We’re used to fast food chains going after their rivals. But seeing a company attempt to shut down their own stores is enough to raise eyebrows. That’s especially true when it’s not the quality of the store that’s in question, but the legal status of its workers. Dunkin’ Donuts caused a stir in the restaurant industry recently. They closed down franchises they believed hired undocumented immigrants and sued the former franchisees to make sure they complied.
The New Food Economy reported that on June 24, 2019, Dunkin’ Donuts Franchising LLC. (a branch of Dunkin’ Brands) filed a complaint in the Delaware federal court.
They wanted to force franchisees Thomas Sheehan and Kenneth Larson to close nine stores in Delaware, Pennsylvania, and Massachusetts after Dunkin’ terminated their connection to the company.
In the lawsuit, Dunkin’ stated that a review of the stores’ records between January 2017 and October 2018 showed that they were missing dozens of I-9 forms. Each employee is supposed to turn that in to prove their right to work in the United States.
Dunkin’ also argued that the franchisees failed to use the E-Verify system to double-check I-9 Forms against a government database.
The contract franchisees sign with Dunkin’ states that they must “obey all laws.” Accordingly, Dunkin’ can terminate the contract if they believe the franchise broke the law. In this case, the corporation argued that the franchisees violated federal employment laws by hiring employees without requiring adequate proof that they had the right to work in this country.
On June 20th, Dunkin’ served the defendants a Notice of Default and Termination.
It effectively gives 90 days notice until their relationship officially ends. Dunkin’ Donuts is suing because they claim the defendants didn’t acknowledge receipt of the notice and still uses the company’s branding.
This is the third time since September 2018 that Dunkin’ took measures to close down franchises over hiring practices.
The New Food Economy reports that in that month, a customer complaint prompted Dunkin’ to review paperwork and practices for five Delaware stores. The company said the stores failed to verify the working rights of a “substantial” number of employees and closed them down, suing the franchisees to make sure they complied.
And in April 2019, Dunkin’ sued a group of franchisees who collectively ran 14 stores in Virginia and New Jersey.
Again, they claimed the group members failed to close after being served terminations.
There are 9,419 Dunkin’ stores in the U.S., though.
And they are all operated by franchisees. That’s why the services on offer vary store-to-store.
Hello! Our restaurants are independently owned and operated by individual franchise owners. At this time, there's no national refill program. It is left to the discretion of the owner/franchisees whether or not to offer a refill program.
— Dunkin' (@dunkindonuts) July 2, 2019
Dunkin’ actually sued franchisees over their policies around hiring immigrants before, as reporter Sam Bloch pointed out on Twitter.
#Dunkin is known for suing its franchisees—it filed around 100 lawsuits around a decade ago, mostly for various financial wrongdoings and store quality issues https://t.co/0e2ZmKmNrW
— Sam Bloch (@samkbloch) July 9, 2019
Another commentator suggested that franchisees sometimes hire immigrants because they think it will save them money.
The practice could be useful because franchisees have to pay fees to their parent company.
But at least one franchise owner has a pretty well-paid side gig.
It's too bad he's "ONLY" a Dunkin' Donuts franchisee:https://t.co/bzgjk18FnP
— John Paul Motta (@JohnPMotta) November 8, 2017
As far as we know, he is not one of the store owners being sued.
And another Dunkin’ manager found her own way to make some extra money.
She took the dough out of doughnuts
— New York Daily News (@NYDailyNews) July 10, 2019
Markia Nelson, a Dunkin’ Donuts manager in Florida, allegedly hired a “fictitious person,” logged 235 work hours for them and pocketed the checks for herself. The fake worker was paid $8.65 an hour and earned $1,610.84. https://t.co/4Pbt61ePHp
American-based franchisees aren’t the only ones finding themselves in legal trouble.
The Bureau of Internal Revenue has filed a P1.12-billion tax evasion case against Golden Donuts Inc, the exclusive Philippine franchisee of international brand Dunkin' Donuts. https://t.co/nAio85bwzj
— ABS-CBN News (@ABSCBNNews) February 23, 2018
We can’t see Dunkin’ going for this suggestion…
Hey Dunkin’! We think it’d be great to offer a franchisee appreciation week! Celebrate all those franchisees that do such a great job.
— Dunkin’ Fanpage (@DunkinFanpage) April 25, 2019
Today, Dunkin’ has been trending on Twitter for a less controversial reason.
And we can thank the hashtag #CoffeeIn5Words for that.
America Runs on Dunkin' coffee #CoffeeIn5Words
— Dunkin' (@dunkindonuts) July 10, 2019
People still love Dunkin’.
They sidestepped the courtroom drama for regular old Twitter drama with a long-term rival.
Dunkin’s is better than Starbucks’ #CoffeeIn5Words pic.twitter.com/p8mLGQgQbD
— Mitch 🟦 (@MitchInAZ) July 10, 2019
Ironically, though, their summer ad campaign is all about chilling…
All of the lawsuits are currently pending, however. So we’ll have to wait to see which way the donut crumbles.
