independent joe magazine issue #10 september 2011

Get With the (Social Media) Program by Linda Formichelli

Franchise Owners Bankingon Citizens Combo StoresBy Matt Ellis

Rhode Island’s Fair Dealership Act Paves Way for Massachusetts Bill

Profit Building with PerryProfit Building with Perry

September 2011 • Issue 10 We Communicate, We Educate, We Advocate!

also in this issue by Betsy Lawson

Untitled-1 1 5/12/2011 5:45:24 PM

SEPTEMBER 2011 • INDEPENDENT JOE 3

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Rhode Island’s2007 Fair Dealership ActPaves Way forMassachusetts BillBetsy Lawson

Message from DDIFO ChairmanDan Connelly

Using Incentives to Improve ProfitsPerry Ludy

Get With the (Social Media) ProgramLinda Formichelli

DDIFO Directoryof Sponsors

Franchise Owners Banking on Citizens Combo StoresMatt Ellis

Index ofAdvertisers

RI Law continued on page 11

Advocates seeking to level the play-ing field between franchisees and franchisors in Massachusetts ref-erenced Rhode Island’s 2007 Fair Dealership Act Rhode Island – and its 2008 amendment – as providing the much-needed statutory protec-tion against unfair – even predatory – practices of corporate franchisors. The disparity of power becomes most evident, proponents of S1843 assert-ed during hearings at the Massachu-setts State House on June 29, around issues of equity, contract renewal, areas of encroachment and the right to cure.

The legislation is sponsored by State Senator Brian A. Joyce (D) who has an office in Canton where franchisor Dunkin’ Brands Inc. is headquartered. Massachusetts currently has legisla-tion that protects franchise owners of automobile dealerships from unfair practices, but not for other types of franchising in the state such as res-taurants, Joyce said.

“The motivation for the Rhode Island legislation is exactly the same for filing a bill in Massachusetts – to pro-tect the franchise owner from poten-tially arbitrary and capricious actions by the franchisor,” Joyce said.

And just as none of the “doom and gloom” economic predictions made by the opponents of the Rhode Island Act have come to pass in the three years since it became law, Joyce anticipates no adverse impact on business here in Massachusetts.

“It’s a simple matter of fairness,” he said, “...to protect the hardworking franchise owners who have invested in the state from losing everything.”

Indeed the testimony offered by fran-chisees about exploitative practices

Rhode Island’s 2007 Fair Dealership Act Paves Way for Massachusetts Bill

by franchisors was eye-opening for members of the Joint Committee on Community Development and Small Business. Like many in the general public, legislators spoke of misunder-standing the franchisor-franchisee re-lationship, assuming it is one of equal footing between two parties who freely enter a fair and even-handed contract.

But as Jim Coen, president of Dunkin’ Donuts Independent Franchise Own-ers (DDIFO); Carl B. Lisa, general counsel for DDIFO; Robert Zarco, a Miami-based attorney who repre-sents franchise owners across the country; and Eric H. Karp, partner at the Boston law firm of Witmer, Karp, Warner & Ryan LLP stressed during their testimony, state protections are necessary to prevent gross inequities between the two parties.

Further hearings are not scheduled in Massachusetts until late October. In the interim, it may be helpful for those considering contacting their represen-tative to support S1843 to understand the origins of the Fair Dealership Act and its impact on franchising in Rhode Island and elsewhere.

How we got here: a brief legal historyBeginning in 1853 with Isaac Singer’s sewing machines, franchising has been a pathway to the American Dream for generations of self-starters in this country. It has also been the road to ruin for countless others taken advantage of by a disparity in power between the franchisor and the fran-chisee. The first legislation aimed at curbing abuses was California’s 1971 Franchise Investment Act. It man-dated potential franchisees be fully informed about the risks and respon-sibilities they were undertaking.

by Betsy Lawson

Those defending the rights of franchi-sees, however, maintain that these disclosure laws have only served to strengthen the position of the franchi-sors as they control the content of the franchise agreement. Attorney Eric Karp, whose firm specializes in franchise litigation, calls these “contracts of adhesion.” He defined this term during the recent Massa-chusetts hearings as “take it or leave it” contracts that allow no room for negotiation. This results in procedural unfairness.

Karp went on to describe how sophis-ticated sales people will tell prospec-tive franchisees that any negotiation on their part could jeopardize the franchise agreements. These agree-ments, Karp noted, can run upwards of 700 pages of legalese—plenty of fine print in which to bury unfair conditions.

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Independent Joe ® is published quarterly by DD Independent Franchise Owners, Inc.

Editors: Jim Coen, Matt EllisContributors: Linda Formichelli, Betsy Lawson, Perry Ludy

Advertising: Joan Gould • Graphic Design/Production: Susan PetersenDirect all inquiries to:

DDIFO, Inc. • 150 Depot Street • Bellingham, MA 02019508-422-1160 • 800-732-2706 • [email protected] • www.ddifo.org

DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners.

INDEPENDENT JOE®, INDY JOE®, and DDIFO® are registered trademarks of DD Independent Franchise Owners, Inc.

Any reproduction, in whole or in part, of the contents of this publication is prohibited without prior written consent of DD Independent Franchise Owners, Inc.

All Rights Reserved. Copyright © 2011 • Printed in the U.S.A.

Welcome to the 10th edition of Independent Joe, DDIFO’s quarterly magazine. I am writing to you as the newly elected Chairman of DDIFO Board of Directors. As this magazine goes to print, Congress has passed a resolution to raise the debt ceiling, the nation’s credit rat-ing has been downgraded, the stock market is on a roller-coaster ride, and Dunkin’ Brands (DNKN) is, once again, a publicly traded company. Uncertainty abounds, yet Dunkin’ Donuts franchise owners continue to open and operate their Dunkin’ Donuts restaurants as they always have– with hard work, relentless focus, and dedication to providing superior customer service.

During Uncertain Times, DD Franchise Owners Maintain Focus and Dedication

Now that Dunkin’ is publicly trad-ed, the financial press is closely examining the company, trying to analyze Dunkin’ Brands’ earnings and growth prospects. Journalists are learning what our members already know – that nearly 100% of Dunkin shops are owned and operated by franchisees and that these franchisees are the ones investing their hard-earned money to grow the business.

From Dunkin’s decision to sell the newly launched Dunkin branded K-Cup exclusively in Dunkin’ restaurants, to the disclosure in the DNKN prospectus that ap-proximately 90% of 2010 restau-rant openings came from existing franchisees, it is increasingly clear that our franchise owners are key stakeholders in the Dunkin’ Do-nuts business.

Our goal at the DDIFO is to protect and enhance your stake-holder investment in the Dunkin’ system; it is the overriding focus of our regional meetings and ex-ternal communications. I encour-age you to attend our regional and

I wish you a great fall business season – one filled with sunny weather, increased guest counts, and lower commodity costs.

Dan Connelly, ChairmanDDIFO, Inc.

national meetings and bookmark our website to stay up to date with the news and information that directly affects your business. We have a great lineup of speakers and programs for our second an-nual National Members Meeting at Mohegan Sun in Uncasville, CT on September 19 and 20; I hope to see you there.

by Dan ConnellyDDIFO Chairman

Dan Connelly is Chairman of the DDIFO Board of Directors and the Director of Business Development for JCM Franchise Development, LLC

6 INDEPENDENT JOE • SEPTEMBER 20116 INDEPENDENT JOE • SEPTEMBER 2011

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Using Incentives to Improve Profits

Profits continued on page 22

In most situations, profit improvement is not as difficult as it may seem. Think about it. Profits improve when revenues increase, customer satisfaction im-proves, and costs decrease. If that is true, then why not develop an incentive program that encompasses all three of these measures?

Recently, I had the opportunity to moni-tor and review a profit improvement in-centive plan that was designed by QSR restaurant managers and implemented with their crews over a two-month pe-riod. Giving managers the task of ham-mering out the details and overseeing the implementation greatly contributed to the program’s success.

The restaurant managers came up with a contest where all fifteen restaurants in the network could participate. The goal of each restaurant was to focus on four specific areas for improvement: cus-tomer satisfaction, add-on sales, guest check average, and labor cost control. They set it up as follows:

1. Customer Satisfaction ImprovementBased on a receipt-driven customer survey program similar to Dunkin’s GSS, the managers set a goal to improve their current overall satisfac-tion rating by 2%--taking it from 68% to 70%. When a restaurant received a score of 70%, that location was entered into a drawing to receive a prize at the end of the contest. If the restaurant achieved a score of 71%, it was en-tered a second time; once for reaching 70% and once again for the additional percentage point. If the restaurant achieved 72%, it received three entries, and so on. The goal was not only to reach higher customer satisfaction levels, but also to create incentives for restaurant managers to motivate their crew members to help achieve higher scores.

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2. Add-on SalesThrough suggestive selling, managers aimed to increase add-on sales by 20% within the two month timeframe. Cashiers were instructed to promote specific items and managers used POS to track the number of times each cashier was able to attach an ad-ditional product to a customer’s guest check. When a restaurant reached 20%, that location received one entry into the contest; at 21%, the restau-rant received two entries, and so on. Managers learned that putting the right people at the cash registers was critical for the success of this initiative. They also learned that by giving cashiers a

specific promotional item to sugges-tively sell helped the cashiers be more comfortable pushing that item.

3. Guest Check AverageThe managers set a goal to improve the current threshold run rate in Guest Check Averages by $0.05 per transac-tion. Based on the same contest entry method above, if a restaurant received a $0.05 improvement, that location received one entry into the drawing. At $0.10, the location received two entries, and so on. This activity would be the true indicator of whether the contest could be self-funded.

4. Labor Cost ControlAny franchise owner will tell you that controlling labor costs is one of the toughest challenges of running a QSR. Some managers are more adept at it than others. The contest was an oppor-tunity for underperforming managers to work harder at controlling labor. While every restaurant was allowed to par-

ticipate in the contest, only those that reached 100% of their labor goals were entered into the prize drawings.

AnalysisIn the final analysis, the contest was successful because restaurant man-agers created the terms, selected the prizes, and were solely responsible for motivating their teams. What’s more, the increased levels of improvement justified the cost of the program. Con-sider this:

• Every restaurant in the franchise had a chance to participate on equal footing, operating within the frame-work of the four specific areas;

• Employees were motivated to win meaningful prizes that were selected by their peers and managers;

• Restaurants did not have to worry about being too far behind to win because any location was eligible to enter the drawings based on reach-ing a single goal;

• Focusing on labor controls as a ticket to entry helped managers significantly reduce costs and, along with the other improvements, ensured that the contest would be self-funded;

• The contest fostered team building because winning depended on each team member’s participation; and

• By incrementally increasing a restau-rant’s chances to win, team mem-bers were motivated to sell additional products and promote the customer satisfaction survey. It got them in the habit of improving customer service.

Employees were enthusiastic because of the high quality of the prizes. First prize was a cruise to the Bahamas

Controlling labor costsis one of the toughest challenges.


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SEPTEMBER 2011 • INDEPENDENT JOE 9Social Media continued on page 19

The numbers are impressive: Consumers spent more than five and a half hours on social net-working sites in December 2009 – an 82% increase from the same time the year before. Facebook boasts 750 million active users, with 50 percent of those logging on in any given day. And accord-ing to the microblogging platform Twitter, as of March 2011 users were sending 140 billion tweets per day.

Dunkin’ Donuts franchise owners are starting to hop on the social media bandwagon to market to their customers. For example, you’ll find dozens or even hun-dreds of Dunkin’ Donut franchises on Facebook, LinkedIn, and Four-

Get With the (Social Media) ProgramHow Dunkin’ Donuts Franchisees Are Using Social Media to Connect with Customers

square (more on each of these platforms below).

Customer loyalty and positive word of mouth are two benefits of using social media; people trust what they see from their friends and directly from the businesses they frequent more than they trust commercials, and they enjoy hav-ing multiple avenues for connect-ing with the businesses they like.

Dunkin’ Brands has established itself well on different social media platforms and is eager to help franchise owners maximize their opportunities while also keeping their brand message consistent.

According to Jessica Gioglio, PR and Social Media Manager for Dunkin’ Brands, the company

by Linda Formichelli

has a number of social media best practices and a Franchisee and Field Marketing Social Media Policy which requires franchisees

register their Twitter accounts and/or Facebook pages with the company.

For additional information on this policy and how to register a Facebook account or Twitter page, go to the Contracts and Legal section of Franchisee Central. To learn more about Dunkin’s best practices for social media, call the Navigator at 877-800-2922.


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Wisconsin and Iowa Take a StandThe Wisconsin Fair Dealership Law (WFDL) was enacted in 1974. Origi-nally designed to protect gasoline dealers from being dropped arbitrarily by oil companies, the WFDL now extends to other supplier and reseller relationships, including franchis-ing. The WFDL prohibits a grantor of a dealership from terminating, or substantially changing the competi-tive circumstances of, the dealership agreement without good cause. The statute also requires at least 90 days written notice of termination, non-renewal, or substantial change in competitive circumstances, and a 60-day period to rectify any deficiency identified by the grantor (i.e. right to cure).

In 1979, the federal government insti-tuted the Franchise Rule that stipulat-ed more than 20 areas of disclosure be required when selling a franchise. Despite these disclosures, however, franchise agreements could retain the right of the franchisor to expand, ter-minate, or non-renew upon its discre-tion, regardless of the performance of a franchisee. Franchisors say this is necessary to preserve their ability to sever relationships with those whose business practices may be negatively affecting the brand. Franchisees, on the other hand, claim this power is abused by unfair terminations and non-renewals. They argue that fran-chisors are able to demand one-sided contracts because of their enormous financial and legal resources.

The perceived one-sidedness of these franchising contracts again became a hot topic in the early 1990s at both the state and federal level. The Committee on Small Business of the U.S. House of Representa-tives released a report in 1990 titled “Franchising in the U.S. Economy: Prospects and Problems.” This report reflected the committee’s opinion that:

“a serious imbalance of power exists between franchisors and franchisees after the franchise agreement is initiated and throughout the ongoing relationship. Advantages of financial strength, access to information and to legal advice creates a gross dispar-

ity of bargaining power in favor of the franchisor that results in one-sided franchise agreements that are offered and generally accepted on a take-it-or-leave-it basis... inherent in practi-cally every franchise agreement is the potential for significant abuse of the interests of franchisees.”

In the wake of this report came the 1992 Iowa Franchise Act and its 1995 amendments. What started as a dispute over territorial rights between two Iowa businessmen who owned a combined total of 26 KFC stores

across Iowa, ended in a law that required significant changes in how franchisors were to conduct busi-ness in the state. Iowa is now widely considered the most wide-reaching franchising legislation in the country.

Characteristic of the Iowa legislation that continues to make it so contro-versial is its attempt to regulate areas traditionally covered in a franchise contract, such as transfer rights, ter-

mination, nonrenewal, encroachment, jurisdiction and remedies – the same issues that would arise in the Rhode Island legislation introduced in 2007 by Rep. Stephen R. Ucci (D) and Sen. Christopher B. Maselli (D) – the Fair Dealership Act.

RI Law Recognizes Imbalance of Power

While the legal language of a state statute can be difficult for the layper-son to interpret, the explanation by the Rhode Island Legislative Council

at the end of the Fair Dealership Act could not have been clearer:

“This act would provide protection for dealership owners within this state from the superior economic power of dealership grantors.”

As the bill awaited the governor’s signature, Senator Maselli said in a released statement, “These large companies inherently have greater

bargaining power and economic resources than dealers in the negotia-tion of dealerships.”

The release goes on to say:

“[The Act] ... would extend the 30-day period to 90 days in order to allow a business to reposition itself in the event that a contracted amount is not sold. The legislation also prohibits a corporation from terminating, cancel-ling, failing to renew or substantially changing the competitive circum-stances of a dealership without good cause...”

RI Law continued on page 25

RI Law continued from page 3

“This act would provide protection for dealership owners within this state from the superior economic power of dealership grantors.”


AccountingAdrian A. Gaspar & Company, LLPCertified Public AccountantsRobert Costello1035 Cambridge Street, Suite 14Cambridge, MA [email protected]

Bederson & Company LLP - CPAs and ConsultantsSteven Bortnick, CPA405 Northfield AvenueWest Orange, NJ [email protected]

Bedford Cost Segregation Bill Cusato60 State Street, Suite 700Boston, MA 02109978-263-5055 [email protected]/ who_we_serve/ddifo.asp

Caturano & CompanyJennifer Grossetti80 City SquareBoston, MA [email protected]

Cynthia A. Capobianco, CPACynthia Capobianco60 Quaker Lane, Suite 61Warwick, RI [email protected]

James P. Ventriglia, CPA, Inc.Jim Ventriglia145 Phenix Avenue, 2nd FloorCranston, RI 02920 [email protected]

Gray, Gray & Gray, CPAPaul Gerry, CPA34 Southwest ParkWestwood, MA [email protected]

Performance Business Solutions, LLCCost Segregation and Energy ManagementJeff Hiatt87 Lafayette Road, Suite 11Hampton Falls, NH [email protected]

Rubiano & Company, CPA’sDaniel J. Rubiano, CPA5 Austin Avenue, Suite 1Greenville, RI [email protected]

Sansiveri, Kimball & Co., LLPJoseph Mansour55 Dorrance StreetProvidence, RI [email protected]

Thomas Colitsas and Associates, CPATom Colitsas103 Carnegie Center, Suite 309Princeton, NJ [email protected]“A Member of Franchise Pros”

Advertising Access RewardsDoug Jentzsch1012 W Beardsley PlaceSalt Lake City, UT 84119866-681-2427dougj@accesscashrewards.comwww.accesscashrewards.com

Back Office Caturano & CompanyJennifer Grossetti80 City SquareBoston, MA [email protected]

IKMS Group, Inc. Cliff PrattPO Box 6221Manchester, NH [email protected]

Building Absolut Contracting William Lako4346 Route 27Princeton, NJ [email protected]“A Member of Franchise Pros”

Duro-Last Roofing Jim Schriber 525 Morley DriveSaginaw, MI [email protected]

Royston, LLCCabinetry and MerchandisingBonnie PadgettOne Pickroy RoadJasper, GA 30143800-334-1766bonnie.padgett@roystonllc.comwww.roystonfordunkin.com

Secure Energy Solutions, LLCMike Schmidt12-14 Somers RoadEast Longmeadow, MA 01028413-733-2571 ext. [email protected]

ViewPoint Sign and AwningBill Gavigan35 Lyman StreetNorthboro, MA [email protected]

Business Broker Hirshon Associates, H & H Properties and FranchisesStephen Hirshon425 Broadhollow RoadMelville, NY [email protected]“A Member of Franchise Pros”

Kensington Company & AffiliatesDavid Stein185 Roslyn RoadRoslyn Heights, NY 11577516-626-2211 office718-490-2218 [email protected]

Directory of Sponsors


Susquehanna Commercial FinanceBrian Colburn2 Country View Road, Suite 300Malvern, PA 19355443-996-1792brian.colburn@susquehanna.netwww.susquehanna.com

Trust Capital FundingMark Wesalowski132 Adams Street, Suite 1Newton, MA 02458800-LENDER1Mwesalowski@trustcapitalfunding.comwww.trustcapitalfunding.com

Food Products CSM Bakery ProductsMarla Cushing1901 Montreal Road, Suite 121Tucker, GA 30084770-723-2083marla.cushing@csmglobal.comwww.csmbakeryproducts.com

PepsiCoBryan Gruttadauria315 Norwood Park SouthNorwood, MA [email protected]

Human Resources ADP Kurt Salomon225 Second AvenueWaltham, MA [email protected]

CareerBuilder.Com Erica Basso400 Crown Colony Drive, Suite 301Quincy, MA 02169781-453-3581erica.basso@careerbuilder.comwww.careerbuilder.com

Diversified Solutions, Inc.Chrishelle Gavoni412 Long Pond RoadPlymouth, MA 02360508-746-6995jkerchgavoni@comcast.netwww.diversified-solutions.com/dsi_dd.html

The PCI GroupRobert Boffa, Sr.303 Molner DriveElmwood Park, NJ 07407201-797-8000 ext. [email protected]

Insurance The Hill AgencyRita Frailey5 Washington AvenueEndicott, NY 13760800-446-1775rfrailey.hilla01@insuremail.netwww.thehillagencyinc.org

KK Insurance AgencyAshish Vadya541 BroadwayLong Branch, NJ [email protected]

Paris-Kirwan InsuranceJohn Mulcahy1040 University AvenueRochester, NY [email protected]

Sinclair Insurance Group - Risk ManagementMatt Ottaviano4 Tower DriveWallingford, CT [email protected]

Starkweather & Shepley Insurance Brokerage, Inc.Sabrina San Martino60 Catamore BoulevardEast Providence, RI 02914800-854-4625 ext. [email protected]

LegalLaw Office of Carmen D. Caruson, PC Carmen D. Caruso77 West Wacker Drive, Suite 4800Chicago, IL [email protected]

Lisa & Sousa Attorneys at LawCarl Lisa, Sr.5 Benefit StreetProvidence, RI [email protected]

Directory of SponsorsFinance Business Financial ServicesScott Kantor3111 N. University Drive, Suite 800Coral Springs, FL 33065954-509-8019skantor@businessfinancialsservices.comwww.businessfinancialservices.com

Capital One BankGeorge Ziminski499 Thornall Street 11th FloorEdison, NJ 08837732-767-4115george.ziminski@capitalone.comwww.capitalone.com

Cashmaster Cash SolutionsJayson Dunston2108 Trving Blvd.Dallas, TX 75207214-747-1982 ext. [email protected]

Direct Capital Franchise GroupRobyn Gault155 Commerce WayPortsmouth, NH 03823603-433-9476rgault@directcapital.comwww.franchise.lendedge.com

Fidelity BankSally Buffum465 Shrewsbury StreetWorcester, MA 01604508-762-3604sbuffum@fidelitybankonline.comwww.fidelitybankonline.com

GE Capital, Franchise Finance Ab Igram201 Merritt 7, 2nd FloorNorwalk, CT [email protected]

Joyal Capital Management Franchise DevelopmentDaniel Connelly50 Resnik RoadPlymouth, MA [email protected]

Merchant Cash & CapitalSeth Broman450 Park Avenue South, 11th FloorNew York, NY 10016212-545-3185sethb@merchantcashandcapital.comwww.merchantcashandcapital.com

Directory continued on page 23


When Dave Carvalho and his partner, Brandon Woolkalis, were looking for a location in Cam-bridge, Mass. to open their latest store, Carvalho found a spot along the Charles River— in one of the few available commercial parcels along Memorial Drive. The loca-tion is close to a major highway interchange and between 35,000 and 40,000 vehicles drive by there every day. Set just 50 feet back from the busy two-lane thorough-fare, the shop could not handle a drive thru, but at 3,000 square feet, it was more than he needed for his Dunkin’.“It made a lot of sense to find another business to use some of the extra space. It’s an urban set-ting and densely populated so we started thinking about what kind of business could be mutually benefi-cial,” said Carvalho.During their planning and analysis of the new Cambridge site, Carv-alho gave a call to Neal Faulkner, who, two years ago, replaced the Baskin’ Robbins in his Bellingham, Mass. combo store with a Citizens Bank branch. “Dave was not the first franchisee who’s called asking about the bank combo,” said Faulkner. “I recom-mend it to every one. It’s worked out well.”Dunkin’s history with combo stores has been hit and miss. When Baskin’ Robbins came under the Dunkin’ Brands umbrella in the mid 1990s, it seemed like a great fit to locate an ice cream shop within the confines of a Dunkin’. But, because ice cream is a special-event pur-chase while coffee is more of a daily purchase, the synergy never quite worked to its expectation. Carvalho says he still has three Dunkin’- Baskin’ combo stores in Massa-

Franchise Owners Banking on Citizens Combo StoresSecond Dunkin’-Citizens Combo Opens in Massachusetts

by Matt Ellis

chusetts. He says it is possible to generate enough revenue in the summer to cover the expense over a 12-month period but it depends a lot on the store’s location and cus-tomer count. Banks offer a different paradigm. Jeremy Cyrier, founder and presi-dent of MANSARD, a market-

research driven commercial real estate brokerage and advisory services firm in Lexington, Mass., works with franchise owners to upgrade locations in the greater Boston market. He says the idea of putting two complementary busi-nesses inside the same four walls is similar to putting complementary consumer products on an end-cap in a retail store. It helps introduce customers to new products by pairing them with something about which they are familiar. In the case of a Citizens branch inside a Dunkin’ he says, “It’s a real

estate play and it’s a cross market-ing play that can help bring new customers to each location. It allows them to reduce their occupancy per-centage and develop business with another branded retail service.”For Citizens, the Dunkin’ combo store is the bank’s latest foray into new retail space. In 1990, Citizens

opened its first branch inside a supermarket; today the bank has supermarket branches in 12 states. These full-service branches are suc-cessful because they accommodate people’s busy schedules—enabling someone to make a deposit, cash a check or apply for a new mortgage at a place they are frequenting any-way. They also allow the bank to op-erate with lower overhead because they are not paying to rent a large commercial space.Partnering with Dunkin’ Donuts makes a lot of sense according to

Dunkin’ franchise owner owner Dave Carvalho with Citizens Bank Branch Manager Sudhir Seth in their Cambridge combo store.

Combos continued on next page

SEPTEMBER 2011 • INDEPENDENT JOE 15Combo continued on page 17

Combos from previous pageTrevor Knott, Senior Vice Presi-dent and Director of Partnerships & Marketing Operations for Citizens Financial Group, because it offers convenience to the consumer and aligns the bank with Dunkin’s great brand recognition.“This is a natural extension of our successful in-store model where we offer extended hours and seven day banking. This is all about giv-ing customers a choice and provid-ing greater access to bank when and where it is conve-nient for them,” said Knott. The Citizens branch inside Carvalho’s Dunkin’ opens at 6:30am on weekdays and 9am on weekends; it stays open until 6pm on weekdays and 2pm on week-ends. “We’ll have the business in the morning. They will bring in business in the afternoon. That’s when their business peaks. So as a customer is waiting to open an account, or sign up for a new mortgage, they can get a coffee or a flatbread sandwich,” said Carvalho.The synergies extend to marketing as well. In Faulkner’s case, he says Citizens was eager to promote their first Dunkin’ location.“They developed new initiatives and allocated resources—like sending out mailers to nearby residents an-nouncing the new location. We’ve offered Dunkin’ Donuts gift cards for people who open new accounts or a free pound of coffee for people who come in for a financial review. They spend money on advertising and

we spend money on products. It’s worked well.”Faulkner says he was also im-pressed at Citizens’ use of social media to generate buzz about their location. “They have Facebook and Twitter accounts and will alert

customers about the location and any specials they’re offering. They’re aggressive in their use of social me-dia as a marketing tool and it’s been valuable to grow the store. We’ve learned a lot from them.”Carvalho says his agreement with Citizens includes a shared mar-keting fund which is used to print co-branded collateral materials for special events. The bank is also buy-ing products to use in promotional give-aways.“They bought coffee and mugs from us for gift baskets they are raffling off to customers who come in for a financial review or to open a new ac-count,” he said.

Synergies aside, franchisees say the deal has to make sense from a bottom-line perspective. According to Faulkner, whose combo is now approaching its second anniversary, the numbers definitely add up.With the Dunkin’-Baskin’ combo

in Bellingham, Faulkner says his store was about 15 percent below market average. When he first considered replacing the Baskin’, he needed a plan for how to use the existing space. The store already had a sitting area, with soft seating and conventional seating and there weren’t a lot of options for a business to share the space. “I basically had 800 square feet that I wouldn’t have been able to do anything else with,” he said. “Plus, having them pay for their electricity and air conditioning, plus rent, meant that I could reduce

my costs. In our first year, the market was down 2 percent but our store was up 8 percent. In the second year, the store has been beating the market by 3 percentage points. We have seen a 5-10 point increase in sales just by

having Citizens in there. Our growth has definitely been impacted by the bank branch,” said Faulkner.Cyrier says he wouldn’t be surprised if banks become the ones who go seeking in-store partners like Dunkin’ Donuts. “The retail bank branch is not what it used to be. People don’t come in to deposit cash into their passbook savings accounts anymore,” said Cyrier. “Banks have an ATM model and a financial products and ser-vice center model. Many that have large real estate portfolios may look at holding onto the properties and retrofitting them. That could involve

Citizens Bank operates a full service branch inside the Dunkin’ locations.

The branch is open 6:30am-6pm weekdays; 9am-2pm weekends


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having a coffee shop or other complementary business inside.”According to Carvalho, his new combo store is already showing promise. We talked to him right after the bank branch opened – just a month after the Dunkin’ debut – and he said traffic has been growing each week. “There has actually been more pedestrian traffic than I originally thought from people walking along the river or walking over from the nearby hotels and apartments. If we can maintain that business and increase the vehicular traffic, this will be a homerun,” he said.Carvalho is already looking forward to the annual Head of the Charles Regatta in October which brings over a quarter million spectators to the Charles River over the week-end. Next to the Boston Marathon, it is the single largest outdoor sport-ing event in Boston. He expects the outdoor seating area at his newest

Combos continued from page 15

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shop – which he likes to call “wa-terfront seating” – to fill up on that busy weekend. So far, both Dunkin’ and Citizens are cautiously optimistic that cus-

tomer counts at this new combo store will grow and that each busi-ness will help feed the other. They know it could take a while before enough customers recognize the convenience of having their bank inside their favorite coffee shop.

Banking is steps away from the coffee counter. Banking customers can receive free Dunkin’ products when they open a new account or receive a financial review.

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“At present, Dunkin’ Donuts has nearly 30 local Twitter feeds at the DMA level which have been very successful in supporting a number of franchisees. It’s recommended that independent franchise owners check in with their field marketing team to determine if one of their DMAs is already supporting social media efforts locally,” said Gioglio.

Social Media 101Social media refers to user-generated con-tent and communities formed using free or inexpensive software. Here are some of the platforms Dunkin’ Do-nuts franchise owners are using to connect with their customers.

LinkedIn (www.linkedin.com): LinkedIn is a professional networking site with 120 million members. Mem-bers post profiles that are similar to CVs with work history, skills, and educa-tion, and can also include a photo, short status updates, and links to their websites. LinkedIn is a “six degrees of separation” concept where members can find people who are connected to their own connections.

Many Dunkin’ Donuts employees and franchise owners have Linke-dIn profiles; however, because of the nature of the platform, these tend to be more static CVs than communication channels with customers – although Shabnam Panjwani, who owns two Dunkin’ Donuts stores in Atlanta, posts her Facebook and Twitter messages on her LinkedIn profile.

Facebook (www.facebook.com): Facebook is a social networking site where you make connections with others by “friending” them, which allows you to see and com-ment on one another’s profiles.

Users can post status updates, photos, videos, and more.

“We use Facebook to do event planning,” says Robyn Frederick, VP of Human Resources and Marketing at Heartland Restaurant Group, which owns 16 Dunkin’ Donuts locations in Western Pennsylvania. “So if we do kids’ days or ‘decorate your own donut’ day or a ‘design your own Coolat-ta’ day, we’ll set that up on our Facebook page as an event, and

that invites others on Facebook. So for anybody who likes us, it will go into their Facebook.”

Foursquare (https://foursquare.com/): According to its website, “Foursquare is a location-based mobile platform that makes cities

easier to use and more interest-ing to explore. By ‘checking in’ through a smartphone app or SMS text service, users share their location with friends while collecting points and virtual badges. Merchants and brands leverage the foursquare platform by utilizing a wide set of tools to obtain, engage, and retain cus-tomers and audiences.” Four-square has 10 million members.

Panjwani uses Foursquare to offer special deals. “Basically, if your phone is GPS-enabled, you’re able to pick up what areas you’re in, and Foursquare will let you know what’s around you and if any of the businesses near you are run-ning specials.”

Google+ (https://plus.google.com/):

The newest kid on the block, Google+ is somewhat simi-lar to Facebook. It allows you to add people to different “circles” and to post updates to whichever circles you want, so you choose who sees what.

Search for Google+ members with “Dunkin’ Donuts” in their profiles and you’ll come up with 186,000 results; however, the vast majority of these are employees with personal accounts, not franchisees looking to communicate with their customer base.

Twitter (www.twitter.com): Twitter is a “microblogging” platform where people post “tweets” com-prised of 140 characters or less.

Social Media continued from page 9

Social Media continued on page 21


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When you tweet, your message appears on your followers’ Twitter home pages. In addition, if you tag your tweet with a “hashtag” (such as #dunkin’donuts), your tweet will appear in the stream when people search on that keyword. Many peo-ple tweet about both their personal lives and their businesses.

There are dozens of Dunkin’ Donuts franchises on Twitter, including Pan-jwani and Frederick.

How Franchisees Are Getting It DoneSo how are savvy Dunkin’ Donuts franchise owners using social media? Here are just some of their tactics.

• They’re holding contests.

Contests are a great way to get cus-tomers excited and involved. “We sometimes do a scavenger hunt for coupons, where our Twitter follow-ers need to find certain things in the store,” says Frederick. Another way to garner more followers is to host a Twitter contest where followers en-ter by “retweeting” a post you wrote; that way, your message is seen by people well beyond your immediate network of followers.

• They’re using coupons and deals.

Frederick posts JPEGs of coupons to Twitter so followers can print them out and bring them in. She also runs “show this Tweet” specials where she offers a deal on Twit-ter and her followers can show the tweet to the counterperson on their phone or in a printout to take advan-tage of the deal. This tactic has the advantage of letting store managers know how well Twitter is working for them, since social media ROI is hard to quantify.

• They’re tooting their horns.

There’s no point in being active in social media if no one knows you’re there. Savvy Dunkin’ Donuts fran-chisees are including their Twitter

tags on their Facebook pages, their Facebook addresses on their cou-pons, and so on. For example, some stores post signs encouraging cus-tomers to follow them on Facebook, and Panjwani includes the store’s Facebook page on coupons.

• They’re listening.

Christopher Carfi, a social media expert and president of Cerado, a company that offers software and services relating to marketing, cus-tomer relationships, and social me-dia, suggests that franchisees listen to the conversations that are going on in social media before jumping in. He says, “When you walk into a party, you’re less likely to engage in meaningful conversation with folks if you immediately start spouting off about your business.”

• They’re getting involved.

After you’ve lurked for a while and have an idea of what’s going on in your area of the social media space, Carfi suggests contributing to people’s conversations. This will help you garner more followers. For example, on Twitter, if someone responds to one of your tweets, all of that person’s followers will see the tweet and also see your Twitter name, which will let them follow you. If you post a comment on some-one’s Facebook “Wall,” all of that person’s friends will see your post.

“We talk with customers all the time on Twitter,” says Frederick. “For ex-ample, K-Cups just came out so the last thing we sent out was, ‘Dunkin’ Donut K-Cups are exclusively at Dunkin’ Donuts stores.’ People wrote back asking what flavors we have, how many come in a box, where can they get them, are they available through the drive-thru, and so on.” Panjwani also makes it a point to reply to social media follow-ers who comment or ask questions.

• They’re sharing the spotlight.

Social media marketing can take a lot of time and energy, so some business owners are recruiting their employees to help. These employ-ees also help by adding their own unique personality to their store’s social media pages. “I’ve granted my two store managers administrative rights to the Facebook page,” says Panjwani. “Every once in a while, they come up with something witty and I tell them to have at it.”

• They’re visible.

You need to keep active in social media so members don’t visit you and see tumbleweeds. Carfi sug-gests participating in social media like Twitter and Facebook at least every other day. “I do it twice a day,” says Frederick. “In the morn-

ing before I start, I send out all my tweets about what’s going on for the day. Then, in the eve-

ning I respond to all the questions. And twice a month I put out the new products because Dunkin’ Donuts’ marketing window always starts on the first Monday of every month.”

• They’re cross marketing.

You can use one form of social media to drive people to other plat-forms, or even to your website or blog. For example, Facebook has an application that allows your status updates to be automatically trans-mitted to Twitter, and there are ap-plications that send your blog posts to various social media platforms all at once. “All our Facebook feeds go into Twitter, and all the Twitter feeds go into LinkedIn,” says Panjwani.

Social media offers franchisees a unique opportunity to connect with customers to educate them, get feedback, sell product, spread word of mouth, and build community. Communicate with your customer base person-to-person instead, and your social media campaign will be sure to take off. “It’s an awesome communication avenue,” Panjwani says.

Social Media continued from page 19

Panjwani makes it a point to reply to social media followers’ questions.


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issues are not easily resolved and can result in legal action. The gross dis-parity in resources to undertake litiga-tion, Lisa stressed, has been a severe disadvantage to franchisees. The Fair Dealership Act addresses this gap by awarding damages, injunctive relief, and recoupment of attorneys’ fees, provisions franchise agreements have traditionally disallowed.

For this and other protections, such as a reasonable length of time to cure certain defaults to

avoid contract termination, advo-cates for franchisees championed to preserve the Act in its entirety. These advocates—including the Coalition of Franchise Associations (CFA) and DDIFO—contended that the Act was, in fact, good for Rhode Island business. Not only did it protect the investment of current franchisees who paid payroll, property and other taxes; it also encouraged others to consider opening franchises of their own.

In the end, an amendment sponsored by State Senator Daniel Connors (D) and Representative Gordon D. Fox (D) was put forward that reduced the number of days required for “termi-nation, cancellation or non-renewal” from 90 to 60 while all other parts of the Act remained intact. It passed and has been in place for three years. Has it had the negative impact on the Rhode Island economy predicted by the Act’s detractors?

“Everything has really been business as usual in Rhode Island since the law passed,” Lisa said.

Dennis R. Murray, Chief Securities Examiner for the State of Rhode Is-land Department of Business Regula-tion (DBR), agreed with this assess-ment. Among other responsibilities,

the DBR is charged with enforcing compliance with the state’s franchis-ing laws, an area overseen by Joanne Sullivan, Principal Securities Exam-iner. Sullivan said there has not been a noticeable increase or decrease in filings for franchise registration or renewal, nor is her office aware of any court cases resulting from the Fair Dealership Act.

“The impact has really been null,” Sullivan said. When the Act was first adopted, the DBR attached an adden-

dum to franchising agreements that outlined the provisions of the new law. Since that time, how-ever, Sullivan explained that most franchise agreements in the state now incorporate the language of the Act itself making the adden-dum redundant. The addendum has since been discontinued. Both franchisors and franchisees, Sullivan said, “are well aware of compliance.”

“And that’s good news for propo-nents of the Massachusetts bill under consideration,” said DDIFO

President Jim Coen in a recent phone interview. “What makes the Rhode Island law so significant,” Coen said, “is that franchisors have – in legal terms – come to recognize a franchise relationship statute that was previous-ly thought bad for the franchisors.”

“The Fair Dealership Act is a signifi-cant step toward leveling the playing field in neighboring Rhode Island,” Coen said, and lays the groundwork for similar legislation in Massachu-setts and other states. Comparable bills have since been introduced in Kansas and Tennessee as well.

While debates over the terms of franchise agreements continue, franchising continues to represent an important piece of the nation’s economy. In the year the Fair Dealer-ship Act was passed, figures from the IFA showed franchised businesses producing goods and services worth $802.2 billion and providing 9.1 million jobs. Every year, tens of thousands of budding entrepreneurs seek new opportunities for the American Dream through franchising. And in growing numbers, franchisees are recognizing the inequities of their franchise agree-ments and are seeking solutions to remedy the playing field.

RI Law continued from page 11

These are all important provisions for franchisees in Rhode Island, noted Carl B. Lisa, who in addition to being general counsel for DDIFO is a principal in the Providence-based firm of Lisa & Sousa, Ltd. The firm specializes in franchise and business transaction law.

Lisa said initially the Act “flew under the radar” of the franchise community and had very little public-ity either posi-tive or negative. Although originally intended to address a dispute with a product-distribution franchise, the new law soon drew defend-ers from many in the business-format franchise commu-nity, such as franchisees of Dunkin’ Brands, Burger King, and others for leveling the playing field between franchisor and franchisee.

Some franchisors chose to halt or slow business activities for new franchise outlets in the state, which Lisa described as a “short-lived, knee jerk reaction.” By the next legislative session, however, lobby-ists for franchisors, most notably the International Franchise Association (IFA), proposed a comprehensive amendment, which if passed, would have virtually eliminated most provi-sions of the Act. They argued that the legislation is bad for business and, in the end, would deprive the state of much needed tax revenues. They also claimed that state invention in the form of legislation was also an out-right violation of the contractual rights guaranteed under the U.S. Constitu-tion, article 1 section 10:

“no state shall... pass any... law im-pairing the obligation of contracts.”

Historically, franchisors and franchi-sees have relied heavily on the right to contract to set the terms and condi-tions of their relationship, but these

DDIFO General Counsel Carl Lisa, DDIFO President Jim Coen and Attorney Eric Karp testify at Fair Franchising Hearing at the Massachusetts State House.


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Stera-Sheen Brands by Purdy Products Co.Cathy MorganPO Box 456Wauconda, IL [email protected]

Directory of Sponsorscontinued from page 23 SureShot Dispensing Systems

Deanna MacKinnon100 Dispensing WayLower Sackville, NS Canada B4C 4H2902-865-9602 ext. [email protected]

TredSafe/Wal-MartTed Travis450 West 33rd StreetNew York, NY [email protected]

Waste ManagementJoAnn Bradbury107 Silvia StreetEwing, NJ [email protected]

DDIFO® does not endorse or recom-mend commercial products, processes, or services. A DDIFO® sponsor is paying to advertise, and it is not to be considered a product or service endorsement by DDIFO®. Furthermore DDIFO® does not control or guarantee the currency, accuracy, relevance or completeness of information provided by sponsors in their advertising.


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OUTSOURCE ALL YOUR PAYROLL and HR FUNCTIONS to

one trustworthy source with over 42

years experience, and who understands the

employee issues many Dunkin Donuts operators face on a

regular basis.

Your Human Resource Department, Since 1969

1-800-929-4PCI www.PCIHR.com

Payroll Processing Employee Benefits Workers’ Compensation Written Safety Programs

HR Legal Compliance Employee Handbooks UI/TDI Administration Background Checks

BEFORE PCI... AFTER PCI...

Adrian A. Gaspar & Company, LLP

Bederson & Company LLP - CPAs

Business FinancialServices

Direct Capital Franchise Group

eCube

GE Capital,Franchise Finance

HyperactiveTechnologies

Joyal Capital Management, LLC

Kensington Company& Affiliates

KK Insurance Agency

Lisa & Sousa, Ltd.Attorneys at Law

New EnglandAcquisitions

New EnglandRepair Service

Paris Ackerman &Schmierer LLP

The PCI Group

Performance BusinessSolutions, LLC

RF Technologies

SKAL East, Inc.

Sprint

Starkweather & Shepley Insurance

SusquehannaCommercial Finance

Insurance...Solutions...IntegritySince 1879

Proud Sponsor of….. Dunkin’ Donuts Independent

Franchise Owners

Starkweather & Shepley Insurance Brokerage, Inc.

Contact

Sabrina San Martino

Vice President

1-800-854-4625 Ext. 1121

Over 30 Years Experience in Dunkin’ Donuts Franchise Providing

Unparalleled Coverage’s, Pricing & Service

See you in September...

independent joe magazine issue #10 september 2011

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