We had the pleasure of sitting down with franchise expert (and guest author) Peter Casey from Capital Franchise Group to discuss the benefits of visiting a discovery day...

Peter explains that discovery days are designed to allow the franchise candidate and franchisor to meet face to face. For the franchise candidate, it is a chance to take a good look around the franchisor’s headquarters and meet with senior management. For the franchisor, it is used as a hurdle for franchise candidates to jump over to prove that they are serious about buying into the franchise system.

Peter has contributed an article, The Franchise Discovery Day thats covers, "The Discovery Day In the Eyes of the Franchisor" and "What to Expect at the Discovery Day."

Yesterday, I wrote a blog post about the Dunkin' Donuts franchise and received the following comment:

You are “not sure if opening a Dunkin Donuts is such a good idea”.

Why because they require 1.5 Million Net worth?

Or is because it’s not one of the deals you sell?

Comment by Jim — May 6, 2008

I was just going to reply to this comment but as I was writing back my reply I realized the importance of this topic and decided to post it to my blog. I want to start off by saying that the following statement... "I am not sure if opening a Dunkin' Donuts franchise is such a great idea" is just my opinion based on what the company is doing to their franchisees.

If you want to understand the story in full I suggest you read the article Dunkin' Donuts business practices have lots of holes on the New York Daily News website and make your own judgement.

I do want to answer Jim's question by saying...

A franchisee / franchisor relationship should be a solid relationship with one goal, the success of the franchise. Would you want to tie up $750,000 in cash to open a Dunkin' Donuts, take the risk of being sued by them and possibly be forced to sell your locations?

Just to give you an idea of how many times Dunkin' Donuts has sued their franchisees in comparison to other franchises I have provided the information below:

Lawsuits between franchisor and franchise:

• Subway - Aprox. 29,000 locations - 12 lawsuits since 2006
• McDonald's - Aprox. 22,500 locations - 5 lawsuits since 2006
• Dunkin' Donuts - Aprox. 7,900 locations - 154 lawsuits since 2006

Dunkin' Donuts has about 21,000 less locations than Subway and 14,500 less than McDonald's but has been involved in over 140 more lawsuits than both companies.

To answer Jim's other question, I do not "sell" franchises. I provide information on many different franchise companies and other small businesses to help individuals open their own franchise or small business.

You can read more about the benefits of opening a Dunkin' Donuts franchise by reading my Dunkin' Donuts Franchise Review.

Also, I have added a poll to our Franchise Forums called Is a Dunkin' Donuts Franchise a Good Investment? where you can vote and also view what others have to say about opening a Dunkin' Donuts franchise.

According to a New York Daily News article by Cindy Gluck, a franchisee of Dunkin' Donuts, the company is looking for reasons to sue existing single-unit franchisees in order to replace them with multi-unit franchisees.

"America may run on Dunkin', but Dunkin' Donuts is running me out of business. I wanted our store manager to share in our success, I offered to sell him a 15% stake. I wanted everything to be upfront, so I immediately notified Dunkin' Donuts. Dunkin' said that even though the transaction had yet to be completed - and even though I had notified the company beforehand - I had still violated their policies." Says Cindy Gluck, Dunkin' Donuts franchisee.

Dunkin' Donuts is suing Cindy and her partner and trying to force them to sell their 2 locations for 50% of what the stores are actually worth. Dunkin’ Donuts plans to sell these stores to multi-unit franchisees who have the capability of opening 5 or more locations..

In order to compete with Starbucks, Dunkin' Donuts has announced a plan to open 15,000 stores by 2016. The fastest way to do this is to have their multi-unit franchise owners expand by opening more locations. To become a Dunkin' Donuts franchisee, you are now required to have a net worth for 5 restaurants at a minimum of $1.5 million and $750,000 in cash reserves. If you are thinking about a partnership, go ahead, but there is one caveat; one single candidate must personally meet the financial qualifications. Also, if you want more units you have to expand at the rate of 5 at a time. Based on all this information, I am not sure if opening a Dunkin' Donuts franchise is such a great idea.

Photo: Tim Boyle / Getty Images

I am a firm believer of learning from past mistakes. In business, you need to make many mistakes before you can succeed. Sometimes you can learn from other people’s mistakes and turn a failing franchise into an empire.

I am pretty sure you know the name Dave Thomas. Dave Thomas was the founder of the Wendy's franchise. Many people do not know that Dave's first experience in the franchise world was with the Kentucky Fried Chicken franchise. By simplifying the menu, Dave turned around four failing KFC franchises and within four years sold the restaurants back to KFC and received a percentage of the sale. This made him a millionaire at the age of 35.

Don't rule out buying an existing franchise that is failing. This could be your opportunity to buy into a franchise system for much less than it would cost to open a new one. I am not saying that every franchise that is failing can be turned around, but if you look hard enough you may find a diamond in the rough.

Photo: Spencer Platt / Getty Images

The bottom line is... Every business should have a business plan. Therefore, if you are buying a franchise you should prepare a business plan.

One of the main reasons you will need to write a business plan is to obtain financing from a bank or any other lender. A business plan will help your lender understand exactly what he or she is investing in.

Also, once you have written your business plan you should use it as a guideline and refer back to it after you have opened your franchise. I have seen many small business owners write their business plans and then file them away. They end up never looking at them again. You should think of your business plan as a roadmap to success.

Are you asking yourself... How do I Write a Business Plan for My Franchise? There are many tools out there to help you.

There are many costs involved when opening a franchise. Many people ask me "How much does it cost to open a franchise?" I explain to them that it is not a simple answer. Every franchise has its own financial requirements, so the costs to start a franchise are different for every franchise company.

Here is a list of 6 common costs to open a franchise:

1. Franchise Fee
2. Legal Fees
3. Build-Out Costs
4. Inventory
5. Supplies
6. Working Capital

The franchisor does not contribute to any of these costs. So make sure you know exactly what your overall costs are before making an investment.

"Johnnie" is the brainchild of Todd Chusid, CEO and Founder of Johnnie's Dog House Franchise. Johnnie is a fictitious little boy from the 1940's whose sole purpose in life was to create an establishment for his friends with tastes from their hometown or the experience of hot dogs from parts of the world that they may have never traveled.

Johnnie's Dog House is a new and upcoming hot dog franchise. They offer 2 different types of franchise locations A) Johnnie's Fast Casual Restaurant and B) Johnnie's Mobile Kiosk. These mobile kiosk locations can be opened at locations such as Home Depot, Lowes, airports and college campuses. We had the pleasure of interviewing Todd and finding out more about this new and exciting franchise. You can find out more about Johnnie's by visiting our interview with Todd Chusid.

Photo © JohnniesDogHouse.com

Industry experts seem to think so. Dennis Lombardi, restaurant industry consultant with WD Partners, tells Nancy Lyons of MarketWatch, McDonald's is as close to recession-proof as you can get.

Dennis discusses McDonald's robust earnings for the first quarter of 2008. He does say that domestic sales are not as strong as international sales but McDonald's is continuing to focus on value and possibly lowering prices of certain items to stay more competitive. He also says "I can't think of a more conservative company to invest in during a recession."

Photo: Justin Sullivan / Getty Images.

The Subway franchise has made a commitment to have its restaurants and operations become more environmentally friendly. The first "eco-store" opened in Kissmmee, Florida five months ago and there are more US locations due to open.

In addition to some individual stores going green, Subway has also made some overall changes that will help the environment. Here are just two examples:

Subway now offers napkins with 100 percent recycled materials. The Result: An estimated savings of 147,000 trees annually.

Subway switched their cutlery and drinking cups from polystyrene to polypropylene. The Result: An estimated annual resin savings of more than 610,000 pounds and saves the equivalent of 13,000 barrels of oil.

Opening a "green" Subway will also put more "green" in the franchisee's pocket. These eco-stores are designed to reduce energy costs which will decrease a franchisee's expenses. Although these franchises cost more to open, Subway estimates these eco-store franchise units to save much more money over time.

According to the new Franchise Disclosure Document (which all franchisors must follow by July 2008) franchisors must disclose all information to a potential franchisee. This includes any lawsuits or bankruptcies.

They must also disclose how many franchises have been sold, terminated or transferred in the past 3 years. In addition, the franchisor must reveal whether any officer of the franchise has any interest in all approved suppliers.

After seeing these changes made it makes you think... "Why did the FTC wait about 30 years to add these requirements?" These changes were well overdue.