Sharing the dough

— and is paid in cash. "This is big money," one Dunkin' franchisee told The Post. "They must be really desperate to grow."

New York Post
December 29, 2009

Sharing the dough
Dunkin' giving sweet payoffs for new openings
Josh Koshman and Holly Sanders Ware

Dunkin_Donuts_Nigel_Travis.jpg

Dunkin' CEO Nigel Travis Bloomberg

Dunkin' Brands has found a new way to make nice with its franchisees.

In the new year Dunkin', one of the most litigious major franchisers in the country, is going to start offering outsized referral bonuses to the same owners it has focused on suing.

Starting in January, Dunkin' is offering franchisees $25,000 if they refer a new store owner who opens one to five locations — and $50,000 if they open more.

The company needs to meet certain financial targets, including new-store openings, to be on track to meet its debt payments in 2011. Private-equity firms Bain Capital, Carlyle Group and THL Partners bought Dunkin' in a $2.4 billion leveraged buyout in 2006.

Experts said while referral programs are not uncommon in the franchise business, Dunkin's new program is unusually generous.

"A $10,000 product credit is the most I've seen from a major franchiser," said a lawyer familiar with major restaurant chain agreements.

This referral represents more money — and is paid in cash.

"This is big money," one Dunkin' franchisee told The Post. "They must be really desperate to grow."

Dunkin' spokeswoman Karen Raskopf said referral programs like theirs are standard in the industry.

But this is also the latest in a series of moves by Dunkin' to try to improve relations with its franchisees.

Dunkin's detractors have said the company is one of the most litigious franchise systems in the country. Attorneys and franchise operators contend that Dunkin' targets store owners over minor violations in an attempt to terminate their franchise agreements and pushes them to pay big penalties.

Dunkin' denies that it is at odds with its franchisees. Even so, Dunkin's former chief legal counsel, Steven Horn, announced in October that he would retire after a spate of reports scrutinizing the company's behavior. President and Chief Brand Officer William Kussell, who oversaw store expansion, also stepped down.

Since then, CEO Nigel Travis has indicated that Dunkin' would be willing to consider changes to the franchise agreement that would give store owners more say over their business, sources said.

The new referral program caught some Dunkin' franchisees off guard.

"They are waiting for the franchise agreement to be renegotiated and all of a sudden this comes out," said a franchise attorney.

Dunkin' spokeswoman Raskopf said despite the new referral program, Dunkin's expansion effort is going well.

"We opened approximately 160 Dunkin' stores on a net basis in the US in 2009," she said. "There are very few franchising concepts that opened that many net locations last year. A large percentage of those stores were opened by existing franchisees, and we like to see organic, internal growth."

Comment
JerryLennon
12/29/2009 4:33 AM

Instead of actually fixing the problems, Nigel Travis apparently is under the orders of the Venture Capital greedsters to try an "PR" their way out of this mess. Keep in mind it's the venture capital companies that have been largely responsible for the economic collapse.

A few angry franchisees aren't the issue - there are serious issues with unprofitability across the network. And foreign operations are out of control, with Baskin Robbins operations collapsing in Thailand, struggling in other formerly profitable Asian locations, and the company under investigation in Australia for their selling of migration visas and failed locations to unsuspecting Koreans, Indians, and Chinese. Australian CEO Shane Radbone is in serious trouble with the authorities and franchisees who have been short supplies for months due to financial mismanagement.

Rewarding a few successful franchisees to "keep their mouth shut" is a trick that few will elect to support.

Search for Baskin Robbins Australia or Allied Brands Ltd. to read the truth!

http://www.nypost.com/p/news/business/sharing_the_dough_2WLt9kAhgwRhRg4ZrOqnJJ


Brought to you by WikidFranchise.org

Risks: Cash payments indicate under-the-table dealings, Desperate to sell any franchise for any price, Discounted franchise fees are a sign of desperation, Encroachment (too many outlets put in territory), Expand with another store across the street or we’ll sell to new franchisee, Predatory actions, Raining litigation, Sincerity, United States, 20081229 Dunkin giving

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License