Not long ago, Dunkin’ Donuts franchisees were up in arms. At the end of 2009, the company was embroiled in more than 350 lawsuits against franchisees (so many, in fact, that it affected Dunkin’s ranking in the 2010 AllBusiness Franchise AllStars). And some franchisees alleged that Dunkin’ was using in-store security cameras to spy on them.
Enter new Dunkin’ Brands CEO Nigel Travis, who took the helm in January 2009 and put the company into crisis management mode. QSRWeb.com recently took a look at the moves Travis has made. His actions can serve as a template, not only for turning around a company in crisis, but also for ensuring that your system never faces a crisis.
1. Listen to franchisees. Jim Coen, president of the Dunkin’ Donuts Independent Franchise Owners organization (DDIFO), says Travis is actively reaching out to franchisees and not only listening to their concerns, but involving them in corporate decisions. For example, the company tests value menu items in certain markets, then gets franchisee feedback before deciding whether to proceed with the menus system-wide. Value menus have been a bone of contention during the recession as franchisees argue the discounts cut into their profits, so it’s no wonder franchisees have welcomed Travis’s new approach. Listening to franchisees and actually implementing their ideas is a smart move any time. The people on the front lines can teach you a lot about what works and what doesn’t.
2. Focus on operations. In addition to repairing franchisee relations, Travis is working to improve operations and store economics, including supply chain, front-of-store systems and back-of-store systems. In today’s economy, every franchisor should be working continuously to improve operations and efficiencies so franchisees can maximize their profits. No longer can you assume that “If it ain’t broke, don’t fix it.”
3. Don’t just talk the talk; walk the walk. Travis replaced the company’s general counsel with franchise veteran Rich Emmett, who is known for collaboratively dealing with issues. He also installed a new management team heavy on former franchisees. It’s easy for franchisees to dismiss your corporate office as out of touch if none of your execs have actually been in the trenches as franchisees. Putting former franchisees in key roles simply makes sense.
4. Don’t do too much too soon. Travis sees lots of opportunity for Dunkin’ both nationwide and internationally. Right now, however, he’s focused on smoothing the ruffled feathers and streamlining systems in the company’s core Northeast markets. Trying to grow a flawed system before you work out the kinks is a recipe for disaster, so make sure your franchise system is running smoothly before you go full speed.
If you’re still not convinced of the importance of franchisee satisfaction, look at it what Travis told QSRWeb: “We’re trying to attract our current franchisees to bring in more franchisees — including a referral bonus for our franchisees.” Unhappy franchisees won’t refer others to the system.
Some Dunkin’ franchisees are still unhappy. Repairing broken trust takes time. That’s why it’s better never to let franchisees’ trust falter in the first place.
Rieva Lesonsky is founder and president of GrowBiz Media, a content and consulting company that helps entrepreneurs start and grow their businesses. Follow Rieva on Twitter @Rieva. Visit SmallBizDaily.com to read more of Rieva’s insights on small business and to buy her newest book, Marketing 101: Quick Tips for Marketing Your Business.