Dunkin' Franchise

Financing Details

Dunkin' does not offer any direct or indirect financing to franchisees. Furthermore, Dunkin' does not guarantee any franchisee's notes, leases, or other obligations.

Litigation Summary

Dunkin' and its affiliates have been involved in several legal disputes. Currently, there are multiple pending actions. These include a 2011 lawsuit filed by Fahrad Salari Lak, Lock Bakeries, and F and J Holdings alleging promissory estoppel and fraud related to a bakery supply plan, where Dunkin' successfully limited damage claims to out-of-pocket expenses and lost business opportunities. A 2023 action from a Pakistani franchisee, Phoenix Food (Pvt) Limited, alleges breach of contract for non-renewal of an agreement, with the court enforcing a mandatory arbitration provision. Dunkin' filed a lawsuit in 2022 against its Spanish franchisee, Coffee Alliance, S.L., for breaching a Master Franchise Agreement by failing to meet a development schedule; the court ruled in Dunkin's favor, and the franchisee has appealed. Additionally, a 2024 class action complaint was filed by John Michael Taferner and Itzel Diaz against Inspire Brands and Dunkin' Donuts Franchising LLC, alleging hidden "dine-in fees" and other claims such as breach of warranty and fraudulent misrepresentation. In the past fiscal year, Dunkin' and its affiliates commenced two breach of contract and trademark infringement claims against franchisees: Baskin-Robbins Franchising LLC, Dunkin' Donuts Franchising LLC, DD IP Holder, LLC, and BR IP Holder, LLC v. Alamo Donuts, LLC (filed July 2024) and DD IP Holder LLC v. Atlanta Airport Concessions, LLC (filed August 2024), with the latter resulting in a permanent injunction and a $110,000 judgment. Over the last three fiscal years, Dunkin' has concluded several litigations. Notably, a 2003 lawsuit by 32 Quebec franchisees against Dunkin' Donuts (Canada) Limited regarding negligent management and lack of support resulted in a 2012 trial court finding of liability against Dunkin' (Canada) for $16.4 million CDN, later reduced to $10.9 million CDN on appeal. A 2015 civil rights claim by a former franchisee alleging discrimination and tortious interference was settled in 2017 by Dunkin's insurance carrier without admission of liability. A 2017 class action alleging deceptive practices over blueberry donut products settled in 2018 without admission of liability. A 2018 lawsuit by a former franchisee for breach of contract and misrepresentation settled in 2020 for a nominal amount. A 2018 arbitration against a Swedish franchisee for non-payment of fees and counterclaims for fraud settled in 2018 without admission of liability. A 2019 arbitration by Newburyport Donuts, Inc. concerning a new restaurant site also settled in 2020. Dunkin' Brands entered into a settlement agreement in 2019 with thirteen state Attorneys General regarding "no-poaching" provisions in franchise agreements, agreeing not to enforce them and to amend relevant agreements. In 2019, the New York State Attorney General filed a lawsuit against Dunkin' Brands for credential stuffing attacks in 2015 and 2018, which settled in 2020 with Dunkin' Brands agreeing to security measures and paying $650,000. In 2021, Dunkin' Donuts Franchising LLC sued Vicky and Bonny Coffee Express Somerdale LLC to terminate 12 franchise agreements, settling in 2022 with franchisees agreeing to sell and pay $97,000. Other concluded cases include a 2001 Canadian lawsuit that settled in 2017, a 2012 Quebec franchisee lawsuit that settled in 2018, a 2022 class action by Daniel Crooks and Matthew Miller alleging gift card non-redemption issues that settled in 2023, a 2022 franchisee termination dispute with Ram Donuts Inc. that settled in 2023, a 2022 termination dispute with AB Corp. that settled in 2023, and a 2023 class action by Martin Kelledy concerning undisclosed mobile app charges, which was dismissed in 2023. Additionally, an affiliate, Arby's Restaurant Group, Inc., settled with several states in 2019 over similar "no-poaching" provisions.

Renewal Conditions

To renew their franchise agreement, Dunkin' franchisees must provide written notice of their desire to renew between 12 and 36 months before the current term ends. They must have consistently maintained Dunkin's standards and substantially complied with all terms of the agreement. Franchisees should not have received more than three default notices in the ten years prior to the renewal notice, nor any after providing the notice. All payments and liabilities to Dunkin' must be current. Additionally, franchisees must either demonstrate they have obtained a lease extension or a new lease for the restaurant premises covering the renewal term that meets Dunkin's requirements and remodel the restaurant, or if Dunkin' determines relocation is necessary, secure an approved substitute premises and develop a new restaurant there according to current standards before the current term expires. Finally, franchisees (and any owners) must sign Dunkin's then-current form of termination and general release, execute the then-current franchise agreement and related documents, and pay a renewal fee.

Staffing Notes

Dunkin' requires that all franchisees manage their restaurants with at least two individuals; one must be the owner or another approved owner, and the other a designated representative. Both individuals must successfully complete Dunkin's initial training program, demonstrating literacy and fluency in English. While personal on-premises supervision by the owner is not strictly mandated, owners are expected to devote continuous best efforts to the business. New franchisees should anticipate performing substantial manual labor and working full shifts daily, especially during the first year. On-premises managers must be trained according to Dunkin's standards and cannot be involved with competitive businesses. For Multi-Brand Locations, all employees serving Dunkin' customers must be properly trained and meet Dunkin's requirements.