Boston Globe Reports Dunkin' Donuts Finds Suing Franchisees a Profitable Biz

According to experts, Dunkin’ Donuts has figured out and is pioneering how suing its franchise owners can be a major “profit center” for the franchising firm. The donut chain, currently engaged in over 350 lawsuits with franchisees, can easily find an infraction as a pretext for store termination in almost any of the brand’s thousands of donut shops, according to franchisees.

“It’s like harassment. No one runs a 100 percent perfect business,’’ said one franchisee who declined to be named but said the shop had recently been targeted by Dunkin’. “There’s no relation with Dunkin’ anymore. We’re just a number to them." - Boston Globe

Franchisees often can only be critical of their franchisor on stipulation of being anonymous because of fears of being targeted, terminated and litigated against by their franchisors.

At a meeting of the Dunkin’ Donuts Independent Franchise Owners in Worcester, Massachusetts, one of the franchise industry’s top lawyers, Robert Zarco, emphatically warned Dunkin' franchisees:

“They [Dunkin Donuts] will find something in 99 percent of the cases that is not accurate and they will send a letter of termination, saying some of the breaches are incurable and it is inconsistent with the good will of the brand,’’ said Zarco, who has represented franchisees in cases involving more than 300 companies. “By far and away, Dunkin’ is the most litigious brand out there.’’

… Zarco, the attorney, said the fines charged to settle some of the allegations are arbitrary and not spelled out in any documents, and have ranged from tens of thousands of dollars to upwards of $2 million. Zarco has won at least two cases related to the fees on behalf of franchisees, who say that the company can profit off terminations by collecting transfer fees and increasing royalty fees from new franchisees.

Read the full news story at the Boston Globe