Dream Dinners CEO Focused on Business Model, Not Litigation
Dream Dinners, a meal assembly franchise company, has been hit with two new lawsuits just this year, both now filed in state court in Washington. As reported last week, one lawsuit representing two franchisees in Ohio has been amended to include the franchisor's attorneys as defendants, alleging illegal earnings claims among the allegations. The second lawsuit, representing approximately fifteen owners, is expected to be amended shortly on similar grounds.
In spite of the lawsuits, Leonard believed in what Stephanie Allen and Tina Kuna, owners of the franchising company, were doing and accepted their invitation to join their organization. From his business perspective, Leonard said he went through something similar in his previous industry. "I know it's an off-the-wall analogy, but there are a lot of similarities in my executive position with Maytag." Leonard spent twelve years at various leadership positions in all three of Maytag's divisions (retail, builder and national accounts), according to a Reuters report. He left Maytag to launch an innovative retail concept in the Northwest called the Maytag Stores, where he served as CEO for almost three years.
He likens it with the appliance company's front-load washer which revolutionized that industry in the late 1990s when it came out with the first model. He said when washers were typically selling for $399, the new Maytag model soared above the others at $1000. It completely transformed Maytag. "In a year and a half our stock went from $18 to $72 a share. We were a 100-year old company with a consistent history," he explained.
American Moms Want "Back to the Dinner Table"
Although the new washer model was a very trendy thing to get into, Leonard said eventually the industry weeded out people who weren't there for the right core business reasons. Now, he sees the meal assembly concept the same way. "It is not just a fad. It is a viable, powerful place to be.”
Leonard again confirms that Dream Dinners has approximately 180 locations. Although they did have 240 locations at one time, they have done some reorganizing of their owner partners. "There have definitely been stores that have closed." He adds that some of it has actually been according to plan. Right now the chain is not growing.
Leonard feels Dream Dinners is much more stable than its competitors. "Our food costs reductions have been substantial and there are changes we have put into place with new partnerships." But he says that they are increasing corporate and franchise owner profitability. At the same time, he said many of their meal assembly brands have either ceased to exist or closed many of their franchised doors.
“We are in front of all major trends in America right now," Leonard said. He continued that the firm receives calls from organizations much bigger than Dream Dinners because they foresee that America wants to return back home to the dinner table. Dream Dinners targets the American mother with school-age kids who is trying to simplify her life. He said, "Food service is getting hammered while grocery stores are growing. That is the statistical data behind the new trend of "back home."
Leonard feels Dream Dinners has weathered the storms much better than most in the industry. He said after being on a roller coaster ride in the meal assembly segment the last five or six years, the chain is now more stable.
Real Competition Comes from Retail Food, Not Meal Assembly
Today, Dream Dinners' main competitors are not in the meal assembly industry. They are in the $25 billion retail
meal solutions category, which is where "dinner for tonight" resides, meals that the American mom doesn't make. Leonard says it's the TGIFridays, Chili's, curbside delivery, orange chicken from the grocery store, the cooked foods that she buys, brings home, puts on plates and calls it dinner. "That's where America’s most unhealthy, most unnutritional food resides," he explains. The franchising firm’s entire focus in the business model is on being the solution to that consumer problem, not in what is currently classified as meal assembly.
Leonard feels that the industry has been too focused on itself. "That has been one of our competitors' major downfall. Meal assembly is a solution to the retail meal segment of the food industry, a $25 billion space, not a $350 million space." Leonard exclaims, "According to our research, it’s the guilt and conviction of those moms not putting a dinner on the table that they are proud of that is the driving force of our business."
Moving Forward in the Midst of Litigation
With the escalation of litigation, how will Dream Dinners move forward?
Leonard said he knows the business model has been put at risk based on a handful of franchisees suing the franchisor. As a leader his focus is on what he can control. "I cannot control the litigation or the mindset of the franchisee plaintiffs. He said he has reviewed pretty much everything that is on the table with the firm’s counsel, who is confident that the franchisor will prevail. Leonard anticipates seeing it through. "It's a distraction, but I have compartmentalized it cleanly for the company. I have a team completely focused on it. The rest of us are focused on driving the business," he declares.
When asked if he has changed anything in the Discovery Day PowerPoint presentations, which was one method the company allegedly used to give illegal earnings claims according to the lawsuits, Leonard said no. Although he is not directly involved in the sessions, he occasionally observes them by dropping in to introduce himself.
He said the purpose of Discovery Day was to conduct a mutual interview on whether the prospects are aligned with the character and the professional qualities of being a franchisee, and for the candidates to determine if they want to partner with Dream Dinners. Leonard explained that the process was incredibly professional and purposeful, and that at no time during or after that session do they give earnings claims.
Leonard said he may look back at this as a learning experience, but he is pretty confident in their ability to fight the lawsuits. He feels the majority of their franchisees are happy, but said it would be arrogant for him to speak on their behalf. "I invite you to speak to any franchisees in our system," he stated confidently. Through their Franchisee Advisory Council representatives, the franchisees are a huge part of the company. Leonard feels the FAC members are world-class stewards for the rest of the system.
“We do not have the mindset that most franchisors do,” Leonard said. “We are completely and utterly committed to our owner community and that’s why I embed owners in the planning process. If I cannot transform my owners' businesses, I cannot expect my company to be transformed. The success of the business will be merited on its royalties and not on franchise sales.”
(Coming soon: Part 2: Franchisee Advisory Council Co-President Speaks Out; Franchisor and FAC Address Internet Articles and Blogging)
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Related reading
- Dream Dinners Responds to Latest Litigation
- Dream Dinners, Attorneys Sued for Illegal Earnings Claims, Violation of Washington Franchise Act
