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Dunkin’ Donuts business practices have lots of holes
My business partner and I are Dunkin’ Donuts franchisees, but we may soon be out of the doughnut racket. We’re just two of thousands of people doing business with Dunkin’ under the franchise system. As with many corporate chains, every Dunkin’ location is owned independently, in exchange for a fee and/or a percentage of profits.
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Because I wanted our store manager to share in our success, I offered to sell him a 15% stake. I wanted everything to be upfront, so I immediately notified Dunkin’ Donuts.The corporation’s response? A lawsuit. Dunkin’ said that even though the transaction had yet to be completed – and even though I had notified the company beforehand – I had still violated their policies.
To be clear, the deal was never consummated, and, when informed of the policy, I immediately withdrew the offer.
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In order to compete with Starbucks, Dunkin’ Donuts has announced a plan to open 15,000 stores by 2016. There’s only one problem with that plan. Because Dunkin’ Donuts is made up entirely of franchisee-owned stores, it relies on franchisees to open new stores.Only large, multiunit owners who already own dozens of stores have the means to expand quickly.
Dunkin’s answer to this conundrum is to systematically replace single-store owners with multistore owners. And because they can’t just force these mom-and-pop shops to sell, they strong-arm them with threats of lawsuits over minor “contract infractions.”
I’d say start a boycott, except that would hurt the small time owners just as much as corporate is.
There is classic joke
A motorist is pulled over for speeding
The motorist demurs – “officer is you examine my license you will note that i have no speeding tickets
The officer asks the motorist that if he never speeds why does he have an expensive radar detector on his dash
“Officer i travel by car a fair bit. When I come to a new town I want to find the donut shops quickly and without having a car accident”
Krispy Kreme drove all the other dough nut shops out of my neck of the woods, And now Starbucks is getting all the College kids and Krispy Kreme is not doing so hot anymore. I think being “in” is more important than Dunkin’ management thinks. The solution to a few under-performing stores is to have a lot of under-performing stores???
Duncan Donuts sucks. They are going for a new image. Their new commercials are embarrassingly bad. There is one here in Knoxville and soon to be more. I’ll boycott them, but only because I never went there anyway. Krispy Kreme is king here.
This DD franchise owner needs to find a lawyer that knows state franchise law. He will find that in fact HE has a lot of power over DD. State franchise laws give the franchise owners a lot of clout. Many of these provision that DD is trying are probably illegal in most states.
The trick is to know your state laws and use them. He can have a lot of the provision in his contract tossed out of court.
And he can thank his state auto dealers for that. They carry a lot of weigh in the state capital and manage to get a pro-franchisee law passed to protect them from idiots at Ford, GM, Toyota, et. all. They laws makes it very expensive and difficult to for a brand to close, screw with, or dictate onerous terms to a franchisee.
And BTW… Starbucks is not franchised.
Coffee shops in general hit their zenith in terms of public interest a couple of years ago. Most kids that are gen-Y and after do not drink coffee but instead drink energy drinks. In addition, the obesity issues in the US are pushing people (we hope) away from donut shops. So, unless Dunkin’ Donuts gets away from coffee and donuts, I really do not see long term potential for them.
Dunkin pulled the franchise from my local donut shop in ’06 because – and I got this from the former owner – the local shop didn’t stick to the franchise-approved menu. What was the deviation? Green donuts on St. Patrick’s Day.
Y’see, we used to have a regional chain – Mr. Donut – that took plain old cake donuts, added some green food coloring, and sold ’em one day a year: March 17. When Mr. Donut went under in this area and Dunkin franchises took over the old stores the franchisees kept up with the tradition (after a one year lapse that sent the area into a near panic). For over a decade Dunkin kept up the tradition, until the corporate overlords got wind of it and pulled the rights. My local store tried to make a go of it as an indie but didn’t have the wherewithal to continue. Last August, it closed, probably for good.
Now, I’ve been told that Dunkin does the green thing in other markets, but apparently it wasn’t permitted in WV. Who knows? Just more corporate BS.
Found DD’s coffee WEAK (using less than the full bag per brew ?) and the donuts LOUSY – FOAMED DOUGH COATED WITH SUGAR AND NO SUBSTANCE !!! Don’t go there anymore !!!
I’m heading over to Dunkin’ right now and leave an upper decker.
This is not atypical of some of these sorts of operations. There are interesting horror stories by Subway franchisees too.
#7, CG,
Tim Horton’s doesn’t sell coffee. They sell Heaven in a Cup. Damn I wish they had a franchise around this neck of the woods.
Any large franchise is not a good racket to get into. Your rights are not their concern (just look at most large fast food chains). Read Fast Food Nation to find out more.
This is not surprising in the least. Just one more reason to limit the size of any franchise operation to a hundred or so operations, if that.
#12–gmknobl==limit the size of any franchise? EXCELLENT IDEA. Franchises and corporations are creatures of law and can be regulated as wished. I see a lot of benefits in such a limitations and only one downside==a small circle of people can’t get rich at the expense of many.
Benefits==less incentive/ability to defraud, more local control, regional variability, more competititon.
In fact, the elements of the benefits are already well known and legislated in current anti-trust laws which are far too favorable to conglomeration/monopolizaiton now, and not enforced anyway.
Be good for a brain storming session anyway. Who needs ((any given “name”)) on every other street corner?
#7 !!!
Dugg for Tim’s. Oh, wait, wrong site. My bad.
I say support your local coffee shop, and tell them to carry donuts. If I open a shop? why woudl I pay for a name if they are going to stab me in the back?
Never been back. One Saturday morning 3 years ago I walked into a DD and asked for a dozen. “Sorry, we’re all out.”
Right. You’re out of the only freakin’ product you sell, morans. And no, I don’t want day-old crullers.
That store went out of business last year.
the answer:
generally for name recognition, this familiarity (usually) buys you a guaranteed customer base as well as often matching dollars for regional marketing campaigns. Of course this only works if the name you buy is desirable and not a liability. I like Carl’s Jr. hamburgers for instance, (are they franchised? dunno) and if I am travelling know what I am getting there. Conversely I think Arby’s is like eating donkey meat and won’t go near one. So if you served sandwiches buying the Arby’s name is no asset.
But you are right, if you have a good local source go for it.