Three Stories about Quiznos, Coffee News and Dunkin’ Donuts.
Quiznos: Maine franchisees of the franchising firm that earlier this month filed for bankruptcy, failed miserably under a broken business model. Some are questioning what detriment there was to their state’s economy. Analyzing the sub sandwich chain’s past franchise disclosure documents shows there was approximately $5.4 million in Maine citizen economic loss. The human toll is even larger. Quiznos franchisees and their families have been and will be devastated financially and personally for the remainder of their lives. Ken Madore, former owner of two Quiznos locations in southern Maine attested to the financial ruin in being a franchisee. “We were all doomed from the start and we had little to no recourse. While we tried everything in our power, we soon learned the deck was stacked against any Quiznos franchise owner. We could not reach breakeven.” Read More at MFOA…
Coffee News: A Bangor Maine based franchisor that has been franchising since 1994, Coffee News is experiencing a free fall in the number of its franchise owners. The chain has declined in franchise units by 31 percent from 2008 to 2012, according to its latest FDD. Another problem for the brand is the abnormally high termination rate of 131 percent of Coffee News franchise owners during the five-year period of 2008 to 2012. “Many other franchisees experienced what I experienced. It just doesn’t work for them,” says Jeffrey Ball, a former Coffee News franchise owner in Portland, Maine. “He says that he did everything – he sold the ads, printed the newsletter through a local print shop and distributed it at his expense. When asked what his franchise fee and royalties went for, Ball answers: “Coffee News gives you the privilege of distributing and selling Coffee News in your area.” Read More at Blue MauMau….
Dunkin’ Donuts:October 2009, Dunkin’ Chief Legal Counsel Steve Horn was terminated by Dunkin’ Brands CEO Nigel Travis. The Dunkin’ Donuts Independent Franchise Owners (DDIFO) had been researching and investigating the practices of the Dunkin’ Brands over the last few years. DDIFO had taken a number of steps to investigate franchisees complaints. DDIFO found: Dunkin’ Brands General Counsel Steve Horn had tweaked the franchise agreement over the years, many attorneys referred to it as the most egregious contract in all of franchising. Dunkin Brands used that agreement to extract over $100 million dollars of franchisee equity from 1998-2009. DDIFO benchmarked litigation in the top 20 Food Service Franchises and found Dunkin Brands 350 lawsuits against franchisees was the highest total in all of franchising. Stan Furash was operating two Dunkin’ Donuts franchises in Bradenton, Florida when, in 2009, Dunkin’ terminated his franchise agreement. “Dunkin Brands terminated us because they claimed my wife abandoned the business, which to me was a farce because the shops were doing better than ever before, and besides there are many successful franchisees that operate in multi-states. Furash says while he ran the two stores he increased annual revenue from $1.5 million to over $2 million and couldn’t understand why he was being targeted. He fought the termination, draining his savings to pay the associated legal fees. In the end he lost because he says, “The deck was stacked against me, and they held all the cards.” Furash was ultimately forced to shut the doors and turn off the lights. “Our bank foreclosed as we could no longer pay the bills. Forty good people were put out of work. My financial situation is a disaster. At 57 years old I am forced to start over. We have little or no ability to pay for our children’s college and have to start saving for retirement at a very late age.” The stores closed and were never opened again as Dunkin’ Donuts.
In October 2009, Dunkin’ Brands CEO Nigel Travis terminated Steve Horn and others. That signaled to the entire franchise community that a change had occurred in the strategic direction of Dunkin’ Brands. Since that purge Dunkin Brands has negotiated with the franchisees to produce a kinder more gentle franchise agreement that includes three of the four principles of LD 1458. Read More at DDIFO…