You’d think that operating a donut shop would be the best job in the world, what with all the free donuts and all. But if you own a Dunkin’ Donuts franchise, don’t expect to have any fun, at least not without a lawyer present. That’s because Dunkin’ has a nasty habit of suing its franchisees for everything from cracked floor tiles to failing to fill out tax forms, according to attorney Robert Zarco. Just how litigious is DD? Between January 2000 and September 2002, it filed 350 lawsuits against its franchisees, compared to just 12 filed by McDonald’s. And between January 2006 to June 2007, Dunkin’ filed 157 suits, compared to just five for Subway. So what the heck is going on here? Zarco says the company’s ultimate goal is to make additional money by collecting hefty penalties and to kick out old franchisees so it can get new franchisees to buy in. Dunkin, for its part, claims this is all hogwash. ”Dunkin’ Brands has never pursued litigation against a franchisee without clear cause,” CEO Nigel Travis wrote in a letter to franchisees. We agree 100 percent with Mr. Travis. After all, we wouldn’t want to get a call from one his lawyers.
More specifically, we wouldn’t want to get a call from Stephen Horn, the chief legal officer and general counsel at Dunkin’ Donuts. This guy doesn’t mess around. In 2000, he gave a speech that seemingly encouraged large franchisors to spy on their franchisees, including snapping photos of their homes, cars, boats and private lives. Why? Because if they’ve got enough money for a beach house on Maui, they could be underreporting sales and thus shortshrifting corporate on royalty payments. “One of the best ways to gather evidence that will potentially have some impact in court is to conduct surveillance of the franchise,” Horn is quoted as saying at that now-infamous gathering in 2000. If this seems like something out of a bad Hollywood movie, it just might be. In addition to being a prodigious litigator, Horn is the author of two high-octane legal thrillers: “In Her Defense” and “Law of Gravity”. Truth really is stranger than fiction.
Come to think of it, we’d definitely want a guy like Stephen Horn on our side. Especially if we had to contend with greedy customers who think that spilling some hot coffee entitles them to a million bucks. Exhibit A: Robin and Greg MacLeod, who are now suing Dunkin’ Donuts for $200,000. They claim their 23-month-old son suffered “serious and permanent burn injuries” after a hot hash brown fell from his mouth and onto his neck, causing unspecified injuries. Imagine what you could dredge up if you trained the surveillance camera on these folks.