Things Are Seldom What They Seem, Skim Milk Masquerades as Cream

Dunkin Doer says:
"I think that was true during the bad years but only to a limited extent. They seem to have sold franchise territories during the reigh of terror only to disengaged, equity players, most of whom failed miserably and are gone along with the old bad management that employed those tactics. Anyone remember the Developer of the Year, Kainos Partners?"

Let me get this straight. The 350 legal cases Dunkin' Brands Inc filed to terminate their franchisees would be the limited extent you refer to? I recall seeing roughly 1200 different franchisee names in the latest FDD. Dunkin' engaged to a limited extent in terminating 29%-30% of the franchisee base.

Kainos Partners were not terminated franchisees. Rather, Dunkin' Brands, Inc had equity stakes in Kainos which they had taken immediately before Kainos' pre-planned bankruptcy in 2009. Dunkin' Brands, Inc made a killing on the deal.

Dunkin Doer says:
"Now that they have abandoned the abuse of their franchise agreement and gone back to trying to have good relationships with their franchisees, they are sellign franchise territories to people who will be a success."

I suppose Dunkin' Brands Inc needed to clean up the system with the 350 franchisees they failed to successfully select. Or, was it that DBI needed to flip the controlling franchisor entity from the "existing" DD Franchised Restaurants, LLC to the "new" DD Franchising, LLC in order to regain control of the system to recapitalize the securitization and eventually take the system public?

I find it hard to believe that 29%-30% of the franchisee base were cheaters, miscreants and corner cutters.

call from a dress designer and manufacturer in NYC who was being sued here in Texas under the Antitrust law (Sherman Act) for vertical price fixing and unlawful refusal to deal in pursuit of fighting Internet retailers who were price cutting. Every time some price cutter would set up a web site and offer discounts on his dresses, he would be inundated by threats to terminate their busness with him from those retailers who had brick and mortar stores and who had invested in the capital requirements for providing personal service. The Internet people were just selling the dresses at discounts and providing no service and having no investment in a store or its staff. The customers of the Internet discounters would go to the stores of the brick and mortar retailers and use them as a try on resource, then order the dress from the Internet discounter.

This was in the two year period just before the Leegin decision re vertical price fixing in luxury goods by the Supreme Court.

Anyway, this guy had been paying his NYC lawyers (who, it turned out, had never had an antitrust matter in their lives) $ 20,000 a month to try to learn about antitrust. Nothing was happening in his case.

He asked me what he should do, and what I would do if he switched lawyers and hired me. I asked him how much business he thought the plaintiff might represent as his customer, and he gave me a rather substantial figure. I told him that Internet retailing was here to stay and that all he could do was lay back and enjoy it, and that I would sell to the Internet discounter (as all his competitors would have to do soon anyway). I told him that the brick and mortar retailers were seeing everything they handled being sold on the Internet and couldn't quit buying from everybody.

He hired me and we got him out of the case in a week by agreeing to sell to the plaintiff. Life was beautiful thereafter, and he has been my client ever since, with frequent matters coming here rather than to his regular NYC lawyers. He has gone on line to say nice things about me on AVVO and elsewhere, and he pays his bill by return mail. I am now doing all his Middle East licensing deals and all his other designer deals, as well as all his dispute resolution work.

I tell this story because it is the event that started me on this road of using more common sense and less aggression in the promotion of my practice. I look at disputes in different ways than people who just have to appease angry would be clients. I used to touch on early resolutions, but I found that my wealthy clients were too angrry and unwilling to think of anythng but bloodletting. Like all litigators, I would not risk getting fired because I urged some easier resolution.

Then, as life moved on and I saw that I was absolutely right in what I wanted to do in almost every instance, I began to take more risk of being fired by angry clients who wanted blood to flow all over the streets. When I would explain - in my own way - the risk of losing/expenses profile of not going for early resolution - some of these pissed off people would actually consider it and not fire me. This started occuring more frequently. People started coming to me because others to whom I had sold this more rational apprpoach had referred them to me. I began raising my hourly rates to reflect that I was now more valuable because I knew how to get things accomplished sooner and better.

I work less and make more nowadays because people come to me for insight and closure much more often. That value is wonderful.

How I do that is to use my own techniques for analysing the constituent parts of disputes until I find what it is "really" about, and then I try to identify what they had that - had they used it effectively - could have avoided the fight in the first place. I found that there is just about always one or more things they could have done that they missed because they were agenda driven instead of reality driven.

Now I have my system down pretty pat, and it works marvelously for those who deside to make the investment in intelligent rather than in belligerunt resolution. The problem with it is still that tough people with a lot of money have to be told to put their ego back into their pocket.

That argument does not just apply to those who are ready to retire. Anyone wanting to ‘get out’ is loath to criticise their brand.  Typically if they are to be allowed to exit the acceptance of an ‘appropriate’ buyer it will be conditional and/or usually involves taking a hit on what they expected would be a worthwhile resale price.

For most the moral question of climbing out of the pit on the back of another sucker [and family] is avoided.  It is another of franchising’s catch-22 situations. Damned and damned either way.