Dunkin Donuts has some 7,000 locations at this point. Out of them, how many would you guess are franchised by African Americans? Would you guess less than 1 percent of them? It's true! And if the recent franchise news about the company is an indicating factor, either Dunkin Donuts will need to change how it conducts business, or that number may never improve.
With only 50 franchises in its roster being owned by African Americans, the sweet treat chain was delivered a lawsuit this week. A group of African Americans and other ethnic franchisees have come together to take their grievances and concerns to the courtroom. What they claim, the reason they are suing, is that Dunkin Donuts has been treating African Americans unfairly. For starters, they allege that the franchise has been trying to keep black franchisees pushed into areas of the country that are poor and less desirable. Problem is, these areas are also less profitable.
Before people undertake the monumental task of becoming a franchisee, they have no doubt done their homework. A franchise like Dunkin Donuts will cost you a lot of money, depending on the location, with the range being somewhere between nearly a half a million dollar investment to well over a million. So there's a good chance that anyone who was willing to put down that kind of money spent some time going over the projected figures on what the area could bring in when a store was developed there.
It's important to keep in mind that those projected profit figures could only come from one place - Dunkin Donuts themselves! African Americans who have joined the lawsuit claim that those numbers never added up leaving them high and dry with some filing bankruptcy in time. One has to wonder where Dunkin Donuts came up with those figures and were they intentionally deceptive just to make the franchise location seem that much more palatable to interested parties.
According to the U.S. Census Bureau, franchise businesses account for around $1.3 trillion in yearly sales. But the portion of that going to African American owned franchises is in question. If Dunkin Donuts is allegedly pushing black entrepreneurs into the less profitable areas, perhaps it's happening in some of the other franchises as well. It's certainly not the first time that a franchise has been sued for some sort of racial discrimination. It's happened in the past with Quizno's, Denny's, IHOP, and 24 Hour Fitness.
If you are an African American who is interested in franchising with Dunkin Donuts, or any other business, consider taking these measures prior to doing business:
- Do a lot of research first. Check out the area for yourself. Stop in other businesses and speak to the owner to see what their thoughts are on the area's business climate.
- Get some hard fast figures on what you can expect the store to earn, and try to speak with some other minority franchisees, so you can get some first-hand feedback on how things are going for them.
- Don't just settle for what you are handed either if you feel pushed into a particular area, question why that is. There's usually a reason why someone would be pushed into an area, because opening in profitable areas doesn't usually need any convincing.
- Reach out to groups that can help if you feel you need it. There are small business groups, as well as black franchise ones, that can also take a look to see if you are headed in the right direction.
If you visit the Dunkin Donut franchising site, you will find that they state they seek out qualified individuals, regardless of their race, and that a "significant" portion of their stores are franchised by women, minorities, and first generation Americans. While there's no statistic available to back that up, it certainly raises a few eyebrows.
Without a doubt, Dunkin Donuts wishes it could turn back the hands of time. Perhaps not in doing anything different with the group of people suing them, but they probably wish they could go back two weeks ago when the franchise focus of the week was all things Chick-fil-a!
Follow Matthew Lynch, Ed.D. on Twitter: www.twitter.com/lynch39083