Dunkin' Says It Must 'Build and Protect' Franchisee Equity
At Dunkin’ Donuts, we clearly value the partnership with our franchisees, whose entrepreneurial spirit and drive have helped to create a powerful and much-loved brand. We also understand that our primary responsibilities as a franchisor are to build and protect the long-term equity of our franchisees, over 70% of whom are small business owners with five stores or fewer. When one franchisee does not operate a Dunkin’ Donuts store in a lawful manner or run the business ethically and in accordance with the standards outlined in their franchise agreement, it diminishes customer goodwill, damages the brand and hurts other franchisees by association.
We do insist that our franchises be operated legally, but that has nothing to do with size. Franchisees who have been terminated for fraud or other criminal activity range from small to very large. What they had in common was illegal behavior. The article cites an underreporting case the Company lost several years ago, but that is one of three losses in nineteen years. Courts look at evidence and the behavior of litigants. Our record is extraordinarily successful because of the care we take in bringing cases that are investigated properly.
Regarding what was said and written at the ABA Forum in New Orleans eight years ago, there was absolutely no discussion there, or anywhere else for that matter, of looking into our franchisees’ private lives. The only discussion of lifestyles was had in the context of wealth, contrasting how some people live with what they claim to earn. A few examples were given of franchisees who, year after year, claimed to earn little or no money from their franchises (their only source of support), yet who were able to purchase expensive second homes entirely for cash (no mortgages).
We do not investigate franchisees because they are wealthy. We have many of them and they are a source of pride in the strength of our brands. But when a franchisee who is suspected of hiding his true sales is relatively poor on paper but has an expensive lifestyle, it’s fair to ask how that is done. And the assets in question, the houses and boats talked about in the article, were discovered by reviewing public records and not through any kind of surveillance or spying.
At no point was it ever suggested that franchisees should be threatened with turning over evidence to the IRS or any law enforcement agency. That is clearly improper and a practice we would never engage in.
Last, Dunkin’ Donuts’ viability as a franchisor depends entirely on the success of our franchisees; the satisfaction of our franchisees is borne out by their actions:
* The vast majority of all Dunkin’ Donuts franchisees who are eligible to renew their contract elect to do so;
* In addition to high-quality new franchisees that we have brought into the system over the last 24 months, it’s important to note that 2/3 of all new Store Development Agreements were executed by strong existing franchisees.
Great operators understand that their investment in Dunkin’ Donuts is best protected when every franchisee upholds the same laws and standards, and they look to us as the franchisor to ensure that everyone is playing by the rules. When all else fails, it is Mr. Horn and his team who defend the credibility and integrity of our brand, and to suggest otherwise is a disservice to Bluemaumau readers and all Dunkin’ Donuts franchisees.
