February 17, 2008
Bickering between Dunkin' Donuts and Its Franchises

Some of you may have read my posts a few weeks ago about a local donut joint here in town called Linda's and the subsequent discussion regarding authenticity and chains (see here, here, and here.

A couple of the Yelp users I wrote about framed Linda's against the chain of Dunkin' Donuts, and in fact I got into a longtime discussion with the guy my age while I was visiting about Dunkin' Donuts, the value of their convenience, and what he felt was the declining quality of their product, in favor of proliferation and speed.

Compare this with our discussion with Joe Pine from back last fall, in which Joe referred to the Starbucks edict that "it should take time to get a cup of coffee."

Apparently, many of the franchise-holders of Dunkin' Donuts agree to some extent, that there is a point of too much proliferation. And that's not that surprising, considering that they have quite a financial stake into not seeing the Dunkin' Donuts brand extend too far...especially out of their stores.

Word came from Nina M. Lentini at MediaPost last Friday that "98% of surveyed franchise owners oppose the Sara Lee partnership that calls for the installation of self-service stations in office building break rooms, cafeterias and other venues with large food-service operations. It also said that 97% oppose the Hess partnership, which calls for the installation of self-service coffee, hot chocolate and donut stations within Hess gas-convenience stations from New Hampshire to Florida."

Apparently, Dunkin' Donuts franchisers are particularly upset that this comes a year after a deal was struck with Procter & Gamble to start selling the coffee in grocery stores. Of course, all these extensions of the Dunkin' Donuts brands do not bring value back to the franchisers.

This reminds me of many of the issues networks have faced with their affiliates, in the age of digital distribution (see, for instance, here). Obviously, while the brand may find ways to circumvent the previous necessities for local points of sale or broadcast, the owners of those local franchises or stations will see any nationalized brand extensions as competition for their spot, and the unrest can impede that growth, if these concerns aren't sufficiently considered at the outset.

I'd suggest that, considering this donut war is becoming the knowledge of the public at large, that Dunkin' Donuts might have been better prepared for these issues. If one wants to expand their brand in a new direction, there is growing pains, and those are especially painful if the primary distributors of the brand feel left out of the loop in the process.

That's not to say that these deals are necessarily a bad idea, but more planning with all the interested parties in mind can go a long way, and it may help to make the difference between creating branded products that mean something to consumers and extending the brand to the point that it becomes so thin that the original intent of a brand--as a mark of certain quality--retains little meaning.

While the Dunkin' Donuts franchises are acting out of their own financial interests, to be sure, they are raising issues that are perhaps vital to the brand.

Any thoughts? E-mail me at samford@mit.edu.