Dunkin's Gluck Deposition Not Forthcoming
Caldeira's statement was as follows:
"The franchises of Cindy Gluck and Asam Habib were terminated because they transferred an interest in one of their stores and knowingly concealed it from Dunkin' Brands, Inc. (the franchisor) with fraudulent documents which is entitled to know who owns its licenses per the franchise agreement.
After the fraud was detected, Cindy Gluck confessed in a letter to the franchisor. As a result of that confession, Ms. Gluck was deposed under oath and denied the contents of her own letter.
As is the case with all franchisees that have been terminated, Ms. Gluck and Mr. Habib have been offered an opportunity to sell their stores rather than lose their franchises as part of the termination process. As a franchisor, we seek to retain locations when a franchisee is terminated. As part of that process, field personnel naturally discuss (as part of their collective responsibility) what will potentially happen to the store locations as a result of the litigation.
To be clear, there is absolutely no evidence in the emails to suggest the termination was pre-textual (sic), and any such characterization is misguided, wrong and irresponsible. To reiterate, Dunkin' Brands does not enter into litigation with franchisees unless there is clear cause, which was unequivocally the case with Ms. Gluck and Mr. Habib, end of story."
As reported in the Smoking Gun Email article (below), Blue MauMau had planned to attach the Gluck deposition after acquiring it from Dunkin' Brands. But in requesting a copy of the transcript, Caldeira stated that if it was part of the public record, Blue MauMau should be able to obtain a copy. If not, he suggested requesting it from Gluck's attorney, David Jaroslawicz. He added that in addition to Gluck's deposition, Blue MauMau should ask him for the depositions of "the people that Ms. Gluck purportedly transferred interest to, received money from and then never returned."
But according to Jaroslawicz the depositions were not filed in court by Dunkin's attorneys. He said, "They are not a public record, as Mr. Caldeira well knows. Dunkin' attorneys have not yet provided me with a copy of the deposition, which they should under the rules." Jaroslawicz adds, "I do not have the deposition of the other people that Mr. Caldeira refers to, but those are the people that Cindy Gluck planned to sell an interest to, and which apparently fell apart, and is the reason Dunkin' is seeking to terminate Cindy's franchise."
As another update, Blue MauMau has not been able to reach Konstantino Skrivanos, a Dunkin' multi-unit operator who was named in the "smoking gun" emails related to the termination of Cindy Gluck and business partner Asam Habib. It has been reported in the media that Skrivanos now owns at least 12 Dunkin' stores in the Brooklyn area and approximately 100 on the east coast.
According to court records, attorneys for Dunkin' Donuts and franchisees Gluck and Habib are currently in court settlement conferences.
Related reading:
- Dunkin' Donuts Mom and Pops Squeezed Out by Private Equity Firms
- Smoking Gun Emails Billow Dark Cloud over Dunkin' Brands
- Franchise topic:
How is what Dunkin doing illegal? What does the contract say?
The Truth Shall Set You Free!
TIF
While your emotionally laden conclusive opinions may seem exciting to you they really don't mean anything. So again, I ask what does the contract say?
The Truth Shall Set You Free!
TIF
The Truth Shall Set You Free!
TIF
Yes, the language of the contract for the transfer of ownership interest is critical, perhaps even dispositive as a matter of law. Certainly a well-drafted contract would have made the transfer contingent upon zor approval.
As I have said before, one of the key take-aways here is that before you transfer interest in your business (even a minority interest) be careful and seek legal and tax advice.
Even if your business is non-franchised, you may have loan covenants, lease provisions, rights-of-first refusal by partners or debt holders, etc. which restrain alienation. As with any restraint on alienation, courts may scrutinize closely, but you really should err on the side of caution here.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
So, I read the original complaint filed by Dunkin and unless I am mis-reading the complaint, it sounds like Gluck had misrepresented the ownership of their second store in their initial 'filings' with Dunkin. The two managers were owners but on the application, Gluck and her original partner put themselves as the only owners.
Have any of the other attorneys on here read the complaint? If so, am I mis-reading the complaint?
The Zor defenders were all screaming about Gluck being a broker for 7-11, yet the complaint says nothing about that.
Of course, it's tough to keep your story straight when you are forbidden to write anything down and can't use e-mail or anything else but Mafia type communications and you have to stuff evidence in your briefcase so nobody can see it.
Since a few people contacted me offline regarding this matter, I should clarify that there is a crucial distinction:
On the other hand... if you threaten criminal prosecution to gain advantage in a civil matter, that is a whole 'nuther story, both from the perspective of attorney ethics and the criminal law.
A franchisor which shall remain nameless does indeed skate perilously close to the edge and even crosses the line on occasion, but in this instance, I don't see that fact pattern with Dunkin'/Gluck.
However, Momma Gluck and Momma Horn should tell the kids to play nice in the sandbox--one of the kids got a shaky legal case and the other got a boss with an IPO in the not-too-distant future.
Perhaps about time to smoke the peace pipe.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
Guest the "Gluck Defender" asks - "Now...is that finally clear to you Mr. Truthy?"
Repsonse - No.
The Truth Shall Set You Free!
TIF
The Truth Shall Set You Free!
TIF
As one who had a few choice words published about the dubious practices of Mr. Horn, I am hardly a defender of Dunkin' tactics. I have never before or since seen a presentation such as that infamous one given by Mr. Horn, and I am in addition acquainted with the practices of Mr. Zisk and would hardly place him as a shining light of the franchise bar.
However, TiF has a point about the facts.
I find it odd that Dunkin' depositions are published, but the zee depositions are not. If what Mr. Caldeira says is true, there appears to be not only a breach, but a willful attempt to disguise the breach. Without the zee and the other 3rd party EBTs referenced by Caldeira, we don't know.
Be that as it may, if there is a breach and that breach is non-curable (both big assumptions here), then the zee is indeed subject to termination.
If the zee is terminated and continues to use the marks, that is a Lanham Act violation (here, there appears to be an estoppel issue viz the continued supply of marked product for resale, but that's another story) and the breaching/infringing party is subject to damages and injunctive relief.
Now, if at this stage of the dispute the non-breaching party then chooses to refrain from fully exercising its remedies at law in consideration of a monetary sum, that is generally not something which would be unethical--let alone illegal.
Let me be clear: Horn, Zisk and their ilk are the type of people that give lawyers a bad name. And I don't see a lot of zors emulating them, which suggests that their practices may be perceived by their peer group as counterproductive.
But...in this instance, I'm not convinced that sufficient facts are on the table to jump to the conclusion which "Guest" has made. I am uncomfortable with throwing around words like "illegal" and "extortion" based on what has been laid out to date.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
It is always about the contract since that is what is enduring and should be reliably durable.
And there is a huge difference between Coldstone and Quizno's vs. Dunkin Donuts. Dunkin has business models that work for their franchisees and the losers at Coldstone and Quizno's don't.
The Truth Shall Set You Free!
TIF
The Truth Shall Set You Free!
TIF
With the originator still in command, I agree that the relationship and the course of dealing quality usually rule over the contract - because when that is positive no one ever has to look at the contract - it just works.
But when ownership changes, and especially when the change is brought about mainly because of the financial operating statement of the franchisor, the new owners don't invest in "relationships" except for the relationship that is stated in the franchise agreement.The value of the company to the investors is that the franchise agreements are enforceable and that enforceability permits the franchisor's insistence upon compliance. PERIOD GET IT.
The days of touchy feely shit at DD are over. If you don't like it, you can sell your franchise. That's your remedy. If you want to make a fight of it, you either have to get the group together in a militant campaign that is warchest funded, or you will take it in the ear. One franchisee at a time on meager budgets won't get it done.
Y'all stand around lamenting po ole Cindy Gluck, but you aint standing into a real fight. Maybe it's because Cindy Gluck really doesn't have a case that everyone wants to go to war over. Frankly, I agree with that. She doesn't. But since you aint puttin it up, yo might consider that all this whining only makes you look ridiculous.
--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Franchisees are making too much money to risk mounting a rebellion as you've described. If you do not like being a franchisee you should sell.
The Truth Shall Set You Free!
TIF
The Truth Shall Set You Free!
TIF
Dunkin franchise owners are largely losing money? That cannot be. Entrepreneur magazine lists happy Dunkin in its top three picks of best franchises to buy. That's selected from a list of its top 500, which in turn is chosen from thousands.
You seem to be implying that Entrepreneur wants us to buy a loser. Now you can criticize Dunkin all you want but I resent you tarnishing the reputation of such a venerable news magazine.
Entrepreneur 500 is not much more than a beauty contest.
For the past 25 years I have closely perused the January Issue.
In my estimation the Franchise 500 it is not even close to an investors buy list, that Morningstar, or by a brokerage firm may issue.
It is nothing more than a listing of up to date (12 month) information about Franchise Systems. Sort of a productivity tool to see whats happening in franchising. It's not much more than a listing tool, not much of a due diligence tool for that matter (other than it lists the franchises in the category that you may be investigating, which has some value).
Just because Entrepreneur Magazine lists 7-Eleven as the #1 Franchise, doesn't mean anybody shoud go out and buy one, but I will tell you, over the years I have met many franchisees that have have made good livings owning 7-Eleven. I can also say that for Subway and Dunkin Donuts. There are failures in all (see my blog post regarding SBA Loans )
I do find it offensive when companies brag about the the fact that they are #1 in their category, to me people in franchising know that the Franchise 500 is a weak due diligence rating. So why should they boast?
Jim Coen
877-469-3002
Blog: Lets Talk Franchising
Executive Director of the New England Franchise Association
Clerk, Dunkin Donuts Independent Franchise Owners (DDIFO) Board of Directors
Jim Coen
877-469-3002
Blog: Lets Talk Franchising
Executive Director of the New England Franchise Association
President, Dunkin Donuts Independent Franchise Owners (DDIFO, Inc.)
I'm sure that many have accepted Entrepreneur's endorsements as free (credible) commentary on franchise quality.
Years ago I was called to consult with one Franchise 500 'list recipient' that was reduced to operating on an owner's personal credit card. I looked, I listened, and I walked away.
It seems to me that our industry is beginning the cleansing process, but not from the inside out or with government's assistance. It's being done the old fashioned way - through education and self-defense.
And BTW, isn’t Entrepreneur Media for sale? Haven’t certain practices regarding the Internet come to light?
Nick Bibby is a franchise consultant and principal of the Bibby Group.
Nick Bibby founded BibbyGroup.com, an organization dedicated to franchise and entrepreneurial excellence.
Guys, I cannot stomach the sarcastic tone of these paragaphs. For me, Entrepreneur Magazine has always been THE publication that I have pointed my franchise candidates to, year after year, month after month, and minute after minute.
And to think that a great franchisor like Quizno's was omitted from the "Franchise 5,000,000 just because they did not submit their information in time. What is the publishing world coming too.
The final straw for me, regarding this tremendous publicatrion was when Jeff Elgin from FranBoyce was able to buy his "FREE Advice/FREE Consulting" expert columns.
I could go on, but the devil on my shoulder is suggesting other things to do with my time.
Franpro
Franpro is:
Joel Libava , President Franchise Selection Specialists Inc. Cleveland, Ohio
Franpro is:
Joel Libava, President
Franchise Selection Specialists Inc.
Cleveland, Ohio
Borrowing from Entrepreneur.com's scientific ranking system, Blue MauMau presents the definitive list from the mouths of franchise owners.
The top 10 words to describe Entrepreneur.com's list of franchise best buys:
My favorite is #10. Coprophagous listers: It sounds so lofty and respectful.
"Guest": Frankman was being sarcastic regarding Entrepreneur. On a serious note, sites such as BMM are increasingly consulted by prospective zees and their counsel; the days of Entrepreneur's influence have likely peaked.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
That's a good point TIF makes. If the stores are very profitable, then it will be difficult for mom & pop owners to show the entire system (peers and management) the fallacy of its way.
In my opinion, if the system, including franchisees, apathetically tolerates gestapo-like tactics from their zor, then eventually it will catch up with everyone. In pushing for change, senior officers will probably try to convince franchisees that criticizing them and their policies will bring down the company. Not so. The board and the company has a strong survival instinct and would have no qualms about replacing management - in a Canton, Massachusett's second.
What executives are really saying is that they like their jobs.
We've seen from news reports here that if franchisees can figure out how to change management and the company in the direction that is favorable to strong operations and their interests, then their company miraculously learns to treat its mom and pop owners with the respect that is deserved.
Or you can take TIF's advice of selling your store and start looking for work.
The nuclear option is just that, an option. Staying cool on the way to a an all out showdown is always the smart move (with benefits) and in no way indicates a lack of spine to do it all when necessary. Bob is dead on target when he says that management, in a well communciated move, will be the first to blink. Ownership, in turn, looses its lunch at the thought of bad publicity brought by its decision to push in a stupid direction. Nothing new here.
Nick Bibby is a franchise consultant and principal of the Bibby Group.Nick Bibby founded BibbyGroup.com, an organization dedicated to franchise and entrepreneurial excellence.
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