October 2012 • Issue 16
We Communicate, We Educate, We Advocate!
e v a H l l ’ I S ’ E H t a Wh ! g n i v a H
Why Grassroots Politics Benefit Your Bottom Line by Susan Minichiello
by loutier C e i n a f Ste
h is e O w
In 2012, 21 stores have been sold/under contract/ letter of intent. We currently represent 12 DD owners in 7 states looking to sell their network of stores.
INDEPENDENT JOE â€˘ OCTOBER 2012
Process and Progress: Why Grassroots Politics Benefit Your Bottom Line by Susan Minichiello In an election season full of namecalling and attack ads, real issues close to the heart of small business owners can get lost in the fray. Yet, Dunkin’ Donuts franchise owners who are on the lookout for harmful legislation and regulation—and are willing to engage with politicians on such issues—can better protect their bottom line.
that franchisees get involved building relationships with local politicians and learning about the actions of those politicians.”
At the DDIFO National Members Meeting in September, Shanahan and Giannino led a breakout session about growing government intrusion. They provided guidance on how franchisees can prepare for and respond to legisla-
07 08 11 14 27
For several years, DDIFO has employed a strategy of closely following legislative and regulatory issues in Massachusetts, in part because the organization is based there, but also because it is Dunkin’ Brands’ backyard and such issues are closely followed by the franchisee leadership. To that end, the organization hired Boston lobbyist Joe Giannino as Government Relations Director and helped establish a political action committee (DDFO MassPac) for franchise owners in that state. On the national level, DDIFO is a founding member of the Coalition of Franchisee Franchise owner and former DDIFO Legislative Associations (CFA) and sends Affairs Coordinator Rob Branca with Senator representatives to Capitol Hill Scott Brown (R-MA) as part of the annual CFA Day Forum. DDIFO’s new Executive and regulatory threats, emphative Director Ed Shanahan says under sizing how essential it is to establish his leadership there will be a renewed relationships with local politicians. and strengthened focus on addressing Dave Walck, a franchisee in Maine legislative and regulatory issues across who attended the session, discussed the country and engaging franchise how the business has changed in this owners more directly in that process. regard and shared how his strong rap“Like it or not, government is a partner port with a legislator is making a real in every small business. The more acdifference. tive and aware franchise owners are, “Fifteen years ago, the only things I the more likely that partnership will be worried about were: do I have enough productive,” said Shanahan. “Self-presopeners coming in? Is the product ervation requires a certain amount of okay? How much was my throwaway political action and, with the increasing and what was my labor? It’s a whole numbers of laws and regulations of sigdifferent world today, and we’ve got nificant consequence to every Dunkin’ to understand that we need to get Donuts shop, it is of critical importance involved,” he said. “My state legislator
Why Grassroots Politics Benefit Your Bottom Line Susan Minichiello
New Executive Director Listening to Franchisee Concerns Betsy Lawson
Dunkin’s Recipe for Expansion Matt Ellis
DDIFO Directory of Sponsors Hall of Fame Inductees Honored Matt Ellis
I’ll Have What He’s Having! Stefanie Cloutier
Index of Advertisers
knows me and knows I’m a small businessperson. He sends me an email and says, ‘Hey Dave, here’s some legislation I think is going to affect you and your small business that I think we need to defeat.’ I send out a blast email to every franchisee in Maine. Those franchisees get on the phone, call their representatives, and say, ‘This is bad for me.’ So that’s why you need to get to know your state legislators and get them to communicate with you.” In an interview prior to the meeting, Shanahan told Independent Joe, “The groundwork laid by Jim [Coen], Joe [Giannino] and several key franchise owners, has given DDIFO a leg up in the political arena. We need to sustain those efforts and to develop new avenues for convincing elected officials of the validity of our positions. DDIFO is ready and willing to expand its sphere of influence and assist franchise owners in all states to better protect their business, their lifelong investment and their generational legacy. But we Politics continued on page 23 OCTOBER 2012 • INDEPENDENT JOE
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INDEPENDENT JOE • OCTOBER 2012
New Executive Director Listening by Betsy Lawson to Franchisee Concerns Even before he was shaking hands, introducing himself and listening to the concerns of Dunkin’ Donuts franchise owners at the recent National Members Meeting in September, DDIFO’s new Executive Director Ed Shanahan had already spent months getting to know many franchisees and associated business partners. Shanahan called it his “unofficial listening tour” and it began immediately after he was brought on to take over DDIFO. “This is a member organization, driven by the needs of those it serves,” he said. And with more than three decades of experience in government advocacy, coalition building, and organization management, Shanahan said he understands that with an organization such as DDIFO, “it’s all about the members and what they need to be successful in their businesses.” Shanahan earned his bachelor’s degree in political science from Central Connecticut State University and started his career in public service in 1975 with the City of Boston in its Office of Housing. He served in progressively more responsible positions that included business manager, neighborhood manager, and principal rehabilitation specialist. He then moved to the City’s Office of Management and Budget where he worked as deputy director. From there, Shanahan went on to spend the next two decades, from 1984-2004, with real estate trade associations – first as executive director of the Rental Housing Association, then as CEO of its parent, the Greater Boston Real Estate Board. This 120+ year old organization represents the varied and diverse interests of the real estate industry across Eastern Massachusetts. In addition to expanding and enhancing organizational revenues, Shanahan handled legislative and governmental representation. In 2004, Shanahan launched his own government affairs consulting and lobbying practice in Boston and went on to represent a number of major firms
law will differ from state to state, the underlying themes and challenges facing franchisees in New Jersey today will be echoed in some fashion or other all around the country in the months and years ahead. In light of this reality, he believes, DDIFO needs to function as a knowledge base for sharing best practices in how Ed Shanahan with New York franchisee Alex to handle local, state and Rowzani and his wife/business partner, Sue national legislative issues. Through his listening tour and other in property development and manageoutreach to franchise owners throughout ment. He worked with clients to secure the country, Shanahan hopes to keep a passage of significant legislation on their two-way dialog going. behalf as well as prevented passage of various legislative initiatives detrimental “Whether it’s Florida, New Mexico, Ilto their stated interests. linois, New England, wherever,” Shanahan said, “when DDIFO members read At a DDIFO members’ meeting in New or hear about an issue, I want to hear Jersey in September, Shanahan took from them.” careful note of a presentation on employment law and the significant hurdles When a bill is filed, Shanahan explained, employers face if they should step afoul DDIFO needs there to be a two-way of these laws. Shanahan pointed out educational process to make other franthat while the specifics of employment Shanahan continued on page 27
October 2012 • Issue #16
Independent Joe is published by DD Independent Franchise Owners, Inc. ®
Editors: Edwin Shanahan, Matt Ellis Contributors: Stefanie Cloutier, Betsy Lawson, Susan Minichiello Advertising: Joan Gould • Graphic Design/Production: Susan Petersen Direct all inquiries to:
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INDEPENDENT JOE®, INDY JOE®, and DDIFO® are registered trademarks of DD Independent Franchise Owners, Inc. Any reproduction, in whole or in part, of the contents of this publication is prohibited without prior written consent of DD Independent Franchise Owners, Inc. All Rights Reserved. Copyright © 2012 • Printed in the U.S.A. OCTOBER 2012 • INDEPENDENT JOE
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INDEPENDENT JOE • OCTOBER 2012
Dunkin’s Recipe for Expansion by Matt Ellis Depending on your territory, market expansion can take on an entirely different meaning. A new Dunkin’ Donuts franchisee, opening new markets like Omaha for example, begins with a blank slate. Their competitive landscape could be marked with Starbucks, McDonald’s or local momand-pop coffee shops. But, for franchisees in mature markets, sometimes the competitive landscape includes another Dunkin’. Expansion is Dunkin’ Brands’ (DBI) primary strategy to generate future growth and demonstrate to Wall Street that its stock is a smart buy. DBI intends to double its U.S. points of distribution to 15,000 over the next 20 years. This would include free standing shops, alternate points of distribution like colleges, hospitals and transportation centers and self-serve facilities like those at select Hess gas stations.
vice president of operations for Dunkin’ Brands. He says DBI’s growth strategy is to initially focus on markets contiguous to the brand’s base: New England, the mid-Atlantic, Chicago and Florida.
Boston University Marketing Department Chair and DDIFO Board Member Patrick Kaufmann led the panel discussion on market development.
cepts. Now it is entirely owned by its franchisees, and one of the larger shareholders is the person who originally created the concept for the brand.
Hougland joined Gabellieri, Boston attorney Eric Karp and DDIFO Director and Boston University Long John Silver’s Franchise Association Executive DirecMarketing Department Chair, Protor Whayne Hougland (holding microphone) joined Boston fessor Patrick Kaufmann on stage attorney Eric Karp and Rhode Island franchise owner Steve in the Great Hall at Mohegan Sun Gabellieri to discuss Dunkin’ Donuts’ expansion. for the DDIFO Market Development Panel. He emphasized that the Long “The approach is much like we saw in John Silver’s Franchisee Association neupstate New York, first Albany, then gotiated impact guidelines to ensure new Syracuse, then Rochester and then BufDDIFO Restaurant Analyst John Gordevelopment would not threaten existing falo,” which leads to the Great Lakes and don, principal of Pacific Management shops. Any proposed location was studthe industrial Midwest. Consulting Group, says the institutional ied by a third party vendor to determine investors that have bought up much of Gabellieri believes Dunkin’ has attractive if the impact would be more than 10% the DNKN shares vacated by the private unit economics because its “menu and of the existing franchisee’s gross sales; equity firms Bain Capital, Thomas H. Lee sales mix is made up of cost efficient if so, the new shop would not be built. Partners and The Carlyle Group, want products and high customer traffic enWhile it remains to be seen if DBI will earnings growth of 15-20% per share able cost efficient labor.” He also says consider such independent impact studwhich is only possible through same Dunkin’ can be successful when it creies in emerging markets, some franchistore sales growth and unit expansion. ates market density that further drives sees in core Dunkin’ Donuts markets say Wall Street can be impatient, but Gordon supply chain and marketing efficiencies. expansion through encroachment has says Dunkin’s growth will be methodiimpacted their bottom line. Whayne Hougland has witnessed both cal—not rapid. growth and retrenching in his 35 years in There have been occasions when “It took 15 years to double the number the QSR industry. As Executive DirecDunkin’ Donuts franchisees raise the of units in the Chicago market,” said tor and Legal Counsel to the Long John concern that opening a new shop close Gordon. “And, I think Dunkin’s western Silver’s Franchisee Association, Hougto his or her territory would cannibalize expansion will take longer than Dunkin’ land has been witness to a paradigm sales. In these cases Dunkin’ will somewants.” shift within his system from the time times encourage the developing franchiwhen franchisees owned 40% of the At the recent DDIFO National Members see or the potentially impacted franchirestaurants to today when franchisees Meeting in September, Rhode Island see to commission a Customer Intercept own 100%. Getting there involved a franchise owner Steve Gabellieri was Study. The cost of the study is borne significant change of ownership. Long part of a panel discussion about marby one or both. The results of the study John Silver’s was owned by Yum Brands ket development. Prior to owning four can influence DBI’s decision whether to and often co-branded with other conshops, Gabellieri spent eight years as Expansion continued on page 26 OCTOBER 2012 • INDEPENDENT JOE
Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org
Bederson & Company LLP - CPAs and Consultants 405 Northfield Avenue, West Orange, NJ 07052 Steven Bortnick, CPA • email@example.com 973-736-3333 • www.bederson.com
Kensington Company & Affiliates 185 Roslyn Road, Roslyn Heights, NY 11577 David Stein • firstname.lastname@example.org W: 516-626-2211 • M: 718-490-2218 • www.kensingtoncompany.com
Cynthia A. Capobianco, CPA 60 Quaker Lane, Suite 61, Warwick, RI 02886-0114 Cynthia Capobianco • 401-822-1990 email@example.com
Adrian A. Gaspar & Company, LLP, CPAs 1035 Cambridge Street, Suite 14, Cambridge, MA 02141 Robert Costello • firstname.lastname@example.org 617-621-0500 • www.gasparco.com
James P. Ventriglia, CPA, Inc. 145 Phenix Avenue, 2nd Floor, Cranston, RI 02920 Jim Ventriglia • email@example.com 401-942-0008 • www.jpvcpa.com Gray, Gray & Gray, CPA 34 Southwest Park, Westwood, MA 02090 Paul Gerry, CPA • firstname.lastname@example.org 781-407-0300 • www.gggcpas.com Rubiano & Company, CPA’s 5 Austin Avenue, Suite 1, Greenville, RI 02828 Daniel J. Rubiano, CPA • email@example.com 401-949-2600 • www.rubianocpa.com Sansiveri, Kimball & Co., LLP 55 Dorrance Street, Providence, RI 02903 Joseph Mansour • firstname.lastname@example.org 401-331-0500 • www.sansiveri.com Thomas Colitsas and Associates, CPA 103 Carnegie Center, Suite 309, Princeton, NJ 08540 Tom Colitsas • email@example.com • 609-452-0889 “A Member of Franchise Pros”
IKMS Group, Inc. PO Box 6221, Manchester, NH 03108 Cliff Pratt • firstname.lastname@example.org 603-644-4683 • www.ikmsgroup.com Jera Concepts - Order and Production Management Software 17 Fruit Street, Hopkinton, MA 01748 Wynne Barrett • email@example.com 508-686-8786 • www.jeraconcepts.com
Hirshon Associates LLC 425 Broadhollow Road, Suite 428, Melville, NY 11747 Andrew Hirshon • firstname.lastname@example.org 631-249-8989 • www.hirshon.com
Mid-State Isuzu 35 Southwest Cutoff, Worcester, MA 01604 Craig Judge • email@example.com 860-281-4117 • www.midstateisuzu.com
Comcast Business Services 500 South Gravers Road, Plymouth Meeting, PA 19462 Comcast National Sales • Dunkin_National_Sales@comcast.com 866-407-6338 • www.business.comcast.com/internet/index.aspx Sprint 3 Van De Graaff Drive, Burlington, MA 01803 Caroline Fedele • firstname.lastname@example.org 781-367-1057 • www.sprint.com/ddifomembers
Bedford Cost Segregation, CPAs 60 State Street, Suite 700, Boston, MA 02109 Bill Cusato • email@example.com 978-263-5055 • www.bedfordcostseg.com/who_we_serve/ddifo.asp EF Cost Recovery PO Box 79361, North Dartmouth, MA 02747 Ed Craig • firstname.lastname@example.org 774-263-7388 • www.efcostrecovery.com Performance Business Solutions, LLC 87 Lafayette Road, Suite 11, Hampton Falls, NH 03844 Jeff Hiatt • email@example.com 508-878-4846 • www.revenuebanking.com
Energy Gateway, Inc. 451 Worcester Road, Charlton, MA 01507 Christopher Tremblay • Chris@energygateway.org 508-207-9740 • www.energygateway.com
SIB Development & Consulting 288 Meeting Street, 3rd Floor Charleston, SC 29401 Al Rush • firstname.lastname@example.org 843-284-1007 • www.sibdevelopment.com
Glacial Energy 24 Route 6A, Sandwich, MA 02563 Kristy Solt • email@example.com 340-201-4323 • www.glacialsales.com/dunkindonuts
Metromedia Energy 200 West Park Avenue, Suite 125, Westborough, MA 01581 Scott Werman • firstname.lastname@example.org 508-329-0186 • www.mmenergy.com
Trane HVAC 225 Woldwood Avenue, Woburn, MA 01801 Jonathan Ralys • Jonathan.Ralys@Trane.com 781-305-1335 • www.Trane.com/commercial ViewPoint Sign and Awning 35 Lyman Street, Northboro, MA 01532 Bill Gavigan • email@example.com 508-393-8200 • www.viewpointsign.com WatchFIre Signs 1015 Maple Street, Danville, IL Devon Mourer • firstname.lastname@example.org 217-442-0611 • wwwwatchfiresigns.com 8
INDEPENDENT JOE • OCTOBER 2012
Secure Energy Solutions, LLC 12-14 Somers Road, East Longmeadow, MA 01028 Mike Schmidt • email@example.com 413-733-2571 ext. 223 • www.sesenergysolutions.org
Business Financial Services 3111 N. University Drive, Suite 800, Coral Springs, FL 33065 Scott Kantor • firstname.lastname@example.org 954-509-8019 • www.businessfinancialservices.com
Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org Capital One Bank 710 Route 46 East, Suite 306, Fairfield, New Jersey 07004 Stuart Vorcheimer • Stuart.email@example.com 732-439-7626 • www.capitalone.com Centrix Bank & Trust 1 Atwood Lane, Bedford, NH 03110 Deborah Blondin • firstname.lastname@example.org 603-589-4071 • www.centrixbank.com Direct Capital Franchise Group 155 Commerce Way, Portsmouth, NH 03823 Robyn Gault • email@example.com 603-433-9476 • www.franchise.lendedge.com Fidelity Bank 465 Shrewsbury Street, Worcester, MA 01604 Sally Buffum • firstname.lastname@example.org 508-762-3604 • www.fidelitybankonline.com First Franchise Capital 2715 13th Street, Columbus, NE 68601 Karen Johnson • email@example.com 402-562-5111 • www.firstfranchisecapital.com GE Capital, Franchise Finance 201 Merritt 7, 2nd Floor, Norwalk, CT 06851 Christine Keating • firstname.lastname@example.org 203-229-1804 • www.gefranchisefinance.com Infinity Franchise Capital 3154 18th Avenue, Suite 3, Columbus, NE 68601 Sharon Soltero • email@example.com 402-562-1801 • www.infinityfranchisecapital.com Joyal Capital Management Franchise Development 50 Resnik Road, Plymouth, MA 02360 Daniel Connelly • firstname.lastname@example.org 508-747-2237 • www.jcmfranchise.com Merchant Cash & Capital 450 Park Avenue South, 11th Floor, New York, NY 10016 Seth Broman • email@example.com 212-545-3185 • www.merchantcashandcapital.com
CSM Bakery Products 1901 Montreal Road, Suite 121, Tucker, GA 30084 Marla Cushing • firstname.lastname@example.org 770-723-2083 • www.csmbakeryproducts.com Quaker Oats A Division of PepsiCo 402 Kilarney Way, Royersford, PA 19468 Ed Bowes • Ed.email@example.com 610-948-8309 • www.pepsico.com
CareerBuilder.Com 400 Crown Colony Drive, Suite 301, Quincy, MA 02169 Maureen O’Neill • firstname.lastname@example.org 781-453-3570 • www.careerbuilder.com Employers Reference Source 1587 Hamilton Avenue, Waterbury, CT 06706 Sandra Fabrizio • email@example.com 888-512-2525 • www.employersreference.com Gecko Hospitality 1415 West 22nd Street, Tower Floor Oakbrook, IL 60523 Robert Krzak • firstname.lastname@example.org 630-390-1000 • www.geckohospitality.com Granite Payroll Associates 176 Granite Street, Qunicy, MA 02169 Marco Schiappa • email@example.com 401-263-7921 • www.granitepayroll.com Gulpfish.com 1005 Main Street, Pawtucket, RI 02860 Ilya Reikhrud • firstname.lastname@example.org 800-974-4514 Ext 101 • www.gulpfish.com JobOn 141 Log Canoe Road, Stevensville, MD 21409 Pete Steiner • email@example.com 774-217-0340 • www.jobon.com
NFA Restaurant Finance 400 E. 22nd Street, Suite A, Lombard, IL 66148 Larry Howard • firstname.lastname@example.org 205-871-8450 • www.nfaloans.com
Ovation Payroll 2 Stamford Landing 68 Southfield Rd. #100, Stamford, CT 06902 Jim Ferreira • email@example.com 203-530-3512 • www.ovationpayroll.com
Priority Capital 174 Green Street, Melrose, MA 02176 Brian Gallucci • firstname.lastname@example.org 800-761-2118 Ext 14 • www.prioritycapital.com
Snagajob 4851 Lake Brook Drive, Glen Allen, VA 23060 Erin Brumfield • email@example.com 804-822-4604 • www.snagajob.com/employer-solutions
Susquehanna Commercial Finance 2 Country View Road, Suite 300, Malvern, PA 19355 Brian Colburn • firstname.lastname@example.org 443-996-1792 • www.susquehanna.com
The PCI Group 303 Molner Drive, Elmwood Park, NJ 07407 Robert Boffa, Sr. • email@example.com 201-797-8000 ext. 223 • www.pcihr.com
TCF Franchise Finance 300A Lake Street, Suite B, Ramsey, NJ 07446 Mike Vallorosi • firstname.lastname@example.org 201-818-2700 • www.tcfef.com
United Capital Business Lending 215 Schilling Circle Suite 100, Hunt Valley, MD 21031 Trey Grimm • email@example.com 410-771-9600 • www.unitedcapitalbusinesslending.com
Thank You to Our Sponsors!
The Hill Agency 5 Washington Avenue, Endicott, NY 13760 Rita Frailey • firstname.lastname@example.org 800-446-1775 • www.thehillagencyinc.org KK Insurance Agency 541 Broadway, Long Branch, NJ 07740 Ashish Vadya • email@example.com 866-554-6799 • www.kkquote.com
Sponsors cont. page 18 OCTOBER 2012 • INDEPENDENT JOE
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INDEPENDENT JOE • OCTOBER 2012
Hall of Fame Inductees Honored by Matt Ellis for Their Contributions Class of 2012 at Gala At one moment, during the cocktail party after the Dunkin’ Donuts Franchise Owners Hall of Fame gala, a young, first generation franchisee walked up to Jay Dubinsky, reached out his hand, and said what you often hear spoken to first responders or war veterans, “Thank you for what you have done.” The comment exactly addressed one of the primary reasons DDIFO established the Hall of Fame in 2011.
ciously accepted his honor as a Hall of Fame inductee saying, “It’s been a long journey.” He noted how it cost $35,000 to open his first store, and today that would buy a point-ofservice system for one shop. Rader was one of the first franchisees to trade his cash register for a computerized POS.
gala, Brooks put it another way. “My contribution is that I was a pain in the ass.” The truth is that Dunkin’ Donuts Chief Executive Robert Rosenberg counted on Brooks to stand up for
John Rader and
the franchisees. “The franchisees are the reason we are here tonight,” Brooks said from the podium.
In the history of Jay was one of this Dunkin’ Donuts, year’s inductees along with there is one franManuel Andrade, Brooks chisee at the hub Barrett, John Rader, Robert of a network that is Rosenberg and actor, Miestimated to include chael Vale better known as 40 percent of all the “Fred the Baker.” When he Dunkin’ Donuts in entered the system New England. ManCarl Andrade accepts the Hall of Fame Award on behalf of his brother, in 1971, Jay Dubinuel Andrade was Manuel. Also shown: Jim Coen, John Justo and John Motta sky had no restaunot able to attend rant experience, but he was quick to the gala but his brother Carl recalled In the Hall of Fame program, Brooks learn that beverages would be the how the business spread throughBarrett’s is identified as “never one key to Dunkin’ Donuts’ success. out the family and his partner, John to follow the crowd.” But, when he Justo talked about the success they John Rader, who bought his first had the opportunity to address the have had. Dunkin’ in New York in 1965, gracrowd of 240 at the Hall of Fame
Hall of Fame continued on page13 OCTOBER 2012 • INDEPENDENT JOE
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INDEPENDENT JOE • OCTOBER 2012
Hall of Fame continued from page 11
Robert Rosenberg could not be in attendance either but his nieces, Lynne McLaughlin and Carol Resnick, thanked the Hall
The late actor Michael Vale, A.K.A. “Fred the Baker”
hlin d Lynne McLaug Carol Resnick an their of lf ha ll of Fame on be accepted the Ha g er nb se uncle, Robert Ro
of Fame committee and franchisee community for the honor. “Bob is honored to be recognized by the franchisees,” Carol said. Rosenberg was one of two 2012 inductees to never own a franchise.
The other was Michael Vale, whose portrayal of “Fred the Baker” is nearly as iconic as the brand itself. Vale passed away in 2005 after 18 years in the role that defined his career and created a warm, personal, inviting image for Dunkin’ Donuts.
Whether it was Vale’s pronouncement that, “It was time to make the donuts,” Dubinsky’s belief that advertising had to reflect that it was, “Time to make the coffee,” or Barrett’s belief that a franchiseeowned supply chain that acts as a cooperative was in the best and long-term interest of the franchisee community, the Hall of Fame Class of 2012 did a lot for the system. It’s no wonder people thank them for all they did.
Over 200 people attended this year’s Hall of Fame Awards Dinner at Mohegan Sun.
Hall of Fame inductee John Rader with Anthony Pellizzi
Hall of Fame continued on page 20 OCTOBER 2012 • INDEPENDENT JOE
e v a H l I’l S ’ E H t Wha ! g n i v a H by Stefanie Cloutier the Wilde Agency, an ad firm just 12 miles from Foxboro Stadium, home of the Patriots. “It’s because we all do things that people like us – or people we like – do,” said Harhut. “Social scientists call it the principle of social proof.” Social proof means that seeing other people doing something validates it as the right decision for us. When you see someone you admire driving a certain car or drinking a particular beverage, if you identify with that person, then that could be all the justification you need to make that purchase. It’s why advertisers use famous people to promote their brand. Of course, it’s important to make certain it’s the RIGHT person. Professional athletes lead Seeing other people doing better lives than the rest of something validates it as the us mere mortals, or at least right decision for us. they seem to. First of all, they get to play a sport they able to BE them, but I can have what love for an unbelievable amount of they’re having. money. They go to great parties, drive expensive cars – even their hair looks It’s exactly the reason advertisers great. We follow their every move use celebrities to pitch their products. in the press, sighing and wondering And it’s why Dunkin’ Brands (DBI) is what it would be like to live that life, currently using a number of profeswanting just a little piece of what they sional football players, including Eli have. Manning of the New York Giants and And then we see them in an advertisement, wearing a certain watch, or – yes – drinking a certain iced coffee. And we think, well, I may not be 14
INDEPENDENT JOE • OCTOBER 2012
Rob Gronkowski of the New England Patriots, to promote their wares. Quite simply, it works, says Nancy Harhut, Chief Creative Officer of
“You want to make sure the tone of your person aligns with your brand,” according to Doug Chapman, executive creative director and principal at Avenue Brand in Boston. “You might pair a serious person with a serious product or subject, or you pick someone who can entertain.” For a while now, DBI has chosen to use local sports figures. The nice thing about sports figures is that they have a broad appeal across a number of demographics: even people who aren’t avid sports fans are usually aware of the big names. People feel passionate about their teams, as the recent NFL replacement referee
debacle shows. It’s a great way to connect the product with the local audience. Using local sports figures also helps to customize the advertising to a particular region. For example, Dunkin’ can speak to New Yorkers—and New Jerseyites—with Manning and to New Englanders with Gronkowski. They can even go a step further by customizing the ads by season, using baseball players in their spring and summer ads to push the iced beverages, and saving the football players for fall and winter, making the advertising relevant and impactful. From a purely practical point of view, it can also be a little easier to use sports figures than people in the entertainment industry. “Actual actors don’t always want to be directed, whereas athletes don’t have that expertise,” said Chapman. Last spring, Dunkin’ Donuts used their spokespeople in a unique local way, kicking off their campaigns by having Manning and Gronkowski play employee for a day, filling coffee orders and surprising customers at the drive-up window. It was a great way to boost the brand: what fan doesn’t dream of meeting a sports figure up close and personal? The ultimate test of whether or not the use of celebrity endorsements is successful, of course, is if it results in more sales. Some of the most successful celebrity endorsements are also the most memorable. People of a certain age may remember Bill Cosby and his iconic Jello commercials. By the time Cosby became the Jell-O spokesperson, sales of the jiggly dessert had been steadily declining; it had become a “special occasion” food instead of the everyday dessert the company wanted it to be. No stranger to using celebrity endorsers, Jell-O had previously used such luminaries as actress Ethyl Barrymore and comedian Jack Benny to hawk their product. So it’s no surprise they tapped Cosby to tout their jigglers, Jello snacks made to look like different shapes and meant to be eaten with your fingers. Cosby’s endorse-
ment not only stopped the decline, it significantly increased sales. He stayed as their spokesperson for thirty years, a testament to his success. Then there’s George Forman and the grill that bears his name. Who would think to tie a kitchen appliance to a boxer? Apparently Salton, Inc. did;
The ultimate test of whether a celebrity endorsement is successful... is if it results in more sales. the company at the time owned the Lean Mean Fat-Reducing Grilling Machine, as the product was originally named. They were impressed that Forman had made a comeback at age 45 to regain the heavyweight world championship, a feat he attributed to healthy eating. Since a key attribute of their indoor grill is its ability to draw fat away from the food as it cooked, they saw a perfect match with the hale and hearty Forman. The campaign was so successful that the product is now known as the George Forman Grill, spawning the famous tagline, “It’s so good I put my name on it!” Advertising and pop culture experts warn however that you do need to be careful because sometimes your message can be derailed by a seemingly innocuous detail. Back a few years ago, Dunkin’ used Rachel Ray as a spokesperson. After all, she’s a recognized foodie, and she loves Dunkin’ Donuts coffee – it seemed like a natural fit. But when the ads came out there was a backlash: she was wearing a scarf around her neck that appeared to be a keffiyeh, a traditional scarf worn by Arab men supporting terrorist ideals. The scarf was actually a silk paisley thrown on at the last minute by the stylist, but the ad
was pulled nonetheless. Dunkin’ won praise for their quick action and concern for the sensitivity of the issue. Not everyone, however, is sold on the idea of celebrity endorsements as sound ad strategy. International advertising executive Martin Lock, with twenty-five years of experience in the industry, feels that celebrity endorsements tend to be the last resort when all other ideas for brand competition have failed. “Your risk (of exposure) increases over time,” said Lock, “eroding your core brand. It
becomes a veneer, and you risk losing the authenticity of the brand.” The flip side is that it can also help to differentiate you when you have a commodity product, like coffee and donuts, or when you are well established and don’t have something new to tout regularly, like “new and improved.” In those cases, a celebrity endorser can serve to differentiate your product in a crowded market. If you ARE committed to using a celebrity to endorse your product, Lock says it’s critical to do your research, and understand the amount of risk you’re prepared to take, because when it doesn’t work, the result can be disastrous. One of the best examples of an endorsement that didn’t work is OJ Simpson and his endorsement of Minute Maid OJ (orange juice). On paper, it looked like a match made in heaven: well-liked athlete with the same name as your product – what Celebrities continued on page 17 OCTOBER 2012 • INDEPENDENT JOE
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Celebrities continued from page 15 could be better? Of course having your spokesperson indicted for murdering his ex-wife can certainly do more than just tarnish your wholesome image. The unfortunate event spawned several unflattering taglines for the product, and it took Minute Maid a very long time to recover from the notoriety.
And then there is Nike. Back in 2004, Nike’s market research told them there was a market they weren’t reaching: customers who referred to
Of course, in advertising, it’s important to really understand your customers and which celebrity will connect with them. This is where the research Lock talks about comes in.
Celebrities continued on page 22
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themselves as “academically oriented.” They needed to come up with an endorser who would appeal to this market, and brilliantly hit upon re-
Of course, Nike is also the company that had Tiger Woods on their payroll when the golden golfer had his very public marital spat. Which brings up another issue: what to do when the celebrity to whom you’ve so publicly tied your cart goes off the
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When Microsoft went looking for someone to undo their stuffy image, they thought comedian Jerry Seinfeld was a perfect match. After all, he was funny and hip. Problem was, he was so hip that all the computers he used on his popular TV show were Macs. Not the connection Microsoft was hoping to make.
searcher Stephen Hawking to market their Air Jordans to the geek group. Only problem was, Hawking is paralyzed as a result of a long-standing motor neuron disease; he’s been confined to a wheelchair almost his entire adult life. Not a ringing endorsement for how well their sneakers worked.
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Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org
Sponsors continued from page 9
Paris-Kirwan Insurance 1040 University Avenue, Rochester, NY 14607 John Mulcahy • firstname.lastname@example.org 585-473-8000 • www.paris-kirwan.com
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3 Wire Group, Inc. 101 Broadway Street West, Osseo, MN 55369 Derek Knapp • email@example.com 518-563-3200 • www.3wire.com
Sinclair Insurance Group - Risk Management 4 Tower Drive, Wallingford, CT 06492 Matt Ottaviano • firstname.lastname@example.org 203-284-3235 • www.srfm.com
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Wells Fargo Insurance Services 2502 North Rocky Point Drive, #400, Tampa, FL 33607 Mark Stokes • firstname.lastname@example.org 813-636-5301 • wfis.wellsfargo.com
Bunn-O-Matic Corporation 1400 Stevenson Drive, Springfield, IL 62703 Todd Rouse • Todd.Rouse@bunn.com 800-637-8606 • www.bunn.com
Cashmaster Cash Solutions 2108 Trving Blvd., Dallas, TX 75207 Jayson Dunston • email@example.com 214-747-1982 ext. 2 • www.cashmaster-us.com
Lisa & Sousa Attorneys at Law 5 Benefit Street, Providence, RI 02904 Carl Lisa, Sr. • firstname.lastname@example.org 401-274-0600 • www.lisasousa.com RMS Insurance Brokerage, LLC 575 Jericho Tpke, Suite 102, Jericho, NY 11753 Donna Mis • email@example.com 516-742-8585 • www.rmsrestaurants.com Sinclair Insurance Group - Risk Management 4 Tower Drive, Wallingford, CT 06492 Matt Ottaviano • firstname.lastname@example.org 203-284-3235 • www.srfm.com Starkweather & Shepley Insurance Brokerage, Inc. 60 Catamore Boulevard, East Providence, RI 02914 Sabrina San Martino • email@example.com 800-854-4625 ext. 1121 • www.starkweathershepley.com Wells Fargo Insurance Services 2502 North Rocky Point Drive, #400, Tampa, FL 33607 Mark Stokes • firstname.lastname@example.org 813-636-5301 • wfis.wellsfargo.com
Lisa & Sousa Attorneys at Law 5 Benefit Street, Providence, RI 02904 Carl Lisa, Sr. • email@example.com 401-274-0600 • www.lisasousa.com Paris Ackerman & Schmierer LLP 101 Eisenhower Parkway, Roseland, NJ 07068 David Paris • firstname.lastname@example.org • 973-228-6667 www.paslawfirm.com “A Member of Franchise Pros” Zarco, Einhorn, Salkowski & Brito, PA 100 SE 2nd Street, 27th Floor, Miami, FL 33131 Robert Zarco, Esq. • email@example.com Robert Salkowski, Esq. • firstname.lastname@example.org 305-374-5418 • www.zarcolaw.com
Thank You to Our Sponsors!
INDEPENDENT JOE • OCTOBER 2012
Delphi/Fast Track 2+2 Drive-Thru Timer 3500 West Moore Avenue, Suite M, Santa Ana, CA 92704 Mike Pierce • email@example.com 714-850-1320 • www.fasttracktimer.com DTT Surveillance 1755 North Main Street, Los Angeles, CA 90031 Mira Diza • firstname.lastname@example.org 800-933-8388 • www.dttusa.co Ecolab 8300 Capital Drive, Greensboro, NC 27409 Arliene Bird • email@example.com www.ecolab.com/Businesses/ eCube 5 Cold Hill Road, Building 20, Mendham, NJ 07945 Cardie Saunders • firstname.lastname@example.org 888-99-ECUBE • www.getecube.com ePOS Solutions, Inc. 1910 Smith Street, North Providence, RI 02911 Robert Marcello • email@example.com 401-354-6500 • www.epossolutions.net Grainger 100 Grainger Parkway Lake Forest, IL 60045 Valerie Jenkins • firstname.lastname@example.org 503-887-6775 • grainger.com Hi-Tech Sound 53 Brigham Street, Unit 8, Marlborough, MA 01752 Gary Hanna • email@example.com 508-624-7479 • www.hitechsound.com HME Drive-Thru Headsets 14110 Stowe Drive, Poway, CA 92064 Brady Campbell • firstname.lastname@example.org 858-535-6034 • www.hme.com
Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org HS Brands International 500 Myles Standish Boulevard, Taunton, MA 02780 Michael Mershimer • email@example.com 800-723-1150 • www.hsbrands.com
SureShot Dispensing Systems 100 Dispensing Way, Lower Sackville, NS, Canada B4C 4H2 Steve Robert • firstname.lastname@example.org 905-827-4415 • www.sureshotdispensing.com
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TredSafe/WalMart 450 West 33rd Street, New York, NY 10001 Ted Travis • firstname.lastname@example.org 909-949-0495 • www.walmart.com
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Macdonald Restaurant Repair Service, Inc. PO Box 61, 83 Pond Street, Norfolk, MA 02056 Mark & Debi Macdonald • email@example.com 508-384-9361 • www.macdonaldcompany.com
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New England Drive-Thru Communications 12 Wildwood Road, Auburn, NH 03032 Angela Bechard • firstname.lastname@example.org 888-966-6337 • www.nedrivethru.com New England Repair Service - a div. of New England Coffee Co. 100 Charles Street, Malden, MA 02148 Jerry Brown • email@example.com 781-873-1536 • www.nerepairservice.com Paramount Restaurant Supply Corp. 101 Main Street, Warren, RI 02885 Jeffrey Cartier • firstname.lastname@example.org 401-247-6500 • www.pararest.com Payless Shoe Source 3231 SE 6th Avenue, Topeka, KS 66607 Matt Lemke • email@example.com 785-368-7530 • www.payless.com R.F. Technologies 542 South Prairie Street, Bethalto, IL 62010 Jennifer Morales • firstname.lastname@example.org 618-377-4063 ext. 121 • www.rftechno.com Register Tapes Unlimited 1268 Bella Vista Circle, Longwood, FL 32779 Michael Curtin • email@example.com 203-240-4121 • www.rtui.co Silver King 1600 Xenium Lane North Plymouth, MN 55441 Chris Lyons • firstname.lastname@example.org 630-462-4906 • www.silverking.com SKAL East, Inc PO Box 303, 31 Eastman Street, Easton, MA 02334 Jim Zafirson • email@example.com 800-966-0106 • www.skaleast.com/index.cfm?keyword=dunkin DDIFO® does not endorse or recommend commercial products, processes, or services. A DDIFO® sponsor is paying to advertise, and it is not to be considered a product or service endorsement by DDIFO®. Furthermore DDIFO® does not control or guarantee the currency, accuracy, relevance or completeness of information provided by sponsors in their advertising. OCTOBER 2012 • INDEPENDENT JOE
Hall of Fame continued from page 13
150 franchise owners attended this year’s National Members Meeting at Mohegan Sun
Taco Bell and Long John Silver’s franchise owner Sean Tuohy delivered an emotionally compelling speech to attendees of the DDIFO National Meeting. The story of how Tuohy’s family adopted Michael Oher, a homeless teenager who would go onto become an NFL star, became a best-selling book and movie called “The Blind Side”
WHY BUNN? A Partner You Can Count On Back when Abe Lincoln trudged the streets of Springfield, Illinois, we were there … and we’re still here today. Wherever you serve customers around the world, count on us to deliver profitable, reliable beverage equipment and great service.
INDEPENDENT JOE • OCTOBER 2012
Dunkin Ad_02_2011.indd 1
2/14/11 8:48 AM
Hall of Fame continued from previous page
DDIFO Executive Director Ed Shanahan led the discussion of grassroots politics at Mohegan Sun.
e with ares the stag y Dubinsky sh Ja ee ct du n in Coe Hall of Fame Motta and Jim Bill Daly, John
Hall of Fame “After Pa
Plates created by Peggy Karr Glass were awarded to each Hall of Fame inductee.
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Celebrities continued from page 17 rails and does something you’d really rather not be associated with. That’s the downside of using celebrities to endorse your products. Whether you choose to drop the endorsement depends entirely on your brand and the transgression: if you’re promoting wholesomeness and your endorser is caught breaking a law, you’ll have a problem. But if your brand is projecting an edgy lifestyle, the celebrity’s bad behavior may not make an impact at all on your sales, and in fact could enhance sales. With sports figures, the danger is more that they will be traded while your ads are still running, making it important to pick a player with long standing, or a really popular newcomer, something Dunkin’ has been very successful with. And they’ve been agile with developing ads that incorporate those changes. That relevance strikes a chord with die-hard fans.
Whether or not you like the idea of well-known people touting your product and promoting your brand, the fact is that people respond to it. Especially when it’s their favorite sports
player, doing an every day activity that they do themselves: drinking coffee. And hopefully, it will make them drink yours.
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INDEPENDENT JOE • OCTOBER 2012
Politics continued from page 3 can’t do it alone; we need franchisees to be directly involved in the political process as well.”
out what’s going on that could affect you. It’s a bottom up approach, and it works.”
Giannino asserts that many franchise owners already have a rapport of some kind with local politicians.
Winning the Battle
“Whether they’re your customers, your neighbors, your relatives’ neighbors or friends—even if they’re meeting with people in your shops—you probably
Spurred by DDIFO, franchisee Rob Branca has worked hard to increase his political involvement in recent years, developing strong relationships in Massachusetts with Speaker of the House Robert DeLeo, State Repre-
Recent/Pending Legislation & Regulations Here are some examples of the laws and regulations franchisees are facing, or have faced, nationally and in specific states. • National: the “Fair Minimum Wage Act,” a bill in the U.S. Senate to raise the federal minimum wage from $7.25 to $9.80 an hour in three annual incremental increases of 85 cents an hour; also would tie future increases to inflation; in late July, assigned to a congressional committee for consideration before possibly sending to the House or Senate as a whole • New Jersey: a bill proposing an increase in the minimum wage from $7.25 to $8.50 an hour in NJ; passed the full Assembly in May; stalled in the State Senate because Governor Chris Christie vowed to veto it • Florida: lawmakers are now classifying Dunkin’ Donuts as a restaurant instead of a bakery, changing how franchisees are taxed on the sale of donuts and other baked goods
Franchise owners Dinart Serpa, Greg and Jeeny Califano, and Rob Branca with Massachusetts Speaker of the House, Robert DeLeo.
already have some kind of relationship with your state reps, senators, aldermen and city councilors. All of these relationships are crucial and should be cultivated, because it’s the local connections that matter most.” Through these personal relationships, franchise owners can ensure that politicians understand the difference between Dunkin’ as a brand and the individual franchisee as an independent small business owner and a voting constituent. Franchise owners play an important role in their local communities and deserve a voice in the decisions impacting their operations. Giannino says lawmakers and policy-setters are coming to realize just how much franchisees invest in hiring local people, paying taxes and supporting local charities and community organizations. “If you build a good rapport with your legislators and other politicians, they’ll turn to you for your opinion and, conversely, you can go to them to find
sentative Linda Dorcena Forry and State Senators Michael Moore and Brian Joyce. Branca has spearheaded successful meetings with legislators and government agencies that have resulted in defeating or amending harmful laws and regulations. Most recently, Branca helped generate an amendment to the existing Fair Share Law in Massachusetts that will go into effect on July 1, 2013. Currently, the law requires any Massachusetts employer with 11 or more full-timeequivalent (FTE) employees to provide employees with health insurance that passes certain tests, or pay the Commonwealth $295 per year per FTE. Further, if fewer than 25 percent of employees opt to accept the employeroffered coverage, the employer must pay the penalty. “As written, the Fair Share Law is anything but fair, especially since there is no consideration for the reasons an employee might choose not to accept coverage,” said Branca. “In our world, Politics continued on page 24
• Illinois: the restaurant tax rate (about 10%) applies to all goods purchased in QSRs and other restaurants; Dunkin’ customers are charged the same tax rate on one donut as a dozen even though a dozen is technically a bulk sale; in grocery stores, the bulk sales tax rate (about 2%) applies; DDIFO members are working with the Illinois Chamber of Commerce to identify explicit language in the current law that permits charging bulk tax rate without fear of repercussions in future audits • New York City: a regulation banning sales of big sodas and other sugary drinks at restaurants, concession stands, workplace cafeterias and other eateries (doesn’t apply to supermarkets or most convenience stores); puts a 16-ounce size limit on cups and bottles of non-diet soda, sweetened teas and other beverages considered high in calories; passed by the NYC Board of Health in August 2012 • Massachusetts: a tip pooling law banning any employees with “managerial authority” from collecting tips; prevents Dunkin’ employees who are not true managers from sharing in tips even though they work in direct service operations; has been spurring class action lawsuits; amendment lost by one vote in MA Senate; the fight continues with a grassroots effort encouraging franchisees to attend oneon-one meetings with their senators • Rhode Island: a tip pooling bill modeled on the MA law; initially passed the RI Senate and was sent to the House; Dunkin’ franchisees mobilized to convince their representatives how unfair the bill was to countless employees in the state; House legislators listened, and the bill died; it’s likely to be re-introduced next session; franchise owners remain alert and engaged. OCTOBER 2012 • INDEPENDENT JOE
Politics continued from page 23 it’s common for employees not to take up the coverage we’re offering. Many of our employees are covered under a spouse’s health insurance plan or are seniors or military personnel with other coverage in place. Still, even though I was in compliance in terms of the minimum plan standards I was offering – in fact, the plan I offer employees goes beyond the minimum standards – I was paying thousands of dollars in penalties due to the take-up rate requirement.” Branca brought this inherent unfairness to the attention of key legislators. They agreed the law is unjust and fought to fix it accordingly. In August, the Massachusetts legislature passed, and Governor Deval Patrick signed into law, an act that includes new Fair Share provisions, namely raising the FTE threshold from 11 to 21 and making an adjustment for employees with other coverage. Branca has also taken an active role in examining how legislative and regulatory action in Washington, D.C. could im-
INDEPENDENT JOE • OCTOBER 2012
pact Dunkin’ Donuts franchise owners by assuming the role of vice-chairman of the CFA. “As the saying goes, ‘If you don’t have a seat at the table, you’re probably on the menu.’ That’s why we all need to make sure we’re part of the local, state and national political conversation. If we don’t, it’s our bottom line that will be devoured,” he said.
CFA representatives, including DDIFO’s Jim Coen and Rob Branca meet with US Congressman Jim McGovern
Other franchisees agree. “We have to engage politically to protect our operations. I recently faced an issue impacting a location in Florida and, had it not been for the relationships I have with local politicians, we never could have resolved it. Of course, if it weren’t for their actions, I never
would’ve had the problem in the first place,” said David Daly. “No matter what, some politicians overstep basic issues of public protection and expand powers where they shouldn’t. That’s when you need to be able to go to your officials and ask for help. And they need Politics continued on next page
Politics continued from previous page
How to Get the Ball Rolling If you have access to the Internet, you can find out who your elected officials are and how to contact them, as well as where to vote, primary and general election dates and much more information that will help you get connected, get involved and start building invaluable relationships with government officials. Resources for federal, state and/ or city/town officials and voting/ elections information: • http://www.usa.gov/Agencies/Stateand-Territories.shtml or www.usa.gov/ Contact.shtml • http://votesmart.org/ (Click Government & Officials, then Offices & Officials) • www.eac.gov/voter_resources/contact_your_state.aspx Another way to find your town or city website, is to use a search engine like Google, Bing, Yahoo, etc. and search for your town or city name together with your state abbreviation (e.g., Elmhurst IL; Holyoke MA; Davie FL). The official city or town website typically appears as the top result. A city or town website typically provides links to contact the mayor and city councilors, as well as other local officials, committees and boards.
How to Talk to Politicians Start with Positive Comments & Establish Common Ground, like: • “Thank you for your hard work.” • “Our kids play little league together.” • “I fully support your position on...” • “I read a great article about you in our local paper.” • “I appreciate your help.” • “I am a local business owner who has 50 employees that live and work in your district.” Don’t Go Negative, like: • “I won’t vote for you unless you...” • “I pay your salary.” • “You work for me! “ • “Do your job!” • “I don’t trust politicians.” Other Key Points: • The office visit is important – show up in person. • Be concise – show respect for their time. • Ask for their vote/support. • Say “Thank you”. • Have polite conversation.
to know who you are: that you own x number of stores employing x number of people in their constituency, that you vote and maybe even that you contribute to their campaigns.” “We have to educate our politicians about who we are and the issues that matter to us,” Chris Prazeres said. “Go to community events, like little league opening day. All the politicians are there. It’s a great opportunity to meet them and let them know we’re small business owners, not a big corporation, and that we live down the street from them, creating jobs and investing money in the community. In my experience, once they understand this, they take seriously what we say about the negative impact certain legislation has on us, and consequently on our employees and our communities. That’s when they really listen and are responsive.”
Empowering DDIFO DDIFO leadership is committed to identifying key legislative and regulatory issues nationwide and lobbying in the best interest of all franchisees, but they need help from franchisees. “We know we have a cadre of franchise owners with existing political relationships that would be great to have in the DDIFO rolodex,” Giannino said.
“We need to know about the relationships you have with local politicians and policymakers, and we can advise how to leverage those relationships in ways that protect your
Franchise Owner David Daly with Boston City Councilor John Connolly.
investment,” Shanahan agreed. “As soon as you hear about a piece of legislation or a regulation that could impact your business, let us know. We can follow up, make inquiries, identify the key players, ascertain the likelihood of it moving forward or not, and determine if there’s a need for mobilization. That’s part of my job, and I stand ready and eager to serve in that capacity.”
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Expansion continued from page 7 approve or deny a new site. Regardless of the decision, the results of the study are not shared with the franchisees.
he said. “Besides, the second and third generation is important to Dunkin’ Donuts.”
By his own estimation, one Dunkin’ Donuts franchise owner in a core market saw his gross sales drop by 20 percent when DBI approved the development of a new shop less than a mile from his existing location. He told Independent Joe, not only did DBI bypass this franchisee entirely—refusing to offer him the chance to develop the new location—it is also considering another new shop in close proximity to his territory. This double-whammy encroachment punch could significantly reduce this franchisee’s profits and hamper his chances to harvest the equity he has put into the business.
“My caution to your franchisor is to be patient with the franchisees and give them time to build their team and support them with training,” said Hougland. “And my caution to the franchisees is go for it—but be sure you have the right team along with you.” But, time marches quickly for publicly traded companies. Because expansion is so critical to Dunkin’s story and stock valuation on Wall Street, Gordon is not so sure patience will be an option, or be rewarded by the investment community. Restaurant Analyst John Gordon told meeting attendees, Western expansion will take longer than Dunkin’ wants.
Even as isolated encroachment situations arise in core markets, DBI is banking on increasing its penetration in emerging and future markets. At the breakout session, Gabellieri showed a slide indicating, there is approximately one shop for every 10,000 people in New England and New York; one for every 24,000 people in Philadelphia, Chicago and South Florida; one to 99,000 in other markets east of the Mississippi; and one for every one million people in western markets. So, while a westward march is inevitable, Gabellieri says it won’t happen overnight. “Developing contiguous to successful markets is smart,” he said. “East of the Mississippi (River) is where Dunkin’ Donuts sees good growth opportunities, again focusing on markets contiguous to the base,” he said. And, Gordon notes, approvals for new Dunkin’ shops in western markets appear to be happening faster than expected, which indicates DBI’s interest in getting new beachheads established, while increasing the density in states in the middle. Something else DBI is banking on is tapping the expertise and capital of some of its successful core market franchisees to lead the development charge into new markets. One example is the Milwaukee Coffee Brewing Company, a partnership of six franchises headed by Mark Cafua, which is developing 30 locations in Milwaukee and surrounding towns over a four-year span. The group is getting well known and is actively engaged in its new communities. After all, they know what it’s like to be a linchpin of a neighborhood. The proximity to Chicago, with its existing supply chain and the largest CML in the country, certainly improves the Milwaukee group’s chances for success. And considering the density in New England, it’s hard to find any opportunities to add 30 new locations to a network without branching out west. DBI can make that argument to other established franchisees as it continues to fill in open spaces. Gordon concurs it’s in DBI’s best interest to have well capitalized franchisees from its core markets develop new territories. “They know the business and they know what it’s like to build,”
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Shanahan continued from page 5 chise owners aware and prompt them to take action at the local level. “After all, all politics is local,” Shanahan said, quoting the phrase made famous by the former U.S. Speaker of the House Thomas P. (Tip) O’Neill, for whose campaigns Shanahan volunteered. Knowing how to work within the legislative system, organize, and take action are some of the skill set Shanahan brings to his new role as executive director of DDIFO. Or, to use a sports analogy, Shanahan said that it’s the franchise owners “who’ve got the real skin in the game.” Sports language often peppers Shanahan’s conversations because in addition to being a lobbyist and professional membership organization leader, Shanahan spent many seasons running across college football fields as an NCAA referee. Before he officially retired from Division 1 football, he officiated at the four oldest rivalries in college football, including “The Game” between Harvard and Yale. In addition, he served as president of the Eastern Association of Intercollegiate Football Officials, Boston Chapter. Keeping the peace between opposing teams and ensuring a fair and level playing field are skills he brings to the task of making sure the needs of small business owners are not unfairly encroached upon by government regulations. From what he’s been hearing in the field and at the national conference, franchise owners in different parts of the country are all facing increasing pressures from government oversight and regulations. “If sprinkles and frosting are being taxed some place today,” Shanahan quipped, “you bet other municipalities will look to do it too.” And while taxing sprinkles was meant only as a humorous example, Shanahan said in this struggling economy, where all levels of government are struggling with reduced budgets, elected leaders are looking for new sources of revenue—and when something works in one place, it could well be enacted in another. Shanahan tipped his hat to Jim Coen, former DDIFO president and chief operating officer, for building up a strong network within DDIFO. “Kudos to Jim,
he’s put together a sponsorship program that’s been doing exceedingly well,” Shanahan said. The trajectory of the DDIFO sponsorship program is positive and it is functioning very well, he said. Current DDIFO board chair Daniel Connelly echoed this sentiment that DDIFO communications channels have grown and strengthened considerably in the past few years. “Jim’s done a fantastic job in growing us to where we are.” When Coen opted to not renew his contract with DDIFO, Connelly said the board underwent an extensive search and culled it down to 50 qualified resumes. Shanahan’s blend of lobbying experience coupled with growing memberships in a number of trade organizations proved the right blend of experience to keep DDIFO moving forward. “Our franchisees are waking up every morning facing a challenging business climate. As the brand continues to move
beyond New England,” Connelly said, the membership base of DDIFO will keep expanding as well. “Every franchisee signs the same [franchise] agreement,” Connelly said and is dealing with the same essential issues when it comes to running a small business. When their individual businesses are thriving, the most desired next step for most franchisees is to expand. “Expansion is good for the local economy, good for architects, for construction, for people looking for jobs,” Connelly said. So there is leverage among a membership organization such as DDIFO to work in tandem with local, state, and national lawmakers to ensure small businesses can thrive. To this end, Connelly said both Shanahan and the board are committed to representing franchise owners from all around the country and building a truly national organization.
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OCTOBER 2012 • INDEPENDENT JOE