Dunkin's Stalking Scheme Plagues Franchisees in Court

Posted Fri, 2008/08/22 - 18:22 by Janet Sparks

Dunkin' gathering "ammunition" for confrontation meeting? Photo/BMM

CANTON, Mass. (Blue MauMau) - Dunkin' Brands' onslaught of litigation against its mom and pop franchisees over the past eight years was foreshadowed by a presentation given by its chief counsel in 2000. The spying techniques it advocates has been a growing plague on its franchisees. At the American Bar Association's Forum on Franchising in New Orleans, Stephen Horn presented to fellow franchise industry attorneys his company's approach in catching franchise operators in acts of underreporting sales as related to royalty payments, and other related issues. At that time Horn was general counsel to Allied Domecq, the umbrella organization over Dunkin' Donuts, Baskin-Robbins and Togo's Eateries, having left his position at Schmeltzer, Aptaker & Shepard in Washington D.C. Two of his partners at that firm, Robert Zisk and David Worthan, now with Gray Plant Mooty, act as outside litigation counsel to Dunkin' Brands.

In Horn's written materials for the 2000 ABA Forum "Franchising without Borders" Volume II (click to see larger cover page pictured on right), co-authored with franchisee attorney Jeff Haff, he instructs the audience, "One of the best ways to gather evidence that will potentially have some impact in court is to conduct surveillance of the franchise." He explained that the best surveillance is not necessarily to generate evidence for court, but to provide ammunition for a confrontation meeting with the franchisee. "If the case goes to court, the franchisor can always use subpoenas to gather all the evidence, of which surveillance will provide but a snapshot."

According to Horn, "There are quite a few former federal agents who now make a living as private investigators, and they certainly are the best at obtaining good results." But he said surveillance can be expensive and has its limitations, in that investigators can be found out. He explained, ". . . this will put the franchisee on his guard, possibly preventing the franchisor from getting the evidence it needs to confirm its suspicions."

Horn's co-presenter seemed to take offense to that. In the written materials of their presentation a footnote was published: "Mr. Haff notes that surveillance also may adversely affect franchisee morale and trust of the franchisor. If the basis for terminating an underreporting franchisee is breach of trust, hasn't the franchisor breached the trust of an innocent franchisee by putting him under surveillance?"

Haff said in an interview with Blue MauMau that he remembers Horn taking a very aggressive stance on franchisee underreporters. "There's no question about that." Haff said Horn took a poll during his speech asking how many in the audience had a rule that business owners get one warning, but on the second time they tell them they are out. He said quite a few people raised their hands. "But It was Horn's opinion that that was an unacceptable position for a franchisor to take. Horn advised, 'The first time a franchisee was caught, they were done. Period. They got no warning, no explanation.'”

Horn elaborated on some of Dunkin's hardball tactics in his written materials. "Investigators are fairly ingenious at figuring out ways to get the job done." He adds, "Some are known to use small video cameras that can fit inside a briefcase. . .and investigator posing as a customer can shoot footage while eating on line or sitting at a table . . .an investigator can pose as a potential buyer if the franchisee has the business on the market."

Dunkin' Views All Franchisees as Suspect

Dunkin's investigations go beyond that of the franchisee's business. Horn expressed that their lifestyles and attitudes should also be investigated. "Everyone knows which franchisee just built a beach house and which one drives a late model Mercedes Benz." He feels every franchisee is suspect, happy or unhappy (ABA forum material, Common Signs of Underreporting, pg. 3). He said, "The franchisee who is happy and wants to expand should be asked, 'Has anyone checked to see how much he claims to earn from the business?' If his P&Ls look so bad that you would expect him to be begging to get out of the system, you have probably discovered another underreporter."

But then Horn presents the opposite scenario of those who are unhappy, explaining, "A franchisee who feels the system has not worked for him may decide to use a little 'self-help' by underreporting sales."

A Look Back at Dunkin's Litigation Pattern

Dunkin's litigation history shows an aggressive pattern that has been destructive for many small operators since 2000. Nation's Restaurant News and the Boston Business Journal reported that 350 suits were filed by Dunkin' between January 2000 and September 2002, compared to 12 filed by McDonald's for the same time period. And during the 18-month span between January 2006 to June 2007, Dunkin' filed 157 lawsuits compared to Subway's 5.

After Dunkin' was acquired in 2006 by three private equity firms, Bain Capital Partners, Thomas H. Lee Partners and The Carlyle Group, Horn took over as chief legal counsel in charge of loss prevention—loss prevention was described by its own operations director as "investigations of underreporting cases and transfer matters, meaning transfers to other franchisees." In the latest barrage of lawsuits, franchisees are alleging that the company is continuing to use the tactic of spying on operators to gather evidence for court in an attempt to terminate small operators—a similar strategy to what Horn described in his 2000 forum presentation.

Most involve allegations of breach of contract issues and a variety of infractions, but also include accusations of violating federal laws such as tax evasion and noncompliance with labor and immigration rules.

In one federal lawsuit still going on, Dunkin' terminated 52 franchisees, accusing many of masking overtime pay by using identities of former employees, violating the Fair Labor Standards Act, engaging in identity theft and failure to pay payroll taxes. But the franchisees represented in the suit allege that Dunkin's bogus threats are all part of its scheme in utilizing a nonnegotiable term of its franchise agreement known as the "obey all laws" provision. They contend that Dunkin' uses noncompliance to any law "in a manner which is unfair and deceptive to coerce unwarranted financial concessions from franchisees," and that they are "victims of a pretextual and malicious scheme" perpetrated by Dunkin' to disenfranchise them from their stores.

The lawsuit goes on to describe Dunkin's scheme as one utilizing "a so-called Loss Prevention" unit . . . which engages in Gestapo-like raids on franchise locations in a threatening and intimidating manner designed to strike fear into current and former employees, and embarrass the franchisee in his community."

The court held that Dunkin' did not have to prove its claims prior to terminating the franchisees in this case. The motion for protective order discloses that in addition Dunkin' eventually wants to gather personal information—including social security numbers and medical files—on the franchisees' employees. At issue is the fact that this sensitive information is being released to people who are not authorized to access or see such private data. Without the consent of the employees their information is given to Dunkin' the franchisor, not the franchisee who is the employer.

Another lawsuit filed for underreporting against a franchisee in Pittsburgh was dismissed in 2003 because the court did not find Dunkin's accounting methodology to be credible. At the same time, Dunkin' dismissed the same charges against a store operator in Florida, although its attorneys continued to litigate other charges of tax evasion and employment law violations.

Horn's Post-Presentation: Ammunition to Negotiate with Owners

At the conclusion of his 2000 ABA Forum presentation, Horn turned on a slide projector and, according to Penn State Law Review's acclaimed Beguiling Heresy: Regulating the Franchise Relationship, authored by eyewitness Paul Steinberg, a frequent contributor to Blue MauMau, and the late Gerald Lescatre, Horn "regaled the assembled attorneys with photographs not of Dunkin' stores, not of Dunkin' franchisee deliveries, not of surveillance inside stores—rather, Horn showed photographs of the personal homes, boats, and cars of Dunkin' franchisees." According to Steinberg, he attended that session and took detailed notes.

The report reveals, "He then made explicit to the attorneys what he meant by "ammunition" for a confrontation meeting: the franchisee would be confronted with photos that the private investigator had taken while lurking around the family home. Dunkin' attorneys would point out that there was an "obey all laws" clause; the family appeared to be living beyond its means, and what would happen if the IRS got these photos? Under such circumstances, Horn stated, the franchisee would normally pay the Dunkin' demand. Franchisees who fight Dunkin' risk exposure of their private lives, as Horn's slide show indicated; one franchisee subsequently said that Dunkin' even makes inquiries into franchisees' "romantic relations." The threat of forfeiting a $500,000 investment and having one's "romantic relations" exposed provide a powerful weapon to ensure franchisee submission to franchisor demands."

One citation from the Penn State Law Review states:

Franchisees who fight Dunkin' risk exposure of their private lives, as Horn's slide show indicated; one franchisee subsequently said that Dunkin' even makes inquiries into franchisee's "romantic relations" --n554. Martin, supra note 148, at 111 (citing fall 2002 interview in Bloomberg Markets magazine).

After the attorneys finished presenting, the Law Review publication reports that several attendees gathered around the two presenters. Several asked Horn about his recent novel, a legal thriller he wrote in 2000, and one asked for his autograph. According to Steinberg, "None asked about the ethics of Dunkin's strategy. When this author [Paul Steinberg] asked if Dunkin's practices did not amount to extortion, Horn hastily said that he had been misunderstood. Some while later, this author had communication with three attorneys about Horn's presentation; two of the attorneys had attended the meeting. One of those who attended noted that his clients had told him about the Dunkin' surveillance, but that he was surprised that Dunkin' was so public about discussing such practices, as well as surprised at the lack of reaction from the attendees."

Steinberg's book also states, "One attorney who had not attended the presentation defended the Dunkin' practice and said it was ethically permissible. That is debatable: an attorney who retired after working for a disciplinary committee in a major east coast state told the authors that the issue was clear-cut: threatening criminal prosecution (tax fraud) in order to gain advantage in a civil matter. (See Code of Professional Responsibility 107:5.) The issue was not, she explained, how artfully the franchisor attorney skirted the letter of any ethics regulation: "he knows precisely what he is doing, why he is doing it, and he knows what the response of the other party will be. It's not even a close call in my mind. It's shocking to get up and boast; it makes you wonder what else they're up to."

Dunkin' Responds with Threats

In April Blue MauMau asked Dunkin' if Stephen Horn had made statements at a meeting implying that " . . . if he saw a franchisee driving a fancy car who owns a Dunkin' shop, he felt that the franchisee wasn't working hard enough or he was stealing." Stephen Caldeira, Dunkin's chief global communications officer, said he had spoken to Steve Horn and he had unequivocally stated that he had never made such a statement. "This incident simply did not happen," insisted Caldeira. He said, "Franchisees that know Horn know he would never think or say such a thing, knowing his strong moral and ethical character. This is pretty shocking news to us."

Caldeira warned that the company had spoken to their outside counsel and without a legitimate basis for running the quote [on Blue MauMau], and without proper documentation, they would consider it as an act with reckless disregard as to whether it was ever said. According to Caldeira, Dunkin' lawyers told him it would give them a strong suit for libel.

He continued saying that they were giving fair warning: "Unless you have some kind of foolproof documentation that Steve Horn made this statement, I've told you what our next steps will be . . . With all due respect, I just hope you have your ducks in a row if this is the way you are going, because we will be prepared to refute and get engaged in short order."

Reporter's Note: Dunkin' Donuts is invited to respond to this article. If Blue MauMau receives a meaningful response it will be published immediately.

Related reading:

Franchisee Sentenced amid Dunkin’ Lawsuit Barrage
Jury Finds Hole in Dunkin' Donuts Case Against Pittsburgh Franchisee
Dunkin’ Spate Stirs Anger among Franchisees
FindLaw:Dunkin’Says Stores Skimped on Overtime Pay
Detroit Mom and Pop Franchisees Sue Dunkin' over Illicit Business Practices
Smoking Gun Emails Billow Dark Cloud over Dunkin' Brands
Dunkin' Donuts Mom and Pops Squeezed Out by Private Equity Firms
Indians allege discrimination by Dunkin’ Donuts company Articles
Duelin' Dunkin' has "one of the toughest franchisee discipline programs in the country", Franchise Times
Beguiling Heresy: Dunkin' Donuts' Strong-Arm Approach in Spying on Franchisees
Regulating the Franchise Relationship (Introductory chapter of the book Beguiling Heresy: Regulating the Franchise Relationship posted online)
October 2002 issue of Bloomberg Market's magazine, Dunkin' Donuts' Spate of Lawsuits Stirs Anger Among Franchisees

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117 Comments

TIF is missing the point by Guest

Submitted by Guest on Mon, 2008/08/25 - 14:12.

TIF, I believe Guest has answered your question. How about you answer this one? Well some of your family members are NOT underreporting royalties, sales/income taxes and DO NOT employ illegals but are accused of and assumed guilty of doing so without any discussion or evidence, for the sole purpose of extorting money. By the way, by the time your family proves this they are basically on the street. What do you think should happen to the accusers?

A real example of Horn's Extortion Game by Guest

Submitted by Guest on Wed, 2008/08/27 - 19:00.

As a Franchisee currently being extorted by little Stephen Horn, here is an example of DBI's Loss Prevention tactics of Guilty until proven Innocent or until you go Bankrupt. My partner and I joined the DD system in 2001 by signing a 3 unit SDA. We barely hit financial requirements but managed to become approved Franchisee’s. In 2002, we built our 1st store by risking everything we had including collateralizing all of our personal assets with our SBA financing facility. The 1st 18 months was brutal sweat equity. There were times, sometimes months at a time, where we couldn’t afford our payroll, so my partner and I would send our employees home and work the counter until either 11PM or 12AM when our overnight crew checked in. Every DD mom-n-pop operator knows what it is like to sleep on a 50lbs bag of flour. And quite honestly, it’s actually not that bad, when you accept failure as not being an option. We did whatever needed to be done to make our investments work. In 2004 we opened our 2nd store and felt the relief of a successful opening. With that, my partner and I began drawing a minimal $500/wk salary. In 2005 we opened our 3rd store with greater success compared to store #2. Finally, we starting to see and feel the fruits of our labor come to life. In the summer of 2006 we signed another 3 unit SDA and opened our 4th store around the same time. What I thought was good, at the time, was actually the pretext to their extortion game. Our 4th store was developed exactly 1 mile away from another Franchisee’s store and things got emotional during the period leading up to the store’s opening. During that time, DD Loss Prevention somehow received a tip that our organization was paying cash to employees. They acted on the information and we were lucky to be randomly selected for a Loss Prevention Audit the same year. Like Stephen Horn says, “A lot of our guys have backgrounds as former FBI investigators and IRS audit agents.” They will say they don’t but trust me little Stephen Horn acts on anonymous tips. If his buddies at the FBI do it – Why wouldn’t he? The 1st interview with Loss Prevention occurred 2 months after we delivered, in entirety, including some original files, the documents that were requested. What I thought was going to be a friendly business review followed by discussion was actually a strong handed attempt to find anything, even if immaterial, to support the anonymous tip received. The individual slammed his hand down in my store’s dining area and said, “We have all the information we need at this point but we’d like to hear it from you personally. How is it that you get the cash to pay your employees?” He had my Manager’s W-2 in his hand and continued, “The average DD Manager makes $40K plus per year. How is it that your Manager can make a living earning only $29K per year?” My response was simple. “Before answering that question, I would like you to ask me 1st – Did this individual work the entire year? The answer will be No. Now, to answer the 2nd part, he was away for 3 months during the year at which time he had gone to India to marry his wife. If you annualize his salary, the numbers will show a salary of approximately $39K. In addition, I provide him with a SUV, cell phone, life insurance, and a gifted ticket to India.” With that said his tone became friendlier and asked some other questions trying to figure out this grand scheme that had no basis. I run a clean shop operationally and financially bottom line. Four months later, in October 2006, the same individual from Loss Prevention requested to meet with one of our other Managers in a different store. The store in question is a NTO within a supermarket. In order to operate the store, effectively, it is business critical for the Manager to live within a close proximity. After consulting with our CPA, we decide to include, as a convenience to the employer, a leased apartment facility for the primary Store Manager. Regardless of whether or not the Manager occupies the leased apartment has no bearing on the individuals pay and treated as a general business expense as a convenience to the employer. The Manager being questioned had an annual salary of roughly $41K. The conversation was more to the point this time around: LP - “Who pays for your apartment?” SM - “Boss pays.” LP – “Do you have to repay him?” SM – “Boss has done a lot for me and I owe him a lot.” LP – “Meaning, for the apartment.” SM – “Yes.” LP – “Do you know it’s against the law to have your Boss pay for an apartment without paying taxes on it? Do you pay taxes on your income?” SM – 1st part “No.” 2nd part “Yes.” LP – “No, you do not pay taxes on all of your income because your Boss does not give you a 1099 for the apartment. What do you do with the cash that your Boss gives you?” SM – “I deposit my check in the bank.” LP – “I don’t think you’d deposit all of the cash in the bank. If so, I want you to go home right now and get me your bank statements. Otherwise, you are also going to get in trouble with your Boss.” * The above conversation is not verbatim but provides a general description of the tactics used during the conversation. It is my assumption from the manner in which the questions were being asked that all conversations with Loss Prevention were recorded by the individual handling the case. However, it has not been confirm to date. At that point, my Store Manager wasn’t sure how to handle the questions and started tearing thinking he had done something wrong. Not being able to respond any further, LP excused my SM by saying he’s going to ask Boss the same thing and that the bank statements may still be requested. Once again, they had nothing to go on. In March 2007, I had presented a development plan to the Development Team demonstrating, in detail, our strategy on growing our existing 4 store network to 10 stores in 2 years followed by an additional 2 stores in year 3. The development plan, fully executed, would have positioned our organization as a 12 store network within a very unique geography within the Mid-Atlantic region. Most Franchisee owned networks are in geographies that overlap with other Franchisee owned stores that foster development competitiveness between Franchisees of the same brand. Our specific market would have been exclusive to us, within a 15 square mile radius, creating significant value added synergies. After the presentation, I was given numerous “pats on the back” with one particular comment that stuck with me made by the Regional Director of Development, “I wish all Franchisee’s thought about development the way you do. What they need to understand, is we are going to penetrate the markets. And if you don’t do it, someone else will.” We began executing on our plan, within 2 weeks of the meeting after securing the necessary financial commitments, by issuing a LOI to acquire 2 stores. The LOI was sent to Dunkin, by the selling Franchisee, for review and acceptance. The selling Franchisee was also under a lawsuit with DD at the time. I was expecting their approval of the acquisition, based on the positive presentation and being an integral piece of our strategy; instead, I was delivered a Termination Letter, within 30 days, in April 2007. The allegations being made are as follows: 1) Underreporting of Gross Sales. The basis is in 2004. Our primary production store reporting $1.2M, in gross sales on our annual filings, our total deposits into that account was $1.7M. They are alleging we have concealed sales of $500K. The difference was reconciled to the penny, in perfect balance, during the 2nd interview with Loss Prevention. The reconciliation was performed with 35 minutes using an excel spreadsheet that was printed and given as support. 2) Payment in lieu of compensation (snowballs as a payroll tax issue since we don’t issue a 1099 on fringe benefits): a. Expenses taken for the lease of a SUV given to a key associate. b. Expenses taken for the lease of a residential apartment. c. Expense taken for a tuition payment made on behalf of a cousin who had built an excel model for us to use in our business operations. Hitting us for breach of contract and obey all laws has nothing to do with protecting the integrity of the Brand. It’s about a Den of Thieves who hawked our books to uncover the value. The value to them has to do with the Collateralized Debt Obligation (CDO) issued to finance the LBO by the 3 pigs (Private Equity): a. Churn our franchise agreements from a 16 year average life into fresh 20 year franchise agreements. This creates greater ongoing present value for the assets that underlie the CDO that was supposed to “Liberate” us. The underlying pool of assets is made up of Franchise Agreements and options on real estate leases held by the Franchise’s. b. Our portfolio of store leases is only 5% of our total Gross Sales. By exercising the options, on behalf of the Franchisor, they will reap the residual spread by subletting our leases to new Franchisee operators at 10% for the next 16 years. c. Generate immediate transfer fees. d. Enforce ridiculous penalties for allowing us to sell our stores. The last item d, above, exemplifies the extortion. Being for settlement purposes only, I received their purposed settlement letter from little Stephen Horn’s friends at GPM. Highlighted as follows: 1) Allowed to sell to our “selected” not just “approved” franchisee. 2) The sale must be completed within 3 month otherwise we will impose a $300K penalty. 3) If the sale is not completed within 5 months, then we will impose a $500K penalty. 4) In consideration of the above, we will waive our right of refusal in selling your stores. I wonder if this about “In Her Defense” or maybe the “Laws of Gravity” because it’s certainly not reality. When presented, I asked them to justify the $300K & $500K penalties. That was over 4 months ago and I’m still waiting for an answer. More importantly, it’s been over 16 months since receiving the termination letter. They are holding up the development of my 5th store that was in process when were “Terminated”. Having secured the property, I am bearing the holding cost of the rent as an ongoing expense. Maybe they can’t win in court because they technically sold the company to finance the LBO. Meaning they have a Master Franchise Agreement with the TRUE FRANCHISOR – DB Master Finance, LLC – the bondholders on Wall Street. It’s difficult to win a case based on fraud when the true Racketeers aren’t even named as a Plaintiff. That’s right Dunkin Brands, Inc is a dual servicing organization on behalf of the bondholders and the Franchisor. Like a management fee relationship that can get replaced. Little Stephen Horn has to compensate with his overly confident and arrogant character because he managed to win by scaring little mom-n-pop operators in the past. It makes me wonder why no one inside the company has been able to speak with me as businessmen since filing the complaint. We went from “A” rated operators to “C” rated overnight with no indication of this coming. Their audit lasted over 1 year and now we have been in litigation for over 16 months. Our organization has not been able to move forward over the last 28 months while absorbing on-going legal cost on top of increasing operating expenses. And what is Stephen Horn doing – taking pictures of my house? What a d*ckhead!

Dunkin' extortion comment reply by Paul Steinberg

Submitted by Paul Steinberg on Wed, 2008/08/27 - 19:43.

This is disturbing, and indicative of a new level of extortative behavior by Dunkin; previously this type of tactic was not used against employees of the franchisee.

My understanding is that in another current case, Dunkin is seeking medical and pay records of franchise employees.

Any judge considering permitting Dunkin to have access to personal data of third parties should consider the consequences. The people working in the store have NO legal relation to Dunkin. This is a company which has been very aggressive in working hand-in-glove with the government to get people criminally prosecuted, and in a case such as the exchange between the Dunkin interrogator and the third-party set forth above, the implicit threat is clear to any reader.

You should have your attorney communicate with Mr. McCarthy and with the attorneys who are currently dealing with Dunkin problems. There is a pattern of activity being alleged which may rise to the level of criminal activity. You may also wish to read the 2004 Penn State Law Review article; your attorney can pull this from online or drop me a line and I will send a courtesy copy.

Lastly: don't feel picked on about having your employees threatened. You are not the first to have this slimy Dunkin' tactic, and if they are threatening Janet Sparks and store employees my guess is that they are getting bolder and more open in their tactics. That arrogance may just prove to be their undoing.

Good luck to you.

Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

This is standard operating procedure for Dunkin by Guest

Submitted by Guest on Wed, 2008/08/27 - 20:49.

It isn't new ground for Dunkin. It isn't even the tip of the iceberg. This good person is only one typical example of someone who has created value that was targeted for appropropriation. I bet the attorney general of Connecticut and Illinois could provide more info.

RE: TIF is missing the point by Truth in Franchising

Submitted by Truth in Franchising on Mon, 2008/08/25 - 14:24.

Guest writes - Well some of your family members are NOT underreporting royalties, sales/income taxes and DO NOT employ illegals but are accused of and assumed guilty of doing so without any discussion or evidence, for the sole purpose of extorting money. By the way, by the time your family proves this they are basically on the street. What do you think should happen to the accusers?

TIF answers your exact question - They should be strung up from the highest yard arm by their nasty bits.

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

The virtue of consistency by Paul Steinberg

Submitted by Paul Steinberg on Mon, 2008/08/25 - 17:34.

TiF does have the virtue of consistency in this thread. But as so often with extremist positions, this one is intellectually coherent but pragmatically unworkable.

No human being is perfect, and in a cash business this can be a particular concern. Having audited retail foodservice operations and been a QSR franchisee--not to mention running into flawed people on a daily basis-- I am inclined to lean more towards a dose of mercy, if for no other reasons than pragmatic.

What this Stephen Horn incident demonstrates is that there are non-pecuniary costs to distrust when that distrust becomes known to the counter-party.

What disturbs people about this Horn behavior is that a business matter becomes personal and intrusive. If Horn was surveilling the donut shops and dinging people on discrepancies between reported sales and their business tax returns, that would be one thing.

But snooping around people's private lives with telephoto lenses and becoming a junior G-Man is crossing the line.

There is a difference between someone partnering up with a competing donut shop (in violation of a non-compete) and someone partnering up with someone for a tumble in the hay. There is a difference between someone reporting different gross sales on their 1040 and someone who takes a deduction for private school tuition.

I'm not condoning extramarital sex or taking a tax-deduction for tuition. But I don't see what those have to do with keeping a clean donut shop and reporting your correct sales pursuant to contract.

Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

Obey All Laws by michael webster

Submitted by michael webster on Mon, 2008/08/25 - 18:06.

The obey all laws clause is objectionable in the extreme as it permits Mr. Horn the fig leaf to investigate all possible infractions of any law, use maximum power to extort a settlement, and has no reciprocal obligation on the franchisor.

Michael Webster PhD LLB
Franchise News

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Dunkin’s Horn Denies Bias Allegations; Threatens to Sue Press by Guest

Submitted by Guest on Mon, 2008/08/25 - 08:48.

Well well....now Dunkin' is now trying to intimidate the Press for revealing Dunkin' Brand's long known prejudices against their very own franchisees. Prejudices that have led to Dunkin' Brands becoming the franchise industry's leading litigator. However,like any dictatorial law abusing entity they have a little problem - our Free Press can expose them to the world. In fact, our Constitution and society welcomes and protects disclosure of illegality, abuse of power and violation of public trust. Free Speech sheds light on Dunkin' just like cameras exposed Bull Connors' dogs attacking Civil Rights workers in the 60's. Janet Sparks' supurb investigatory work is revealing, frame by frame, the illegal and immoral actions of Dunkin' Brands and its equity owners, Carlyle, Bain and Lee. And the world will be a better place because exposing corruption and shedding light on illegal and immoral business practices will enlighten and motivate those in power who can act to protect franchisees. And if they don't act on information like this then I'm sure informed public outrage will force them to act in protection of franchisee victims. Mr. Horn and Dunkin' are used to abusively taking their one-sided franchise agreements into Court where they have the advantage in a rather unlevel field. But if they are stupid enough to try and silence the Press (as they have threatened to do) then they will run smack into the First Amendment which is designed to protect the Press and enhance revealtion of the truth. Mr. Horn and Dunkin' Brands will loose that battle - for it is a battle against America and our traditions of Free Speech and fair play. People have a right to know the truth about Dunkins' prejudices and business practices and our Constitution protects that right.

Re: Good luck. We are a DD family... by Truth in Franchising

Submitted by Truth in Franchising on Mon, 2008/08/25 - 09:06.

Since you've failed to respond I'll put the question to you once more...

Well some of your family members are underreporting royalties, sales/income taxes and employ illegals. What should happen to them?

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

For the total FRAUD TIF by Guest

Submitted by Guest on Wed, 2008/08/27 - 21:39.

I said a few days ago that we were a DD family, which in my language means my family. You immediately jumped to a conclusion that I made an all encompassing statement about the world of DD franchisees. Make a case out of that you snide, obnoxious, no faced fool. The more that people understand your stupidity the lower your stock, which I suspect is pretty low. And you run a company? I doubt you run anything but an online fraud known as TIF. I finally got a laugh after seeing you for what you are - just a pranster who's having fun making people mad. Congratulations - a clown is always fun, once they're seen in their drag.

Re: For the total FRAUD TIF by Truth in Franchising

Submitted by Truth in Franchising on Wed, 2008/08/27 - 21:56.

Sorry you feel the way you do, however opinions they do vary and some are more valuable than others!

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

RE: Re: For the total FRAUD TIF by Guest

Submitted by Guest on Thu, 2008/08/28 - 00:49.

"....however opinions they do vary and some are more valuable than others!" Yours are worth as much as a verbal promise from a Quiznos' sales agent. Man, does he have your number.....and so do I and a lot others. ,,,,,,,,Here are a few more commas for your usage in your posts, ignoramous.

You made my day by Barbara Jorgensen

Submitted by Barbara Jorgensen on Thu, 2008/08/28 - 01:54.

Quote to TIF about his opinions, "Yours are worth as much as a verbal promise from a Quiznos sales agent."

Thanks guest I'm laughing so hard. Like they say comedy only works when there is truth behind it.

TIF I will ask again by Guest

Submitted by Guest on Wed, 2008/08/27 - 21:00.

Knowing all of this, and asusming (based on your posts) that you fully intend to and will comply with all terms of a Dunkin franchise agreement, would you buy a commitment to develop the minimum 5 shops from Dunkin Donuts?

Re: TIF I will ask again by Truth in Franchising

Submitted by Truth in Franchising on Wed, 2008/08/27 - 21:24.

I have no idea. I've done no due diligence on Dunkin Donuts and would not let the posts on BMM subsitute for actual research.

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

TiF correct on sex and spying by Paul Steinberg

Submitted by Paul Steinberg on Mon, 2008/08/25 - 13:42.

TiF is absoutely correct. There is nothing wrong with forcing someone to forfeit their business if they break a single law.

On the other hand, if they break the law 20,870 times this is deserving merely of a slap on the wrist. After all, they are a franchisor and therefore can do no wrong. That's why TiF doesn't comment on that.

As to spying with telephoto lenses outside peoples homes and sending gumshoes to dig up the juicy sexual dirt, TiF again is correct. In fact, I hear that Steve Horn is looking into an RFID tag which will be implanted subcutaneously at the first training class, as well as a chastity belt which can only be unlocked after Horn has verfied the identity of the zee's prospective sexual partner, and cross-matched same against his database of marriage licenses.

People outside of the franchise industry find Horn's obsession with people's personal lives to be creepy. But they simply don't understand the franchise industry like TiF and I do.

Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

TIF is missing the point. Again by Guest

Submitted by Guest on Mon, 2008/08/25 - 09:38.

The franchisees were NOT GUILTY of under reportting or employment law violations. All they did was drive a Mercedes or buy a nice house. That is what leads Steve Horn to believe that he can extort a penalty out of them by filing a federal lawsuit that he has no evidence for. Many franchisees just pay to get their lives back or because they can't afford to fight a giant Washington DC law firm and run a 24 hour business. I ask TIF what should happen to people in a franchisor system that do this?

Beach House in the Cape or Hamptons by Guest

Submitted by Guest on Mon, 2008/08/25 - 20:02.

Does DD have to investigate everyone who buys a Beach House in the Cape and Hamptons? What about if the spouse works or money is in trust or inherited. Is that why they wanted to review personal returns as well?

Luther's got a ne beach house in the Hamptons! Call Magnum P.I.! by Guest

Submitted by Guest on Mon, 2008/08/25 - 20:42.

Sound the sirens!!! Load your cameras with film! Look for incriminating underwear! Steve Horn better get his gumshoe brigade to storm over down there to see if Mr. Luther spent franchise roylaties on his new fancy beach house! He is living large, so he must be a thief, right? See where this boneheaded approach leads? Nowhere good. Some BIG changes need to happen at Canton. Wait!!!! I see some panties in the window!

RE: TIF is missing the point. Again by Truth in Franchising

Submitted by Truth in Franchising on Mon, 2008/08/25 - 10:17.

Here is one more try for an answer regarding DD cheaters! It is a simple question about cheating and not about how a franchisee is caught cheating or the practices of a Dunkin Brands.

Re: Good luck. We are a DD family...

Submitted by Truth in Franchising on Mon, 2008/08/25 - 06:06.

Since you've failed to respond I'll put the question to you once more...

Well some of your family members are underreporting royalties, sales/income taxes and employ illegals. What should happen to them?

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

Last time, TIF by Guest

Submitted by Guest on Mon, 2008/08/25 - 10:34.

I understand that franchisors pay you to litter these posts with noise so that franchise investors and law enforcement might miss the real things going on. You have passed the point of dimishing returns and they will just skip replies to your threads and focus on the meat at this point. If they WERE stealing, the contract says you pay the money you owed and lose your franchise. That is what should happen, but that is not what this article says is happening here. This is alarming if this is at all true. Maybe I should sell my boat and beach house so I don't have people rummaging through my trash? WHO was under reporting, TIF? Horn didn't say anyone was did he? The article says that Horn said let's see who bought a new boat. I bet we can squeeze him. Who has a girlfriend on the side? I bet we can squeeze money out of him. That is what was reported. Not that he has a girlefirend who told me he wasn't paying his royalties. Who was caught cheating the franchisor? No one. Why is the franchsor suing people for cheating on their wives? To get money? The law has a name for that and it isn't franchise enforcement. This is the targeting of people on no rational basis. It is absurd. I almost don't believe it. I have to ask my lawyer what the heck is going on here.

Re: Last time, TIF by Truth in Franchising

Submitted by Truth in Franchising on Mon, 2008/08/25 - 10:52.

If a franchisee's lifestyle does not match their P&Ls and tax returns do you think it is okay for a franchisor to hire an investigator to look into the matter?

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

TIF by Guest

Submitted by Guest on Mon, 2008/08/25 - 11:50.

Only if the zee gets the same consideration when they realize the zors lifestyle does not reflect thier bottom line. THE ZOR SHOULD HAVE PAID FOR KILLER DD

Last time, TIF by Guest

Submitted by Guest on Mon, 2008/08/25 - 11:26.

A franchisee's lifestyle is none of the ZOR's business. The franchisee could be independently wealthy and running his little dunking donuts shop as a hobby. Maybe he just liked the "time to make the donuts" ads and likes donuts! DD needs to spend more time getting some of the costs out of the business and come up with updated advertising with more memorable taglines like the aforementioned "time to make the donuts". If the volume of a store as measured by "subject to royalty reporting" is low or going in the wrong direction, forget the witch hunt, work with the owner on getting volume up through all available means. If there is skimming going on, it will probably float to the surface while going through this process. Spying on zee's only makes for more disgruntled operators and more spinning wheels an wasted time. A franchise that is afraid to attract attention by enjoying the fruits of his labor soon becomes less motivated and then the zee and the zor have lost! The zeal for improving the business gets side tracked and you end up with a bloated company where no one trusts anyone!

I like this line by jd

Submitted by jd on Mon, 2008/08/25 - 11:42.

'A franchisee's lifestyle is none of the ZOR's business.'

Reminds me of the time the company I worked for was hired by a church to determine how much many an accountant had stolen from them over 12 years (she admitted to over $250k) The accountant was living a lifestyle way above her means (lake house, boat, trips, etc), but everyone thought it was because her husband's business was doing well, and her lifestyle was none of their business anyways. Turns out, maybe it should've been.

When the Zor could be damaged by the ways of a wayward zee, they should be concerned.

Another question I have, because it's brought up often about the IFA, but if the DDIFO is aware of any illegal activities of a franchisee, do they feel that they have a responsibility to protect the 'good' franchisees and notify the Zor?

maybe the issue is larger by FuwaFuwaUsagi

Submitted by FuwaFuwaUsagi on Mon, 2008/08/25 - 12:20.

It was written:

'A franchisee's lifestyle is none of the ZOR's business.'

My reply:

Perhaps the issue is broader than you think. Many companies now are mining credit card data bases for lifestyle based choices and genetic based problems. Credit issuers are now reviewing credit card transactions crossed with loyalty cards to determine credit scores, insurance companies are examining receipts to detect patterns that they believe are at risk behaviors, etc, etc.

Do I approve of this - heck no, but the reality is this is what is going on, and the Government likes it, they like it very much. There is nothing the Government and businesses as whole would like to do as much as eliminate cash transactions so they can track every moment and develop detailed profile and count transactions for a variety of reasons.

So while I understand to some point the visceral response to DD, it should be pointed out it extends far beyond DD, and the Government is very much in favor of it. In fact, when doing a background check on someone the Government goes to private industry to purchase the data in order to circumvent the laws that prohibit the Government itself from doing such direct tracking.

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

I agree with this line, JD by Mufflerman

Submitted by Mufflerman on Mon, 2008/08/25 - 12:03.

"When the Zor could be damaged by the ways of a wayward zee, they should be concerned".

Being concerned, taking appropriate steps to determine the extent of the violations of the FTA, and enforcing the contract's provisions are all reasonable, ethical and defensible responses.

The alleged practices by Dunkin Donuts as detailed, if true, are unreasonable, unethical, and indefensible, regardless of any presumed probable cause.

In a word, no. What the by Mufflerman

Submitted by Mufflerman on Mon, 2008/08/25 - 11:22.

In a word, no.

What the franchisor does have every right (and some inherent responsibility) to do is to investigate the manner in which a specific franchise is being operated, with an eye toward determining whether the terms of the FTA are being violated in some way that is detrimental.

A hot car, boat, or girlfriend on the side are personal matters that may have absolutely nothing to do with underreporting or other franchise violations. Maybe the franchisee hit the lotto, had a rich relative pass away, or heaven forbid, has another legitimate source of income outside the franchise system in question.

What you are apparently condoning is a form of "profiling", followed by thinly veiled harassment disguised as "investigation", followed by extortion. If the allegations regarding Dunkin Donuts as reported are true, I find it difficult to understand how anyone could find such practices justifiable. There is a right way and wrong way to do just about everything--if a franchisee is cheating, the franchisor has plenty of ammunition at their disposal without resorting to such despicable tactics.

Re: In a word, no. What the by Truth in Franchising

Submitted by Truth in Franchising on Mon, 2008/08/25 - 12:00.

Franchisors have every right to investigate bad operations, any non-compliance, underreporting, fraud or illegal activity in which their franchisee may be involved.

Franchisors have as much right as anyone else in a contract to enforce their rights. And if they chose they may hire a third party investigator, forensic accountant, lawyer or psychic to uncover the facts.

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

RE: Re: In a word, no. What the by Guest

Submitted by Guest on Mon, 2008/08/25 - 18:06.

TIF....STFU. You come across as more ignorant with every post in this thread. You've already proved the point.

Re: RE: Re: In a word, no. What the by Truth in Franchising

Submitted by Truth in Franchising on Mon, 2008/08/25 - 18:13.

Regarding STFU...May God Bless You Cowardly Guest Troll!

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

RE: Re: RE: Re: In a word, no. What the by Guest

Submitted by Guest on Tue, 2008/08/26 - 00:34.

"Regarding STFU...May God Bless You Cowardly Guest Troll!" Oh. I'm sorry tif. I forgot to identify myself as you do. FIT, or am I XYZ or is it LSMFT? I keep forgetting. Which do you prefer? By the way, why aren't you using those commas I left you in another post? Oh, and one more thing........STFU! Try harder.

A right to do something vs. the right thing to do by Guest

Submitted by Guest on Mon, 2008/08/25 - 13:14.

While Dunkin might have the right to do these sleazy things, it seems pretty stupid to do them. Of course the business guys like Luther and certainly Kussell probably have no idea just how low this back room operation has sunk. They are trying to sell like 15,000 new franchises right now. You want to buy one? Do you know anyone who would? You can be completely honest and live like a choirboy and it doesn't seem to matter. It'll be much harder for the business guys to make their deals now. Think they like it? I don't. I'm thinking Steve Caldeira's bluster is just that. The last thing Dunkin needs is yet another public lawsuit, especially a defamation one where truth is the best defense. That means they will drag the story on for years, and it will get worse and worse as even more sleazy things roll out into public view.

TIF, I agree that by Mufflerman

Submitted by Mufflerman on Mon, 2008/08/25 - 12:13.

"Franchisors have every right to investigate bad operations, any non-compliance, underreporting, fraud or illegal activity in which their franchisee may be involved". Agreed.

They also have every right to do so in an ethical, professional manner without resorting to the types of tactics alleged of Dunkin Donuts, practices that when exposed, by their very nature could damage the brand as much or more than any underreporting franchisee.

Last time, TIF by Guest

Submitted by Guest on Mon, 2008/08/25 - 10:34.

not sayin' it's right.... by Granville_Bean

Submitted by Granville_Bean on Sun, 2008/08/24 - 00:16.

BUT-

My "on the street" impression is that DD has more than its share of dirty Zees. We get immigrant applicants that we won't hire due to obvious paperwork problems, as well as people we have let go when visas expire or affirmative info comes out that papers are not valid.

Then we see the same EEs working at DD's. We are friendly with many of their EEs as some people work for both us and them. We ask did So-and-So get their papers straightened out, I see he is working. The employees laugh and say "you don't need papers at Dunkin's".

Yeah yeah this is anecdotal about that particular Zee, but if that kind of thing is widespread in their system, what is the Zor to do??? It is negative for the brand when their Zees get "raided" (as several have been) and featured on the 11 o'clock news. This has happened somewhere sometime at almost every brand in QSR, but just seems like DD gets more than their share.

Illegals by Guest

Submitted by Guest on Mon, 2008/08/25 - 08:06.

are welcomed by the IFA. Check out the IFA web site. They are lobbying for illegals to to work without "The Proper Paper Work" Franchising has become so corrupt it's hard to know where the next finger will point. I think that Richard has an opportunity here, in that the Zor should have invested in some Killer DD, prior to trusting certain zee's with future royalties. This Zor is now the one who been fleeced. Looks like the zee is now on the other foot.

Richard is so against our ridiculous position on immigration by RichardSolomon

Submitted by RichardSolomon on Mon, 2008/08/25 - 09:35.

that I consider myself a supporter of the sanctuary movement. The fascist neocon mentality that currently runs this country has to go, or we will face rapid ostracism by the rest of the world - moreso even than we now have to deal with. --

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

Liar by Guest

Submitted by Guest on Sun, 2008/08/24 - 10:13.

Unlike your dirty shop, Granville Bean, Dunkin Donuts franchisees screen ALL employees through the Homeland Security website for proper work eligibility. Dunkin is the ONLY QSR operation that does this. The franchisor may lorder its employees not to write anything down when shaking down a clean franchisee, but the franchisees have MANY paperwork requirements. Stop lying.

Jon Luther by Guest

Submitted by Guest on Tue, 2008/08/26 - 17:39.

Does this very aggressive behavior have anything to do with Jon Luther becoming CEO and Chairman?

Probably not by RichardSolomon

Submitted by RichardSolomon on Tue, 2008/08/26 - 18:53.

Luther isn't a vindictive person. He would personally prefer to get things done cooperatively, but with recognition that in the end he does have the whip hand.

The agenda is set by the new owners, not by Luther.

I have seen in many companies a similar change in the modus vivendi when control passes to new authority. The new authority doesn't have the relationship baggage, and can be more easily insistent upon the formalities of compliance.

Resisting the formalities of compliance is usually a bad decision, In the end, what is being demanded is what the franchisees signed their names to in the franchise agreement. Former lax enforcement doesn't change the new owners' prerogatives. Accusations and name calling certainly won't help sort things out well over the short term. Acrimony is worthless wampum.

A compliant system is a more profitable system for the franchisor if the concept still has life expectancy. The incentive to whip it into compliance is very strong. How painful that process will be, and how long it takes to get there, will be affected by acceptance or resistance. But in the end, the contract still rules in this kind of situation.

Actually, the more cooperative the franchisees are, the more likely it will be that some accomodations may be considered. Confrontation that is not meritorious on legal grounds usually just makes things worse.--

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

Jon Luther, Chairman & CEO of Dunkin' by Guest

Submitted by Guest on Tue, 2008/08/26 - 21:12.

Richard, I hope you are correct in your assumptions about the Chairman and CEO, however there can be no denying that litigation has increased considerably under his leadership. Why is it that much larger companies like McDonald's have only 10% of the Dunkin' litigation? Mr. Luther has the power to correct this atrocious condition. The new owners have entrusted the culture and even the direction of the company to the Chairman and CEO. Borad members do not dictate or formulate these policies. I remain concerned about families who invest in these franchises and are kicked out of the system with little opportunity to correct the problems. I think the government must become involved in this relationship to ensure the business model works. I am always troubled when the cook refuses to eat his/her own food. How many corporate owned units are there? If the franchisor cannot make money or does not want to risk its capital, I do not believe they should be allowed to sell franchisees. After all, the franchisor has a 4% to 7% advantage over the franchisees because franchisors do not pay royalties! One other question, does Dunkin' make money by forcing franchisees to purchase goods and services from companies they own or companies they receive compensation from? Does Dunkin' pass along rebate monies to the franchisees or do they keep the money themselves? Yes, I agree that starting a business involves risk but it should not involve a guarantee that small business people will lose their entire life's savings, home, and in many cases cause the break-up of the marriage. I hope that Mr. Luther reconsiders the business model and will ensure that the cost of sales, the cost of the furniture/fixture/equipment and other "mandated" costs leave enough for the franchisee to make a profit.

Jon Luther by Guest

Submitted by Guest on Tue, 2008/08/26 - 21:06.

It was written: I think the by FuwaFuwaUsagi

Submitted by FuwaFuwaUsagi on Tue, 2008/08/26 - 23:05.

It was written:

I think the government must become involved in this relationship to ensure the business model works.

My reply:

What evidence do you have, or stated differently, why do you believe the Government is CAPABLE of doing this and then why do you believe they would actually enforce and regulation they enact? I can site example after example of Government incompetence in business and science that would astound you. And I can furnish example after example of meaningful legislation that is never enforced because the system can be bought.

I can understand you may be in emotional pain why would you think the Government can make this better? Are you just grasping at a straw?

Curious,

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

Government Laws to Protect Small Business by Guest

Submitted by Guest on Tue, 2008/08/26 - 23:19.

If the laws are on the books that will provide some protections for the franchisees it will be up to franchisees and their lawyers to enforce them.

It was written: If the laws by FuwaFuwaUsagi

Submitted by FuwaFuwaUsagi on Tue, 2008/08/26 - 23:31.

It was written:

If the laws are on the books that will provide some protections for the franchisees it will be up to franchisees and their lawyers to enforce them.

My reply:

What would these laws be. Please be specific.

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

The families that invest in these franchises can by RichardSolomon

Submitted by RichardSolomon on Tue, 2008/08/26 - 21:35.

avoid losing their businesses by doing what they agreed to do in the contracts that they signed.--

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

Lax Compliance by michael webster

Submitted by michael webster on Tue, 2008/08/26 - 19:41.

Richard writes: "Former lax enforcement doesn't change the new owners' prerogatives. "

This is wrong, both on legal and psychological grounds. The latter being the most important.

If the relationship has been built up with a mutual forbearance of legal remedies, and this relationship has worked, before the new owner "insists" on its legal rights, it ought figure out why what was working did so.

Richard wrongly assumes that the franchisor was simply indulging the franchisee's who cheated on royalties.

It is much more likely that this was a mutual recognition that 'or is cheating 'ee and 'ee gets to cheat back. Right or wrong, if that view is going to be changed, nobody can afford to get on their legal high horse.

Michael Webster PhD LLB
Franchise News

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

spouting the company line? by Granville_Bean

Submitted by Granville_Bean on Mon, 2008/08/25 - 22:18.

Yeah, after the DD got RAIDED, they put a sign up in their lobby bragging on how they do this. Why do you think they decided to make such a big deal about it? BECAUSE THEY HAD SO MANY BLATANT ILLEGALS TO BEGIN WITH. I think it was in mid-2006 that the Zor started to ram this down the Zees throats. So now the Zor tries to make lemonade from their lemons. Good. But it was forced on the Zor too, by the dirty Zees getting bad press for the brand.

If you think that Zees weren't doing it, I think you're naive. Just Google on "Dunkin illegal alien" and see the DD Zees who got prosecuted for blatant illegal hiring.

So you admit lying by Guest

Submitted by Guest on Tue, 2008/08/26 - 17:20.

You acknowledge that Dunkin does not hire illegals, but before you said that the ilegals you wouldn't hire went to work at DUnkin that you admit does not hire illegals and has a sign in the window saying they don't. I don't care what bullcrap you say is the reason they don't hire illegals. I care that you lied. Sounds like Steve Caldeira is hot to sue somebody for lying about Dunkin. I hope that it is you.

Dunkin Stalking Scheme Plagues Franchisees in Court by Guest

Submitted by Guest on Sat, 2008/08/23 - 13:35.

This attorney and the franchisor are out of control. Shame on the ABA for allowing such a presentation. The Franchisor seems to be forgetting that this is America, and this kind of abuse will not be allowed to continue. Shame on the attorney and shame on the Franchisor. Cathy Thomas

Income Tax, Sales Tax and Royalty Cheaters by Truth in Franchising

Submitted by Truth in Franchising on Sat, 2008/08/23 - 15:28.

What is correct action for a franchisor?

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

Corrective Action by Guest

Submitted by Guest on Sun, 2008/08/24 - 07:47.

"What is correct action for a franchisor [for financial cheating]?" End the franchise rights. But Dunkin's next natural progression seems to be water boarding to find out what friends are in cahoot.

RE: Income Tax, Sales Tax and Royalty Cheaters by Guest

Submitted by Guest on Sun, 2008/08/24 - 00:47.

"What is correct action for a franchisor?" Why you not know answer, Mr. Millionaire franchisor?

Correct franchisor action depends upon who is the by RichardSolomon

Submitted by RichardSolomon on Sat, 2008/08/23 - 19:41.

franchisor. The former owners of DD had a history with the franchisees that the present owners are not "burdened" by.

That the technology of relationship management in the DD system is still in the stone age is very telling. Its sad state of obsolescence says that the former owner knew/believed there was a lot of fudging going on but had too much relationship history with the franchisee population to allow the making of the hard decision to put in an information management system that would make cheating more difficult and that would encounter wide resistance in the franchisee population. So the system had no other way to deal with cheating but the gumshoe in a tree with a camera.

I strongly suspect that very soon the new owners of DD will insist upon the adoption of 21st Century relationship management technology that will greatly reduce the need for gumshoe tactics and lawyers who want to play cowboys and cheaters.

If I am correct, the DD franchisees will scream bloody murder about having to buy into the new MIS protocols, but the management will insist and it will get done, The cheaters will suffer most, and everyone else will adjust.

Actually, this will be, I predict, the easiest of the many adjustments the franchisees will have to make from here on out. DD management will be exploring every possible alternative marketing opportunity that is legally and practicably available to them, and the DD franchisees will be much more upset about that, as that will impact even the honest non cheating segment of the group.

The new contracts that will be insisted upon at renewal/resale time will be substantially more disadvantageous than what they are living with presently. This will make the future as a DD franchisee appear to be much less bright and the resale values of the franchises less than hoped for.

If I were counsel for the franchisee association, I would advise putting a stop to the name calling, and working quietly on a new business concept that can be developed free and clear of in term covenants not to compete into which they can seque as they leave the DD system.

I frankly doubt they would follow that advice, as what I see now is too much venom to permit competent tactical planning. Sad but probably true.--

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

Dunkin already does that but the skullduggery continues by Guest

Submitted by Guest on Sun, 2008/08/24 - 10:27.

Everything you mentioned from the MIS suysyems to awful and draconian franchise contracts and more have been in place for years. However, the use of undercover operatives and all the other dirty tricks continue. How would you like to have your bank account electronically monitored and debited and have an undercover agent posing as your emplopyee commit violations and then you get sued for what their agent tried to do but you stopped and asked to pay a million dollar settlement to make a federal case about it go away? Something has to change and fast if this company wants to expand.

Whoa... by Paul Steinberg

Submitted by Paul Steinberg on Mon, 2008/08/25 - 17:48.

Guest writes: How would you like to have your bank account electronically monitored and debited and have an undercover agent posing as your emplopyee commit violations and then you get sued for what their agent tried to do but you stopped and asked to pay a million dollar settlement to make a federal case about it go away?

There is a big difference between ACH debits pursuant to permission of the account owner and "monitoring" an account. You would have to clarify that.

As to your comments about "an undercover agent posing as your employee" committing "violations"-- this is something which you should consult a good franchise attorney (preferably one familiar with your franchise system) about. You may have legal remedies, and the agent and his Principal may be criminally liable; it depends on what exactly happened.

Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

Dunkin Launches Poker-Face Training Program by Bob Frankman

Submitted by Bob Frankman on Sat, 2008/08/23 - 01:59.

Dan the Dunkin' franchise owner is a successful graduate of Dunkin's pilot poker-face training classes offered to franchisees CANTON, Mass. (Satire MauMau) - In order to help franchise owners, Dunkin Brands brand advisory council, a group of franchisor appointed owners elected for their agreeable abilities, announced on Friday the launching of a new poker-face training program. The program is anticipated to be extremely popular with franchisees who like their privacy.

This new program was launched immediately after Dunkin' Donuts chief legal officer announced what sort of franchisees he sends corporate spies out to investigate. His hand-out materials state that a franchisee with a happy face is a dead give-away and "should be asked, 'Has anyone checked to see how much he claims to earn from the business?' The company targets unhappy franchisees for surveillance too. For this grim bunch, he elaborates, "A franchisee who feels the system has not worked for him may decide to use a little 'self-help' by underreporting sales."

Jimmy Johnson, a DesMoines Dunkin franchise owner of some 5 years, says, "I used to have corporate attorneys jumping out of the bushes with their cameras and scaring the bejezers out of me. They said they knew I had something up my sleeves because I was too happy. When a company officer one night crawled out from under my bed, my wife said she had had enough."

Johnson signed up for the pilot program and has had good results.

"After completing the company-sponsored poker-face training program, I have a new life," he says. "I neither look too happy nor too sad."

Sandra Murphy, a Dunkin franchisee from Biloxi, has not been so lucky with the pilot program. "Even though I took the class, no matter how I try not to, I still break out in a frown once in a while when I think of my store profits," states Murphy. She adds, "My field operations manager tells me such an unhappy and disgruntled face is a sure sign that I will soon want to cheat the company. So I've decided if the poker-face lessons do not produce better results soon, I'm going to try a full-face treatment of botox. That will surely make me look the part of a successful and loyal Dunkin franchise owner and keep the spies away."

A company spokesperson said that since announcing this program to franchisees at 8 p.m. on Friday, some twenty of the two-week training courses to be offered in most major New England cities have all been filled as of 11 p.m. the same night. Advanced poker-face classes will be launched in December.

Something Stinks in Canton by Guest

Submitted by Guest on Fri, 2008/08/22 - 23:16.

Dunkin's terror tactics have evolved well beyond those techniques referenced in Ms. Sparks' well written piece. Dunkin's present M.O. has the franchisor "gathering evidence" purporting to establish that a franchisee has violated a federal law (wage & labor, immigration, tax law). Next, Dunkin' terminates the franchisee for his violations of federal law, which by corollary, give rise to a violation of Dunkin's abusively overbroad "obey all laws" provision. And that's where the rubber meets the road.... With its Notice of Termination in place, Dunkin' files a lawsuit against the franchisee. Soon thereafter, when Dunkin's outside counsel has churned enough litigation fees (think form complaints and form motions at the push of a button - just add facts and watch the billables grow!) they propose a settlement - now follow this: Pursuant to this proposed "settlement" offer, the franchisee is given a rediculously short amount of time to sell his store(s) to an "approved" buyer - generally between 60 and 180 days. If the franchisee is unable to sell his store(s) in the prescribed time period, he is forced to deidentify and turn his store over to Dunkin', relinquishing all equity in the store(s) - often resulting in losses of millions of dollars. If the franchisee is "lucky" and happens upon an approved buyer, he is required to pay a "penalty" to Dunkin' from the proceeds of the sale. This "penalty" can be hundreds of thousands of dollars - sometimes even millions. Taking all of the foregoing into consideration, the final product is a franchisor, with knowledge and, ostensibly, "proof' that a franchisee has violated a federal law. However, rather than reporting that franchisee to the appropriate governmental agency/authority, the franchisor CAPITALIZES ON THE SITUATION by extorting money from the exiting franchisee (in addition to legal fees and transfer fees). The upshot - Dunkin' receives a windfall, Dunkin's outside counsel gets paid, the government, none the wiser, loses out on any fines or penalties that it would have imposed for the alleged criminal conduct, and in cases involving payroll violations, for instance, the employees never even receive the back pay owed to them. Dunkin's tag line is "America runs on Dunkin'" - Ironically, given that money that should be lining government coffers is fueling Jon Luther's Jet - shouldn't it be "Dunkin' runs on America"?

Dunkin' Runs Over America by Guest

Submitted by Guest on Sat, 2008/08/23 - 20:13.

Dunkin' may run on America but Dunkin' is also clearly running over American principles of decency and fairness in business practices - spured on by an apparanetly uncontrolled legal department and voracious equity investots ( Carlyle Group, Lee Partners and good old Bain capital). In the end the brand will deteriorate and actually things are probably so bad in this system now that the equity investors will stay "under water" in their investment. Curious how our capitalist system works... governement regulators, legislatures, attorney generals, courts and other institutions allow this kind of near crimminal behavior by a corporation and then when there is a final systemic collapse and public outrage ( ie Enron, the mortgage crisis) then they all jump in with big media covered efforts to put the poor victims back together again. Which they never can do. In the end everyone is going to loose in franchising when a leading chain like Dunkin' Brands continues to get away with preying on its own franchisees. Sad but true.

It was written: Dunkin' is by FuwaFuwaUsagi

Submitted by FuwaFuwaUsagi on Sat, 2008/08/23 - 23:01.

It was written:

Dunkin' is also clearly running over American principles of decency and fairness in business practices

My reply:

AAArrrrrrgggghhhhhh!!!! What type of cherry are you? Where, where do you find an American principle of fairness and decency in business practices? Do you want me to tell you where it was kind of sort of found for a brief time: in the old west, when deals were made on a man's word, and a man's word was his bound. The minute the West got more mobile and shyster's could skip town, change their name, and not be recognized because it was a very small world (as a histological fact most people never ever knew what Jesse James looked like until he was dead!!! Seriously, he was known, as many be reputation not by appearances.) what little reasonable "fear" resonated in those who dealt in business vanished. However I doubt you would even consider those transactions as fair and decent. They were generally very, very predatory in nature. And often the buyer had no viable choice but to enter the transaction. The difference is the buyer understood he did willingly enter the transaction, no matter how much an affront it may have been to fairness. On the other end if the seller cheated the buyer, a rendering of justice would most assuredly take place. Do you know the bloody history of labor unions in this country? To the best of my knowledge outside of the old west there was never a time of widespread quasi-ethics in business. That does not mean some or even most people may have elected to conduct business on a personal code of ethics but to the best of my knowledge it was never wide spread.

For gosh sakes people wake up and shake it off. You are in a slumber, a damn intoxication induced by liberal brain washing that gives you the ridiculous, childish, absolutely stupid, asinine, infantile notion that the friggin’ Government can protect you, that fairness is not an abstraction but a tangible quantity, and that there is a bloody Santa Claus. Wake the heck up, get on your feet, learn how to protect yourself and use solid judgment when you deal with people.

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

Deals in the Old West by michael webster

Submitted by michael webster on Mon, 2008/08/25 - 00:23.

Fuwa writes " Do you want me to tell you where it was kind of sort of found for a brief time: in the old west, when deals were made on a man's word, and a man's word was his bound. The minute the West got more mobile and shyster's could skip town, change their name, and not be recognized because it was a very small world (as a histological fact most people never ever knew what Jesse James looked like until he was dead!!! Seriously, he was known, as many be reputation not by appearances.)"

I disagree and believe that the west was always mobile.

One of the more interesting facts about the American expansion and domination of the west was the lack of currency or specie. Counterfeit currency appears to have played a reasonable role in facilitating credit up to around 1867 in the US.

This is odd because, at the time, in virtually every other European country, counterfeiting currency is treason and punishable by death. Indeed, several centuries before in England those who debased the coin had their nuts cut off.

But, in the West the lack of hard currency and demands for trade inspired a different view of currency fraud.

So, Fuwa, while we may look fondly to a past generation in which the man's word was gold, there was a lot of fool's good around - and those very lies turned out to be for the commen good. Odd, eh?

Michael Webster PhD LLB
Franchise News

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Michael writes: One of the by FuwaFuwaUsagi

Submitted by FuwaFuwaUsagi on Mon, 2008/08/25 - 02:05.

Michael writes:

My reply:

Hmmm, I am considering what you wrote. I'll look into this. I noticed a very large book about the history of the U.S. banking system and currency the other day. You are very correct that currency was lacking in the old west, but I never heard the counterfeiting angle before. Interesting, very interesting.

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

Book by michael webster

Submitted by michael webster on Mon, 2008/08/25 - 09:18.

A Nation of Counterfeiters, Steven Mihm. He makes the intriguing point that people preferred lousy copies of good bank notes to excellent copies of crummy banks!

Michael Webster PhD LLB
Franchise News

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Re: It was written: Dunkin' is by Guest

Submitted by Guest on Sun, 2008/08/24 - 23:54.

wow, shouldn't you be a school teacher for, like, first graders? this stuff would get you a donut in the mouth just to shut you up wandering around a business with your drivel. what a yuk.

Fuwa, grow a pair by Guest

Submitted by Guest on Sun, 2008/08/24 - 20:16.

When you can muster up a few hundred thousand bucks and sweat it into tens or even hundreds of millions like many New England Dunkin franchisees have, then you have a horse in the race. Until then, wiggle back into the warm comfy spot you popped your cute little noggin from and let the big boys fight it out until it is safe. Game over.

It was stated: When you by FuwaFuwaUsagi

Submitted by FuwaFuwaUsagi on Mon, 2008/08/25 - 00:28.

It was stated:

When you can muster up a few hundred thousand bucks and sweat it into tens or even hundreds of millions like many New England Dunkin franchisees have, then you have a horse in the race.

My reply:

You are correct I have no horse in this race. I never will. For one, even if I was stupid enough to sign DD’s FA once, there is no way I would have rolled any profit into another unit. You sound like a typical zee to me, too afraid to strike out on your own and embrace true entrepreneurship, so you looked for big fat momma teat to latch onto as you entered business in safety mode, secure in the ridiculous mantra you no doubt swallowed (among, apparently with other things) of being is business for yourself but not by yourself.

And then with some measure of success, instead of removing you from the OBVIOUS and readily APPARENT risk of your business arrangement, you expanded, putting yourself and your family at risk when you could have mitigated your exposure by divestiture.

And you are correct I am not worth 10s of millions, although I am working on multiples. The difference is I did it on my own, as my own man, never groveling at the feet of anyone else, my own ideas, my own capital, every step of the way me, myself, and I, and I love it that way. At no time have I ever asked for the Government to do anything but get the heck out of my way, and I certainly would never ask them to infringe on everyone’s liberty to fulfill the desires my own innate talent deprives me of.

You entered into your contract willingly and now you are upset by the ramifications of your contractual obligations. You did this to yourself. You could have mitigated or eliminated the risk you exposed your family to.

So you don’t like me - tough. I am not about to turn into a punching bag for mamby pamby boy such as yourself. Try building a business like a real man instead of licking the boots of your master and hoping you can be part of someone else’s success.

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

Wassa matta Fuwa? by Guest

Submitted by Guest on Mon, 2008/08/25 - 13:25.

I said you were cute.

Wassa matta Fuwa? Submitted by FuwaFuwaUsagi

Submitted by FuwaFuwaUsagi on Mon, 2008/08/25 - 13:42.

Wassa matta Fuwa?

Submitted by Guest on Mon, 2008/08/25 - 10:25.

I said you were cute.

My reply:

LOL - that was funny. Cracked me up.

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

Wassa Matta Fuwa by Guest

Submitted by Guest on Mon, 2008/08/25 - 20:58.

;) Hey it's only the interwebs. An e-snark and a laugh ain't bad.

Looking for a True American Who Knows a True Entrepreneur by Darnelle White

Submitted by Darnelle White on Mon, 2008/08/25 - 01:36.

"You sound like a typical zee to me, too afraid to strike out on your own and embrace true entrepreneurship," - Fuwa

"True entrepreneurship?" And what, pray tell, is that?

I have read this line of thinking in various franchise articles. The choice is a bogus one.

Darnelle writes: "True by FuwaFuwaUsagi

Submitted by FuwaFuwaUsagi on Mon, 2008/08/25 - 02:15.

Darnelle writes:

"True entrepreneurship?" And what, pray tell, is that?

I read this line of thinking all the time in franchise articles and the whole. This whole argument that a franchisee is not an entrepreneur is a bogus argument.

My comment:

I am not sure it is bogus, but I'll readily grant it is presumptive. And it is one of those things in the realm of a great topic for a thesis paper. This debate has run in other forums and I think the general consensus was that those who enter franchising with the intent of using a lot of capital to control many units and take a great deal of personal funding risk are entrepreneurs and those that enter with the mindset of I'll try one unit and if that pans out I'll consider expanding are not, and probably safety seekers who were attracted to franchising for the safety aspect rather than trying to vastly leverage someone's else’s work.

That is what I recall from conversations in the past.

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

True entrepreneurship is not in play when by RichardSolomon

Submitted by RichardSolomon on Mon, 2008/08/25 - 02:33.

the buyer is so ignorant of the manner of effective vetting of the investment opportunity that he is fleeced by a glib sales pitch and parts with all his worldly wealth (plus taking on additional debt and other long term contract liability) with incompetent knowledge of what it is all about.

That's the difference between an entrepreneur and a FranWad.--

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

Re: It was stated: When you by Guest

Submitted by Guest on Mon, 2008/08/25 - 00:38.

what a straight up pussy. no name, no face, just a bunch of BS to dish out telling the world how to act and nothing to back it up. bye bye.

Can you say troll? by FuwaFuwaUsagi

Submitted by FuwaFuwaUsagi on Mon, 2008/08/25 - 02:00.

Can you say troll? LOL!!!

Michael, I think at this point we should just admit, despite our years on the “net”, that we fell victim to a obvious troll. This guy probably lives in his mother's basement, wears Scooby-Doo pajamas, and whacks off to old Richard Simmons videos in between bags of Doritos.

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

Troll by michael webster

Submitted by michael webster on Tue, 2008/08/26 - 00:59.

Fuwa, I am afraid that you are correct. I could blame it on Canada, but for obvious reasons that wouldn't work.

Michael Webster PhD LLB
Franchise News

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Re: Fuwa, grow a pair by Guest

Submitted by Guest on Sun, 2008/08/24 - 21:26.

Guest, you are right. Some visitors won't identify who they are here, but they stay on here to jump on business owners with thier big shot advice from their armchairs. This is their place to be feel goods without risking anything but their free time trying to be important. Don't worry, they aren't, and people know it. Good luck. We are a DD family.

Re: Good luck. We are a DD family by Truth in Franchising

Submitted by Truth in Franchising on Sun, 2008/08/24 - 21:51.

Well some of your family members are underreporting royalties, sales/income taxes and employ illegals. What should happen to them?

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

DD Family by michael webster

Submitted by michael webster on Mon, 2008/08/25 - 00:13.

TIF and Richard, the basic strategic problem can be reduced to simple negotiating game. Suppose that the chances of cheating are 1/20. Everyone agrees that this is the objective chance.

Now lets play a simple game - I draw a card from a 40 card deck, all the face cards removed. I know what my card is and have to convince you without showing you the card that I haven't pulled the "cheating" card.

How would you play this very serious game?

Michael Webster PhD LLB
Franchise News

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

That isn't a game. by RichardSolomon

Submitted by RichardSolomon on Mon, 2008/08/25 - 02:36.

It's a scam disguised as a game.--

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

RE: Re: Good luck. We are a DD family by Guest

Submitted by Guest on Sun, 2008/08/24 - 23:50.

TIF, have you claimed every single cent you ever made since your first job? If you pocketed even one nickel, you fall into the same category. It's just a matter of degree. This is at least the 3rd time you're asking the same question without a reply. Get a clue, will you? What do you want someone to say, "String 'em up by the huevos and slowly twist them over a giant bonfire?" Let me know about that nickel. I'm sure I could gather up a posse to see how well you twirl with a flame licking at your keester.

Re: Re: Good luck. We are a DD family by Guest

Submitted by Guest on Sun, 2008/08/24 - 23:30.

This guy/woman is even a bigger big mouth here than the fu fu bird. Always screaming, always accusing, but has nothing. He/she goes around accusing wildly but has nothing but a fake name. Hmmm, must be a lonely life at home.Can you imagine these people in the real world - must always be hiding in a corner waiting for life to happen.

Not Up to Me, But ... by michael webster

Submitted by michael webster on Sun, 2008/08/24 - 20:57.

Guest writes: "Fuwa, when you can muster up a few hundred thousand bucks ..."

Uh, bud. If you have been listening, you would know that Fuwa could plop down much more than $100k for a franchise.

But, strangely he believes for that sort of coin the franchisor should perform some valuable services, which are quantifiable.

He is a much bigger boy than you are.

Michael Webster PhD LLB
Franchise News

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

RE: Not Up to Me, But ... by Guest

Submitted by Guest on Tue, 2008/08/26 - 00:48.

"Uh, bud. If you have been listening, you would know that Fuwa could plop down much more than $100k for a franchise." You must be joking. Listening to who, fuwa, or have you personally audited his finances? I'd like to hear what you base your knowledge on.

Re: Not Up to Me, But ... by Guest

Submitted by Guest on Sun, 2008/08/24 - 23:35.

Uh, bud, listening to who? An assumed name? You must be him/her if you know so much about the person. Where's any proof that fu fu can lay down anything except a wise crack with only wind behind it?

Stupid Guest by michael webster

Submitted by michael webster on Mon, 2008/08/25 - 00:07.

Guest writes: Where's any proof that fu fu can lay down anything except a wise crack with only wind behind it?

Well, dummy try reading all the posts and figure it out.

Michael Webster PhD LLB
Franchise News

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Re: Stupid Guest (and stupid attorney) by Guest

Submitted by Guest on Thu, 2008/08/28 - 01:17.

"Well, dummy try reading all the posts and figure it out." So proof is here on BMM that Fuji or whatever has millions, as he claims? What law school did you go to that suggests you call an adversary stupid and dummy, ass-wipe? Real classy and professional. PhD and LLB my ass. I never saw so many unbusy so-called lawyers who have nothing better to do than to monotonously pontificate on a forum like this. Do any of you even have one client to keep you a little busy? I suppose it's safer to have you here making noise than to have you screwing up the public's legal matters.

Again Fuwa by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2008/08/24 - 03:20.

I love what you wrote. It is right on. And Fuwa I do not like your comments because you have sexy beautiful eyes. Talking about reality in business is a wake up call for many people who tried franchising and got fleeced. Lessons learned the hard way is costly and it hurts.

Which way did he go? by Sleep Tight

Submitted by Sleep Tight on Thu, 2008/08/28 - 05:03.

Has fuwa started letting you pet the rabbits again?

Island girls are.... by RichardSolomon

Submitted by RichardSolomon on Thu, 2008/08/28 - 04:49.

very friendly. --

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

Re: Dunkin' Runs Over America by Truth in Franchising

Submitted by Truth in Franchising on Sat, 2008/08/23 - 20:24.

How would you recommend Dunkin deal with franchisees who cheat on royalties by underreporting?

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

I guess you know, TIF by Guest

Submitted by Guest on Sun, 2008/08/24 - 20:18.

Frame them when they don't. Otherwise, you tell us.

Re: I guess you know, TIF by Truth in Franchising

Submitted by Truth in Franchising on Sun, 2008/08/24 - 21:16.

Cheating is cheating and there is no excuse.

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

RE: Re: Dunkin' Runs Over America by Guest

Submitted by Guest on Sun, 2008/08/24 - 00:55.

How many times are you going to ask the same question? At least this one is almost grammatically correct.

If zees have an by Guest

Submitted by Guest on Sun, 2008/08/24 - 00:12.

ability to make the right money in a fair system and they still cheat then they should be thrown out ... not pursued into the ground; that is unhealthy for the rest of the franchise owners and ultimatley, the zor. If zees are being screwed by a rat zor then I say; cheating is a good place to start .... just don't get caught. If you don't want to get caught then I recommend some paranoia and thought. If you can't manage the "thought" - don't! Just don't! You are expected to cheat - zor expects to catch you. Usually a cheating zee is the only one that thinks his cheating is a secret. If you need to get away from a rat zor and you can't gather what you own and run faster; then you best be running hard at him or, you jus best be leavin' your crap behind ... and run ... run Forest run ... Now that there is som trutt in franchin .. y'all.

Re: Re: If zees have an by Truth in Franchising

Submitted by Truth in Franchising on Sun, 2008/08/24 - 11:14.

It is interesting to know that you believe it is okay to cheat the franchisor.

What about sales tax, income tax and percentage rent? If you are going to cover your tracks you must make all your reporting and books match or you will easily be found out.

Oh and don't be concerned about those pesky federal and state felonies for tax evasion since your franchisor is a rat you get a pass.

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

If franchisee logic were prevalent, which it isn't,... by RichardSolomon

Submitted by RichardSolomon on Sun, 2008/08/24 - 11:45.

you might expect that these franchisee loudmouths would be ranting against the crooked franchisees whose conduct is at the heart of the need for aggressive investgation of franchisee reporting fraud. If there were no crooked franchisees in the system trying to cheat the franchisor of its due, there would be much less, if any, need for surveillance.

Where are the loudmouth franchisees to speak for franchisee honesty?

We're waiting!--

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

Re: If franchisee logic were prevalent, which it isn't,... by Truth in Franchising

Submitted by Truth in Franchising on Sun, 2008/08/24 - 12:16.

The franchisee partisan loudmouths are not going to admit that franchisee cheating is wrong since the only time a franchisee would ever resort to cheating would be if the franchisor had it coming.

And the sales and income tax things along with percentage rent due the landlord...well that's justifiable too since the government is responible for under regulating the franchisors and of course the landlords are in cahoots with the franchisors. It is just one giant conspiracy to subjugate and indenture franchisees (the common folk).

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

Free-riding is as much of a wrong as opportunism is by Les Stewart

Submitted by Les Stewart on Sun, 2008/08/24 - 17:31.

Gentlemen,

Yes, franchisee cheating on any franchise or government system [free-riding] is wrong. Richard and TIF are commended for pointing out the obvious point that there is no monopoly on virtue on either "side". And no one wrong justifies another.

However, arguing the wrong of 1% does not justify the opposing 99%.

The poor, downtrodden multinational corporations faced to play by the same rules as the shrewd and ruthless Mom and Pops?
So....men are justified because female-responsible spousal assault exists?

Threadbare logic revealed upon any 1/3-assed reflection.

Les Stewart MBA
Understanding Franchising

Les Stewart MBA FranchiseFool :: WikidFranchise

The law in its majesty by RichardSolomon

Submitted by RichardSolomon on Sun, 2008/08/24 - 18:20.

forbids rich and poor alike from sleeping under bridges and begging in the streets.--

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

Re: Free-riding is as much of a wrong as opportunism is by Truth in Franchising

Submitted by Truth in Franchising on Sun, 2008/08/24 - 18:07.

Wow yet another obtuse post from our resident pedant Les Stewart.

The Truth Shall Set You Free!

TIF

The Truth Shall Set You Free!

TIF

RE: Re: Free-riding is as much of a wrong as opportunism is by Guest

Submitted by Guest on Sun, 2008/08/24 - 23:58.

"Wow yet another obtuse post from our resident pedant Les Stewart." Wow, another useless post from our resident insecure little man, trying to be a big man. ,,,,,, Here are a couple of extra commas. Try using them sometime.

franchisee logic by Mufflerman

Submitted by Mufflerman on Sun, 2008/08/24 - 12:40.

Franchisees have no right to cheat through underreporting and in most systems where fees include contributions to advertising funds, they are not only cheating the franchisor but their franchisee colleagues as well. Those that regularly hire illegals are endangering not only themselves but everyone aligned with their franchise system. There can be no justification for such violations of law and the franchisor has an inherent responsibility to protect its trademark, its business interests, its revenues and its reputation. That being said, some of the documented and alleged strong-arm tactics by Dunkin Donuts go far beyond the realm of reason and the ends don't always justify the means.

franchisee logic by Guest

Submitted by Guest on Sun, 2008/08/24 - 17:26.

I am a big proponent of the E-verify yet I know several of my zee's do not use it. How do I know b/c they poach my worker as well as hire several workers I have had to let go due to expiration of Visa and bad paperwork. I do sleep better at night knowing that a legal employee cannot try to blackmail me or the Zor cannot take my store away at a low price. I do not understand the other Zee's who do not use the program fullying knowing it is a requirment and they can lose their investment.

In April Blue MauMau asked by Guest

Submitted by Guest on Fri, 2008/08/22 - 23:49.

Re: In April Blue MauMau asked by Guest

Submitted by Guest on Mon, 2008/08/25 - 20:06.

Maybe Blue MauMau should poll all the Dunkin Franchisees and see who actually thinks Steve Horn has all "moral character" Steve Caldeira swears they all see him as. Two Steves..two liars ???

Stone age stuff by RichardSolomon

Submitted by RichardSolomon on Fri, 2008/08/22 - 21:42.

It's hard to think that in this day and age a franchisor wouldn't just change to POS technology that tracks information that can be cross referenced to other management information to build a case of probable cause for under reporting.

Then, if your system shown instances of probable cause, you do an examination of the franchisee's "books".

Stalking ought ot have gone by the wayside 15 years ago. It seems that DD is really in the stone age when it commes to compliance issues. That there is a franchisor attorney that would present such a paper is ridiculous per se.

Electronic surveilance is your first step. Examination of "books" is the second.

When I was in high school we used to tell stories about gumshoe guys climbing up trees to take pictures of women whose husbands were inadequate, philandering. That was 54 years ago, for God sakes!--

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

Correct Books by michael webster

Submitted by michael webster on Fri, 2008/08/22 - 22:06.

Richard is correct, if it was evidence for a civil trial, then no physical surveilance is necessary.

Michael Webster PhD LLB
Franchise News

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

If Caldeira could show his face, he'd say... by Paul Steinberg

Submitted by Paul Steinberg on Sat, 2008/08/23 - 00:32.

Since Mr. Caldeira is likely holing up at an undisclosed location till his industry colleagues stop laughing, I will have some sympathy and suggest that this would be close to Caldeira's analysis:

It is true that POS data can indicate problems; metrics such as COGS/Food Cost, average ticket, item correct/no sale, product mix, labor:sales ratios, et cetera--these are all helpful, and Dunkin' uses them as part of the loss prevention program, as does any auditor.

Indeed, one of the reasons why Dunkin' went to this creepy surveillance is because the courts found that the financial audit-based methodology used by Dunkin' was insufficient to support termination based on underreporting.

Financial audit techniques must be complimented by site visits, whether by "secret shoppers" or by franchisor personnel who disclose their identification.

And a financial audit is quite a different animal from a fraud audit:

It is important to remember that if we are focusing on loss prevention, the majority of loss is caused by persons who are internal and therefore have access to the paperwork and the POS system; as such a mere financial audit such as done by an internal auditor may not suffice.

I abandoned internal auditing because there wasn't enough caffeine in the world to keep me from sleeping on the job most times, but I did love the fraud investigations. I won't bore you with details but suffice it to say that in a cash business people can be quite creative about circumventing internal controls, and they know that you are monitoring things such as Food Cost.

In short, the thieves know many of the metrics the auditor is watching, and adjust their methodology accordingly.

Tangentially, I would observe that franchisees are often the ones who demand investigation of fellow franchisees who are grossly underreporting. Such zees are freeloading on the ad monies of more-compliant zees, and I have seen cases where zees sought a franchisor audit of their own franchise because one of their business partners was stealing.

I don't have a problem with any franchisor dealing with underreporting. And industry experts such as Mike Mershimer have noted that many indicia of underreporting may actually be waste and employee theft; a fact which suggests that a proper Royalty Assurance program may actually be a franchisee management tool.

I do have a problem with people such as Mr. Horn and Mr. Zisk because they are as slimy as the thieves they purport to be pursuing. When major companies such as Dunkin' Donuts give such people unfettered rein, they do a disservice to their franchisees and risk a black eye in the media.

In this case, it would appear that Mr. Horn did not even tell the truth to Mr. Caldeira and the result is that the chief global media spokesman for this company has taken a serious hit to his credibility.

Dunkin' franchisees deserve better.

Mr. Luther might consider that if Mr. Horn is not able to be candid with Mr. Caldeira then Mr. Luther might want to decide which of them remains on the Dunkin' team.

Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

There are a few things you should know about Jon Luther by RichardSolomon

Submitted by RichardSolomon on Sat, 2008/08/23 - 07:07.

First, he knows what he's doing. The ridiculous nonsense that is being described in this thread is not Jon Luther's doing.

Second, he is essentially honest. The cooking of the books at AFC/Popeyes that ended up getting its top management caught out as cheats in the IPO resulted in his leaving. He had no part in the fraudulent financial reporting and wouldn't be tarred with that brush.

Third, Luther knows who his bosses are. He will handle non compliance issues properly. I suspect that one of the "issues" that the DD association is upset about may be that professional management may tighten the system somewhat, and that the old "relationships" that might have been abused by some franchisees aren't available any longer.

I would bet that the new owners already have selected their own franchise lawyers. Maybe the in house counsel may need to go - and that certainly sounds like something worth doing. A new face with a fair but firm approach to the franchisee community would be very helpful in the education process that is inherent in the new regime.

While I get really worked up about crooked franchisors ripping off investors, I have no sympathy for franchisee cheats. When discovered, they need to be terminated very publicly. Paul is right about the discovery process being focused upon generating admissible evidence. Wealthy franchisees who get caught cheating and are terminated always sue. You need to be ready with the litigating guns when the default/termination notice goes out. Frankly, with a wealthy crook franchisee, I would rather have the sumbitch in front of a jury than in some private arbitration. Honest franchisors need not fear jury trials unless they are represented by lawyers with whom juries can't relate. Country club types don't belong in jury trials. Use the silk stocking folks for the silk stocking projects and find a guts ball trial lawyer to deal with your franchise litigation. The more open and notoriously you kill a thief, the more quickly the others get a very stark message that franchisee fraud won't be tolerated.

If there are a lot of cheaters in the DD franchisee population, the DD franchisee association won't be able to be of much assistance to the franchisor in cleaning it up. The question is whether the DD association will be smart enough not to make a lot of noise in support of non compliant franchisees. We already saw in the Cindy Gluck case that the association took a position in support of an obviously non compliant franchisee. That doesn't help association credibility.

Based upon my litigating experience representing franchisors, I can testify that many with whom the management were very chummy ended up robbing them blind. In one instance, the owner of the franchisor company went way overboard on compliance forgiveness to help franchisees in difficulty, only later to have those same franchisees join in large franchisee group litigation against the company, and be found out in the course of discovery in that case to have been cheating murderously for many years.--

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

Extortion: The Elements Of by michael webster

Submitted by michael webster on Fri, 2008/08/22 - 20:58.

Janet writes:

"Dunkin' attorneys would point out that there was an "obey all laws" clause; the family appeared to be living beyond its means, and what would happen if the IRS got these photos?

Under such circumstances, Horn stated, the franchisee would normally pay the Dunkin' demand.

Franchisees who fight Dunkin' risk exposure of their private lives, as Horn's slide show indicated; one franchisee subsequently said that Dunkin' even makes inquiries into franchisees' "romantic relations."

The threat of forfeiting a $ 500,000 investment and having one's "romantic relations" exposed provide a powerful weapon to ensure franchisee submission to franchisor demands."

What would happen if the attorney threatened to send these photos to the IRS?!!

Well, Chuckle Bunny, an attorney might go to jail for extortion - threatening to bring a criminal suit in order to extract a settlement of a civil suit, which would otherwise be unavailable on the facts.

If the Chuckle Bunny attorney had evidence of a IRS fraud, then Chuckle Bunny is likely obligated to turn such evidence over to the IRS.

Pronto - no threats, no promises. Just do it.

But, it appears that this Chuckle Bunny attorney might get more out of threatening than doing.

Hmm. Or perhaps Chuckle Bunny just likes to look at the pictures?

Glad to hear from Paul that he thinks Chuckle Bunny is not representative of the ABA Forum Members.

Anybody else quick, after 8 years, to denounce Chuckle Bunny?

Michael Webster PhD LLB
Franchise News

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Chuckle bunny lawyers are defnitely not needed,,, by RichardSolomon

Submitted by RichardSolomon on Sat, 2008/08/23 - 10:36.

representing anyone in the franchising industry.

In my experience, these smart mouth in house bozos aren't the ones doing the real work anyway. They ride along with their names on pleadings as political gestures by the real lawyers. Then the impotent smart mouth in house bozos make statements as though it was them and not the real lawyers who got the hard work accomplished.

In house lawyers do not try cases. They have never, in most instances, taken a deposition, written a brief, filed and argued a motion, offered admissible evidence in accordance with applicable rules of evidence, tried a real case in a real court in front of a real jury,cross examined a witness in a real trial, made an evidentiary objection or defended against an evidentiary objection. In reality, damn few outside business or franchise lawyers have ever done that either. The real trial lawyers are very few.--

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

Janet Sparks to wed by Paul Steinberg

Submitted by Paul Steinberg on Fri, 2008/08/22 - 20:45.

Caldeira states: With all due respect, I just hope you have your ducks in a row if this is the way you are going, because we will be prepared to refute and get engaged in short order.

Congratulations to Janet and Stephen on your engagement. And here I thought Colorado outlawed bigamy. But Caldeira is in Massachusetts, where attitudes are rather liberal. Will you be on the bridal registry at Dunkin, or at Subway?

Typical Dunkin' behavior:

engage in dubious behavior,
deny it ever happened, and
threaten to sick Bob Zisk and his pit bulls on you if you don't shut up.

Nothing new or surprising there.

What does surprise me is that Dunkin' Donuts pulled this threat with a well-connected reporter with 30 years in the franchise industry. At least Bob Zisk let me have my lunch first, and I got a nice day at the beach and my conference fee refunded.

People like Horn and Zisk are not representative of the mainstream franchisor bar, and hopefully with reporters such as Ms. Sparks exposing these practices to daylight their tactics will not become the industry norm.

And while I understand that Mr. MauMau has already run this matter past his counsel, I would be honored to assist pro bono. Many people misinterpret Edmund Burke's support of America; his position actually was that the colonists had the right to a fair hearing in Parliament and the right to a respectful and open debate.

Fittingly, Burke made a statement which is quoted to law students (at least, where I attended, if not where Horn and Zisk went). Burke said: "All that is required for evil to triumph is for good men to do nothing."

That Dunkin' has gotten away with such reprehensible behavior for so many years should be an embarrasment to those who have observed this and remained silent.

That a multi billion-dollar franchisor should feel the need to deny the truth and to threaten a reporter who dares expose the truth is both indicative of Dunkin's knowledge of the wrongfullness of its acts and a tribute to the journalistic integrity of Janet Sparks who did not cower in the face of Caldeira's threat.

So even if Caldeira doesn't keep his word on the engagement...

...Congratulations to Janet Sparks on some excellent reporting and a backbone worthy of her reputation.

Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

You have aptly demonstrated. ... by RichardSolomon

Submitted by RichardSolomon on Fri, 2008/08/22 - 22:36.

why the University of Texas Health Science Center no longer uses lab rats. They now use lawyers for laboratory experiments, because there are some things that a rat just won't do.--

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, it is because by FuwaFuwaUsagi

Submitted by FuwaFuwaUsagi on Sat, 2008/08/23 - 00:30.

Richard, it is because people get attached to the rats and care about what happens to them. Lawyers on the other hand...

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

You're right/// by RichardSolomon

Submitted by RichardSolomon on Sat, 2008/08/23 - 05:01.

I completely forgot about that--

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

Lab rats offended by Guest

Submitted by Guest on Fri, 2008/08/22 - 23:51.

Comparing Robert Zisk to a rat is an insult to the rat.

Dunkin's Stalking Scheme Plagues Franchisees in Court

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