Dunkin' Donuts Expansion Plan Will Hurt Some Existing Franchisees

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.

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