If your favorite Dunkin’ Donuts shop is an individually-owned franchise and not part of a large group of stores, don’t grow too attached to it, warns Cindy Gluck, a DD owner in Brooklyn. She claims DD corporate waits patiently for smaller franchisees to make any mistake at all, then strong-arms them out of business at a huge financial loss. The sheer number of lawsuits DD has aimed at small-time owners recently indicates that something unusual is going on:
Dunkin’ Donuts has sued other franchise owners 154 times since 2006. Over the same stretch of time, McDonald’s was involved in five lawsuits. And Subway, a company that has four times the number of locations as Dunkin’ Donuts, sued its franchises 12 times.
Why would they do something so apparently self-destructive? Because the company’s larger business strategy requires bigger franchisees who can open lots of stores rapidly to compete with Starbucks, and it’s too expensive to buy out the small owners any other way. She and her business partner are currently being forced out of business for this very reason, even though their two Brooklyn-based stores are doing fine.
Gluck’s mistake was offering to sell a 15% stake in her company to a store manager. She told Dunkin’ Donuts about this beforehand to make sure it was okay. It turns out it wasn’t. In fact, even though she immediately withdrew the offer, Dunkin’ Donuts has threatened a lawsuit against her and her business partner unless they sell DD corporate their two stores for half of what they’re worth and pay a $100,000 penalty fee.
The consequences of this are real, personal and painful. The owners of these stores – who overwhelmingly tend to be immigrants – lose their entire life’s work.
Maybe America runs on Dunkin’, but Dunkin’ itself is a corporate giant that runs on the sweat of franchisees large and small.
We small franchisees have just about been sweated out.
“Dunkin’ Donuts business practices have lots of holes” [New York Daily News] (Thanks to Rob!)
(Photo: Consumerist)
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Dunkin Donuts used to be really good back in the good ole’ days ™ when they used Araban Coffee and each site made their own donuts.
Once they were bought by Allied, the first things they did was kill “Fred the Donut Guy” from the commercials and proceed to use cheaper coffee and consolidate donut production to centralized factories.
Of couse the result is watery flavorless coffee that is way oversugared and donuts that sit on the shelves for days instead of one day as in the past.
I live in Eastern Massachusetts and you can actually see DD stores in line-of-sight of each other (i’m not kidding). The market out here is way oversaturated with “product” and how any of them make money being so close together is beyond me.
just the thought of donuts makes me want to spew chunks.
@rickshawed: I’m a fellow New Englander (in the Constitution State). It always surprises me that DD and Starbucks can do such good business in the land of independent doughnut shops. (Of course, the same can be said for the pizza business, too.)
@Steaming Pile:
i like the fact that i can go to my favorite dd shop and my coffee is waiting for me before i get to the counter…fixed just the way i like it.
@humphrmi:
“The best part was, whoever the new owner was, refused to take the CRC sticker off his door (Chicago Rabbinic Council, one of the nationwide Kosher certifiers) even though they sold breakfast sandwiches with bacon!”
Maybe a little whack to the door with that rock hammer (appearing in your nym) would fix the problem?
When i first started reading the comments i thought yeah lets boycott DD!!! but as i kept reading i thought “hmm some dunkin doughnuts sounds delicious right now”
=(
@Front_Towards_Enemy: Ever consider asking for less sugar?
Comment on Dunkin’ Donuts Suing Its Own Small Franchisees Out Of Existence DD has a commercial where they make fun of other coffee shops for speaking
“Fritalian” – in other words, fancy foreign language for a simple cup of
joe. I thought it was pretty funny until it got to the end of the spot and
they try to sell you a “latte”. Way to slam the other guys and then
immediately do EXACTLY what you are poking fun at.
I hope the owner of the store near my parents house gets sued; he’s a jerk. I used to work for him, but quit after I realized he wasn’t going to give me a manager position like he said, and decided that I was too cute to work in the back baking donuts. The only good thing was that it was also a Baskin Robbins and we got to take a couple scoops home every day.
Also, we were allowed to take home the day-old donuts before they threw them away, but apparently he put an end to that soon after I left.
I always thought it would be fun to own a Dunkin Donuts, but I guess I’ll pick a different chain. How about Taco Bell?
a$$holes
Growing up, I never really considered DD to be a huge corporation. I always thought of it as a local, Northeast thing. 20 years on, I think it’s safe to say that has changed.
Surely I’m not the only guy that has several non-chain doughnut places around. They’re not making iPods, for Christ’s sake. Guys, avoid Winchell’s, Krispy AND DD? Better for your local economy and better. Right?
I really like the non-chain donut places in the area, but I’m not usually out the door by 7 am, when my very favorite shop closes. Seriously, if you can’t get there by 5:30 you may as well not go since there is so little left after the various early morning crews go through.
Fortunately our DD is mostly good, but someone needs to teach them how to run a drive thru.
These people pour their heart and soul into their business, establish a solid customer base, and Dunkin Donuts swoops in to steal it from them only to reopen their own store in its stead. EVIL!
I know my boycott not only hurts Dunkin Donuts corporate but the franchisee owner as well, but I don’t need a donut that badly to support bullying thief-in-the-night tactics like these.
So Dunkin Donuts can kiss my patronage goodbye. I thank you, and my ass that certainly doesn’t need any donuts, thanks you too. However, if DD decides to change its wicked ways, there is a chocolate cream donut that has my name written all over it.
@lim: Wait, I don’t get it. Your local donut shop closes at 7am? Isn’t that when they should be opening for business?
@Front_Towards_Enemy: No wonder I haven’t had a good donut in years. I used to like one type of donut from DD, the French crullers, and maybe twice a year I stop by DD on the off-chance of getting a fresh one. It never works: they’re always stale. Stale donuts are never a good thing, but the French crullers especially have to be fresh and hot or they’re revolting.
Oh well, now I know. My nearest DD sits right next to a Starbucks, so it’s probably not long for this world anyway. I’ll save myself the trouble of going there anymore.
@nequam: When you live in these parts, Your coffee selection is:
Black – Means Black no Sugar
Regular (pronounced Regalah) which is cream and sugar.
Anything else you will exceed the brain capacity of the DD worker and they will stare at you until someone resets them. Also, If you go to a DD and start with the mocha-lattte-skinny-shit, you are likely to get whacked with a stale donut.
I once considered opening a DD/BR franchise. Where I live they could make a killing, but upon researching it they require a minimum number of stores to be opened (I think its like five) within a like two years and we had no desire to open that many or even to find the locations that would make owning five locations in my area reasonable/profitable.
Local bakery it is. Mmmm… Homemade donuts.
There are two approaches to franchising:
If you are evil and are only franchising because you can’t finance a whole lot of store openings on your own and want to make some quick money as well, then sell people franchises and then, later, find excuses to screw them over and make the best locations corporate.
If you are smart, you parter with your franchisees to build good solid businesses and foster innovation. McDonalds seems to do this very well. New menu items, like the Sausage & Egg McMuffin were invented by franchisees, tried, tested, and then rolled out on a wide scale. McDonalds also seems willing to give franchisees a ton of leeway in trying new concepts like this one:
[www.mcfun.com]
Yup – real chefs preparing freshly cooked meals to order. Incidentally, the owner of this one has 19 others in Orlando, many of which are also heavily themed – including the menus. It’s nice to see people having the freedom to innovate. It’s good for the franchisor, the franchisee, and customers alike.
Dunkin Donuts: You are being evil, short sighted, and sucking. This will come back to haunt you, as it should.
Back in the early 90′s I worked 3rd shift at a DD. Many years before the KK craze hit, I used to bring the hot, freshly-dipped, french crullers out from the back room at 3am, still on the metal rod, and people would buy them up in under two minutes.
Those were the good ol’ days..
What I can’t understand is how this makes sense. Suing small owners out of business doesn’t prevent existing large owners from opening oodles of stores right now. The premise in the article seems flawed in that sense. DD should be able to have it’s existing large owners open lots of new storefronts without killing off the small owners no?