CANTON, Mass. – In answer to recent reporters' inquiries on the company's spying on franchisees, an unnamed Dunkin' Donuts spokeswoman stated, 'We have never conducted surveillance on any of our franchisees' or employees' personal property, nor would we condone such actions."  But for those in the franchise industry, that response is hard to swallow in view of detailed reports in Blue MauMau on Dunkin' attorney Steve Horn’s own presentation at an American Bar Association meeting in 2000. The presentation included photographs of boats, homes and cars of franchisees under surveillance. In the article, Dunkin’s written materials handed out to conference participants couldn’t be more clear. It states, "Everyone knows which franchisee just built a beach house and which one drives a late model Mercedes Benz."

In regard to Dunkin’s admitted spying maneuvers, New York attorney Paul Steinberg, a frequent contributor to Blue MauMau, gave his account of Horn’s presentation in his Penn State Law Review publication,  Beguiling Heresy: Regulating the Franchise Relationship. Steinberg reported that Horn “made explicit to the audience what he meant by “ammunition” for a confrontation meeting with the franchisee, saying he would be confronted with photos that the private investigator had taken while lurking around the family home.

Recently, in an interview, Steinberg said, “Dunkin’ denying Horn’s presentation on spying tactics indicates a lack of integrity. That’s outrageous.” He said taking photos of people’s private homes is crossing the line and it is creepy. “They are taking people to court and they are taking away people’s life savings on the grounds that this person is a liar,” he explained. 

Horn on spying, ABA

But the franchising firm continues to deny spying on its franchisees, despite its own evidence. When asked about Dunkin’s latest statement made in a recent New York Post article early this month, Michelle King, director of global public relations, again strongly denied that attorney Horn made such comments. “Those statements that Steve Horn is accused of making are false and unfounded.” She then sent a statement saying, “It is unfortunate that false and unfounded information regarding a presentation to a group of franchise attorneys made nearly 10 years ago continues to be reported as if it were credible information.”

When attorney Eric H. Karp, now representing the Dunkin’ Donut Independent Franchise Owners, was asked if he was present at Horn’s 2000 ABA Forum presentation, he said no. But he did remember another ABA Forum session in 1996 by Larry Hantman, then senior vice president and general counsel of Dunkin’ Donuts. He said Hantman showed a video of a man with a very, very heavy wristwatch and heavy ring handing money over to a person behind the counter, showing the cash going into a cigar box and change being made out of the cash register. Karp said, “Larry explained that that was why many Dunkin’ shops have floor to ceiling mirrors behind the counter, so that they can video tape. Karp asks, “Is this surveillance on the private lives of franchisees?  No. But it is shocking to me that they would undertake this kind of video.”

Karp feels a franchisor has a legitimate interest in upholding its system standards, whatever they are. "But the way franchisors uphold standards most effectively is to teach, to coach and to encourage, not to hit people over the head with a 2 X 4," he says." He said we also need to remember that Dunkin’ corporate selects and approves the franchisees. 

Franchisee attorney Robert Zarco also knows of Dunkin’s spying tactics. He tells of how a customer of one of his franchisee clients, was really a corporate spy. He came in wearing 007 black-framed glasses with a pin hole on the bridge with a miniature camera inside. He ordered ten or twelve boxes of donuts. The corporate spy then paid the franchisee in cash to record if he would put the money into his pocket or in the register, or if he would ring it up as something different than what was charged.

Is that illegal?  Zarco says no. “But it is a very draconian measure to your franchise business “partner” to treat him that way, instead of just confronting him with the facts and giving him a warning.” He explained, “Using the dark espionage glasses means they are setting him up to “trap” him in order to use it as evidence. They are already preparing their legal case against that franchisee.” 

But Dunkin’s PR director Michelle King insists, “We would never spy on our franchisees. . . personal property.”  Her statement continues, “. . . we have and always will conduct our business with uncompromising integrity, holding both employees and franchisees to the highest standards of professional and ethical conduct.”

Related Reading:

• Dunkin's Stalking Scheme Plagues Franchisees in Court
• Termination (Pretextual or Ulterior Motive)
• Dunkin' Donuts v. Grand Central Donuts
• Are Franchisor CIOs Out of Touch With Reality?
• Dunkin' Donuts Accused of Churning Franchises for Profit
• Smoking Gun Emails Billow Dark Cloud over Dunkin' Brands
• Franchisee Awaits Jury Trial after Four-Year Battle with Dunkin' Donuts