Franchisees sour on Dunkin' Donuts

Donuts are pictured outside a Dunkin' Donuts store in Miami, Fla.

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Kai Ryssdal: Dunkin' Donuts store owners have wrapped up their fall get together in Worcester, Mass., this week. There was the usual talk of glazed versus jelly-filled. But franchisees were really buzzing about the latest product being cooked up: lawsuits. Marketplace's Mitchell Hartman explains.


MITCHELL HARTMAN: It's like a food fight, with franchise-owners hurling accusations of harassment, and Dunkin' Donuts throwing back denials it's doing anything wrong.

The company routinely accuses franchisees of legal infractions, like not filling out tax forms, or having cracked floor tiles, says franchisee attorney Robert Zarco.

He says the company then socks his clients with huge fees and lawsuits. The object to push them out, and get new franchisees to buy into the donut chain.

ROBERT ZARCO: There have been over 350 lawsuits in order to squeeze franchisees out of the system, or extracting substantial dollars in financial penalties.

KAREN RASKOPF: We have never pursued litigation against a franchisee without clear cause, nor will we.

That's Dunkin' Donuts spokesperson Karen Raskopf. She says the company only sues franchisees to safeguard the brand.

Jim Coen heads the franchise owners' association. He says it's too bad relations are so testy, because Dunkin' Donuts is doing great. Last year, sales were up 5 percent.

JIM COEN: Whereas Starbucks may be positioned as a more expensive brand, Dunkin' Donuts positioned their marketing toward the working class, toward the average Joe.

Attorney Robert Zarco says Dunkin' Donuts should focus on the food.

ZARCO: The coffee has to taste good and be nice and hot. The donuts have to be fresh.

It's a recipe that would please franchise-owners and customers alike.

I'm Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

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