powdered sugar on oneself is a sort of baptism.

On the edge of Jackson Square is the French Market, a place for local food, produce, crafts, and colorful characters.

Nearby Royal Street has antique shops, jewelry stores and art galleries.

Just outside the French Quarter is Frenchman Street, the place to go for live music, food, and local culture. “This is where the locals go to enjoy raw jazz, trumpets, trombones and tubas,” says Letort.

For history buffs, New Orleans has a world-renowned World War II museum, also nearby.

A little further afield, a $1.25 streetcar ride takes you to City Park, which has 1300 acres of outdoor activity. There’s kayaking and paddle boating, mini golf and a carousel. It’s also home to NOMA, the New Orleans Museum of Art. The museum has an outdoor sculpture garden on grounds with a lagoon, magnolia grove, and live oaks strung with Spanish moss.

Did we mention the food?

There’s no sense in visiting a place if you’re not going to try the local food.

Here, the iconic food is Cajun, which comes from the French-speaking Acadian people relocated to Louisiana from Canada. Bell peppers, onions and celery are key ingredients, along with garlic, paprika and cayenne pepper.

“Whether you’re in Nebraska or Chicago or LA, you’re eating the same thing,” says Cariello. “But you can only get real Cajun Creole here.”

Signature dishes include gumbo (stew with seafood, chicken or sausage), Jambalaya (rice, meat and vegetables), crawfish etouffee (a thick stew similar to gumbo), and the aforementioned beignets. If your taste runs more to sandwiches, there are the Po-Boys and muffulettas, made with Italian cold cuts on a round bread loaf.

Cariello insists there are no bad restaurants. “You can get the best fried chicken at a gas station.”

But whether it’s the food, the music, or the array of diversions to tickle your fancy, New Orleans is definitely worth the visit.

“It’s so unique,” says Cariello. “It’s Disney for adults.”

•

INDEPENDENT JOE • APRIL/MAY 2018 23

The Big Easy

g n i l t s u B a s t s a Bo y m o n o c E t n a r Restau

By Cathy Cassata

24 INDEPENDENT JOE • APRIL/MAY 2018

I

n 2016, more people visited New Orleans than ever before. The record-breaking tally of 10.4 million visitors was, according to the French Quarter Business Association, the greatest since 2004—the year before Hurricane Katrina devastated this fun-loving city.

Conventioneers, sports fans, and Mardi Gras enthusiasts spent a record $7.41 billion here in 2016—the latest year for which data is available; it was a 5.1 percent increase over the visitor spending record set in 2015.

Even as fewer people are residing in New Orleans than did in 2005, there are many more restaurants—especially in the French Quarter.

"We have something like 30 percent more restaurants post-Katrina than we did before," says Louis David, Vice President of Industry Attraction & Retention at the New Orleans Business Alliance. "About a year or two ago, our visitor numbers finally eclipsed what they were before Katrina.”

According to the U.S. Bureau of Labor Statistics, more jobs were created in the restaurant industry than any other in 2017. And while that can mean opportunity for residents in the area, it means a major challenge for restaurant owners and operators.

Big on Small, Local Businesses For all its vitality and its location on the nation’s largest marine waterway, New Orleans is not a destination for Fortune 500 companies. Just one, Entergy Corporation, calls New Orleans home. Compare that to Cincinnati, a city of approximately 100 thousand fewer people, which is home to nine Fortune 500 companies.

Rob Lalka, Professor of Practice and Executive Director at the Albert Lepage Center for Entrepreneurship and Innovation at Tulane University, says part of the reason is that New Orleans has always thrived on small operators

and businesses, dating back to 1718 when the city was founded as a trading port. Transportation is still an important piece of the economy, but over the past century, tourism and hospitality have become huge contributors.

“We take food seriously here. We like having the option to go to new places, but there's also a sense of community and family when we go to the same restaurant," Lalka says.

Take coffee for example."We drink a lot of coffee, but there are a lot of local players in this market such as PJ's Coffee.

If you're a PJ's person, you drink a lot of that," Lalka says. "It's just our culture."

Founded in the late 1970s PJ's Coffee started as a regional chain then went national. CC's Coffee House is another family-owned coffee house in Louisiana associated with Community Coffee, a coffee roaster and distributor based in Baton Rouge.

"It's hard to find Folgers in the stores here," says David, even though Folgers has been roasting coffee here since the early 1960s. “You go to a store and you'll find mostly Community Coffee with a number of other local brands and then at the bottom of the shelf you'll see national brands.”

Therein lies one of the challenges facing brands like Dunkin’ Donuts that are national in scope, but don’t have traditional followings in southern states like Louisiana. And restaurant operators learn quickly that it’s hard to make a foothold in a place with stiff competition for top-shelf employees and managers—even for those who know their business inside and out.

Tough Challenge Vik Patel had been a Dunkin’ Donuts franchisee for a dozen years – and opened more than 50 shops – when he decided to expand from his base in the Florida Panhandle. He signed a deal to purchase five existing Dunkin' shops in Baton Rouge and New Orleans in 2016. Almost immediately, he had big

INDEPENDENT JOE • APRIL/MAY 2018 25

neighborhoods don't allow drive-thrus or the option for new builds.

"We operate more like the city of Chicago, or New York or D.C., rather than other cities our size because there's not a lot of places you can come in and demolish a building and develop a quick service restaurant to specs," he says. news. New Orleans Saints quarterback Drew Brees had agreed to sign on as Patel’s partner to develop more locations throughout the Pelican State.

"He and I signed an agreement to build 70 Dunkin' stores over five years in Louisiana, but after about six months it became evident that even with Drew on board we weren't able to drive business into the stores," says Patel.

What went wrong? Patel says it was a combination of the local competition and the market’s unfamiliarity with the brand. "[New Orleans] is a very locally-driven economy where they support their businesses. This may be one reason Dunkin' didn't take off there for me," says Patel.

"They have local bakeries that make beignets, and they also have mom-andpop donut shops that make donuts on the premises and have a very different flavor.

This makes it hard to break in," Patel says.

Because of the competition for restaurant employees, Patel also says he found it hard to find and retain reliable workers.

"You always deal with different challenges with minimum wage [employees], and this happens in some of my Florida stores too, but there was one time where 22 days out of 30 a New Orleans store wasn't opened on time because the person opening didn’t show up on time. They'd also close early, and a lot of days there weren't enough donuts by 4 o’clock because no one showed up for work that day," Patel says.

He hired a supervisor and paid him more than he would typically, in order

to turn his store around, but it didn’t work. Patel is selling his Louisiana stores to focus on his core Dunkin’ Donuts shops and seek other brand development deals.

New Orleans is well aware of the challenges restaurant owners are facing in the superhot food service industry. The city has instituted programs to teach skills to first-time workers, according to David, who helps manage local workforce initiatives. Among the programs is one known as STRIVE, which helps teach young workers the importance of being on time, and calling the manager if they can’t make it to work—instead of just not showing up.

"The city is focused on training our workers and those just getting into the hospitality industry. Since it's such a huge industry here, we want to make sure that people are ready to enter the industry," says David.

At Tulane, Lalka is part of the team developing the New Orleans Culinary and Hospitality Institute, or NOCHI, which will offer certificate programs in culinary, baking and pastry arts, as well as a hospitality entrepreneurship program. It’s slated to open in 2019.

"Think of other cities that have a culinary sense to their culture, like New York, Paris, and San Francisco. They all have a culinary institute. We want to do the same," Lalka says.

Like those cities, New Orleans also presents a real estate challenge for quick service restaurant owners that rely on drive-thru locations to drive their business. According to David, because of the region’s large historic footprint, many

26 INDEPENDENT JOE • APRIL/MAY 2018

And, because of its layout, it’s hard to use traffic counts to determine the spots that would justify a site location.

According to David, "Like other older cities, we have a grid network which means you have 10 other choices to get from point A to point B instead of just one road. Where in cities like, say, Houston there's only one major road connecting two parts of town.”

All slowed down A 2013 Bureau of Labor Statistics “Time Use” survey found people in Louisiana spent more time praying and relaxing than in other states. A columnist for the New Orleans Times-Picayune newspaper wrote this about the survey: “Going slow is evidence that this city and state consider human interaction more important than adherence to a schedule. Visitors to our city may say that everybody is friendly and nothing starts on time, but they might not connect the hospitality with the tardiness.

Being friendly takes time.”

For those vacationers coming to the Big Easy to enjoy a meal at one of scores of fine restaurants, the slower pace means more time to savor the flavor and soak in the surroundings. But, that approach doesn’t work as well for QSRs, where speed and efficiency is an important part of the customer experience.

"Food here is a topic of conversation.

While you're eating a meal, you're talking about another meal you've had.

Eating is very much an experience.

People aren't trying to get food fast.

They are interested in trying to make sure it's a family gathering opportunity and a chance to connect with people," explains Lalka.

•

Yes, this is the same Harrah’s that graces the Las Vegas strip. The lux hotel is 26 stories high and features 450 rooms and suites. It offers a birds-eye view to the New Orleans skyline in one direction, and the Mississippi River in the other.

Walking distance to both the convention center and the French Quarter, the hotel is well situated for work and pleasure.

But with the plethora of dining and

New Or leans

entertainment options onsite, you may find it difficult to leave.

For those into gaming action, there’s the famous Harrah’s casino, offering poker, slots and table games like craps and baccarat. Stroll on over to their nightclub, Masquerade, for a mix of dancing, drinking and go-go girls, as well as more casino games. Or relax in the Hoodoo Cocktail lounge, offering flavored frozen drinks, signature cocktails, and beers on tap.

Dining options run from casual (buffet, grill, cafes) to higher end (Ruth’s Chris Steakhouse). And just outside their doors are Fulton Street, a brick-paved pedestrian path with outdoor concerts and Manning’s Bar and Grill, and Fulton Alley, a boutique bowling alley with craft food and drinks.

Inside or out, onsite or off, the city is your oyster in this prime location.

•

INDEPENDENT JOE • APRIL/MAY 2018 27

FEATURE

By Jeff Lyons

WELCOMING DUNKIN' TO MY HOMETOWN F

or seven generations, my family has lived in Evansville, Indiana. My great-great-great-grandfather came here from Ireland in 1828 to start a farm just a mile away from where I live today.

He sought the wide open territory to begin life anew in a promising land. From this beginning, the Midwestern values of hard work, hospitality and a pride of place have shaped our attitudes about Evansville and, indeed, ourselves. We tend to welcome new things with a certain amount of skepticism. It’s not a jaded cynicism, but more of a healthy inquisitiveness, and it can have a lot to do with where a person lives.

Healthy inquisitiveness is a prominent characteristic of the West Side of our city: Mom and pop stores, family businesses and a tilt toward the traditional. The newer East Side has all the razzle-dazzle of an expanding metropolis: national chain stores, trendy eateries and a more transient population. It’s “where the young kids are,” as my father used to say.

In the middle is Evansville’s North Side with some of the progress of the East and some of the stability of the West. Some of my neighbors say it’s been on the move in

recent years, so maybe it’s no surprise that it is where Kam Patel chose to open his new Dunkin’ Donuts/Baskin-Robbins.

FINDING A SWEET SPOT IN THE MIDWEST I met Patel for coffee by the large window in his store. Outside, the relentless Indiana winter grayed the sky, but inside we’re embraced by the coziness of coffee and pastry aroma and the friendly chatter of other customers. I discovered that his path to Evansville mirrored the journey of my ancestors. Patel says his story is common among Dunkin’ Donuts franchise owners. He and his brother Nick started with the chain 20 years ago working the counter in Cherry Hill, New Jersey—just east of Philadelphia. Over time, each worked in different stores, acquiring new skills and responsibilities. They were finally ready to enter the system as franchisees in 2017, they decided to head to the Midwest. While Dunkin’ Donuts locations are commonplace in the northeast, they are still relatively scarce outside of major cities in Indiana, Illinois and Kentucky.

Their quest brought them to southern Indiana.

28 INDEPENDENT JOE • APRIL/MAY 2018

“We found Evansville to be a good opportunity,” says Patel, “It’s not too big of a city and at the same time, it’s not too small a market”.

Evansville is a city of nearly 120,000 located on a sweeping bend in the Ohio River. We’re a regional hub for commerce, education and culture, and the area has enjoyed stable, steady growth. The city is home to several large, publicly traded companies like Springleaf, Berry Plastics and Mead Johnson Nutrition. We boast two universities, plus a soon-to-be-opened branch campus of the Indiana University Medical School. Evansville was settled 200 years ago and is steeped in a rich history and tradition. Interestingly, the Patels found their sweet spot on the North Side; an area with both legacy restaurants and stores and new business growth. The North Side doesn’t have the traffic congestion the East Side has, and it’s convenient to customers from the West Side.

Opened in late February, their store sits on busy First Avenue, the business corridor of the North Side. The site had been a McDonald’s for 40 years and is

well-known and well-traveled.

“McDonald’s had so much traffic coming through this location, they relocated to be able to add a double drive-through, and we took the spot,” says Nick Patel, who manages the shop he owns with his brother.

I was eager to find out how Dunkin’s arrival was being received by North siders – and others from Evansville – as well as how the brand could compete with places like the Donut Bank, a long-time local business owned by an Evansville family and situated just down the street from Patel’s shop. In chatting with other customers, I learned a less apparent scenario: Dunkin’ doesn’t “compete.” It complements the existing stores with new choices, new locations and new flavors.

The loyalty of my parent’s generation has softened a bit to be inclusive of the new and attractive.

FOND MEMORIES FIND A NEW HOME On a Monday morning, after the morning rush for coffee, donuts and sandwiches in the drive-thru, the restaurant is still bustling with activity. Jessie Gross, a local realtor and mom is enjoying a donut with her 3-year-old son Elliott, to celebrate bravery shown at his first dental appointment. An Evansville native, Gross is encouraged by the new activity. “I’m glad the North Side is being reinvented. The new businesses cater to what people want.

It’s something new and attractive,” Gross says.

At a table nearby, Patricia and David Mitchell have driven across town to sample the coffee and donuts at the new Dunkin’ Donuts for the first time. For the couple, now in their 70s, donuts have always signified a reward. “When I was a little girl, mom and dad would give us a nickel for donuts. It was always a little treat, a comfort food. Now we come here.

I like the colorful décor of the store. The pink and orange catches your eye” says Mitchell.

For others, the arrival of Dunkin’ Donuts in Evansville evokes fond memories.

Sarah O’Gara first experienced the donuts and beverages while living in New York.

“When I was pregnant, I craved hot tea

and donuts every day,” she remembers. O’Gara is sharing a pink sprinkle donut with her 2-year-old daughter Wyllow. “We drove across town this morning just for the memories. This place is different from what we have in Evansville. It’s new and fresh and brightly-colored.”

“The donut business here is very different,” says Kam Patel, “People love donuts at this place, very different from New Jersey where the primary seller is coffee and iced coffee.

Here, the donuts are the big sellers and the specialty lattes and drinks. People are excited and happy that we are here. We’ve had great support from the community, even the mayor came to our grand opening and local media covered the event”.

“Years ago there was a Dunkin’ Donuts right next door to where the new one opened,” recalls Evansville Mayor Lloyd Winnecke, “And as a young guy I had a paper route, and to run the Sunday route, I got up at oh-dark-thirty to deliver—my dad helped me—and every Sunday after we delivered papers we would go to that Dunkin’ Donuts. So, when I heard they were coming back to town—although I certainly love the local donut options—it was a flashback to some really great childhood memories to see they were going to be opening again on the North Side and right next to where my Dad and I used to go.”

Winnecke, now in his second term as mayor, is bullish on the new business.

“I think it’s going to be a real gold mine for [Dunkin’ Donuts]. This is probably the greatest time in our city’s history for investment. There are literally hundreds of millions of dollars in investment going in all over our city. We are on a roll, there’s definitely a vibe that didn’t exist five or even 10 years ago. Now’s a good time to be in Evansville and making an investment.”

With one store up and running, the Patels are already looking to future expansion

within the Evansville market. If customer enthusiasm is any indication, more stores will come sooner rather than later.

“When are you putting one on the West Side, East Side?” Those are the questions the Patels say they hear every day. “This tells us people are coming from all over to eat, even from 20 miles away. We are planning to grow, but only as fast as we can handle.” The next-nearest Dunkin’ Donuts location is in Owensboro, Kentucky, 40 miles away, so the options are wide open for now. “We can scout for the best locations at this point,” Nick Patel says.

The best location may be in the minds and hearts of the customers. By demonstrating their ethic of hard work and their hospitality and pride of place, the Patels are energizing the Dunkin’ Donuts brand here in Evansville and winning the loyalty of customers like me. We share the same values and the same life stories, as well as a love of life’s sweet rewards!

•

Jeff Lyons is the chief meteorologist at WFIE TV 14 in Evansville, IN.

INDEPENDENT JOE • APRIL/MAY 2018 29

FEATURE

BY JULINE MCMULLEN

Dunkin’ Donuts and Dale Carnegie L

ate in 2015, the global brands unit of a major hospitality company recognized they had a problem. The unit was bracing for massive international expansion across several of its key brand properties. The problem was they needed to promote from within, but knew their pipeline did not contain leaders that were ready to step up. They needed to be trained and developed so they could lead the expansion effort. The other problem was how to corral a globally diverse, uberbusy set of people, take them away from their day-to-day meetings, and keep them focused on learning.

Ronnie, the chief learning officer for that company, looked for a partner with a track record of developing successful leaders; one that was in step with their global learning culture. She turned to Dale Carnegie, the people and leadership training company.

Dale Carnegie designed a Corporate Director program that allowed for geographically dispersed leaders to learn collaboratively online. Since implementation, over 100 directors have been promoted to VP through the leadership program—all of whom were able to continue being productive in their current jobs.

Recently, Dunkin’ Brands also met with Dale Carnegie to talk about a leadership pipeline and restaurant excellence.

For over 106 years, Dale Carnegie, the company named for the author of the renowned book, How to Win Friends and Influence People, has trained generations of leaders to be successful. Among their most notable endorsers is Berkshire Hathaway CEO Warren Buffett, who credits taking Dale Carnegie training with his own success.

Dunkin’ conducted a survey to determine where across the footprint leadership training was most needed. Franchisees

“ [The Dale Carnegie] sessions were extremely relevant and should be a required step for any District Managers. ” —Didier Choisy KPV responded they were experiencing high turnover among their restaurant managers. It was clear that without great leaders in place at the restaurant level, restaurant excellence could be sacrificed. The survey showed that multi-unit operators also needed to embrace the people side of their management responsibilities. And, it indicated a business need and an interest in having access to high quality, easy to use, affordable training.

Among the reasons Dunkin’ Brands ultimately selected to partner with Dale Carnegie was its ability to customize certificate programs to fit the leadership pipeline needs of its franchises. The goal? To provide access to leading edge management & leadership training that is among the best in the quick service restaurant (QSR) industry.

Dunkin’ Brands and the Brand Advisory Council’s Peoples and Systems SubCommittee worked with Dale Carnegie to develop Live Online certificate programs for restaurant managers as well as multiunit leaders. The certificate programs cover key leadership and management topics that include delegating, coaching, employee engagement, developing essential leadership skills and time management.

The Dale Carnegie certificates are one way Dunkin’ franchise owners can motivate their employees and provide tools for growth, so when they take on management roles, they are set up for success.

Collaborative coursework is conducted

30 INDEPENDENT JOE • APRIL/MAY 2018

through LIVE virtual classrooms. Courses are grouped into two certificate paths that align with critical professional development skills and people skills. Participants earn certificates as they learn key steps to: • Develop Management & Leadership skills quickly • Attract and retain people who are enthusiastic about their professional development • Boost employee performance with realtime personalized coaching online Feedback thus far has been favorable.

Chelsey Barrett, a general manager for David Weeks, a franchisee in Watkinsville, Georgia, wrote of the experience, “Informative training and excellent hosts.” Other comments point out that the content was “engaging, applicable to [my] job and immediately able to be used with my team.” Another trainee said of the material he learned, it was fun and educational. “I would have loved to have [the material] when I first started in management.”

Whether in the hospitality or the quick service restaurant industry, excellent people translate into excellent customer service and continued success. With its new partnership with Dale Carnegie, Dunkin’ Donuts can enhance its training to focus on more interactive, social learning formats that will appeal to the current and new generation of employees.

As an added benefit of the collaborative training, program participants developed new and stronger relationships across functions and regions. As Ronnie notes, “The success of this program speaks to Dale Carnegie Digital’s ability to help people communicate and collaborate toward a common vision.”

•

Juline McMullen is the director of client strategy and a senior trainer for Dale Carnegie in Boston.

Directory of Business Members ACCOUNTING Adrian A. Gaspar & Company, LLP, CPAs Robert Costello 617-621-0500 • cpas@gasparco.com 6 Kimball Lane, Ste. 150, Lynnfield, MA 01940 www.gasparco.com

Employers Unity LLC

Shawn Anderson 585-202-6901 • sanderson@employersunity.com PO Box 173836, Denver, CO 80217 www.employersunity.com

Marcovich, Mansour & Capobianco, LLC

Joseph A. Mansour, Jr. 401-334-9099 • jmansour@mm-cpas.net 640 George Washington Hwy. Bldg C Suites 200-201, Lincoln, RI 02865

Sansiveri, Kimball & Co., LLP

Michael A. DeCataldo 401-331-0500 • mdeca@sansiveri.com 55 Dorrance St, Providence, RI 02903 www.sansiveri.com

BACK OFFICE Jera Concepts

Wynne Barrett 508-686-8786 • wynne@jeraconcepts.com 17 Fruit St, Hopkinton, MA 01748 www.jeraconcepts.com

BUILDING Persona Signs, Lighting, Image

Susan Koelzer 800-843-9888 x390 • skoelzer@personasigns.com 700 21st Street SW, Watertown, SD 57201 www.personasigns.com

Creative Tile & Materials Corporation

Amy Zywot-Slagen 518-713-5367 • azywot@creativematerialscorp.com One Washington Sq., Albany, NY 12205 www.creativematerialscorp.com

Poyant Signs

Jackie Linhares 508-207-1273 • jlinhares@poyantsigns.com 125 Samuel Barnet Blvd, New Bedford, MA 02745 www.poyantsigns.com

Restroom Remodels Company

Keith Vanderbilt 617-500-2554 • keith@restroomremodels.com 15 Hammatt St, Ipswich, MA 01938 www.restroomremodels.com

DDIFO

BUSINESS MEMBER 2 018

COST RECOVERY EF Cost Recovery

SignResource

Ed Craig 774-263-7388 • ecraig3@efcostrecovery.com 32 William St, New Bedford, MA 02740 www.efcostrecovery.com

Trane Commercial Systems

Jeff Hiatt 508-878-4846 • jdh@revenuebanking.com 87 Lafayette Road, Ste. 11, Hampton Falls, NH 03844 www.revenuebanking.com

Mike Blinkhorn 323-562-7638 • mblinkhorn@signresource.com 6135 District Blvd, Maywood, CA 90270 www.signresource.com Jonathan Ralys 978-737-3814 • Jonathan.Ralys@Trane.com 181 Ballardvale St, Wilmington, Ma 01887 www.trane.com

Performance Business Solutions, LLC

ENERGY

Watchfire Signs

Secure Energy

David Watson 205-542-7881 • David.Watson@watchfiresigns.com 1015 Maple St, Danville, IL www.watchfiresigns.com

Jodi Maurer 413-733-2571 x218 • jmaurer@sesenergy.org 12-14 Somers Rd., East Longmeadow, MA 01028 www.sesenergy.org

BUSINESS BROKER

FINANCE

National Franchise Sales

Bank of America/Merrill Lynch

Ellen Hui 949-428-0498 • eh@Nationalfranchisesales.com 1601 Dove Street, Ste. 150, Newport Beach CA 92660 www.nationalfranchisesales.com

Earl Meyers 585-546-9162 • earl.w.meyers@baml.com 1 East Ave., Rochester, NY 14450 www.bankofamerica.com

COMMUNICATIONS Charter Business

Paul Sousa 401-578-1210 • paul.sousa@banknewport.com PO Box 450, Newport, RI 02840 www.banknewport.com

Granite Telecommunications

Tom Fitzgerald 401-574-1119 • tfitzgerald@bankri.com One Turks Head, Providence, RI 02903 www.bankri.com

Verizon

Jeff Bradanini 203-951-5917 • jbradanini@beirnewealth.com 3 Enterprise Drive, Ste. 410, Shelton, CT 06484 http://beirnewealth.com

BankNewport

Bernadette Vidal 212-5980-1707 • Bernadette.Vidal@charter.com 477 Congress St. Portland, ME 04102 www.charter.com Daryl Chelo 401-334-3176 • dchelo@granitenet.com 1 Albion Rd., Lincoln, RI 02865 www.granitenet.com Dustin Ray 207-317-1406 • Dustin.Ray@vzw.com 352 Center St, Auburn, ME 04210 www.verizon.com

Bank RI

Beirne Wealth Consulting Services, LLC

Bridge Funding Group, Inc.

Rick Riecker 800-928-8537 • Franchise@BankUnited.com 215 Schilling Circle, Suite 100, Hunt Valley, MD 21031 www.bridgefundinggroupinc.com

Thank You to Our Business Members!

INDEPENDENT JOE • APRIL/MAY 2018 31

DDIFO

BUSINESS MEMBER 2 018

Directory Business Members Directory ofof Business Members

Eastern Bank

Deborah Blondin 603-606-4724 • D.Blondin@Easternbank.com 11 Trafalgar Square, Ste. 105, Nashua, NH 03063 www.easternbank.com

Fidelity Bank

TD Bank

Peter J. DiFilippo 401-525-6771 • Peter.DiFilippo@td.com 180 Westminster St, Providence, RI 02903 www.tdbank.com

United Bank

Sally Buffum 508-762-3604 • sbuffum@fidelitybankonline.com 465 Shrewsbury St, Worcester, MA 01604 www.fidelitybankonline.com

Mark McGwin 508-793-8342 • mmcgwin@bankatunited.com One Mercantile St, 7th Flr, Ste. 760, Worcester, MA 01608 www.bankatunited.com

LCR Franchise Finance

Wintrust Franchise Finance

Robert Obolewicz 203-644-8481 • robolewicz@lcrcapital.com 315 Post Road West, Suite 200, Westport, CT 06880 www.lcrfinance.com

Northern Bank & Trust Company

Kelley Munsell 781-569-1584 • kmunsell@nbtc.com 275 Mishawum Road, Woburn, MA 01801 www.nbtc.com

Pacific Premier Franchise Capital

Sharon Soltero 402-562-1801 • ssoltero@ppbifranchise.com 3154 18th Avenue, Ste. 3, Columbus, NE 68601 www.ppbifranchise.com

Pinncale Commercial Capital

Mylan Dawson 317-472-2828 • dawson@pincomcap.com 101 W. Ohio St, Suite 2000, Indianapolis, IN 46204 www.pincomcap.com

Sands Investment Group

Kaveh Ebrahimi 805-889-7837 • kaveh@signnn.com 2701 Ocean Park Blvd, Ste 140, Santa Monica, CA 90405 www.signnn.com

Sterling National Bank

Lindy Baldwin 402-312-2542 • lbaldwin@snb.com 500 7th Ave., 3rd Floor, New York, NY 10018 www.snb.com

TCF Franchise Finance

Bill Johnson 952-656-3268 • wjohnson@tcfef.com 11100 Wayzata Blvd., Ste. 801, Minnetonka, MN 55305 www.tcfef.com/franchise

Sandra McCraren 847-432-2488 • smccraren@wintrust.com 9700 W. Higgins Road, 1st Flr, Rosemont, IL 60018 franchise.wintrust.com

HUMAN RESOURCES CertiPay

Danielle Post 813-300-6953 • dpost@certipay.com 130 Bates Ave. SW, Ste. 101, Winter Haven, FL 33880 www.certipay.com

Employers Reference Source

Sandra Fabrizio 888-512-2525 • sandraf@employersreference.com 1587 Hamilton Avenue, Waterbury, CT 06706 www.employersreference.com

HigherMe

Shannon Cassidy 617-890-6476 • shannon@higherme.com 77 Franklin St, Suite 510, Boston, MA 02110 www.higherme.com

TalentReef

Abby Sandbach 720-399-2494 • asandbach@talentreef.com 210 University Ste. 300, Denver, CO 80206 www.talentreef.com

INSURANCE Intrepid Direct Insurance

Bill Strout 913-217-4252 • bstrout@intrepidinsurance.com 10851 Mastin Blvd, Ste. 200, Overland Park, KS 66210 www.intrepidinsurance.com

Regions Insurance

Dennis McClelland 770-274-2914 • dennis.mcclelland@regions.com 12725 Morris Rd. Ext. Bldg. 100 Ste. 200 Alpharetta, GA 30007 www.regionsinsurance.com

Starkweather & Shepley Insurance Brokerage, Inc.

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

LEGAL Constangy, Brooks, Smith & Prophete, LLP

Jeffery Rosin 617-849-7882 • jrosin@constangy.com 535 Boylston St, Ste. 902, Boston, MA 02116 www.constangy.com

Lisa & Sousa Attorneys at Law Ltd.

HIRETech

Carl Lisa, Sr. 401-274-0600 • clisa@lisasousa.com 5 Benefit St, Providence, RI 02904 www.lisasousa.com

Paychex

Justin Klein 732-747-7100 • justin@marksklein.com 63 Riverside Avenue, Red Bank, NJ 07701 www.marksklein.com

Malak Mansour 281-558-7100 • mmansour@hiretech.com 200 Westlake Park Blvd., Suite 501, Houston, TX 77079 www.hiretech.com Ryan Birtles 843-576-9337 • rbirtles1@paychex.com 7204 Copperfield Ct, Wilmington, NC 28411 www.paychex.com

Marks & Klein LLP

Paris Ackerman & Schmierer LLP

David Paris 973-228-6667 • david@paslawfirm.com 103 Eisenhower Parkway, Roseland, NJ 07068 www.paslawfirm.com

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.

32 INDEPENDENT JOE • APRIL/MAY 2018

PLEASE VISIT THE DDIFO BUSINESS MEMBER DIRECTORY ONLINE AT WWW.DDIFO.ORG

DDIFO

BUSINESS MEMBER 2 018

OPERATIONS

HME Drive-Thru Headsets

safeTstep by Payless Shoesource

3M Company

Brady Campbell 858-535-6034 • bcampbell@hme.com 14110 Stowe Dr, Poway, CA 92064 www.hme.com

Acrelec America

Alexander Pezzolla 732-572.0706 ex 202 • alex@jarrettforcash.com 1315 Stelton Road, Piscataway, NJ 08832

Bill Muenkel 952-484-4875 • wemuenkel@mmm.com 3M Center, 220-12E-04, St. Paul, MN 55144 www.3M.com/communications

Kristy Weber 412-532-1246 • kristy.weber@acrelec.com 5490 Campbells Run Rd.,Pittsburgh, PA 15205 www.acrelecamerica.com

Brink's Inc.

Shawn O'Sullivan 617-653-8462 • shawn.osullivan@brinksinc.com 46 Sprague St., Boston, MA 02136 www.brinks.com

Bunn-O-Matic Corporation

Todd Rouse 800-637-8606 • Todd.Rouse@bunn.com 1400 Stevenson Dr., Springfield, IL 62703 www.bunn.com

Jarrett Services ATM, Inc.

Loomis

Emily Wiley 832-925-5283 • Emily.Wiley@us.loomis.com 2500 Citywest Blvd., Ste. 2300, Houston, TX 77042 www.loomis.com

MCD Innovations — Airxcel, Inc.

Christina Trammell 972-548-1850 • christina@mcdinnovations.com 3303 N. McDonald St. McKinney, TX 75071 www.mcdshades.com

Nano Safety Solutions

Cardtronics

Jim Muldoon 978-273-1847 • jim.muldoon21@gmail.com 6 Argyle St, Andover, MA 01810 www.nanosafetysolutions.com

Carrier Corp

Angela Bechard 603-475-2046 • angela@nedrivethru.com 999 Candia Rd. Ste. 7, Manchester, NH 03032 www.nedrivethru.com

Tom Spooner 973-452-4131 • tspooner@Cardtronics.com 628 Route 10 - Ste. 8, Whippany, NJ 07981 www.cardtronics.com Bob Eckweiler 973-222-6742 • Bob.Eckweiler@carrier.utc.com 3 Hollyhock Way, Newton, NJ 07860 www.carrier.com

Crane Payment Innovations

Ray Picard 603-809-3584 • ray.picard@cranepi.com 1 Executive Pk. Dr. #202, Bedford, NH 03110 www.CranePI.com

DTT

Mira Diza 800-933-8388 • mdiza@dttusa.com 1755 North Main St, Los Angeles, CA 90031 www.dttusa.com

Ecolab

Michael Quate 215-287-6953 • michael.quate@ecolab.com 8300 Capital Dr, Greensboro, NC 27409 www.ecolab.com/Businesses

Kyle Clendennen 785-295-6664 • kyle.clendennen@safetstep.com 3231 Southeast Sixth Ave, Topeka, KS 66607 www.payless.com/safetstep-1/

Zachary Waas 630-873-0088 • waaz@princecastle.com 355 East Kehoe Blvd., Carol Stream, IL 60188 www.princecastle.com

R.F. Technologies, Inc.

Michael Murdock 847-495-7350 • michaelm@rftechno.com 330 Lexington Dr, Buffalo Grove, IL 60089 www.rftechno.com

Brendan Bencharit 818-590-4483 • brendan@squadle.com One Broadway, Floor 14, Cambridge, MA 02142 www.squadle.com

Staples Advantage

Joe Shea 781-806-3139 • joseph.shea@staples.com 31 Commercial St. Sharon, MA 02067 www.staplesadvantage.com Kyle Anthony 770-220-5113 • kyle.anthony@tellermate-us.com 3600 Mansell Road, Ste 500, Alpharetta, GA 30022 www.tellermate-us.com

Wind River Environmental

Samantha Kelley 978-344-0926 • skelley@wrenvironmental.com 46 Lizotte Dr., Ste. 1000, Marlborough, MA 01752 www.wrenvironmental.com

Chris Williams 651-503-4763 • christopherJ.Williams@pentair.com 1040 Muirfield Dr., Hanover Park, IL 60133 www.everpure.com

Prince Castle/Silver King

Squadle

Tellermate

New England Drive-Thru Communications

Torrco Everpure

SKAL East, Inc

Carl Huerth 781-806-3139 • carl@skaleast.com 131 Padelford St., Berkley MA 02779 www.skaleast.com/index.cfm?keyword=dunkin

TAX DEFERRED EXCHANGE Exchange Authority

Robert J. Charland, Esq. 978-433-6061 • rcharland@exchangeauthority.com 9 Leominster Connector, Suite 1, Leominster, MA 01453 www.exchangeauthority.com

Thank You to Our Business Members!

INDEPENDENT JOE • APRIL/MAY 2018 33

A LOOK AT THE LAW

BY JEFFREY M. ROSIN, ESQ.

Misclassifying Employees Can Be a Costly Mistake I

n this day and age, most employers have considered the possibility of wage-hour liability. Savvy employers understand that wage-hour liability comes in many different forms, and two of the most talked about have been “misclassification” and unpaid overtime. Misclassification can occur in one of two ways: either the employer classifies a worker as an independent contractor instead of an employee, or the employer classifies the worker as “exempt” and non-overtime eligible and pays that employee a salary with no overtime (or worse, the employee works so many hours that the effective rate of pay is lower than the minimum wage).

There are some common ways unpaid overtime can sneak up on employers: (1)

through misclassification, and finding out that overtime should have been paid; (2) by failing to ensure employees take meal breaks (and, in certain states, rest breaks), and only paying them for an 8-hour shift when, without the break, they actually work 8.5 hours shifts 5 days per week; (3) allowing employees to perform work “off the clock”; or (4) simply not knowing the rule that overtime must be paid to eligible employees who work more than 40 hours in a week.

Wage-hour liability is daunting for employers as they may be responsible for as many as three years of back wages, and penalties can cause those wages to be doubled or, in some states, tripled. What’s more, company owners, officers and top-level managers can be held personally liable to pay misclassified wages, to the same extent their companies are liable.

On March 6, 2018, the U.S. Department of Labor (DOL) initiated a program that encourages employers to conduct an internal audit of wage-hour liability and report the findings to the department. This program, called the Payroll Audit Independent Determination (PAID) program, is a 6-month pilot program that, if handled correctly, will enable employers to correct the liability and pay the back wages, without facing double damages

34 INDEPENDENT JOE • APRIL/MAY 2018

under federal law, or any civil monetary penalty. At the end of the 6 months, the DOL plans to examine the program, evaluate its effectiveness, and consider whether to modify it, or make it permanent.

Notably, the PAID program is only available to employers covered by the Fair Labor Standards Act. Thus, very small employers need to examine whether they even can participate. Further, employers already involved in an ongoing investigation or lawsuit cannot participate. Of course, participation in this federal program will not provide any assistance to employers in a state law case (though, if any back wages are paid through this program, these amounts will likely offset any further liability under state law).

Yet, the program offers employers the opportunity to obtain some peace of mind.

Here’s how it would ideally work. First, an employer would conduct a self-audit pursuant to the DOL’s guidelines. Second, the employer would report the results of the audit to the DOL’s Wage-Hour Division for review. Third, if the Wage-Hour Division accepts the results of the audit, it will inform the employer how to proceed and be involved in notifying the employees impacted, assisting the employer in obtaining releases from those employees.

Employees may elect not to sign the release, and they may take matters into their own hands with their own counsel, so employers should be aware of this risk.

Finally, the employer must correct the violation going forward.

If all goes as planned and hoped, concerned employers will have an avenue to limit liability, and thereby rest easier going forward. More information about the PAID program can be found at the U.S. Department of Labor website.

•

Jeffrey Rosin is Managing Partner at O’Hagan Meyer, Attorneys & Advisors.

icing Register Today for Early Bird Pr Available Until May 8th w w w.DDIFO.org/2018national

& Business Member Registration e Still Availabl Packages Arey are gon e, they are gon e.

Don’t del ay. Wh en the

A team of experienced financial professionals, all dedicated to a singular corporate mission.

Yours.

Imagine a single point of contact—a relationship manager who takes personal responsibility for bringing you tailored financial solutions that meet the needs of your business. No waiting for days for someone to call you back. That’s Sterling.

Sterling relationship managers are not merely responsive. They’re able to draw upon a unique breadth of tools and expertise, applying a thorough understanding of your business.

Whether you’re investing in location refreshes, growth through acquisition or aspire to refinance or recapitalize, your Sterling relationship manager will provide you with the information you need to make smart decisions for better outcomes.

For more information, please contact: Keith Smith SVP, Senior Managing Director 212-575-2473 ksmith@snb.com

Lindy Baldwin VP, Managing Director 402-312-2542 lbaldwin@snb.com

Expect extraordinary.

Member FDIC

snb.com