Independent Joe Attended the March 4th DDIFO Members Meeting

Watch the Videos and see what Independent Joe had to say:

Video 1: Welcome to the DDIFO Members Meeting! Congratulations to the World Champion Yankees and Happy 60th BirthDDay Dunkin’ Donuts.

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Video 2: Competition and Introduction to Street Fighter Mark Slutsky!

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Video 3: Politics and Introduction to DDIFO Legislative Affairs Coordinator Joe Giannino!

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It’s Your Money – Keep It!

As a franchisee it’s not hard to imagine that “this could have been you”.  Fraud is a fact of business life, and if you’re not paying much attention to it your business could be losing tens or hundreds of thousands of dollars every year.  This article will discuss several aspects of small-business fraud: the extent of the problem, some “red flags” that may indicate that someone is stealing your money, techniques that you can use to prevent many common small-business frauds and how to go about detecting an on-going theft.

Small-Business Fraud

Most likely you’ve probably been in business for a while and you’ve read or heard all the fraud stories.  But as far as you’re concerned your organization has fraud under control, right?  That’s what every owner/operator thinks!  The statistics tell a completely different story, though.

• Across the U.S., the average small business loses 7% of its annual revenue to fraud.  The sad part is that since fraud is concealed theft, business owners have no idea that they’re being robbed.
• The employees who are doing most of the stealing aren’t the ones behind the counter.  The most “dangerous” group of small-business fraudsters are, in fact, a business’ most trusted employees: its managers, supervisors, bookkeepers, accounting clerks, payroll and benefits coordinators, etc.
• The average fraud scheme goes undetected for over two years.  That’s a long time – time enough for a fraudster to gamble away a lot of your money, take expensive vacations or pay off lots of personal debts.

Red Flags

Fraud is concealed theft, so there’s a good chance that if a fraudster is stealing your money you won’t notice it.  However, a few red flags may indicate that you’re being victimized.  Keep an eye out for these signs:

1. Unexpected and/or unexplained cash flow problems. You should have a good handle on your cash flow.  If something just doesn’t seem right it just might be because an employee is embezzling your cash.
2. Employees living beyond their means
   Employees who live it up in style may have a legitimate way of supporting that style.  But then again, the money may be coming from you – and not in the form of a paycheck, either!
3. Employees who don’t take vacations

Fraudsters often leave “traces” of their theft in the business’ records such as its books, bank statements, payroll files and vendor files.  Many fraudsters shun vacations to prevent other employees from finding those traces.  So while you may applaud the devoted employee who never takes a vacation, you should also be aware that they could be trying to hide something.

Note that the existence of a red flag in your organization doesn’t necessarily imply that you’re being victimized, any more than the absence of red flags indicates that you’re not being victimized.  Red flags, however, should raise your fraud alert level.  We’ll discuss what that means shortly.

Reducing Your Fraud Risk

There are two ways to reduce your fraud risk: taking fraud prevention measures and taking fraud detection measures.  There’s no such thing as “one-stop shopping” here.  Different measures will target different fraud schemes.  For example, the following three types of small business fraud schemes can result in some of the largest losses:

• check tampering schemes
• fraudulent invoicing schemes
• payroll fraud schemes

So the measures that you take should be directed at these schemes.  In the rest of this article we’ll suggest small measures that you can take to prevent and/or detect some popular variations of these schemes.  But the list is only a start.

Check-Tampering Prevention and Detection Measures

Check tampering schemes are the most popular small-business type of fraud scheme.  Check tampering occurs when an employee either prepares a fraudulent check for their own benefit or converts a check intended for someone else into one they can control.  The example in the first paragraph of this article is a very popular variation: the employee simply writes checks to themselves (or “Cash”, or a relative, or an accomplice, etc.).  You might wonder “how can they get away with that”?  Well, it’s instructive to consider how they conceal such a theft, often for many years:

1. they usually forge the signature, so the owner  never sees the check
2. they typically enter the check into the books as being paid to another party such as a legitimate vendor.  To someone looking at the books or reports, the entry seems to be perfectly normal.

Now that you have some background, you’ll see why the following measures can prevent and/or detect many common check-tampering schemes:

1.  If your organization has two or more employees in the accounting department, the employee responsible for reconciling the monthly bank statement should not have the authority to write checks
2. Have monthly bank statements delivered unopened to you.  When you receive a bank statement examine the payee on every cashed check and every electronic disbursement.  Investigate “unusual” payees.

Simply following these two procedures will cost you about fifteen minutes per month.  But they could save your business thousands of dollars.

Fraudulent-Invoicing Prevention and Detection Measures

A manager for an Illinois manufacturer recently pleaded guilty to setting up two bogus companies and invoicing his employer for services that were never rendered.  By the time the scheme was uncovered, the manager had stolen $1,500,000 from the company.

Shell company schemes are very popular because everything looks legitimate from all angles: invoices look legitimate (even though they were printed on the employee’s home computer) and real payments were made against those phony invoices.  But here are some simple measures that can prevent and detect many fraudulent invoicing schemes:

1. If your organization has two or more employees in the accounting department, the employee responsible for entering new vendors into the accounting database should not have invoice-approval authority
2.  Prior to entering a new vendor into the database, your bookkeeper should call the vendor to make certain that the vendor exists
   Neither major measure will likely place a big time burden on either you or your staff.

Payroll Fraud Prevention and Detection Measures

A benefits and payroll coordinator for a Sudbury, MA garden center was recently found guilty of putting two “ghost” employees on payroll and collecting their pay  After five years she had stolen $290,000 from the company.

The popularity of payroll fraud schemes is surprising.  Payroll frauds are easily-detected because the evidence is so obvious – it just needs to be looked at!  Here are two simple measures that can detect many common payroll fraud schemes:

1. Have your business’ payroll reports reviewed regularly – by someone other than the one who entered the payroll data!
2. Take a few minutes to examine each year-end payroll report.  Specifically look for:
   a. employees whose compensation is out of line with your expectations — including terminated employees!
   b. employees that you don’t know
   c. employees with little or no withholding or tax deductions

Summary

Fraud should not be taken lightly.  Many small business owners have unknowingly been taken for a lot of money, and many never recovered from the loss.  Because business owners can’t “see” fraud, they underestimate their risk and consider fraud losses to be a cost of doing business.  It doesn’t have to be that way.  Owners can take many simple measures to reduce their fraud risk.  The sheer number and variety of schemes is enormous, so getting external help is normal.  For preventative measures, your accountant should be your primary source for fraud-reduction measures specific to your organization.  And on the detection side,  affordable fraud detection services that sniff out many common fraud schemes are now available.

Lynette McKee to Speak at the New England Franchise Association

New faces are being drawn to franchising, but how do you make sure these escapees from corporate America, recent college grads, women who are circumventing the glass ceiling, and recent American citizens choose your franchise opportunity? How do you get above the “noise” in the marketplace?

Lynette McKee, CFE, a recognized franchise industry expert, will outline “Positioning Your Franchise For Growth in the Coming Decade”, a program presented by the New England Franchise Association (NEFA) on March 9 at the Doubletree Hotel, 550 Winter Street, Waltham, MA.

The evening includes a cocktail and networking session beginning at 5:30 p.m., dinner at 7:00 PM, and then the presentation. The entire business community is urged to attend. Membership in the NEFA is NOT required. Reservations are required. Registration Fee is $60 per person and includes dinner. NEFA Members receive $10.00 off. DDIFO is a member of NEFA so all DDIFO Members get $10.00 off. For more information click here.

The negative noise includes a deep recession, lack of financing, negative growth, higher taxes, risky times, inflation, foreclosures, high unemployment, stagnation, bankruptcies, underemployed, and more. These elements make it hard to sign new franchisees.

On the other hand, these noise factors could be considered great opportunities for “frantrepreneurs”. There is an abundance of real estate, human resources, competitive build outs, tax incentives and reduced competition.

McKee will be talking about ways to “get above” the noise and position your franchise for growth by taking advantage of the great opportunities available in this economy.

McKee was featured in an article in Franchise Times listing the “Top 25 Franchise Executives in the US,” As well as named in the “TOP 20 to Watch” in the 2005 January issue of the Franchise Times. She holds the Certified Franchise Executive (CFE) designation from the International Franchise Association and has been a CFE instructor. Her franchise career has spanned the last 20 years in the hospitality industry.

McKee, has recently joined Checkers Drive-In Restaurants, Inc. as Chief Development Officer, located in Tampa, FL. She has also served in executive positions at Dunkin’ Brands, Burger King and Metromedia Restaurant Group, parent company for Bennigan’s Grill and Tavern, Steak and Ale, Ponderosa and Bonanza Steakhouse restaurant chains in Dallas, TX.

About NEFA

New England Franchise Association (NEFA) is the trade organization for franchisors and franchisees in the region, with over 150 members. The mission of NEFA is to bring franchise executives, franchisees and vendors together to share ideas for success.

DDIFO is a member of the New England Franchise Association, and Jim Coen, President of DDIFO serves as a member of the NEFA Board of Directors.

Franchising more than ever before, has an unprecedented opportunity to make a major positive impact on the future New England economy. In a 2001-05 study conducted by PriceWaterhouseCoppers on behalf of the International Franchise Association (IFA) found that in New England over 875,000 jobs are a result of franchising, the total output is over 100 Billion dollars a year, and there are over 35,000 franchise establishments in the six New England States.

Independent Joe to Attend the 3-4-10 DDIFO Meeting

Independent Joe will be attending next weeks DDIFO meeting at the Doubletree Hotel in Westboro

Watch the Video Below!

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Featured Speakers at the 3-4-10DDIFO Meeting at the Doubletree Hotel in Westboro, MA.

The line-up of Speakers for the DDIFO Meeting at the Doubltree Hotel in nWestboro is impressive it includes:  Mark Slutsky of Streetfighter Marketing, Canton, Ohio, Mark co-authored the book “StreetFighter Marketing” with his brother Jeff.  Peter J. Bergeron, of Projections, Inc., Peter is the author of the book “Union Proof: Creating Your Successful Union Free Strategy”. Joe Giannino, DDIFO’s Government Affairs Coordinator and Steven Shottenfeld of TraceTech Solutions, a fraud detection company. See everybody’s bio below.

Since 1980, Street Fighter Marketing has provided cutting edge tactics for generating increased sales on the community or neighborhood level. Since its inception, the company has served thousands of clients in numerous industries in their desire to make their advertising and marketing more cost efficient with their grassroots approach and “guerilla” style tactics. Working with many recognizable multi-unit chains and franchises, their Local Store Marketing (LSM) has proven to provide a significant return on marketing investment (ROMI). In 2005, Street Fighter was acquired by AIMS Worldwide and has since implemented local integrated marketing solutions driving transformational change for companies suffering from declining sales, ineffective mass media, or an inability to expand beyond its initial footprint.

Marc is the Chief Operating Officer of Street Fighter Marketing in Columbus, Ohio. He has been with the Street Fighter organization since its inception over 25 years ago, first serving as an advisor and consultant then later he joined on a full time basis. With a Masters Degree in Special Education from Indiana University, Marc has been able to bring in unique skill sets to the Street Fighter approach to low cost marketing tactics delivered with surgical preciseness on an individual unit basis. Marc is the co-author, along with his brother Jeff of five books: including How to Get Clients, Street Fighter Marketing and Smart Marketing.

Peter J. Bergeron spent most of his 33+ years of service with General Dynamics managing all areas of Human Resources with particular emphasis on Labor/Employee Relations and Union Avoidance.  Most notably, Peter’s primary successful union avoidance experience thwarted many large union organizing efforts at one of General Dynamics’ largest non-union production facilities.  Peter was utilized by numerous General Dynamics business units throughout the country to lead counter-organizing efforts in campaigns ranging from as few as 13 to as many as 5,600 employees.

Post retirement, Peter joined the team at Projections as the Director of Client Services in January 2007 providing assistance and guidance to other companies in their efforts to remain union-free.  In January 2009, Peter was named the Vice President of Client Services for Projections.  In collaboration with the Projections team, Peter recently authored a book, “Union Proof: Creating Your Successful Union Free Strategy,” which has been made ‘mandatory reading’ by the Human Resources staffs of a number of Fortune 500 companies. Bergeron earned BA in Psychology from Villanova University and a MS in Systems Management from the University of Southern California.

Joseph A. Giannino is the principal and founder of Government Relations Group (GRG), which is based in Boston. Joe serves as the DDIFO’s  Government Affairs Coordinator. According to DDIFO President Jim Coen,  Joe’s expertise helps ensure the interests of Dunkin Donuts franchise owners are protected and enhanced at the legislative and regulatory levels. With more than 20 years of service in government, as well as experience as a small business owner, Joe brings firsthand knowledge and expertise that provide a unique and indispensable perspective together with a myriad of valuable contacts.

Before entering the private sector, Joe spent many years working in government. He served as Legislative Director to former Massachusetts Governor Mitt Romney and worked alongside the former Massachusetts House Speaker Thomas M. Finneran. Joe also worked as the Director of Government Relations and Educator Licensure for the Massachusetts Department of Education. In addition, he was elected to two terms as a City Councilor-At-Large for the city of Revere and served as an elected member of Revere’s School Committee for six consecutive years.

Steven Schottenfeld of TraceTech Solutions  holds a Master of Science degree in Computer Engineering and has over thirty-five years of professional software development experience. 

Steve’s past positions include Director of Software Development for GTECH Corporation (annual revenue: $700M), Director of Software Development for Vality Technology, Inc. (annual revenue: $20M) and IT Director at Gray, Gray & Gray, LLP (one of New England’s largest independent accounting firms). 

In 2009, Steve founded TraceTech Solutions, LLC, a data analysis company that helps small businesses detect fraud.  Steve has trained several Massachusetts accounting firms in fraud-detection techniques and has been a guest speaker at several Massachusetts Society of CPAs forums.

Sign-up to Reserve Your Spot Now for the DDIFO Meeting, 3-4-10 at the Doubletree Hotel in Westboro.

Dunkin’ Franchisees Welcome Travis’ Approach

Christa Hoyland of QSRWeb  interviewed Jim Coen, she writes it’s easy for an executive to say he is franchise focused, as Nigel Travis, CEO of Dunkin’ Brands, told QSRweb.com in a story posted Monday.  How franchisees perceive that focus can be another matter.

But Travis is living up to that statement, at least from the point of view of franchisees represented by the Dunkin’ Donuts Independent Franchise Owners organization.

“Nigel has reached out to franchise owners across the country and across the world,” said Jim Coen, president of the DDIFO. “He is making it a priority to listen to franchisees.”

Coen is not a Dunkin’ Donuts franchisee himself but has years of extensive franchise experience and hears regularly from Boston-based DDIFO members. DDIFO-member franchises are located primarily in the Northeast but is focusing on gaining more members from across the United States as the company grows.

Not only is Travis and his new leadership team listening to franchisees, but he also is allowing them to be part of the decision-making process, he said. The company’s decision to wait for franchisees to weigh in on the value test in the Chicago and Detroit markets before moving it forward is just one example.

“That’s an example of his leadership,” said Coen, who took over leadership of DDIFO about the same time Travis came on board at Dunkin’. “This refreshing approach is one that’s been very much accepted, appreciated and welcomed by franchisees.”

Franchisees also are pleased by Travis’ focus on improving operations and store and franchise economics, he said. Dunkin’ Donuts value their loyal customer base — which allowed the company to again earn top ranking for brand loyalty in the coffee category — and want to keep them happy. Improving operations will only further that goal.

Some concerns remain

While franchisees like being part of the decision-making process, some have lingering concerns from issues that arose under the previous leadership team led by Jon Luther. Some franchisees, who wished to remain off the record, say they have not seen any changes in Dunkin’ Donuts aggressive approach to litigation. And they are still upset over what they say is the company’s policy of mandating the installation of a single-provider video surveillance system because they fear the company will use the system to spy on them.

In regard to video surveillance, Andrew Mastrangelo, company spokesman for Dunkin’ Brands, said that the company has never had a mandate for franchisees to install the systems.

“We only recommend video surveillance systems for specific franchisees who have demonstrated an unwillingness or inability over a long period of time to meet our operational standards for creating an optimal customer experience, such as safety, quality of products, merchandising, etc,” he said.

Video surveillance has become standard in the quick-service industry and is typically used as a deterrent for theft and other crimes. But some Dunkin’ Donuts franchisees balked at the idea of the corporation having access to the video feed.

Dunkin’ Donuts had more than 350 outstanding lawsuits against franchisees at the end of last year, a number that affected their standing in AllBusiness’ Top 10 AllStar Franchise businesses ranking for 2010. Coen said franchisees take the hiring of franchise industry expert Rich Emmett as senior vice president and general counsel as a good sign the company is likely to back off of its formerly aggressive legal approach. They are also encouraged by Travis’ track record of working through issues with collaboration.

Since Emmett’s hiring, Coen said the number of calls he has received from franchisees and attorneys regarding new lawsuits has diminished. He has not seen the newest franchise disclosure document to determine if the number of lawsuits has reduced.

Mastrangelo said that the company’s focus is to better serve its customers and is working closely with franchisees to achieve that.

“We have never pursued litigation against a franchisee without clear cause, nor will we,” he said. “We share a common goal with our franchisee community — to protect our brand reputation and their investment in the brand.”

Willingness to empower, engage

Coen said that for a number of Dunkin’ franchisees it’s important that Travis and his team rebuild the trust they lost under Luther’s leadership. And Travis has taken steps in that direction.

“It’s just his willingness to empower and engage franchisees in the process and moving the brand forward,” he said. “That’s the thing that franchisees are just excted about. He gets it. He gets it on a franchisee level what has to happen, and he’s empowering them and engaging them lke they haven’t been for a while.

“That is going to be a major help in the next few years in growing this brand.”

QSRWeb

Dunkin’s Dips into Political Action on Beacon Hill

Kyle Cheney of State House News Service, published at Metro West Daily News writes that much has been made about how the sausage is made on Beacon Hill. But what about doughnuts?

Franchise owners of the 1,350 Dunkin’ Donuts stores in Massachusetts, which employ 25,000 workers, have formed a political action committee aimed at countering the impact of “big labor, trial attorneys and other organizations that contribute hundreds of thousands of dollars annually to help elect candidates in Massachusetts.”

“If we do not get involved to protect our own businesses, no one else will do it for us,” wrote Robert Branca, chairman of the Dunkin’ Donuts Franchise Owners Massachusetts Political Action Committee, on the group’s web site, www.ddfomasspac.org. “Indeed, there are forces working against us daily. Every season new laws and regulations are proposed or enacted that impact our bottom lines, and they never seem to protect our interests.”

“Simply put – political campaigns cost money – and political candidates who help support and promote our business ought to have our financial support, both individually and through the PAC,” the letter continues.

The Massachusetts PAC will back candidates “who understand small business issues and who will promote a legislative and regulatory climate favorable to small business operators,” according to the web site.

Dunkin’ Donuts, caffeinating Massachusetts residents since its first store opened in Quincy in 1950, today serves coffee and baked goods to 3 million customers a day in 8,835 locations in 31 countries, according to company figures.

Jim Coen, president of the Dunkin’ Donuts Independent Franchise Owners, Inc., said the PAC would be a critical voice for the company’s taxpaying business owners.

“These are people who pay real estate taxes. These are people who collect sales tax, who pay employee taxes,” Coen said in a phone interview. “These are people who make investments … in their communities. These people have a stake in Massachusetts.”

Coen said the PAC won’t be particularly visible – the company already has a lobbyist acting on its behalf in the capitol. But a PAC, he said, will enable the franchise owners to back candidates and issues directly.

Save BIG and Boost Cash Flow with Cost Segregation

With tax season upon us, Dunkin’ Donuts franchise owners might be interested to know about noteworthy tax-saving strategies. Enter: cost segregation which, depending largely on the scope of a franchisee’s holdings and investments, can yield upwards of $1 million in additional tax deductions.

“Cost segregation studies can benefit franchisees in many ways,” according to CPA Jim Ventriglia. “By accelerating depreciation, it has the effect of lowering the taxable income of property owners, and lower tax liabilities can provide additional cash flow. Cost segregation can work even if you’re a tenant. I encourage clients to explore the benefits. In every instance we have done so, the benefits far outweighed the expense involved.”

J&M Batista Limited Family Partnership, a real estate company involved in developing multiple Dunkin’ Donuts locations, became aware of the remarkable potential benefits and enlisted the services of Bedford Cost Segregation (Bedford), a DDIFO Sponsor. The principals of J&M Batista, along with their affiliates, have developed more than 50 Dunkin’ Donuts locations in Massachusetts, Ohio, New York and Florida. John Batista, founder of J&M Batista, took over the very first franchised Dunkin’ Donuts shop more than 30 years ago and continues to operate that location, which recently underwent a major remodel.

The leadership at J&M Batista engaged Bedford to perform cost segregation studies on six of its Worcester area buildings. While the properties were built between 2002 and 2008, IRS guidelines and tax law allow for retroactive studies that will yield tax benefits in the current year. With the help of J&M Batista’s Director of Construction and Dunkin’ Donuts Franchisee Matt Doyle, Bedford engineers went to work to document the value of specialty components—including select electrical, plumbing, HVAC, millwork, finishes and many outdoor components—eligible for accelerated depreciation (5-year or 15-year rather than 39-year). This resulted in much higher depreciation deductions as well as critical information for the write-down of certain assets when these properties are remodeled in the future. Bedford worked closely with Doyle and with J&M Batista’s CPA to ensure that every tax benefit was realized.

“We feel that 39 years is too long to wait to recoup our investments, and cost segregation is proving to be a great tool to expedite that recovery,” said J&M Batista President and Dunkin’ Donuts Franchisee Rob Branca. “Plus the additional cash flow derived from Bedford’s studies will serve to fuel our growth and remodels without having to go to the bank to borrow.”

The studies generated an increased depreciation deduction of more than $1 million in tax year 2009. In addition to this tremendous year-one benefit, J&M Batista will realize another $400,000 in depreciation over the next four years. Bedford has worked with several other Dunkin’ Donuts-related organizations and has experienced similar success. J&M Batista was so pleased with the return on the initial six studies that the organization has further engaged Bedford to perform studies on several other properties.

“We’re proud to have been selected by J&M Batista to provide this service and are thrilled that it’s worked out so well for them,” said Bedford Director of Business Development Bill Cusato. “We are also excited about our track record with the Dunkin’ Donuts community and encourage franchise owners and operators to contact us to evaluate how we can help them as well.”

Bedford has emerged among the nation’s leading and most experienced providers of engineering-based cost segregation services, having completed more than 5,000 studies throughout the country. The company’s team includes engineers, architects and construction professionals along with tax experts and business development consultants. Bedford’s property reports are second to none, employing a detailed engineering approach and conforming to the highest standards established by the IRS.

There are many times during the life of a property when cost segregation can add value. Basically, if you have bought, built or made significant capital improvements to a building within the last six to eight years, chances are you could benefit from a study.

“Since 9/11, the government has enacted a number of incentive programs to encourage business owners to invest in their operations by helping them to write-off those costs more quickly,” said Cusato. “Cost segregation is a tool that often helps to unlock much of that value by triggering those incentives and, consequently, is a tremendous way for franchisees to sustain and grow their businesses.”

For more information on how cost segregation can help you achieve considerable tax savings and increase your cash flow, contact Bill Cusato at bcusato@bedfordcostseg.com or 978-263-5055. You can also learn more at www.bedfordcostseg.com.

Carmen Caruso Re-Locates to The Chambers in Chicago

Carmen D. Caruso, a nationally known franchisee trial lawyer and a DDIFO Sponsor, re-locates his practice in “The Chambers” — a dynamic suite of trial lawyers in downtown Chicago who operate on a “lean and mean” platform backed up with the best litigation technology and who prepare their cases for trial in a state-of-the-art mock trial courtroom.

For his franchisee/dealer clients, Carmen believes that The Chambers will serve to “level the playing field” against America’s largest law firms who usually represent the franchisor.   In every case, Carmen will be able to assemble the perfect team, such that franchisees and dealers will never again have to fear being out-matched by the franchisor’s resources.

A litigator with over 25 years of experience defending franchises, Carmen is recognized as one of America’s most dedicated advocates for franchisees, dealers and their associations nationwide and has represented clients in more than 100 systems –including Dunkin’ Brands. He has successfully defended Dunkin’ Brand franchisees in federal court cases involving fraud, terminations and post-termination disputes – and has had significant experience in “system-wide” franchising disputes on behalf of franchisee associations and independent groups of owners. 

Among Carmen’s honors and achievements, he is:

• Named to the Illinois Attorney General’s Franchise Advisory Board, where he advocates the franchisee/dealer perspective.

• Named an Illinois Leading Lawyer and a member of the Advisory Board of the Leading Lawyers Network, 2006 – 2010.

• Named an Illinois Super Lawyer by Illinois Super Lawyers magazine and Law & Politics, 2005- 2010.

• Consistently named a “Legal Eagle” by Franchise Times, a Crain’s publication focused on the franchise industry beginning in 2001 and 2005-2010.

• Frequently invited to write and speak on franchise law topics, from the franchisee perspective, by the American Bar Association (Forum on Franchising), the American Association of Franchisees & Dealers, the Asian American Hotel Owners Association, and the Dairy Queen Operators Association.

• Carmen was also named to the Bar Register or Preeminent Lawyers in 2002, and is AV® Peer Review Rated by Martindale-Hubbell; and he has been named to the “Who’s Who Legal Illinois” list by the International Bar Association.

Carmen D. Caruso
Trial & Appellate Lawyer / Business Litigation
Franchise, Dealership & Distribution Law
 
77 West Wacker Drive, Suite 4800
Chicago, Illinois  60601
Phone:  312-606-8640
Fax:      312-276-8646
www.cdcaruso.com

Political Action Committee Benefits Dunkin’ Donuts Franchise Owners

In 2010, Dunkin’ Donuts franchise owners will have the opportunity to get more involved in government relations beginning with the creation of the Dunkin’ Donuts Franchise Owners Massachusetts Political Action Committee (DDFO MassPAC).

Created as an independent entity, DDFO MassPAC is completely separate from the DDIFO, but exists to leverage the combined resources of Dunkin’ Donuts franchise owners to promote and protect the business interests of that group.

Former DDIFO Legislative Affairs Coordinator and franchise owner Rob Branca is assuming the position of the Chairman of DDFO MassPAC.

“We’ve already gained ground and achieved some success in the legislative arena, but we need to build on that,” said Branca. “Seasoned government relations professionals have advised us that forming a political action committee was the right step to demonstrate that we are involved and serious. We took that advice to heart and made the DDFO MassPAC a reality.”

Branca indicated he would look for a successor as Chairman of the committee once it was up and running so he could focus his attention on his increased responsibilities with the Brand Advisory Council and continue operating his franchises. He said his decision to resign as DDIFO’s Legislative Affairs Coordinator was based, in part, on the desire to allow others to get involved in the process.
 
A Political Action Committee, or PAC, is a private group that raises money for contributions to specific political candidates or parties. According to Branca DDFO MassPAC will be a vital tool for effecting positive change and minimizing potentially harmful outcomes in Massachusetts—home to 1350 Dunkin’ Donuts franchises.

“One of our chief concerns is that we are in strict compliance with the complex rules and regulations that surround the fundraising process, and operating through a PAC makes that much easier. We need to be ever vigilant not to besmirch our hard earned reputations as law abiding, small, family businesses,” he said.

Joseph Giannino, DDIFO’s new Legislative Affairs Coordinator, says the PAC will benefit DDIFO members because it helps put a face on the individuals and families who operate Dunkin’ Donuts stores. “Within the political landscape, it distinguishes these independent, small business owners from the large corporate brand and provides a forum for these men and women to address the real-life impact legislative and regulatory actions have on their livelihood.”

DDFO MassPAC has named David Martin Treasurer of the organization. Martin is Principal of The Chick Montana Group, a campaign finance business based in Dedham, Massachusetts. With more than 20 years of campaign financing experience, Martin is an independent, highly-skilled professional who was handpicked to ensure that the DDFO MassPAC operates according to state law and within the guidelines established by the Massachusetts Office of Campaign and Political Finance.

Among those guidelines are contribution limits, such as:

• An individual may contribute up to a total of $500, including in-kind contributions, to a PAC in a calendar year (husband and wife are two individuals, and may contribute up to $1,000 annually).
• An individual under age 18 is limited to a total of $25 in political contributions to all candidates and PACs in a calendar year.
• A PAC may not accept any contribution—including an in-kind contribution of goods, services, equipment, personnel, facilities or the like—from a business corporation, including a professional corporation, or from any association or organization comprised in whole or in part of business corporations or professional corporations.

You can learn more about DDFO MassPac at www.ddfomasspac.org. Contributions to the committee may be sent to DDFO MassPAC, 675 VFW Parkway #209, Chestnut Hill, MA 02467.

DDIFO Fights to Change Massachusetts Tip Pooling Law

Boston — Massachusetts Dunkin’ Donuts franchise owners went to bat for their employees this week, asking the state legislature to modify a state law that has limited or stopped many shops from accepting tips from their customers.

Rep. Linda Forry ((D-Dorchester), sponsor of the proposed change to what was described as “ambiguous language” in the law, testified before the Joint Committee on Labor and Workforce Development. She was flanked by Dunkin’ Donuts Independent Franchise Owners (DDIFO) President Jim Coen and franchise owners Robert Branca and Clayton Turnbull.

Coen told the committee, chaired by Sen. Thomas McGee (D-Middlesex/Essex) and Rep. Cheryl Coakley-Rivera (D-Hampden), that the current law was intended to prevent managers and executives from siphoning tips away from their lower-wage employees. But he said the law has resulted in unintended consequences because it “denies tips to nearly everyone in the team service environment that many quick service restaurants such as Dunkin’ Donuts utilizes, because at some point during most shifts, even when a shop manager is present, some crewmembers perform at least one managerial function.”  
The issue is the law’s definition of “managerial authority.”
 
Passed in 2004, the law says, “Tip sharing is permitted, provided that the distribution of the tips is limited to wait staff employees, service employees and service bartenders.”
The Massachusetts Attorney General, interpreting the legislation, ruled that “Anyone who has any superiority in rank over another employee cannot share or receive any tips or service charge, whether or not part of their work includes working alongside or with the employees serving the patrons directly. This includes shift leaders, supervisors, managers, assistant managers and anyone who can direct another employee on his or her job responsibilities.”

Forry’s proposal would define managerial authority to limit it to managers, who:
1) have hiring and firing authority,
2) regularly oversee at least two employees, and
3) work in an establishment where some employees are paid below minimum wage and derive much of their income from tips.

The committee took no action on the proposed revisions to the law. The committee staff told the Dunkin’ Donuts team that it may set up a working group of restaurant owners to hammer out the language of the revised legislation. DDIFO government affairs consultant Joe Giannino said he was told the legislators do not want to cause restaurants other unintentional problems.

Branca, who owns Dunkin’ franchises in Worcester and serves as the DDIFO’s Legislative Affairs Coordinator, told the committee that “the law is ambiguous. Franchise owners want to comply with the law, but we need to know what the law is.”
In his and other many Dunkin’ Donuts franchises, he said a shift supervisor “is often a teenager with three months more experience than the other teenagers.”

Branca and Turnbull told the legislators that at Dunkin’ Donuts, shift leaders work the counter to maintain good customer service during peak periods “They are there to make sure a customer who orders black coffee gets black coffee,” said Turnbull, who owns several Boston franchises including several at Logan Airport.

In addition, many shift leaders at Dunkin’ shops do not have the authority to hire or fire employees, the said. Branca and Turnbull asked the legislators “to make it simple.”
Turnbull said the tips add about $2 an hour for his employees. “This is not small beans.”

Branca said the confusion in the definition of managerial authority has resulted in class action law suits against franchise owners. Other suits have been filed on behalf of employees across the country in New York and California. In Massachusetts, “the statute mandates triple damages plus 12% interest and attorney fees, even where there was no intent to violate the statute and where no actual manager shared in any tip pool,” Coen said in prepared remarks given to the legislators.

As a result of the 2004 law, many quick service restaurants—Dunkin’ Donuts included—have removed tip jars and will not allow employees to accept tips.

Coen told the committee that Dunkin’ Donuts franchisees operate 1,350 shops in the state and employ more than 25,000 workers statewide. The sales tax revenues to the state collected from Dunkin’ operations is more than $67 million. And the total investment by Dunkin’ franchise owners in the state exceeds $3 billion.

Ironically, Dunkin’ helped create “the culture of tipping at coffee and donut shops” when the chain was founded in the 1950s and waitresses served coffee in ceramic cups at the counter, Coen said.

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