Dunkin’ Sees Benefit from Lowering Threshold for Franchisees

Jon Chesto reports in the The Patriot Ledger that a dramatic change in Dunkin’ Donuts’ franchising policy to make it easier for new franchisees to open a Dunkin’ shop has helped fuel the chain’s growth during the first half of this year.

Canton-based Dunkin’ Donuts reported on Wednesday that it enjoyed a net increase of 338 new locations worldwide in the first six months of 2010, including 75 new stores in the United States. The company currently boasts of more than 9,000 locations worldwide.

The chain, run by Dunkin’ Brands Inc., changed its policy to allow new franchisees to sign a development agreement for as few as one to three locations. Previously, Dunkin’ had required first-time franchisees to sign development agreements for at least five locations.

Grant Benson, vice president of franchising and market planning at Dunkin’ Brands, said the company made the change about a year ago, partly to help new Dunkin’ franchisees land the financing they need. Benson said the change certainly helped continue to propel the chain’s expansion through the headwinds of an economic downturn.

“We have provided franchisee candidates more flexibility by allowing smaller development commitments,” Benson said. “In some cases, it could be as few as one, (but) we would like to be able to see at least two or three.”

Benson said much of the recent U.S. growth took place in the Southeast and in the Midwest, while overseas growth was strong in Korea and China.

Benson attributed the flexibility of the Dunkin’ Donuts model – shops can be opened in hospitals, train depots or gas stations – as a key element of its success. “That flexibility doesn’t exist with a lot of other concepts,” Benson said.

Jim Coen, president of the Dunkin’ Donuts Independent Franchise Owners association, said this is the first time he’s seen Dunkin’ Donuts allow development agreements for one-location franchises since he’s been involved with the chain. However, Coen said he expects most franchisees will continue to pursue multiple locations.

“The average franchisee nationwide owns at least six shops,” Coen said. “There’s an economy of scale, a point where you reach critical mass, that you really need.”

The company didn’t provide comparable growth numbers for the same six-month period in 2009. Benson said there were 171 net new locations in the U.S. in all of 2009, and 351 net new locations worldwide.

“It speaks to the staying power of the brand and the profitability of the brand,” Benson said. “It’s not a fad. It’s here to stay and built to ride out some of the turbulent times.”

The Patriot Ledger

National Members Meeting to Celebrate DDIFO Growth and Unity

Over the past year, DDIFO has enjoyed tremendous growth. With the inclusion of the Midwest Dunkin’ Donuts Franchise Association (MWDDFA) and the Independent Association of Franchise Owners (IAFO), an association of Dunkin’ franchise owners from the Mid-Atlantic market, DDIFO now represents over 2400 shops in the U.S.  According to DDIFO President Jim Coen, this will be one of the themes celebrated at the upcoming National Members Meeting on September 21, 2010 in the Cabaret Theatre at Mohegan Sun in Uncasville, Connecticut.

But it’s also more than that. “We are designing the meeting around the concept that DDIFO is ‘United Now…More Than Ever’ because we all know that with greater numbers and greater unity comes greater strength for the organization,” said Coen.

 “The DDIFO National Members Meeting is the showcase event for our association,” said Kevin McCarthy, DDIFO Chairman. “With the robust growth of DDIFO we can now say we are closer to national representation. We are expecting good turnout from members throughout the Dunkin’ Brands development triangle of New England to Illinois to Florida. The meeting will provide members with interesting and relevant information plus the opportunity to network and share stories from the front lines.”

Mohegan Sun is situated on 240 acres along the banks of the Thames River in the scenic foothills of southeastern Connecticut. Coen says DDIFO chose this site for the National Members Meeting because the venue offers wonderful amenities at a reasonable price. Plus it is within driving distance for members located along the east coast. Mohegan Sun is 225 miles from Philadelphia, 125 miles from Midtown Manhattan and 105 miles from Boston.

The event will be punctuated by a top-notch list of speakers featuring:

U.S. Senator Scott Brown (R) MA. Senator Brown was elected by the people of Massachusetts on January 19, 2010 to fill the term of the late Senator Ted Kennedy. He serves on the Senate Committee on Armed Services, the Committee on Veterans’ Affairs, and the Homeland Security and Governmental Affairs Committee.  Prior to his election to the U.S. Senate, Brown served in the Massachusetts State Senate.  Senator Brown is a 30-year member of the Massachusetts Army National Guard and currently holds the rank of Lieutenant Colonel in the Judge Advocate General (JAG) Corps. Brown was awarded the Army Commendation Medal for meritorious service in homeland security following the terrorist attacks of September 11, 2001.  Scott’s first job as a teenager was at a Dunkin’ Donuts in Wakefield, MA, he particularly remembers cleaning out the grease trap.

Scott Carter, principal of Supply Chain Associates, Norcross, Georgia. Carter has over 20 years of management, finance, operations and consulting experience.  He has worked in executive positions in industry and consulting and has successfully built two global business strategy and operations consulting firms, UPS Consulting and Supply Chain Associates, LLC (SCA).  He is a member of the board of directors for two quick service restaurant co-operatives representing over 13,000 North American store locations. Carter served as interim CEO for the National DCP and now serves as a strategic advisor.  

Eric Karp, Esq. Karp is a partner at the Boston law firm Witmer, Karp, Warner & Ryan LLP. He serves as counsel to numerous franchisee associations in such chains as McDonald’s, Choice Hotels, Dunkin Donuts, Popeye’s Chicken, Cartridge World, TCBY Yogurt, Portable On Demand Storage, Fitness Together, Resort Maps, and Massage Envy. In that capacity, he provides a broad range of advice and guidance to the leadership of the associations on matters including the franchise disclosure documents, franchise agreements and issues that affect the relationship between the franchisee community and the franchisor as well as vendors and suppliers to the system. He has represented franchisees throughout the country in a myriad of franchise issues including sales, purchases, relocations, remodels, transfers, defaults and terminations and lease issues. 

Perry Ludy, Carolina Restaurant Partners LLC, a Dunkin’ Donuts franchise operator in Myrtle Beach and Florence, South Carolina.  Aside from operating a network of Dunkin’ stores, Ludy is the author of several business books including Profit Building: Cutting Costs without Cutting People, an award-winning management book that is translated into several languages and sold worldwide. Ludy is also a contributing writer to DDIFO’s Independent Joe magazine. His column, “Profit Building” includes many of the topics included in his books. Ludy

Dennis Gramm, FNC Restaurants, a two store franchisee in Northwest Suburban Chicago. He has been part of the Dunkin’ Donuts and Baskin Robbins businesses for 14 years. He began his Dunkin’ Donuts career in May 1996 as a General Manager of Operations in Boston. He experienced quickly the strength of the Dunkin’ Donuts Brand and the importance of franchisee involvement in the independent franchise association, committees and Brand advisory councils.

Dennis has been a franchisee since June of 2007 and a member of the Mid-West Dunkin’ Donuts Franchisee Association and the DDIFO. Prior to becoming a franchisee he held several leadership roles in ADQSR and Dunkin Brands as a Senior Market Executive, Regional Vice President and Vice President of Operations Baskin Robbins USA. In addition to his Dunkin Brands resume Dennis has held executive leadership positions at KFC, Pepsico and Market Day Corporation.  

In addition, the meeting will feature discussions with members of the Brand Advisory Council Panel and the DDIFO Board of Directors. DDIFO Communications Director Matt Ellis will serve as emcee for the meeting.

DDIFO Members Can Register Here

Sponsor support has been significant, booth space has been sold out. Sponsors for the DDIFO National Members Meeting include:

Access to Money;  Adrian Gaspar, CPA; Bederson & Company CPAs; Belshaw Adamatic Bakery Group; Comcast Business Services; Direct Capital Franchise Group; DTT Surveillance; Glacial Energy; HME; HS Brands; IKMS Group; iTech Digital; Jarrett Services; Jim Ventriglia, CPA; New England Repair Service; Paris, Ackerman & Schmierer, LLP; Paris-Kirwan Insurance; Payless Shoe Source; PepsiCo; Performance Business Solutions; RF Technologies, Royston LLC; Secure Energy Solutions; Skal East; Sprint; Starkweather & Shepley Insurance; SureShot Dispensing Systems; The Franchise Pros

DDIFO Members Can Register Here

OEM Upgrades & Innovations Keep RFT Customers Up and Running

Since 1989, DDIFO Sponsor  R.F. Technologies, Inc. (RFT) has provided the quick-serve restaurant industry with drive-thru systems sales and repair services.  To date, the company has handled over four million repairs, ranking it the largest independent service center for drive-thru communication systems in North America.

While that ranking and the volume of repairs are impressive, there’s something even more notable about R.F. Technologies’ repair services:  the proven quality and product innovation.  Through results of independent, third-party testing and ongoing response of customers, it’s clear that R.F. Technologies has advanced its capabilities beyond basic repair services; the company offers significant OEM improvements that are of measurable benefit to restaurant operators.

“We have a full research and development team in-house,” explains Bob Noorian, President of R.F. Technologies, Inc. “We actively develop solutions and improvements for the equipment we sell and service.  Many of our customers don’t realize just how proactive we are in creating real product innovations.”

RFT’s R&D team, comprised of engineers and repair experts, is perpetually testing, investigating and creating prototypes and operational solutions to combat issues of product functionality and durability.  Working in tandem with the company’s sales and customer service teams, the R&D professionals identify equipment issues, assess functionality concerns and find better ways to fix what breaks. 

With its unique position in the marketplace, RFT is able to both quickly respond to known product repair issues and preempt potential issues before certain equipment filters into the general market. 

Noorian offers insight.  “We closely track all repair services. Thanks to the immense volume processed daily, we’re able to quickly identify recurring problems and respond to with equipment improvements and repair solutions.”

Through broad-reaching, closely knit partnerships with various franchise communities, RFT often gets early knowledge of potential issues and is able to innovate practical repair solutions before concerns hit restaurant operations en masse.

“This forward-thinking approach really sets us apart and heightens not only the quality and value of our repair service, but of the OEM equipment as well.”

Excellent examples of RFT’s OEM improvements include solutions created for two commonly used headsets in QSR environments—3M’s C1060 and XT-1 models. 

Such headsets are subjected to harsh treatment in the demanding restaurant work environment.  With insider insights about product use as well as well-documented accounts of recurring issues, RFT’s R&D team created an array of practical improvements to address areas proven weak through daily wear and tear.  RFT’s  custom tooling, perfected with in-house and field testing, allowed the following improvements to be achieved and successfully implemented, dramatically improving the performance and longevity of the headsets.

        ·     support jacket for mic boom

        ·     support sleeve for headband

        ·     thicker case parts

        ·     stronger headband

        ·     operator-friendly tactile feel buttons vs. OEM non-click buttons

A third-party material testing and engineering firm conducted comprehensive performance tests on components of each of these products, comparing OEM standard headsets to RFT-enhanced models.  RFT-enhanced products outperformed the OEM models on all counts. 

            1. TWIST & PULL

            RFT design tested at 47.4% longer durability when a “Twist and Pull” load was applied. The OEM failed at an average of 35.6 lbs releasing the metal band and      wires RFT’s enhancement held up to 67.8 lbs and only twisted internally.

            2. RESISTANCE TO TORSIONAL LOAD

            RFT’s design showed higher tolerance at 270º of rotation versus the OEM which failed at 180º of rotation. The RFT version suffered only a metal band      fracture when failing at 270º, compared to a complete case split for the OEM     product.

            3. MOUTHPIECE

            The RFT mouthpiece design was slightly stronger when subjected to a straight  pull—42 lbs versus 33.0 lbs respectively.

Other products, including the HME Odyssey IQ, have also outperformed OEM models in third-party testing.  According to Noorian, RFT is able to achieve such high performing product improvements because of the company’s investment in custom tooling and the expertise of the staff. 

“No one else in this industry has this level of repair solutions, as we custom tool—literally remake—the parts that require improvements,” Noorian says.

He also points out that the RFT advantages don’t end with the physical enhancements of the products.  “We provide same day service, while OEM’s offer 2-week turnaround times, and we don’t charge for inbound shipping.  Our cost value is $120 per headset while the OEM’s is $200 per headset, and we back our products with free, live, 24-hour professional support.”

Suffice to say, RFT customers reap the benefits of this proactive, progressive approach.   The RFT team frequently receives testimonials documenting the in-field results of RFT’s innovations, including the minimizing of operational interruptions and downtime and the extension of equipment’s life. 

Committed to meeting customer needs, RFT’s position is to continuously conduct field testing and analysis for all products, striving to find and correct issues before customers ever have a problem.

“We go the extra mile so that our customers’ equipment can perform that much longer….to keep their business up and running,” Noorian summarizes. 

For copies of R.F. Technologies’ third-party testing results or for specific product information, visit www.rftechno.com.

Action Alert: Revoke the Expanded 1099 Reporting Requirements!

In the midst of the health care reform debate, a small provision—just a few lines in length—was added to the 2,400+ page document and went essentially unnoticed upon passage. This provision, which radically alters 1099 reporting, will place a substantial burden on companies and small businesses, in particular.

E-mail your Members of Congress today and tell them to revoke the new 1099 reporting requirements!
 
Issue:  A new requirement mandates that businesses must file an IRS Form 1099 for all payments of more than $600 a year paid to providers—including corporations—that provide tangible property and services. This new law significantly changes the impact of the 1099 form, which will now apply to corporate sellers of products and services; the previous law applied only to individuals. Payments via credit or debit card will be exempted from these expanded requirements, as this reporting expenditure will be the responsibility of banks and payment processors. In practice, however, this means that business owners will have to track their purchasing by amount, vendor and method, and then issue the appropriate reporting forms to the IRS and suppliers.

While the rule is set to take effect in 2012, the business community and pro-business members of congress are seeking ways to change the new law. Sen. Mike Johanns (R-Neb.) and Rep. Dan Lungren (R-Calif.) have introduced the Small Business Paperwork Mandate Elimination Act (H.R. 5141, S. 3578) to repeal this part of the health care bill.

Action: Contact your Members of Congress and tell them to support the Small Business Paperwork Mandate Elimination Act and eliminate the expanded 1099 reporting requirements.  Send a customizable letter to your congressmen and senators.

Talking Points:

• Expanded reporting requirements will increase my paperwork burden and reduce the amount of time that I can spend running my stores. Current tax paperwork and compliance requirements are major expenses for my businesses, which are already running on thin margins in the staggering economy.

• Requiring that I obtain a taxpayer identification number (TIN) before every transaction will cause me and my management team valuable time away from running our business. If I cannot find the information or it is otherwise unavailable, back-up withholding may apply. This will drastically increase the paperwork burden and potential back-up withholding liability on all businesses because so many more transactions will be subject to reporting.

• A Small Business Administration study indicates that the cost of complying with the tax code for small businesses is 66 percent higher than for large businesses. Since this reporting requirement makes almost every business-to-business transaction potentially reportable to the IRS, my small business costs will dramatically increase.

• Franchisees do business with a high volume of vendors. Mandating that I track purchases each year by amount, vendor and type of transaction (credit/debit or otherwise) will pose a great difficulty for me and my managers.

• Although new requirements do not apply to the duplicative reporting of credit and debit card purchases, my financial burden remains the same, as franchisees must pay high transaction fees for each debit and credit card purchase.

DDIFO Approves Mid-Atlantic Franchisee Group and Colitsas as New Board Member

DDIFO has officially approved creating a Local Members Committee for Dunkin’ Donuts franchise owners belonging to the Independent Association of Franchise Owners (IAFO) – representing 125 Dunkin’ Donuts stores in New York, New Jersey and eastern Pennsylvania. The Board has also voted to add IAFO Executive Director Tom Colitsas as a member of the DDIFO Board.

“A lot of work has gone into making this a reality,” said Colitsas. “I met with (DDIFO President) Jim Coen a year ago and we discussed how to bring this region into the association. Going forward we are going to engage in an aggressive campaign to increase membership among franchise owners in this region.

Colitsas says the IAFO is holding a seminar in August on topics of interest to the members and at that time they will discuss the benefits that come with inclusion in the DDIFO. “The recruitment effort will focus on education and communication,” he said.

Perhaps the strongest benefit for IAFO members is their inclusion in a group that is growing not just in size but also in influence. Late last year, DDIFO welcomed a Local Members Committee (LMC) made up of over 400 shops from the Chicago area. With IAFO’s entrance, DDIFO now represents close to 2500 shops nationwide.

“We have a huge investment in Dunkin’ Donuts and, as franchise owners we have to protect our investment by making sure we have strong platform from which we can negotiate with the company,” said one Mid-Atlantic franchise owner who asked to remain anonymous.

DDIFO President Jim Coen says the addition of the IAFO shows that DDIFO’s efforts to provide a united voice for franchise owners is working. “Franchise owners throughout the system are learning that we are a true advocate for their business interests and have the clout to get things done.”

Board Vice-Chairman Asheesh Seth, who was the former Executive Director of the Midwest Dunkin’ Donuts Franchise Association (MWDDFA), says IAFO members will immediately see that DDIFO is a great source of information when it comes to protecting franchisee interests. And, he says, the addition of these new members will further strengthen the DDIFO.

“DDIFO’s strength is directly proportional to the number of members it has.  The more that join, the stronger DDIFO will be. IAFO’s inclusion is a huge step in the right direction toward creating a truly national franchisee organization,” he said.

According to Colitsas, new members from the Mid-Atlantic region are going to play a prominent role in the DDIFO.

“We’re very excited down here. We have a good team of dedicated people and we are going to surprise everyone. We’re going to make this a prominent region and make a big contribution to the national effort.”

Franchisor Retaliation: A thing of the past?

The American Heritage Dictionary defines retaliate as, “To return like for like, especially evil for evil.” In life we are taught that one good turn deserves another. In franchising, many believe there is evil lurking when a franchisor decides it does not agree with the words or actions of one of its franchisees. This is especially so when the actions of the franchisor are based on that franchisee’s membership in or leadership of a franchisee association.

Attorney Eric H. Karp of Witmer, Karp, Warner & Ryan, LLP, a Boston-based law firm where he specializes in the representation of franchisee associations, says retaliation has been declining within most franchise systems for two main reasons.

The first is the growth in existence of franchisee associations. Unlike DDIFO, which was formed in 1989, many franchise associations have begun forming just in the past decade as franchising has become more common. More Franchisors have grown accustomed to the existence of independent franchisee associations this their systems, and the more enlightened ones will take advantage of the opportunity to collaborate with them,

The second reason Karp believes retaliation appears to be waning is traceable to the 2007 Federal Trade Commission (FTC) mandate that the existence of a franchise association be included in Franchise Disclosure Documents. The FTC said franchisors must, “Disclose, to the extent known, the name, address, telephone number, email address, and Web address (to the extent known) of each trademark-specific franchisee organization associated with the franchise system” for all prospective franchisees.

“One of reasons disclosure is so important is that they are a legitimate source of information about a system for a potential franchise owner. They teach you about the culture of a system,” said Karp. “The FTC’s regulation was fought by the franchisor community because it provides a stamp of approval on the existence of franchisee associations.”

Yet, many franchisees who organize new associations feel they are targeted by their franchisors—even if they can’t prove it. As Karp points out, there is still a minority of systems which believe in what he calls “power franchising”—another name for strong-arm tactics.  On the other hand, in 2004 Karp presented to the American Bar Association Forum on Franchising a study of the six known court decisions in which franchisees claimed to have been terminated, harassed, intimidated and/or retaliated against by reason of their affiliation with a franchisee association. The score was six wins for the franchisees; three substantial verdicts in their favor and three franchisor motions for summary judgment denied. 

Karp is quick to point out that in the Dunkin’ system, fear of retaliation seemed to diminish after former Chief Legal Officer Steve Horn resigned.

“Horn represented unenlightened leadership. System governance through litigation is not a recipe that motivates franchisees to reinvest in the system,” said Karp.

Today 13 states, not including Massachusetts where Dunkin’ Brands is incorporated, have laws that formally protect the rights of franchise owners to freely associate. In addition, several state courts have reaffirmed that right.  The oldest relevant case dates to 1979 where owners of AAMCO Transmission franchises in Michigan were found, “like all other persons in the United States [to] enjoy the right pursuant to the First Amendment of the United States Constitution to assemble, subject only to those exceptions specifically provided by the statute.”

According to Karp, franchise owners who choose to belong to an association—whether it is formally recognized by the franchisor or not—are part of a protected class, based on the actions of state and federal court judges and juries.

Karp says instances when organizers of new franchise associations have been sued, harassed or discriminated against are rare and don’t fit the maturing business culture surrounding franchising, which rewards long-term growth.

And, because there is often greater change among system owners and mangers than among franchise owners, companies that purchase franchise systems are increasingly recognizing the need to tap the institutional knowledge of the franchisees.

“There’s a growing realization that the only way to deal with competition in the marketplace is to establish a cooperative, collaborative and mutually respectful relationship with the independent franchisee association.”

DDIFO Names Seth Vice-Chairman of the Board

Asheesh Seth, the newest addition to the DDIFO’s Board of Directors, has been named vice-chairman of the board. The vote was counted at the most recent board meeting on June 22, 2010 and marks the first time DDIFO leadership has included a vice-chairman.

Prior to joining the DDIFO board in September 2009, Seth was the Executive Director of the Midwest Dunkin’ Donuts Franchise Association (MWDDFA). Last year, that group joined the DDIFO through the creation of a local member committee of MWDDFA members.

“One of the reasons we wanted to give Asheesh a larger leadership role on the DDIFO board, was to validate the importance of our national footprint,” said Kevin McCarthy, DDFIO Board Chairman. “Asheesh was an important voice in the MWDDFA’s decision to join with us and we to be sure the interests of those franchise owners are being addressed.”

“I am thrilled at the opportunity to serve as vice chairman of DDIFO.  I will continue to serve DDIFO and Dunkin franchisees to the best of my ability,” said Seth.

Seth is the Director of Operations for Sterlite Software, an information technology company in Chicago. A Punjabi Indian born in the US, Seth became acquainted with several South Asian Dunkin’ franchise owners through his work providing IT services to their franchises. When the MWDDFA was founded in 2005 he was asked to join as Executive Director.

“I feel that there are several opportunities that need to be explored with regard to DDIFO and the internet.  Through the utilization of social networking sites such as Facebook and Twitter, we can really get the word out as to what we are doing and possibly leverage these resources to better serve our members,” he said.

 In 2008, the DDIFO reorganized its Board of Directors, opting for a group of professional business people who are not Dunkin’ Donuts franchise owners. Other members include Joseph Kimball, Patrick Kaufmann, and Daniel P. Connelly. Jim Coen serves as DDIFO President.

DDIFO now represents over 2300 Dunkin’ Donuts shops in the U.S. and is currently negotiating with the Independent Association of Franchise Owners (IAFO), an organization of Dunkin’ franchise owners from New York, New Jersey, Pennsylvania, Delaware and Maryland to include those members in DDIFO as well.

According to McCarthy, “These new and diverse sections of the country are adding to the breadth and strength of DDIFO and bringing it closer to being a truly national organization of Dunkin’ Donuts franchise owners.”

IndUS Business Journal Published the press release: Dunkin’ Donuts group promotes Seth

Mid-Atlantic Dunkin’ Donuts Franchise Owners Meeting a Success!

Dunkin’ Donuts franchise owners representing hundreds of stores in New York, New Jersey, Connecticut, Pennsylvania and Maryland gathered at the Newark Sheraton Hotel on June 3, 2010 to learn about DDIFO and discuss issues ranging from franchise operations to brand behavior to estate planning.

“This was an outstanding meeting,” said one franchise owner from New Jersey. “I not only learned about what DDIFO is involved in, I also heard news from BAC members I had not heard before.”

A spirited discussion involving five members of the Brand Advisory Committee (BAC) who represent the Mid-Atlantic region, was led by Jim Cain, a long time franchise owner and former BAC co-chair.  The panel took questions from the crowd of more than 50 franchise owners and Cain addressed the role DDIFO plays in conjunction with the BAC to advocate for franchise owners’ interests.

Jim Coen, President of DDIFO, kicked off the day-long session explaining how DDIFO has evolved in the last two years to a larger, more dynamic group led by a professional board of directors. But the key point Coen made was that the inclusion of franchise owners from the Mid-Atlantic region would enhance DDIFO’s influence and effectiveness.

“There is strength in numbers—no doubt about it. Today people have the sense that we are growing and that DDIFO is moving in the right direction.”

Coen said the recent inclusion of over 400 Dunkin’ Donuts stores from the Chicago region and 52 from the Cleveland-Pittsburgh-Youngstown region into DDIFO happened because DDIFO had rewritten its by-laws to welcome the inclusion of Local Member Committees (LMCs).

“Successful associations must address the needs of members in different regions. That’s why we are welcoming LMCs –to insure there is local representation at DDIFO.”

Six months ago the Mid-Atlantic region organized into the Independent Association of Franchise Owners (IAFO). Tom Colitsas, an accountant from Princeton, NJ who specializes in franchising and represents several Dunkin’ franchise owners, is the executive director of that group.

“Our goal today is to set up an LMC like they did in Chicago so we can become part of DDIFO while maintaining a certain independence for this region,” said Colitsas.

“We are pleased to announce the IAFO will be part of DDIFO,” said Coen. “With your help, DDIFO can be a bigger force to be reckoned with.”

Coen said the specific terms of how the IAFO will integrate with DDIFO still need to be worked out but he is pleased franchise owners from the Mid-Atlantic want to join DDIFO.

That sentiment was echoed by DDIFO Chairman Kevin McCarthy who also made clear the benefits franchise owners receive from being affiliated with an independent organization that is well funded and focused solely on their interests—especially as a change in brand ownership looms.

“This was the reason DDIFO was first formed in 1989, because a corporate raider was poised to take over the company. Now, Dunkin’ is owned by a trio of private equity groups whose motivation appears to be selling the business to reap the profits.”

During a question-and-answer session, franchise owners expressed their concern over some of the initiatives the company has undertaken over the last three years because they have cut into franchisee profits.

Among the featured speakers was attorney Seth Ellis whose law firm, Ellis-Goldberg P.L., works with many Dunkin’ franchise owners to protect assets and ensure smooth succession from one generation to the next. Along with his business partner Gary Joyal of Joyal Capital Management, Ellis detailed how proper planning from advisors who understand the inner workings of the Dunkin’ franchise agreement is vital to providing financial security for franchise owners and their families.

16 companies provided sponsorship support for the Mid-Atlantic meeting. Coen recognized the importance of these sponsors to the mission of DDIFO.

“Because of their support, we are able to put on great meetings like this one.”

DDIFO Road Show Stops in Newark

Coming off the announcement that 400 Dunkin’ shops in the Chicago region have joined the DD Independent Franchise Owners (DDIFO), the organization will host a meeting for franchise owners in the New York Metro area and Mid-Atlantic region on Thursday June 3, 2010, at the Sheraton Hotel in Newark, NJ.

“We are very excited about the meeting at the Newark Sheraton,” said Jim Coen, President of the DDIFO. “So far, pre-registration has been very strong, in part because of our dynamic roster of speakers, including Tom Colitsas—a member of the board of directors for the Independent Association of Franchise Operators (IAFO) the area’s newly created franchisee association.” Coen says IAFO is requesting recognition as a Local Members Committee of the DDIFO, similar to the recently created Chicago members committee.

Presently, over 2300 Dunkin’ Donuts shops are represented by DDIFO, making it the largest association of DD franchise owners in the U.S. Coen says his goal is to make DDIFO a nationally organized association. .

Joining Colitsas on the agenda for the meeting is Seth Ellis of Ellis & Goldberg, P.L. a trust and estate planning firm with areas of practice in administration and litigation for probate, trust and guardianship cases. Ellis currently represents a number of DD franchise owners in New England and Florida.

Also on the agenda are: Kevin McCarthy, Esq., Chairman of DDIFO and Gary Joyal, Managing Partner of Joyal Capital Management, LLC and Affiliates. There will be a Q & A session of Brand Advisory Council members that will be moderated by Jim Cain.

Over the past year, DDIFO has joined with a number of sponsors to provide direct access for franchise owners to vendors and service providers. 16 sponsors have signed on to be part of the Newark meeting.

Among the strengths of DDIFO is its independence. As McCarthy wrote in the upcoming edition of Independent Joe magazine, “There is no stronger rationale for the existence of DDIFO than its exclusive focus on the welfare of its franchisee members. Forceful, exclusively focused, well financed and independent strength is available to you as a Dunkin’ franchise owner through DDIFO.”

The DDIFO Mid Atlantic Franchise Owners meeting kicks off at 10am. You can register to attend here.

Access to Money, Inc. Reports First Quarter 2010 Financial Results

DDIFO Sponsor Access to Money, Inc. (OTC Bulletin Board: AEMI), one of the largest providers and non-bank operators of ATMs in the United States, reports its financial results for the first quarter ended March 31, 2010.

Highlights for the First Quarter 2010:

• Net sales for first quarter 2010 were $7.6 million compared to $7.3 million in the first quarter of 2009
• Operating income for first quarter 2010 was $728,000 compared to $847,000 in the first quarter of 2009
• Net loss for first quarter 2010 was $716,000, or $0.03 per share, compared with a net loss of $597,000 or $0.03 per diluted share in the first quarter of 2009
• Adjusted EBITDA was $1.3 million compared with $1.3 million in the first quarter 2009
• Transaction-based sales were $20.2 million for the quarter compared with $20.8 million for last year’s first quarter
• Average gross sale per withdrawal transaction was $2.46 for the quarter compared with $2.39 a year ago
• Average commission per withdrawal transaction for the first quarter was $1.78 compared with $1.72
• Average net sale per withdrawal was $0.68 compared to $0.67 a year ago
• Average number of transacting machines was 10,983 compared with 11,425 in the year-ago quarter
• Final payment of note payable to Notemachine was made on March 1, 2010, providing approximately $120,000 per month of free cash flow going forward

 

Richard Stern, President and CEO of Access to Money said, “We continued to display strong results, posting another solid quarter of positive Adjusted EBITDA and operating profits.  This was especially encouraging given the adverse winter weather conditions that affected much of the Eastern portion of the country, and the negative impact caused by one of our armored car providers which was forced out of business due to alleged illegal activities.  The effect of this caused approximately 365 ATMs to be out of service for several weeks during the quarter.  The reduction in transacting ATM numbers was the result of our selective removal of lower performing, unprofitable ATMs and normal attrition.”

“We continued to deploy ATMs equipped with the Select-A-Branch technology pursuant to our exclusive distribution agreement.  The machines continue to generate significant increases in transactions.  Based upon the demonstrable success of this surcharge-free program, we are rolling out an additional test market of 60 machines during the second quarter.  We believe the positive results we have achieved thus far with Select-a-Branch can be replicated, and we look forward to capitalizing on the expansion of this program,” he continued.  ”Our agreement with Dunkin’ Donuts is also proceeding well and according to plan, having placed approximately 90 new ATMs with franchisees.  Including the Dunkin’ Donuts program, the total amount of ATM equipment sales this quarter increased to $1.3 million from $363,000 in the first quarter of 2009.”  

Mr. Stern added, “Although we are pleased with the progress we are making with our national sales efforts, our master agreement with Cumberland Farms to supply ATMs to all of its stores recently expired.  While we have been in discussions regarding renewal, it is now apparent that the agreement will not be renewed.  Therefore, we expect a reduction in the number of ATMs currently operating in Cumberland Farms stores over the next six to twelve months.  If we are unable to replace these expiring transacting units with new business, our financial results for future periods would be adversely affected.”

“The student loan business, which we entered in late 2009, was strengthened by our recent agreement with People Capital.  I am pleased to report that system integration is expected to be completed within the next few weeks, which will allow us to be fully operational in time for the peak student lending season.  With People Capital as our strategic partner, we will be able to offer a more robust student loan solution to our customers,” he added.

Mr. Stern concluded, “Our focus will continue to be on strengthening the company and identifying complementary business lines and partners in order to position the company for growth, profitability and Adjusted EBITDA improvements.”

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