Joel Libava
If part of your morning routine involves dashing to your closest Dunkin’ Donuts franchise, I suggest that you bring some extra money with you the next time you go.
That’s because a North American Judge, (in Canada) just told Dunkin’ Donuts to pay $16.4 million to some of its former franchisees in the province of Quebec, who alleged that the chain cost them a ton of money through management errors. And now, Dunkin Donuts corporate is increasing their legal $$ fund reserves.
And, in a surprise move, Dunkin’ Donuts is planning to appeal the ruling.
Now, if you feel that all is fair in love and war, some Dunkin’ Donuts local franchise owners have felt the long arm of the law, too. Like these Dunkin’ Donut franchisees.
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What’s Important About This Dunkin’ Donuts Franchise Lawsuit
The most important thing about this lawsuit has to do with a franchise’s brand.
The Huffington Post was one of the first news outlets to report on the verdict, and quoted the Judge, who said the following- in reference to the responsibility of a franchisor to protect and even enhance it’s brand;
“It failed to do so, thereby breaching the most important obligation it had assumed in its contracts. It must accept the consequences of such a failure. … Franchisees cannot succeed where the system has failed.”
This is huge.
This means that there is an inherent promise being made by franchisors, (in Canada) with respect to a brand. It’s a brand promise.
In the case of Dunkin’ Donuts, it seems that just because they’re a huge brand, their advertising and marketing programs must be 1st rate. But, all the time? Can’t a franchisor’s marketing push flop, once in awhile? Burger King’s $1 Double Cheeseburger certainly did. (And, they got sued, too.)
If you’re a franchise executive in Canada, you may be experiencing a few sleepless nights in the coming weeks. And your marketing department? The folks there won’t be sleeping at all.
Not until the latest franchise marketing plan is thoroughly vetted. By franchise attorneys.
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About the Author
Joel Libava is The Franchise King® — an independent franchise advisor with 25+ years in the industry, two published books on franchising, and his writing has been featured in The New York Times, Forbes, CNBC, Entrepreneur® Magazine and others. In addition, he wrote exclusively for the U.S. Small Business Administration blog for eight years. He doesn't sell franchises. Instead, Joel helps you figure out if franchise ownership is actually right for you — and if it is, teaches you his powerful, proven-to-work franchise research techniques, so you can make a smart, informed decision on a franchise to own and be your own boss.
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