Dunkin' Franchisee Association Makes Unique Decision in Restructuring Board

BELLINGHAM, Mass. (Blue MauMau) - In a bold move by the DD Independent Owners Association, the members of the board of directors have turned in their resignations allowing the DDIFO to hire a group of professional business people as replacements to manage its affairs. According to Mark Dubinsky, who will remain as president, the decision was made as a result of the recent controversy and disagreement between DDIFO and Dunkin' Brands over the direction it has taken. He said, "We actually thought it would be useful in terms of two things. First, perhaps the franchisees were a bit too close to it to be able to see globally what made sense for the best interest of the franchisees. And second, it might give the franchisees more credibility." Dubinsky said Dunkin' management currently thinks DDIFO members are a bunch of radicals looking at issues only from their own perspective. But now perhaps this group of respected professionals can help them get through some challenging times.

Although the new board has not authorized him to reveal who the new directors are, he said they have a cross disciplinary group comprised of a CPA, an investment banker, a franchise attorney, a commercial banker, and an executive who knows the franchise industry well. "We actually have the best of both worlds. We are still going to have the board listen to franchisee concerns regarding what they think is important, but also listen to what they think should happen." He said although the board will be empowered to run the affairs of the association, they are going to stay very close to the desires of their membership. "It will be a representational form of government that I think will work very well."

When asked if they had made the announcement to the corporate office, Dubinsky answered no. "Frankly, we are not currently in a dialogue mode with Dunkin'.  We are hopeful someday that changes, but we are not in conversations directly with the company at this time." He said their general counsel speaks to Dunkin's general counsel, but that is the extent of it. Dubinsky has had no dialogue with management and interestingly, management hasn't officially recognized their organization for many years. When the DDIFO first formed 19 years ago, DDIFO worked hand-in-hand with management and even supported them through a hostile takeover attempt.  "So things have certainly come full circle from working and supporting the management team to where we are today, where we are not seeing eye to eye but also not talking," Dubinsky explained. 

The DDIFO president said their situation with Dunkin' is very disappointing because the franchisees and corporate have so much common ground. "At the end of the day we have to take care of our customers, we have to be a high quality organization. I think the real irony is that if Dunkin' could only figured out how to work better with franchisees, the whole system would accelerate growth. We all know the franchisor has to make money and the franchisees have to be strong and healthy. Everyone rises on a rising tide, and we're all in the same boat."

Kevin McCarthy, attorney in Massachusetts, said he could confirm that he is one of the new directors of the board. He explained that the DDIFO decision came about because they wanted to make a change for positive reasons. "They want to establish a much better communication and a productive relationship with Dunkin' Brands." The franchisor, from his observation, is one of the premiere chains in the industry which has a tremendous capacity to communicate empathically and intelligently with its franchisees. But he feels for some reason that has started to go off the rails. McCarthy said, "The franchisees should be highly commended for their efforts in really trying to make a move that will reestablish the unity and communications that is essential in this chain."

Will Dunkin' Brands now recognize the DDIFO?  McCarthy explains that the Federal Trade Commission in their latest rule, the 2008 Franchise Disclosure Documents, now statutory law, says that the independent franchisee associations have to be recognized as long as they make a proper request. He hopes the company will use this as an opportunity to communicate and bring this chain back into unity. But, McCarthy said,  if they don't the FTC has already mandated the recognition of this organization, and DDIFO is already in the latest disclosure documents. 

But if Dunkin' doesn't open communications, he said their hope is that they will realize how serious and concerned the franchise community is. "We hope that they will use this as an opportunity to sit down and dialogue with us in a meaningful way so that we can quickly get things on a track where we are working closely together as a unified chain. It's the only way a franchise can work, and I know Dunkin' knows that because they are very experienced and highly capable." He continues saying present management knows how important it is for the franchisees to feel a sense of participation, to feel they have a voice, and to feel that they are respected. "But this area is what franchisees clearly feel the chain is becoming deficient in," according to McCarthy, "and this is an attempt to rectify that so the chain can move forward to become one of the best brands in the industry."

In closing, McCarthy said the decision was unique in this organization hiring business professional for their board of directors.  He remarked, "It is a one-of-a-kind move."