DDIFO Chides Dunkin' for Bad Publicity Surrounding Litigation
DDIFO reports in its Business Wire press release that an article posted this week on Blue MauMau.org cites internal documents and quotes from Steven Horn, Dunkin's chief legal counsel in charge of loss prevention, speaking to an audience of attorneys at the ABA Forum on Franchising about aggressive tactics it uses to conduct surveillance on franchisees suspected of underreporting sales. In quoting Horn in expressing his view that the lifestyles and attitudes of franchisees should be investigated as well as surveillance of their stores, McCarthy said, "Targeting franchisees because of their lifestyle is particularly troublesome. No franchisee should be under suspicion or treated differently for aspiring to the American Dream."
DDIFO president Mark Dubinsky added, "We would like to see more reason and balance brought to this situation. To our knowledge, the Dunkin' system is the most litigious major QSR system out there." He feels that litigation and confrontation should be the last alternatives used when underreported sales are suspected.
Dubinsky continued saying, "We believe Dunkin’ Brands must find a way to protect brand equity while also teaching franchisees how to best comply with their business obligations. Other successful QSR franchisors have figured out how to minimize litigation in their respective systems. Dunkin’ Brands should aspire to join the ranks of these leading franchisors in terms of franchisee relations and using litigation against its franchisees as tactic of last resort.”
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Related readings:
- Dunkin's Stalking Scheme Plagues Franchisees in Court
- Dunkin' Says It Must 'Build and Protect' Franchisee Equity
- Beguiling Heresy: Dunkin Donuts Strong Arm Approach of Spying on Franchisees
- Dunkin Donuts Franchisees Angry About Corporate Surveillance and Hardball Tactics
"Guest;" the personal life and/or vices of Mr. Luther are none of any franchisee's business.
The corollary is that the personal life and/or vices of franchisees are none of Mr. Luther's business.
As Michael Webster has pointed out, when business relationships venture into people's personal lives (via "obey all laws" clauses or otherwise) they embark on a slippery and corrosive slope. I doubt that Mr. Luther or Zisk or Horn would like private detectives spying on them and poking into their personal lives. They should accord franchisees the same courtesy as they would want accorded themselves.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
Since I know that some of their Board members post here, I just have a couple of questions for them, if they would care to answer:
1. What types of procedures do you have in place to verify that all of your members are in compliance with federal and state laws?
2. Since everyone is concerned about the brand, do you encourage your membership to inform you if they are aware of any federal or state laws being broken by other franchisees?
3. How many franchisees have you 'kicked out' of the organization for not following stated guidelines?
4. Do you have a number of franchiees that have been convicted of federal crimes? I know looking on the IRS website there was a franchisee convicted of tax evasion.
Just some questions that i think would help me and others out.
Thanks.
If the DDIFO does everything that you say they do, they should feel proud to answer those questions and state that they are looking out for the zees that are honest and abide by the contracts.
These are questions that people ask about the IFA and the AAFD, so what's the problem asking them of a franchisee association?
jd writes: "If the DDIFO does everything that you say they do, they should feel proud to answer those questions and state that they are looking out for the zees that are honest and abide by the contracts. "
No, this a fundamental misunderstanding about the role of the DDIFO.
Any IndFA is both in an adversarial and cooperative relationship with the franchisor.
The adversarial role is the result of franchisor opportunism or over-reaching. A franchisor trying to prevent franchisee free-riding has a number of legitimate legal tactics.
The "obey all laws" claus is repugnant and virtually invites franchisor opportunism - which the IndFA correctly resists.
Both the IFA and the AAFD, on the other hand, are trade associations. The IFA has never enforced their so called Code of Ethics and is primarily lobby group.
The AAFD is a much smaller group and may in the end become a real trade association for IndFAs.
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"
JD: "Informing" on fellow franchisees and such Stalinist tactics would no doubt be welcomed by Steve Horn--sort of John Grisham meets the Stasi.
Nobody has said that IFA or AAFD members should "inform" on each other or rat out each other to the feds.
The issue raised regarding IFA and AAFD is where they have members who use the organization logo to sell franchises, and where those members selling franchises fail to live up to the stated principles of the conferring organization.
None of those questions asked in the IFA and AAFD cases are analogous to the DDIFO.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
Franchisee associations don't collect royalties. Franchisers collect royalties.
Franchisee associations don't enter in a franchise agreement with their members. Franchisers enter into franchise with their franchisees.
Franchisers have clauses written into their franchise aggreements that allow for audits, and penalties. Why would a Franchisee association audit their members? There is no financial justification.
I would assume franchisee associations only accept members if they are current franchisees of the franchiser. If a franchisee was convicted of a felony, the franchiser by most franchise agreements, would have the right to disenfranchise the franchisee. If the franchisee was disenfranchised I would assume they would no longer be a member of the franchisee association, because they wouldn't be a franchisee anymore.
I would assume that most franchisee associations even though it is not their role to collect royalties, would take the position that undereporting of sales is not in the best interest of the franchise system, it takes away from the advertising fund, and from the franchiser's ability to invest in the franchise system.
Bluesky states:
'Why would a Franchisee association audit their members? There is no financial justification.'
if this is what people think, then why do people criticize the IFA or AAFD for dishonest members, but not a franchisee association like DDIFO?
If the DDIFO was aware of a franchisee underreporting sales shouldn't they have a duty to 'protect' the honest franchisees that report all of their sales? If I were an honest franchisee, i would want that.
Or say, the DDIFO knows that a franchisee has a 'rat' problem like the Taco Bell in NYC had last year, but didn't say anything to the zor. Do you think that publicity helped the other Taco Bells in the area?
Such venom, obviously someone that has something against people actually asking questions that the DDIFO might not want to answer. Hopefully your not the spokesman for the DDIFO.
These are legitimate questions, since they are concerned with how the brand looks to the public. People here (myself included) have criticized the IFA and AAFD for protecting franchisors that give bad names to zors. I'm asking the DDIFO if they are the same or if they have procedures in place to drop franchisees from membership if they have broken any types of laws.
I'm sure you and your DD family are always happy to see fellow franchisees bring down the company with IRS convictions. Even the person that posted his story admitted that he didn't follow IRS regulations when it came to employee payments.
lots of people know the color of her panties. It aint no secret what color her panties are.
There's a subtle psychological message here. Folks might just know the color of your wife's panties, and that's what's really got your knickers in a knot.
Next time don't be telling them stories on your own self.--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
I think that what Solomon is trying to say is that if Steve Horn/ Bob Zisk are sending out the goon squad to a particular store, it is because of widespread knowledge of that owner being involved in illicit activities.
Further, Solomon is saying that people are not upset about the goon squad per se but rather are upset because they are hiding something and feel the goon squad will uncover their own malfeasance. More to the point, that they are upset because they perceive that fellow franchisees know of the malfeasance and may rat them out to Horn/Zisk.
I disagree with Solomon, but just doing the translation has left me worn out.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
Splendid interpretation of Solomonspeak, but what if Solomon is right?
The Truth Shall Set You Free!
TIF
The Truth Shall Set You Free!
TIF
I really wanted to be a stand-up comic but had to settle for law school due to limited ability.
As to Solomon, he does tend to speak in riddles after the 4th bottle or so. What amazes me is that even at that point he is sharp as a tack; don't let that aw-shucks cornpone fool you.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
Richard uses parables, the oldest known source of wisdom, to convey his thoughts.
I had a slightly different take on Richard's observation - because of the admonition not to tell stories on yourself.
DD franchisees who claim to know other franchisees who are cheating are probably broadcasting their own unreliability - who else knows a cheater, but a cheater?
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"
MW: possibly true. And for that reason it is worth remembering that delphic pronouncements may have no meaning independent of the subjective perception of the listener.
Which is a polite way of saying that maybe Richard was simply getting a head start on happy hour, after all.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
The Texans are unlikely to be delphic, more likely pelvic.
The Truth Shall Set You Free!
TIF
The Truth Shall Set You Free!
TIF
I posted the recent blog article re non vetting of franchisees in acquisitions, is that the DD association has the potential to be an extremely important resource for the franchisee system, but the appearances, based on the ranting posts of DD franchisees in here, say that the Assn's potential is not being realized.
Start with the point that effective communication to the franchisee population is a principal function. Were that function being executed, the franchisees in here probably would be better informed and have a more competent appreciation of the process - regardless of whether the manner of executing the process is or is not "in good taste".
The alternative is that, again based on the appearances in here, the Assn is doing a good job and all the rantng in here is being done by the miscreants who anticipate imminent exposure of their shenannigans. Why else are people using illusions of someone's wife's panties? The reference to one's wife's panties is to me a freudian reference to the exposure of cooked books.--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
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