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BOCA RATON, Fla.—With regret, this publication is late in reporting the passing this spring of one of the industry's pioneers, franchisee Jason (Jay) Dubinsky. He passed away in Boca Raton, Florida on April 3, 2013 at the age of 80.
His is an amazing sojourn.
When word came of a hostile takeover of franchising company Dunkin' Donuts, Dubinsky, along with fellow franchisees John Boujoukos, George Mandell, Steve Camann and others, formed an independent association in order to help determine who would buy the franchising company as well as to have an ongoing say at the table, no matter who eventually became owner. "Jay" was the first president of one of what was back then only a handful of independent franchisee associations in the quick service restaurant industry, the Dunkin' Donuts Independent Franchise Owners (DDIFO).
In the heat of the takeover battle, the audacious hope was to have these small business people, who dot the streets of New England with their shops, outmaneuver a coordinated hostile takeover by Big Business. That is because in 1989 George W. Mann, chairman of a company called Unicorp Canada Corporation, acquired a large interest in Dunkin' stock and began taking steps towards a hostile financial takeover. The Rosenberg family, who still ran the public company, was being pushed out. It looked likely Robert Rosenberg would lose his position as Dunkin's CEO. In regard to franchisee issues, Unicorp strategically wanted to take the chain's then sizable store real estate holdings and spin them off. That could have meant higher lease costs for franchisees.
Franchisees were convinced that Unicorp had no interest in developing expertise in running donut shop operations. "They just wanted to take the network apart for its underbelly of real estate," says Jason Dubinsky's son Mark, who joined the family business after college.
Franchisees responded by forming a structure in which the donut shop owners, who by their nature are independent-minded business owners, would unite to influence the ownership and strategic direction of the brand that dictated the way franchisees could do business. It wasn't enough to be listened to on a good day in an advisory committee. "We wanted to have a seat at the table when important decisions were made," says Kevin McCarthy. At the time, McCarthy worked for Dunkin' corporate, but later would become the chairman of the franchisee association.
As the forces gathered to form an independent franchisee association, Dunkin' founder Robert Rosenberg saw that an association could be a hindrance to a hostile financial takeover by a "raider." He embraced the formation of DDIFO.
These Main Street capitalists quickly let Wall Street know that Unicorp Canada did not have the franchisees' blessings. DDIFO took out ads in the Wall Street Journal, the New York Times and the Boston Globe to let it be known that the unwelcome takeover would have to deal with hostile franchisees. That could affect the royalties that fed the franchisor and potentially stop new franchise sales.
It worked. George Mann backed off from his takeover attempt.
When "white knight" Allied-Lyons bought Dunkin' Donuts for $325 million, the British-based firm kept Dunkin's existing management structure — including Rosenberg as CEO. But as the dust settled, there was no new seat on the corporation's board of directors for the independent association or any franchisee representative. Soon Dunkin' management told Dubinsky that DDIFO was no longer necessary because franchise owners were already well served by the existing franchisee advisory system.
Dubinsky and others resisted Dunkin's calls to disband.
"We strongly felt that if Dunkin' was sold once, it could very well be sold again," recalled Dubinsky at the organization's 20th anniversary celebration in 2009. "We had no way of knowing who the future owners might be or what their policies might be."
Dubinsky stated last year, "They stopped recognizing us almost immediately after the sale to Allied-Lyons."
Allied-Lyons subsequently underwent a change in ownership. It then sold Dunkin' Brands to a consortium of three private equity firms. Although franchisees had discovered a different private equity buyer, CEO Jon Luther topped them by finding a trio that were willing to pay considerably more for the company. Dubinsky lived to see the Dunkin' firm become public again in 2011.
As his first store branched out into eventually 27 shops, Jay Dubinsky, wife Vicki and sons Mark and Carey worked hard on the business. Even cousins kicked in. "If I wanted to see my Dad, I went to the Dunkin' shop," says Mark. That is because his father worked there some 14 - 18 hours a day.
The family tells the story about how once one of their bakers messed up the donuts, but made matters worse by putting the substandard donuts out for sale. Dubinsky told the baker that messing up the batch wasn't the problem, but rather selling them. He threw out all of the donuts.
"I won't sell our customers junk," he insisted.
It has become both business and family lore.
"Dad liked excellence," says his son, who currently is a director of DDIFO and president of a Dunkin' Central Manufacturing Location, which provides baked goods to 90 Dunkin' shops in Massachusetts and New Hampshire.
After buying an existing donut shop in Methuen, Massachusetts in 1971, the former insurance salesman quickly took to the ranks of franchise leadership – local Boston marketing co-op, national advertising council, president's club, independent franchisee association.
As chairman of the Boston Advertising Committee, Dubinsky pushed from serving donuts to what the franchisor, his own numbers, and his instincts told him was the future: coffee. He helped persuade fellow franchisees on the merits of what his franchisor wanted, to marginally increase the advertising fund by one percent of sales so that Dunkin' could launch and sustain ongoing television and radio campaigns in Boston, Providence, and eventually New York.
"That's what helped drive the business," Dubinsky later told DDIFO about the power of coffee. His own results showed that. While donut sales accounted for 70 percent of Jason's business with his first shop, when he sold his network in 2007, donuts accounted for less than 10 percent of sales. "The money was in beverages," the unassuming millionaire said.
McCarthy thinks the story of Jay going against the wishes of the franchisor in keeping DDIFO and going with it in raising ad funds shows the essence of Dubinsky. "Jay Dubinsky was the epitome of positive leadership. He was cooperative with the company (franchisor Dunkin'), but never afraid to stand up for what was right for franchisees."
He was greatly appreciated by his peers. Last September Jay was inducted by his fellow franchisees into the DDIFO Hall of Fame. Ed Shanahan, new executive director of the association, writes, "His contributions to the success of Dunkin' Donuts are an integral part of the history of the brand and he will long be remembered as one of its true franchise titans! We will miss him greatly!"
Dubinsky considered DDIFO a lasting legacy and a precious gift to franchisees.
"Dad was stunned at the growth of the organization," says son Mark about his father attending the DDIFO's 20th anniversary. His father was particularly pleased both at how independent and strong the association had become in nudging the franchisor behind the scenes into what was right and fair for franchisees as well as the organization's efforts in lobbying for fairer laws.