behind every play there is a thought

Transcription

of Domino’s Pizza Franchisees
THE
THE
VOICE
VOICE
of D o mi n o’s Piz z a Fr a n c hi s e e s
BEHIND EVERY PLAY
THERE IS A THOUGHT
DFA Working for Franchisees
Advocacy, Membership Benefits and Education to
increase Franchisee Profitability
Issue 3 - 2013
Spotlights
8 David Jenks &
Dominic Benvenuti
“Best practice sharing,
networking and learning from
fellow Franchisees cannot be
underestimated. The DFA’s work
as a liaison with DPZ accomplished
many feats that we never could
have done individually.”
26 Sher Senior
“The DFA is beneficial to
Franchisees of all sizes, because
of its relationship with DPLLC.
Their relationship enables them to
facilitate communication between
the collective Franchise body and
our leadership team on issues
that are important to us in a more
effective fashion than we might be
able to individually.”
Features
5 Ken’s Korner
11 DFA Chairman’s Letter
Jim Gerety
14 Credit Card Fraud
Van Carney
18 Change in the Right Direction
Mike McDermott
22 You Signed It... But Did You Read It?
Brook J. Carroll, Esq.
31 It’s Always Quietest Before The Storm
Trey Darby
37 Wage & Hour Issues
SESCO Management Consultants
38 Dominic’s Training Room
Profit Driven Managers
34 Sam Hishmeh
The Voice / dominosdfa.com
“The best resource for Franchisees
is other Franchisees. We are
in this together. We share the
same opportunities as well as
challenges.”
40 Traits of Poor Managers
42 Focus On Recruits To Avoid The Next Lawsuit
Hagood Tighe & Karen L. Luchka
De pa r t ment s
Updates
Vendor Article - Coca-Cola 16
Vendor Article - XLT 30
Women’s Leadership Forum 45
Partner’s Foundation 46
4 DFA
Member Services
47 Membership Form
48 DFA Board Member Directory
50 Vendor Partner’s Directory
Ken’s Korner
D
ear Franchisees,
This issue of Ken’s Korner has been
unusually difficult to write. I am trying
to find balance and send the right
message to both our Franchisees and our
Corporate leadership when discussing
Fair Franchising. I am beginning with
the DFA’s Mission “To provide Domino’s
Pizza Franchisees a unified organization
working to maximize the value of our
member’s stores.” to reinforce why
Franchising legislation is a key focal point
for the DFA.
Currently, the pulse of the Franchisee
body is strong. I believe Patrick Doyle
and his executive team are doing well
leading our Brand in becoming the
#1 pizza Brand in the world. Looking
back over the last five years, Domino’s
Franchisees have made significant
progress climbing out of the financial
hole most were facing in 2008/2009.
The combination of the operational
efforts of the Franchisee system…
the direction of Patrick’s team… the
favorable commodities market… plus the
improved Brand perception has caused
our competitors to take note.
One area which has become a major
concern for many Franchisees,
regardless of their Brand, is Fair
Franchising legislation. The DFA is a
strong supporter of various state and
federal efforts for Franchisee friendly
law implementation. Several states
have active legislative efforts in place
After reading numerous communications
from supporters of Senate Bill 610, I
keep coming back to an article written
by one of the DFA’s legal partners
about the need to continue supporting
legislation like this. Ronald K. Gardner,
the managing partner of the Minneapolis
based law firm Dady and Gardner, has
been a long-term legal resource for the
DFA. I am sharing the article as part of
my effort to educate our Franchisees
about the importance of protecting
ourselves by supporting Fair Franchising
legislation. While Ron’s article primarily
focuses on the bill in California, the
scope of the message applies to
Franchisees in every state.
Why Good Faith is Needed
in the Law
by Ron Gardner
Overall I have seen a lot of questions
raised by the other side (and
by non-sympathetic legislators)
on why good faith is really NOT
needed in statutory law. This is
usually accompanied by some side
statement about good faith and fair
dealings (GFFD) being imposed on
all contracts. Opponents argue that
good faith does nothing but create
another claim for lawyers and does
not add any additional protection
for Franchisees. The reality is that
statutes like California’s Senate
Bill 610 (SB610) are desperately
needed—because the obligation
we all think everyone has to act in
good faith is under assault. When
it comes to adding statutory good
faith, here are some points that I
would make to lawmakers:
1. Franchisees face an uphill battle
whenever a Franchisor makes a
decision that is in contravention
of the Franchisee’s rights. In an
estimated 95% or more of today’s
Franchise agreement, a Franchisor
is given almost unlimited ability to
“modify the system.” This gives
Franchisors the ability to inflict
hundreds of thousands of dollars
in additional CAPEX investment by
the zees (in the event of a change
of image or product line requiring
new equipment) and/or the creation
of massive amounts of additional
operating costs (particularly labor
costs associated with “improved
products”), all in the name of what is
“best for the brand.”
2. In an estimated 80% of all
franchise agreements, jury trials
and punitive damages have been
waived. This lessens protections for
Franchisees, and more importantly,
removes an important “check”
that a Franchisor would typically
have in considering whether to
make changes that might deprive a
Franchisee of the benefit of his or her
bargain.
3. But wait you say, the covenant
of Good Faith and Fair Dealings will
protect the Franchisee against bad
faith conduct when a franchisor
exercises the unlimited discretion it
has to make changes to system—
right? WRONG. Black-letter law says
that the IMPLIED covenant of Good
Faith and Fair Dealing exists in every
contract UNLESS it is disclaimed
by the parties. You know what is
coming….
4. In a growing number of Franchise
agreements, Franchisors are
requiring Franchisees to agree that
the Franchisor DOES NOT HAVE TO
ACT IN GOOD FAITH!! By way of
example, here is a clause I dealt with
THIS YEAR. This is a Franchisor
based in San Francisco, and they
are represented by a multinational
law firm’s California office. This is all
California:
DFA 5
While our Brand is in a good place,
we must be mindful of how upward
economic trends help us and how
downward trends in the past have
made profitablity and growth difficult
for Franchisees. During the successful
times we are currently experiencing, we
have to proactively protect ourselves
from future negative changes in
the economy, commodity markets,
competition, leadership changes,
technology enhancements, or customer
preferences.
that are gaining traction. A recent
set back in California with Senate Bill
610 created quite a bit of response
from the Franchisee community. This
has encouraged more Franchisees to
become involved in educating legislators
regarding the need for legislation
protecting Franchisees.
“Express Agreement. The parties
acknowledge that their business
relationship is based solely upon
this agreement and agree that it
should be enforced according to its
express provisions. The language
of this agreement is to be construed
according to its plain meaning,
and not strictly against a party
because it drafted this agreement.
Neither party intends or expects
either party’s rights and obligations
in this agreement will be defined
or determined to be other than as
expressly written, or that additional
obligations will be imposed on
either party that it has not expressly
assumed in writing. It would be
contrary to the parties’ intentions
and expectations to impose any
doctrine, rule of interpretation,
or implied covenant, such as an
‘implied covenant of good faith and
fair dealing.”
(Emphasis added.) Just read this...
Franchisor not responsible for
ambiguities, can do anything it wants
if it has granted itself sole discretion,
and disclaims an implied obligation
to act in good faith (I assure you
there is no express obligation in the
writing)! The ONLY check remaining
would be SB610.
5. Absent the new statute, all of
the California-based Franchisees
in this California-based system
will NOT have any expectation that
their Franchisor must act in good
faith. This agreement also has the
jury waiver, the punitive damages
6 DFA
waiver, and a provision that says the
Franchisor can do anything it sees fit
in its sole discretion when it comes
to modifying the system. Is this right?
Should a small business owner and
investor have to expect that she
gives up even a right as basic as
expecting the Franchisor will not act
in bad faith as a condition of making
this investment? And imagine the
Franchisees facing renewal—they
have to sign this or lose everything
they built up in the business in the
prior 10 years.
The ONLY solution to the continual
overreach by Franchisors is enacting laws
like SB610.
The DFA’s strong support for new Fair
Franchising laws is not motivated by
a negative opinion about our current
corporate leadership. In fact, the DFA
believes Patrick Doyle and Russell Weiner
have done a good job with our overall
vision and marketing message over
the last 4 to 5 years. Our motivation is
strictly based on protecting Franchisee
rights long-term with legislation to help
ensure the reliability of a Franchisor’s
good faith, fairness, exercise of due
care, and performance including the
administration of advertising, rewards
programs, marketing funds, and
Franchise or development agreements.
It is getting harder and harder to make
money in this business. Franchisees
have to be more involved than ever in
the day-to-day business to ensure their
investment of owning and operating
Domino’s Pizzas can create a fair short-
term ROI. In order to help protect
your long-term ROI, the DFA needs to
be very active in trying to influence
contractual and legislative matters. We
cannot do it without you. We need
your membership in order to influence
a positive outcome. We need a strong
majority of Franchisees who believe as
we do that this is a worthy cause for our
long-term investment. Lastly, we need
your support at the state level and will
need you when called upon.
Legislators need to see and hear from
Franchisees whenever there is legislation
pending about the Franchising industry.
Trust me, Franchisors are very involved
with various organizations and lobbyists
promoting their view of what is fair for
Franchisees. In order to ensure balance,
Franchisees must tell their own story of
how hard they are working to provide
jobs and financial support for their local
communities as small business owners.
Sincerely,
Ken Peebles
Franchisee Interview
David Jenks & Dominic Benvenuti
E
SSENTIALS
NAME: David Jenks & Dominic
Benvenuti
TITLE: David-President, DominicVice President
Awards:
David: Rookie Manager of the year in 1981, Regional Treasurer’s
Award (given to the corporate store with the highest profit
percentage for a year), Regional Manager of the Year 1982,
7 time Franny Winner 1997-2011
Dominic: Franchise Supervisor of the Year in 1996, Franchise Trainer
of the Year 1996, 97, 98, 99, TMS Entrepreneurial Award 2000, 3
time Franny Winner 2001-2011, DFA Mentorship Award 2007
COMPANY: PIES Inc.
AGE: David-50, Dominic-47
FAMILY: David: wife Lorraine.
Children: Jason (36), Shannon (31),
and Michael (28)
Dominic: Children: Andrew (28),
Matthew (26), Aliciarose (18), new
arrival, Aria Mae, and granddaughter
Bella, (2)
YRS WITH DP: David-33, Dominic- 24
YRS AS FRANCHISEE: David-30,
Dominic- 14
# STORES: 17
STORE LOCATIONS:
Massachusetts, New Hampshire and
Maine.
# TEAM MEMBERS: 290
BOARDS: David: Board Member
and President of Boston DMA, Board
Member and Treasurer of the DFA
2003-06, Supply Chain Advisory Board
Member, President’s Advisory Board
Member
Dominic: Domino’s Training Advisory
Council, People First Advisory Board,
Board Member of the Boston DMA,
Vice President of the Portland, ME
DMA Founding Member of the DMA
Founding Member of the Northeast
Training Co-ops
8 DFA
Domino’s Career Path:
David: I was at the end of my freshman year at Michigan State
University when I first heared about Domino’s Pizza. The day I
heard managers make a percentage of profits and “the harder you
work, the more you make”, I was hooked. I started that summer as
an assistant manager at the Grand River location in East Lansing.
One year later, I transferred to the East Coast taking a manager’s
position in Rome, New York. After 6 months managing the store
and doubling sales, I was asked to help open new corporate stores
in the Joyce White Region. After opening 4 stores in Connecticut,
New Jersey, Maryland and Delaware over a period of 6 months, I
was ready to settle down for a while. I managed the University of
Delaware store while supervising the 3 other stores in Delaware
for the next couple of years. During that time, I managed to save
enough cash to move to Boston in 1984 and become a Franchisee
with a little help from “TSM Leasing” (Thanks Tom).
Dominic: I started with David as an MIT in 1989. I was promoted to
manager in 2 months, supervisor in 11 months, and director of
operations 2 years later. I became a Franchisee partner with David
opening 2 stores in 1999 and purchasing 6 more over the next 6
years.
What organizations/activities do you take part in outside of
Domino’s?
David: My hobbies include snow skiing, water skiing, flying, and
scuba diving, to name a few. I love to work hard and play hard. The
true pleasure in these hobbies is that the entire family enjoys them.
Even with our children at ages 28 to 36, they still enjoy heading to
the beaches or mountains together for some vacation time. There is
nothing better than spending quality time with family.
Dominic: I founded kids day in Salem, Massachuts 15 years ago.
That’s a Halloween festival just for kids in the Halloween capital of
the world. I am heavily involved with Relay for Life and MS walks
in several cities. We also support Special Olympics. My hobbies
include: fishing, poker, cigars and the New England Patriots (not
necessarily in that order.)
What motivated you in the early 90’s to make significant
operational changes?
David: We had a very difficult time back then and had made the
decision to go from 7 stores down to 3 stores. Cash was tight, the
financial obligations were many and we were behind with many
vendors including Domino’s. What we were able to do by selling
stores was improve the balance sheet and put us in a
position financially to satisfy the banks and receive loans
to grow again. In 1995, we were able to double the size
of the company. With the financial worries behind us, we
were able to settle in and focus on operations without
distraction. We were in all the schools with the Partners
in Education program, negotiated to get every school
lunch contract we could and focused on getting into the
communities and making Domino’s a household name.
Dominic: I remember being in the stores 3 nights a week
going to different community meetings to gain as much
exposure as possible. If there was an event going on in
the city, we were there. People knew me on a first name
basis in the cities we did business. We were the “go to
guys” if they wanted help to make something happen.
We still are to this day. Our saying was, “we can solve any
problem with pizza”. We took AWUS from $7,700 a week
to well over $13,000.
recipe for disaster.
David: Perseverance, keep doing the things that you
know works for others and never give up. The best new
tool I have seen is the Blue Print for Profit. This is a great
asset in running your business. Find the opportunities to
improve your profit and push hard to make changes.
What advice do you have for a Franchisee in maintaining
changes?
Dominic: Stay focused and disciplined. Don’t get lazy
after a few good months of profit. Everyday is a battle.
Treat it that way.
David: Stay laser focused on great operations, always try
to improve and don’t become complacent. You never
know when a competitor might open down the road.
Great operations day in and day out will make it much
more tough for someone else to steal market shares away
from you.
DFA 9
How important was maintaining the aggressive changes
What keeps you motivated as a Franchise?
you made in a struggling economy to the success of your Dominic: Always wanting to stay on top. I am as
stores today?
Dominic: It wasn’t important to
simply maintain these changes.
It was more important to take
our operations to the next level.
Once sales rebounded, we focused
on training. We wrote programs
including the Pilot version of the
original Book 2 Training Program.
We wrote advanced leadership
and customer service classes
including: Discipline Without
Punishment, Superstar CSR and
a Pulse for Manager’s class. We
focused on building a bench of
assistants as strong as our average
manager. Instead of focusing on
Left: David & Tom Monagham 1981
store growth without people, we
Right Top: 2001 TSM Entrepreneurial Award
focused on the people first. We
Right Bottom: David and Dominic at the Rochester,
always try to anticipate our people’s NY Pizza Theatre
needs to make sure we can
flawlessly execute on a daily basis.
competitive as they come. We have won many awards
David: We used the same template when our market
and now we want our team members to have equal
started to struggle in 2005. We had grown to 15 stores
success. When you watch someone you trained win
over a short period of time and had weakened our
a Supervisor of the Year, Trainer of the Year or Rookie
balance sheet. The pressure continued to mount as
Manager of the Year Award, that is just as rewarding
sales continued to slip and then the commodities spiked
as being recognized yourself. There has to be a drive
in 2007. We made the choice, once again, to sell some
to always want to be the best and even better than the
stores and deleverage. Dominic and I, combined our
previous year.
companies to take advantage of the economies in scale
David: Just like Dominic, I have a burning desire to be the
to improve bottom line profits (one of the best decisions
best at whatever I set my mind to and I love a challenge. I
we ever made). By the time the banks started lending
like nothing better than seeing our competitors wave the
money, after the financial crisis we were in a position to
white flag and close their doors forever. I also really enjoy
purchase stores again. Which brought our total to 17 and providing opportunities for others. Whether it is the
we were stronger than ever as a company. Now, in 2013
management team or a team member, I enjoy the fact
we are experiencing our best year ever from a sales and
that our franchise can provide the opportunity for people
profit standpoint.
to provide for their families. We have plenty of team
members that have been with us since the eighties. In
What advice do you have for a Franchisee who is
fact, the team member that delivered our very first pizza
struggling?
on October 16, 1984 stayed with us until he just recently
Dominic: Stay in your store and stay focused! Too many
retired. That gives me a sense of pride and satisfaction.
people think when they franchise it is “easy street”. They
try to live off the store without working in it. This is a
What best practice has recently impacted your business?
David: Mailing high impact 6 or 8 page menus to all the
residents in our D&S area four times a year. We used to
do database mailings every 2 to 4 weeks, but we were
just hitting the same people over the head with the same
coupon offers. By sending a high quality piece every
quarter, everyone has a coupon and the implementation
is simple. We have the mailers spilt into 12 drops per
quarter and they hit each week. We might drop a
database or have a push week in between and then come
right back with another 12 drops the following quarter.
Dominic: This year we changed our approach to how we
do our budgets. We focused our managers on EBITDA
beyond the FL level. This has resulted in a significant
increase to the EBITDA %. I wrote about it in the last
Voice and update it in this issue. I am also a big fan of
store trainers. Promote someone in the store to help
the manager with training. This way, you get consistent
training and the manager can focus on running the store.
This has helped our OER scores, as well.
What is key to increasing profits?
David & Dominic: Increasing sales is the
best way to increase profits. More sales
provide more opportunity. That doesn’t
mean you can’t reduce your costs,
though. We always have a company
JP&R at the beginning of the year. We
ask the managers for their input as to
what the budget numbers should be for
each line item in their store for the year.
We review it with each, negotiate the numbers
until we are in agreement and then hold
them to that budget throughout the year. It is
amazing to see these managers hit the bottom
line to budget within dollars.
What is the best advice you have received as a
Franchisee?
Dominic: Richard Mueller, “Make your
stores as visible as possible - maximize
signage”. Tom Monaghan, “The 3 most
important people in the store are the
manager, the manager, and the manager”.
Phil Bressler, “Be the mayor of your
delivery area”
David: Tom Monaghan stressing the
Golden Rule, “Do unto others as you
would have them do to you”
Is there anything you wish you had done differently as a
Franchisee?
Dominic: I’d cut deadwood faster... put up with less and
not tolerate poor performers and people who bring our
company down.
David: I would not cut back on marketing when times
were tough. You will dig yourself into a deep hole that’s
very hard to climb out of.
What are your year-end goals for 2013?
David & Dominic: To relocate another store. We really
feel the new pizza theatre image with the right location
is an excellent ROI. Since moving the Rochester, New
Hampshire store in December, we have averaged a
28% sales increase and a 45% increase in order counts.
Carryout now accounts for 65% of our orders. Little
10 DFA
Caesars opened 6 months after our relocation and had
little to no impact on sales. In the past, we had always
pushed to find the site with the lowest rent for the
bottom line. Now, we are looking for the best sites and
forecast the sales increase needed to offset the higher
rents. Rochester only requires a 9% sales increase to
break even with the additional rent.
Dominic: I am using pizza theatre as an arena to help
and create the new and inspired team member.
Minimum 4 Star Average OER
Service at 87%
EBITDA at 17%
Where do you want to be in 5 years, 10 years?
David: In 5 years, we would love to see our stores
averaging $20k AWUS. That was always the pinnacle that
Tom aspired to take the company and has always been a
goal of ours.
Dominic: In 10 years, for David to retire and gift the
company to me out of the goodness of his heart.
How does your Membership with the DFA
benefit you?
David & Dominic: The opportunity to
share with others is invaluable. If you think
your “issue” has never come up before,
you are wrong. We guarantee many others
have been in your situation, figured out
how to get out of it and would not hesitate
to share their story with you. Best practice
sharing, networking and learning from fellow
Franchisees cannot be underestimated. Their
work as a liaison with DPZ accomplished many
feats that we never could have done individually.
Who has been your greatest influence in this
business?
Dominic: David is my biggest influence, he
taught me the business. My Grandfather
taught me the value of education and to
never stop learning. He also gave me my
work ethic.
David: My biggest business influence was
my father. He had a drive like no other. He
worked for GM during the day and managed
to raise livestock and work the fields as well.
They were both 40 hour a week jobs and he
never complained. He wanted the best for
his family and was willing to do whatever it took. That is
where I receive my work ethic and will be forever grateful.
Thanks Dad!
What are the three most important priorities in your
life?
David & Dominic: God, Family and work, in that order.
That’s how we run the company.
Is there anything else you want others to know about
you, either personally or professionally?
David & Dominic: We would like to thank our players
that make it possible for us to be in the position we are
in. These individuals have our backs day in and day out.
Thanks go out to: Jeannie Cashman, JillShannon Douglas,
Eileen LeBlanc, Scott Gasper, Desiree MacIsaac and Patti
Palermo.
Your DFA Chairman
I
have been involved with many service organizations in the past however,
my experience since becoming the Board
Chairman of your DFA has been an interesting learning experience. The DFA’s Mission
Statement is to provide our Franchisees
with a unified organization working to
maximize the value of our member’s individual stores.
At the beginning of my term as the DFA
Chair, I encouraged our DFA Board to always defer to our mission statement when
we discuss how to handle issues, or when
involved with any strategic planning. I see
our mission as our obligation and responsibility to educate Franchisees on current
issues, and concerns while protecting their
internal and external interests in addition
to providing value added services to our
Members. As I think back to the first six
months of my term as Chairperson, I would
like to share some key highlights reflecting
how I think the DFA is staying on track with
honoring our mission statement.
In February 2013, we held our National
Meeting in Las Vegas where information
was shared through public speakers
and workshops. We scheduled a group
of seminars on healthcare reform for
this summer which would have helped
Franchisees prepare to meet the
requirements of the new law. While we
postponed the seminars, due to Obama
delaying the employer mandate, you can
rest assured, they will resume in early 2014.
From the financial perspective, our BOD
took note of the removal of the Equipment
In the second half of 2012, it was brought to
the DFA’s attention that some of E&S’ oven
pricing was higher than what was available
on the open market. After an extensive
review, our CEO, Ken Peebles, confirmed
there were optional sources available
providing significantly lower oven prices.
We shared our findings with DPLLC which
led to talks between Corporate Leaders,
Ken, and our oven suppliers. Recently, the
new leadership at E&S announced new
oven pricing that was more in line with the
pricing found in the DFA’s research.
The previous examples are how your
DFA is working on your behalf. My goal
as Chairman is to continue working with
Ken and the BOD to further achieve our
Mission’s goal of bringing value and
protection to our Franchisees. We have
more work ahead as we anticipate more
opportunities on the horizon. However,
if we do not have the financial and solid
support from a majority of our Franchisees,
it may all be for naught.
Imagine if the DFA did not exist, do you
think you would have seen real savings on
ovens? Mileage reimbursement analysis?
Reduced pricing on uniforms? Multi
-options for background checks? Would
there be an advocate to represent you and
your business on important issues with
DPZ or our legislators? Could you get real
traction as a single voice on the issues and
laws affecting your business as well as the
assistance you may need in times of crisis?
Our CEO spends countless hours working
one-on-one with Franchisees who are
dealing with issues impacting their ability
to be successful. If you were in a crisis
situation, who would you call if the DFA did
not exist?
We do our best to put all of the Franchise
community’s issues in perspective and focus
on where best to influence an outcome.
As with any service organization, we have
Members who have different opinions on
how best to execute the Mission in order
to serve them. Regardless of our focus or
efforts, we can never be completely aligned
with 100% of the members we serve.
Having said that, this is no excuse not to be
a member of the DFA.
I could continue to elaborate on the
benefits regarding the value of the DFA, I
believe it is immeasurable. This is why I give
my time and effort to this organization to
help protect all of our interests and to make
the DPZ system better for everyone. Our
BOD is a great group of caring Franchisees
who volunteer their time and energy
making this the best organization it can be.
However, we can only be successful if more
Franchisees join together and support each
other as part of the DFA.
Lastly, I want to point out the most
important asset we have as an organization,
and that is our CEO Ken Peebles. His
passion for the DFA, his commitment to the
Franchisees, Members and non-Members
alike is unprecedented. I and my fellow
DFA 11
This year, we hired a well respected lobbyist
to help us develop a strategic approach
for Franchisee friendly legislation. Three
of our BODs plus Ken Peebles attended
a multi-brand Franchisee only meeting
in Washington, D.C. While there, they
had the opportunity to meet with key
Congressional Members to discuss issues
ranging from minimum wage, healthcare
reform, fair franchising and much more.
and Supply Profit Sharing Rebate at the
end of 2012. There was a concern about
the lack of communication, plus the
cause and effect of this program ending.
E&S’s subsequent “new” reduced pricing
program was unveiled at the beginning of
January. Many Franchisees were unaware
that E&S had reduced their pricing by 5%
on many items including capital equipment
since there was so little information about
the details of this new program made
available. In addition, there was a new
program introducing a 12% discount on
all new store packages, but only if you
purchased 100% of your new store’s
needs from E&S. This created a concern
for Franchisees who did not need some of
the items listed on the new store package
list. After providing Franchisee feedback
to the Leadership Team about the new
store package program, the Supply Chain
Team announced a 12% discount on all new
store equipment packages with or without
ovens. The DFA appreciates E&S making
this impactful change to the original 12%
discount program. While we did not get all
the changes we were hoping for on E&S’s
new store package discount program, we
were encouraged by the progress the DFA
made to reduce the cost of equipping our
stores in the future.
BOD’s have spent countless hours at night,
weekends, and on vacations working with
Ken discussing important time sensitive
issues. Ken has developed a solid working
relationship with the DPZ Leadership Team.
He is relentless in his advocacy for the
Franchise community, and we are lucky to
have him lead our DFA!
I have been a BOD for six years. I have
seen past frustrations as well as present
challenges. Hopefully, I will see a bright
future for our Franchisees as we move
forward to being the #1 Pizza brand in the
world.
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Respectfully,
Jim Gerety
12 DFA
Chairman of DFA Board
Safety & Loss Prevention
Credit Card Fraud
Van Carney
C
redit card fraud continues
to trend upward year after year.
Sources, such as Bank of America,
published credit card fraud in general
spiked nearly 400% as of Q1, 2013 vs.
2012. All businesses are impacted by
this so called ‘victimless crime’ and
Domino’s Pizza stores are certainly no
exception.
There are contributing factors other
than the current economic situation
in the U.S. Other countries are taking
more aggressive steps to protect
against credit card fraud vs. domestic
card industry, such as thumbprint
signatures on credit card receipts
and ‘Chip and PIN’ card technology.
For this reason, the US is becoming
more of a target for international
fraudsters selling stolen cards and
card numbers online which are
being used domestically. Of more
concern is the ‘card not present’
form of credit card fraud. This is
growing at nearly double the rate vs.
‘card present’ fraud putting internet
and mail order as well as delivery
companies such as Domino’s Pizza at
a higher level of risk.
Credit card fraud related losses
for Team USA stores in 2013 have
increased over 35% vs. 2012 through
the first quarter. It is suspected that
Franchise organizations are seeing
the same trend.
At Domino’s Pizza, we have
recognized the increasing trends
and are taking steps to improve the
security of our credit card acceptance
system-wide. The Domino’s Pulse
Development Team and the IT
Department are working to enhance
credit card pre-authorization security.
The Domino’s Pizza Security
14 DFA
Department continues to monitor
this and other areas of fraud
related losses and provides
recommendations to Team USA &
Franchisee’s to protect against credit
card fraud. These recommendations
include, but are not limited to:
- Order takers should advise credit
card paying customers to have their
credit card and photo ID ready to
present to the delivery expert upon
their arrival.
- At the door, the delivery expert
should request to see both the credit
card and photo ID.
- The delivery expert should
compare the last 4 digits of the credit
card with the last 4 digits that are
printed on the credit card receipt to
confirm they are the same.
- The name printed on the credit
card and signature on the back of the
credit card should match that on the
photo ID.
- If the customer refuses to provide
the credit card or photo ID to the
delivery expert, store Management
should be advised for enhanced
awareness and to take appropriate
actions based on company policy.
credit card fraud. When the credit
card is deactivated once fraudulent
use is identified by the issuing bank,
or card holder, the perpetrator
retains the value or use of the funds
added to the gift cards.
It is also necessary to recognize
the rising ‘hidden’ form of credit
card fraud. This less obvious trend
associated with credit card fraud
involves loading gift cards with
funds from a stolen credit card.
Incorporating this technique into
the crime of credit card fraud
provides several key benefits to fraud
perpetrators.
International Professional Credit
Card ‘Reshipping’ schemes..
The “reshipping” scheme involves
individuals in the United States
who are coconspirators and other
times, are unwitting accomplices to
receive packages at their residence
and subsequently repackage the
merchandise for shipment, usually
abroad.
First, it adds a layer of anonymity
to the crime making it even more
difficult for law enforcement to
identify and pursue prosecution of
perpetrators.
“Reshippers” are recruited in various
ways. The most prevalent involve
befriending, internationally based
perpetrators through internet chat
rooms and dating websites. After
establishing a new online “friendship”
or “love” relationship, the overseas
perpetrator asks for permission
Second, it protects or retains the
monetary value obtained through
Third, if the perpetrator had only
obtained credit card #’s and not an
actual credit card, by adding funds to
gift cards, they then have a physical
(gift) card in their possession to
present to merchants at the point
of sale to allow for a ‘card present’
transaction rather than a higher
risk ‘card not present’ (non-cash)
transaction.
Fourth, it provides a means of credit
card fraudsters to sell physical (gift)
cards to unsuspecting purchasers on
the streets or through online auction
house websites such as EBay or
Craigslist.com to generate cash from
the efforts of their criminal activity.
A Franchisee recently contacted our
Team looking for insight / assistance
regarding a credit card fraud issue
she has had.
to send recently purchased items
to their US based address for
subsequent shipment abroad.
Domino’s Pizza and other merchants
are being used to support the
scheme by ordering and delivering
food or other desirable goods to the
reshippers as thanks. Once caught,
the reshipper claims to realize their
Cyber relationship was nothing
more than an internet scam to
help facilitate the transfer of goods
purchased online by fraudulent
means. Those claims and statements
can be criminally incriminating.
It’s often difficult to get local law
enforcement to investigate these
crimes for various reasons such as
jurisdiction; lack of resources; etc.
Often, they become interested if the
store owner explains they are able
to provide credit card slips that the
reshipper had signed for previous
pizza orders. Since they are not
approved account users of the credit
cards used to pay for pizza orders
and the credit cards have been or
will be disputed and charged back
by actual accountholders, most
states and counties will prosecute
the reshipper for identity theft;
forgery (signing credit card slip) or
other similar crimes. Even if the
reshipper pleads to a lesser charge,
our Domino’s Pizza store owners
can request restitution for lost food,
labor, and other cost related losses.
In conclusion, it’s important
Domino’s Pizza Franchisee’s not
only recognize the impact of credit
card fraud on their businesses, but
to also understand there are steps
which can be taken to protect
against this type of criminal
activity. Franchise organizations
should actively monitor credit
card charge backs on a regular
basis. If you find your organization
struggling with credit card fraud,
feel free to request assistance
from the Domino’s Pizza Safety
and Loss Prevention Team.
Your WRC Safety and Security Team
is:
National Director of Safety and Loss Prevention:
Van Carney, (609) 314-9215,
[email protected]
Manager, Audit and Loss Prevention
Ryan Berkey, (734) 930-3873,
[email protected]
Manager, TUSA Safety and Loss Prevention
John Minick, (410) 859-2137,
[email protected] (Baltimore, MD)
Regional Manager, Safety and Loss Prevention
Tim Erb, (801) 968-3953, [email protected]
(Salt Lake City, UT)
Van Carney, Ryan Berkey, Xavier Navarro, Ebony
Idemudia, and Michael Steen
DFA 15
Vendor Article
Domino’s + Coca-Cola Zero = College Football
A
s summer draws to a close
and kids are finally back-to-school, our
routines can begin once again. For me,
it’s up at 7am, to the office by 8:30am,
work all day, leave around 5:30pm, home
by 6pm, dinner, time with the wife and
kids for a couple of hours, then wake up
and do it all again. Your routine might be
a bit different, but basically, that one is
mine. However, before you know it, it’s
Saturday. God bless Saturday and God
bless college football.
I love college football. My endless list
of chores goes neglected. I am one with
my man cave. Snacks, check. Delicious
Domino’s pizza with pepperoni, sausage,
onions, and mushrooms, check. An icecold can of Coca-Cola Zero, check. I’m all
set to cheer on the Michigan Wolverines.
It’s just me and the gang from ESPN’s
College GameDay. You know, come to
think of it, that’s a pretty good combination Domino’s pizza, Coca-Cola Zero, and
ESPN College GameDay. Hmmm.
For the 2013 college football season,
Coca-Cola Zero is proud to announce
their sponsorship of ESPN College
GameDay. As a sponsor of the ESPN
College GameDay, Coca-Cola Zero has the
right to reach out to select customers to
activate the partnership, and Domino’s is
coming on board. The Coca-Cola Zero Fall
Football program with Domino’s brings
together these three key brands around
16 DFA
college football. This is an exciting new
sponsorship that puts Coca-Cola Zero in
the living room of millions of people who
get their college football started each
Saturday morning with ESPN College
GameDay. As ESPN College GameDay
crisscrosses the nation to bring you the
most exciting college football game of
the week, Coca-Cola Zero will be there
for every key insight, every prediction,
every interview, and every cheer.
Not only will Coca-Cola Zero have
presence on the ESPN College GameDay
broadcast, but the Coca-Cola Zero team
has created some dynamic activation
events that will take place on-site at the
college campus hosting the ESPN College
GameDay show, each and every week.
The Coca-Cola Zero Tailgating event
provides our guests with exclusive access
to the ESPN College GameDay footprint,
delicious Coca-Cola Zero products,
catering, and a comfortable place to
watch ESPN College GameDay. The CocaCola Zero Combine will provide college
students the opportunity to test their
playmaking ability with football drills
in a display located where the students
gather. The Coca-Cola Zero Countdown
Concert will take place on campus during
Friday evenings, and will feature a hot
local band to get the crowd in the right
spirit for the big day on Saturday.
This partnership will allow Domino’s to
activate Coca-Cola Zero’s sponsorship of
ESPN College GameDay in a way that will
prove to be a touchdown for all:
• Domino’s has activated “The Perfect
Combo” to support this program. From
August 26th through December 12th,
consumers will have the opportunity to
order 2 medium 1 topping pizzas, Cinna
Stix®, 16-piece Parmesan Bread Bites, and
a 2L Coca-Cola beverage for only $19.99
• We are once again leveraging the
My Coke Rewards program to draw our
20+mm members to become Domino’s
consumers. For a limited time only, we
are rewarding selected members with a
50% off any pizza promotion code.
• On-site at the college campuses,
wherever ESPN College GameDay goes,
Domino’s will be there as well. Working
with the Domino’s Field Marketing Team,
we will have local on-site sampling
opportunities on Thursday and Friday
within the Coca-Cola Zero footprint.
College students will be able to enjoy
Coca-Cola Zero’s on-site activation
events with a delicious slice of Domino’s.
Now is a great time to stock up on CocaCola beverages, especially Coca-Cola Zero
2Ls and 20oz. bottles. Nothing scores
with today’s young adults like Coca-Cola
Zero does. Primarily targeted males 18
to 34, this is real Coke taste with zero
calories. After 6 straight years of doubledigit growth, Coca-Cola Zero is the right
brand to enjoy while you sit back, relax,
and enjoy some college football.
If you have any questions with your CocaCola Zero order or you need help with
the process, please contact your regional
Coca-Cola sales representative for help.
Training with Mike
Change in the Right Direction
how we came upon those decisions.
What kind of process went into
making that change? What evaluation
was made after the change to see if
it was actually better? Lastly, what
could we have done differently to
have achieved a better result?
W
inston Churchil once said,
“There is nothing wrong with change,
if it is in the right direction.” While
that does not seem like a resounding proponent of change, I think it is
appropriate for where I am at in my
stores. We just sold one store to keep
us below the 50 full time equivalent
employees. That was based on the
formula so far. It seems that the whole
Affordable Care Act is still a work in
progress at this moment. At this time
the employer requirement is on hold
for a year, but I did not want to be
scrambling at the last minute trying to
18 DFA
stay below the 50 FTEs. While selling
that store was a bitter sweet endeavor, I think that it was the right thing to
do. It was a little sad selling the store
after such a short period of time, but
it allowed us to be leaner and more
focused at the remaining stores. This
was a change in the right direction.
I have been looking back at all of
the big changes that I have made
in my life and my company. Some,
unfortunately, were not in the right
direction, but many were. I am sure
that any one of us can look back and
see the good decisions we have made
in our lives. It would be good to see
Domino’s Pizza has made many
changes over the 25 plus years I have
been involved with this company.
One major change occurred right
after we bought our first store.
About 2 months after we purchased
the store, Domino’s dropped the 30
minute guarantee. I was a nervous
wreck when they did that. I thought
that our main competitive advantage
was over and we were going to lose
sales. After 2 months in business,
we were bound to fail. Looking
back on that change, I will bet that
most franchisees believe that was a
good change. I know we as a whole
have let our service standards drop
a little, but that is our fault, not the
fault of the guarantee going away. I
can’t imagine the money saved over
the years or how we would compete
with today’s prices with the possibility
of reducing the price by $3.00. Of
course, we will never know the
positive impact our service guarantee
would have had on our business, but
I think it was something that had to
happen.
Our store image and layout has
changed a few times in the last
25 years. We started out in B or
C locations with an open kitchen.
Image 2000 closed the kitchen off to
customer view and gave our stores a
new shine. It was recommended that
One of our company’s big changes occurred in 2010 with our new and improved pizza. Many stores had huge
jumps in sales almost overnight. At
that point, we only had one store,
and we only saw a slight increase.
Hey, but an increase is an increase,
so I was happy. This boost helped
many struggling franchisees and rein-
vigorated our brand. Franchisees had
been asking for a reformulation for
years before that and the changes and
subsequent sales increases exceeded
anyone’s expectations. We had some
operational issues after that. Basically, we were all just trying to keep
up with the extra volume. I will say
that is probably the best challenge
you could ever have. It caused us all
to make our own operational changes
to handle it. The stores that reacted
quickly and successfully seemed to
maintain the extra sales better than
the stores that did not.
There are many other changes that
have occurred. We have had menu
expansion, the new pan pizza, and
different heat wave bags over the
years. All these changes were good,
maybe even great, but they were all
out of our control. They were our
hard earned royalty dollars at work.
That is great, but what can we do on
our own to make changes that will give
us good results on top of what DPZ
does. I am a huge fan of exceptional
operations. What changes can be
done to really “Wow” the customer?
I have mentioned in previous articles,
that we have been making a push in
one of my stores to really impress
the carryout customers. We open
the door, chat and help them out to
their cars with their food. We have
not neglected our delivery customers
though. We have improved service
drastically going from the low 70%
DOT to the mid to upper 80%. This is
starting to make a difference. It is still
too early to tell for sure, but our sales
have been going up and according to
PWR, out MVPs are up almost 20%.
The best ideas come from within our
own system. What can you do in your
own stores to mix it up a little? If you
do the same thing every day, you will
get the same result. If the results are
good, maybe don’t change too much,
but at least try to make them great. If
your results are poor, then really go all
out to make something happen. I have
one really busy store and two average
stores. Each one sells the exact same
products. One store has just done a
better job consistently year after year.
We are working down in Florida to
achieve similar results. We have some
great people in place. It just takes
some time. I am excited about making
some more changes. Challenging the
status quo. It is good to make some
waves some times. If not, you just get
stagnant. I am not looking for change,
just for change sake. I am looking to
make some changes that put my team
and my company in the right direction.
People are making it happen every
day. There are super high volume
stores that operate at an extremely
high level every single day. Their
customers know they will get a great
product and will be treated graciously
every time. One time just isn’t enough
to convince your customers you are
serious about making them happy.
That takes time. But at least if you
make them happy once, they will give
you the opportunity to serve them
in the future. That opportunity is as
good as gold.
franchisees try to get to better and
more visible locations. Image 20/20
brought new colors, brighter interior,
and a slightly different store layout
with a push to have phone orders
taken away from the front counter.
Our latest and greatest new image
the “pizza theatre” takes us in a whole
new direction. The pizza theatre
stores I have seen are beautiful. They
have a nice big lobby with tables, a
wide open view to the kitchen, and
nice new signage out front. This new
design is very interesting to me. One
reason is it’s huge departure from our
normal store layout, and the other
reason is that I have one store that
really needs a remodel. This drastic
change is scary and exciting at the
same time. I am not convinced that
the current layout provides an efficient
enough flow, but I think the stunning
appearance of the pizza theatre store
concept warrants a closer look. It
seems DPZ is trying to make the most
of the carry out segment and this may
make that happen. Dine-in is a whole
new category most franchisees have
not even thought about. This could
open us up to a whole new possibility
of sales increases. The biggest issue I
see so far with the pizza theatre is the
cost. I keep hearing costs in the two
hundred thousand dollar range for a
new build and sixty to eighty thousand
for a remodel. I just struggle to believe
that is feasible for most franchisees.
Once more stores are open or
converted, it will be interesting to see
if sales increases follow. Either way,
I need to do something at one store.
Here’s to hoping I make the correct
decision.
Mike McDermott
Franchisee: PA, FL
DFA 19
Legal Update
You Signed It...But Did You Read It?
Common Contract Provisions That Can Cost Franchisees Dearly
the end of the then current term.”
Most often, franchisees are unaware
that a contract has automatically renewed until they want to switch providers. When the franchisee calls
to cancel service, they are told the
contract renewed automatically two
months ago and the fee to cancel is
a large percentage of the remaining
monthly fees.
F
ranchisees are familiar with the
typical sales pitch by a service provider offering discounted pricing, better
service and more bells and whistles.
Often, the salesperson touting the
product or service explains all of the
benefits, but not the obligations contained in the “fine print.” For example, the salesperson rarely discloses
the 50% monthly savings is only available if the franchisee enters into a
3-year commitment with an early termination fee exceeding the discounted price.
Being price-sensitive, most franchisees order goods or services without
understanding the burdens these
contracts impose until the relationship has soured, the franchisee wants
to use another provider or the franchisee is exiting the system. Internet, telecommunications, IT services,
22 DFA
private security, armored truck, exterminator, business enterprise software and fixture leasing companies
often use these provisions to lock in
customers and their future revenue
streams. In other words, many of a
franchisee’s discretionary vendors
and suppliers use some or all of these
terms outlined below. Franchisees
should negotiate for favorable terms
before receiving services, since providers are likely willing to give more to
obtain new business.
“Evergreen” Provisions
An “evergreen” contract – like its tree
namesake – exists until a party cancels, usually within a specified period.
For example, an automatic renewal
provision might provide: “the term
of this agreement shall automatically
renew for successive 3-year periods
unless either party provides notice of
termination to the other, as provided
in this agreement, not less than 30
days or more than 180 days before
To prevent this, ask for month-tomonth pricing. Cross out automatic
renewal provisions when signing up
and keep a fax or e-mail copy of the
proposed changes. If the provider refuses to remove a provision, calendar
the deadline to cancel or find another
provider willing to deal on the franchisee’s terms.
Early Termination and “Monthly Recurring Charge” Provisions
Closely related to evergreen clauses
are early termination fees. An early
termination reads something similar
to the following: “If you terminate this
agreement for any reason other than
a material breach by us, you shall pay
to us a termination charge equal to:
(1) The non-recurring charges for the
terminated services and (2) 50% of
the monthly recurring charges for the
period starting with the effective date
of termination and ending on the expiration of the Initial or Renewal Term.”
These fees can take many forms including repayment of all of the incentives or discounts received at service
inception and all or a percentage of
the monthly fees for a future period.
These additional charges will eliminate all of the financial benefits touted by the salesperson. Even worse,
by changing providers mid-term, the
franchisee will be paying two sets of
charges for the same service! As with
evergreen clauses, ask the provider to
waive the early termination charges
or to calculate and provide them in
advance and in writing. If they will
not, chances are these charges will be
significant.
Limitation of Liability
Every services contract this author
has reviewed contains some limitation on the provider’s obligations to
pay damages if the provider causes
the franchisee financial harm. With
“limitation of liability” provisions, the
parties agree on a maximum amount
of damages recoverable for a future
breach of the agreement. Usually,
these provisions make the franchisee
responsible for almost unlimited damages to the service provider, but limit
the provider’s monetary liability if the
provider breaks the agreement. A generic limitation of liability provision
might state: “In no event shall Vendor’s liability arising out of or related
to this Agreement exceed the total
fees paid to Vendor under this Agreement.”
Additional Terms Located on a
Seller’s Website
Another common tactic used by ven-
In business-to-business transactions,
courts usually uphold these provisions. Therefore, take the time to
review the detailed terms and conditions on the company’s website. At
service inception, print a hard copy of
the terms on the company’s website
and pay attention to e-mail updates
from the service provider. “Forum Selection Clauses” i.e. Distant and Inconvenient Locations for a Lawsuit
Finally, most service contracts contain
a geographic requirement for initiating and defending litigation involving
the provider. These “forum selection”
clauses are usually found in the final paragraphs of the contract. Most
people skip over them and unknowingly agree to another state’s jurisdiction for a lawsuit involving the vendor.
For example, a service provider who
does business in California, but has
operations in Nevada might impose
the following requirement upon its
California-based customers: “Nevada
law shall govern this Agreement, and
the parties agree that any related litigation shall be brought only in Nevada
state courts located in Clark County
or federal court located in the District
of Nevada.” Courts have explained
that between businesses, this type
of clause is usually enforceable. As a
practical matter, it gives the service
provider leverage if there is a dispute
because they have a home court advantage. The provider knows it will
be expensive for the franchisee to retain local counsel and travel to, in this
example Nevada, to litigate claims.
Thus, a geographic limitation on future litigation is an important issue to
negotiate in advance before the franchisee contracts for or receives any
services.
In sum, ask the salesperson to provide a copy of the company’s service
contract. Review the fine print before
receiving the service and opt initially
for a month-to-month contract. Ask
for for terms more favorable than
the “standard” ones offered by the
provider. If in doubt contact legal
counsel. As the saying goes, do not be
penny wise and pound foolish when it
comes to negotiating for services that
may impact the franchisee’s bottom
line years in the future.
Under this provision, if service costs
$40 per month, and the contract has
been in place for two years, the vendor’s liability may not be more than
$960 even if the vendor fails to provide service. If the franchisee depends upon the vendor’s services to
operate, these types of limits can be
catastrophic because the vendor and
their insurance carrier will not pay
even when the franchisee has suffered substantial loss. As with other
one-sided provisions, ask the provider
to remove the limiting language. At a
minimum, consider whether the vendor provides a service that is crucial
to business operations and consider
insurance to cover some of the potential losses.
dors is to provide a website address
that contains the complete terms and
conditions applicable to the service.
This strategy makes the initial “signup” documents shorter in length and
look as though the terms are less
onerous. Appearances can be deceiving, as often the website will contain
complicated and lengthy provisions
that will be unfavorable. In software licensing, these are often called
“clickwrap” agreements, in which the
customer agrees to terms of service
provided somewhere other than on
the document signed or “clicked on”
by the customer. An example of this
type of provision is: “your signature
below is your agreement to the company’s terms and conditions, found at
www.___________.com, that are
incorporated by this reference.”
Brook J. Carroll, Esq.
Attorney at Hathaway, Perrett
DFA 23
E
Sher Senior
SSENTIALS
NAME: Sher and Chris Senior
TITLE: Franchisee - Austin, Texas
COMPANY: S.S. Pizza, Inc/Senior
Pizza, Inc.
AGE: 41, 43
FAMILY: Married 16 years
Children: Christian (14), Jake (12),
and Mallory (7)
YRS WITH DP: 23, 17
YRS AS FRANCHISEE: 16
STORE LOCATIONS: Austin, Texas
DMA
# STORES: 4
# TEAM MEMBERS: 97
BOARDS: ATX DMA President
2013-2014 term (top 40 for first
time in 2012), ATX DMA VP 20112012 term, ATX DMA President
2009-2010 term
AWARDS/ACCOLADES: 4/4
Platinum EOC (2013)!!!, Franchise
Partner of the Year (2012), Rolex
Challenge (2012, 1995), Million
Dollar Club (2012, 2011), 11/11
Club (2000), Silver Franny (2000),
Extra Mile Award (2000), 10/10
Club (2000), DMA of the year-ATX
(2000, 1999)
26 DFA
Domino’s Career Path:
In 1990, Domino’s Pizza was my co-op job in high school. I worked
for Tommy Mouch in Rosenberg, Texas. I started as a CSR, and once I
graduated, I became a delivery driver. As a driver, I put myself through
3 years of college at University of Houston when I was offered a GM
position. I went to the job boards at U of H the next day and remember
looking at the potential starting salaries I could expect after finishing
my degree the next year ($18K). It took all of about 10 seconds to
decide that I would accept the GM position (my starting pay as GM was
double those starting salaries). I was GM for about 3 ½ years before
deciding to franchise. Chris and I were working together at that time,
we married and moved to the Austin area that year where we built our
first store in 1997. We purchased our second store in 2003, built a
third in 2005, and purchased the fourth in 2008.
We are excited to currently be in the process of opening the first pizza
theater store in the Austin market, scheduled to be open by the end
of August.
Favorite Advice:
Last year, when we started ramping up our training and operational
initiatives in our company, we began communicating to our team that
the determining factor of success in ANYthing boils down to one thing,
making the decision... and thus our company motto/tagline was born
“DECIDE”. Chris designed a word cloud (below) that encompasses the
message.
Favorite Quote:
“Whether you think
you can, or think
you can’t—you’re
probably
right!”
Henry Ford
Biggest Mistake:
I think one of the
biggest
mistakes
we’ve made was
missing out on
some
significant
opportunities by
not being prepared
for growth. You
should always have
a pipeline, and always work toward positioning yourself for growth,
because you just never know when an opportunity will come along.
And always “THINK BIGGER!”
Three Highest Priorities in your Life:
Honoring God, Nurturing family, Maintaining integrity
DMA PRESIDENT
Describe your responsibilities as a DMA President. What are the
advantages of being a DMA President?
Tenacity. It took us 18 months to start breaking even
when we opened our first store in Pflugerville. Ten years
later, we took a huge hit at the same store and lost half of
our sales when a Little Caesars opened across the street.
We’ve bounced back, our sales are now better than ever
and we’re expecting them to explode as we’re days away
from relocating it to a pizza theater store.
We’ve achieved the “american dream” with Domino’s
Pizza and are proud of our success, but there have been
some significant potholes as we’ve gone down that road.
We NEVER give up. We NEVER quit. And we NEVER CLOSE
A STORE. We get knocked down... and we get up again!
How have you changed your marketing strategy in
response to the economy?
We’re now more than half way through our fourth
consecutive year of double digit positive growth sales.
We’ve done very little LSM during that same period. In
It has been great getting to know the Franchisees better
here and seeing the market function in a more unified
fashion.
years preceding, we were spending a lot of money on
doorhanging and other store level sales building, but
weren’t seeing any ROI. Which is why we clearly saw the
logic of the recent advertising roll up and slight increase
in contribution. We know they get a lot more bang for
our advertising dollar. That being said, we’re considering
adding something into the mix to give our momentum
more velocity.
It is important to mention, though, that when we cut
back the LSM, we focused our effort on improving our
operations. When sales are struggling or declining, a lot of
us react by dumping money into marketing an aggressive
offer to get the phone ringing again, but then handle it
with deficient service. Rule number one in building sales
is to not lose a customer. Therefore, great service MUST
be the foundation of any marketing strategy.
However, there are always challenges. While Austin boasts
one of the best local economies in the country, the climate
is very difficult to hire in. So we circle back to tenacity as
the key to our success. There’s also a large “anti-chain”
contingent here. Historically, Domino’s did not have a
high quality perception in the ATX (local for Austin, Texas).
Since New & Inspired and its brilliant marketing campaign,
we’ve seen a HUGE shift in the perception of the Domino’s
brand in Austin.
MANAGEMENT
As an operator, what are the three most important things
you rely on from DPLLC?
Open communication, integrity, and successfully maintaining the balance between protecting the interests of
the Franchisees, while meeting their obligations to the
shareholders.
What has been your greatest challenge?
Without a doubt, our biggest challenge has been keeping
our business relationship and our marriage relationship
separate, while sharing a career that, at times, has been a
24 hour a day endeavor. At the same time, our partnership
is what has played the biggest role in our success. We
have different strengths, and by identifying them and
dividing up our roles within the company accordingly we
have been able to not only maintain our business, but also
thrive.
What has played a key role in your success as Franchisees?
DFA 27
One of the main responsibilities of a DMA President is
collaborating with our Marketing Leader to determine
content for our meetings based on what is relevant to
the collective goals/direction of the many Franchisees
in the market.
As President, I have been fortunate
enough to have had the opportunity to connect with
Franchisees more frequently and help facilitate more
regular communication between the group. This can be
challenging in a market with 13 Franchisees, but we have
been working together very well and our performance
(and camaraderie) in the market has improved as a result.
Last year, several of us became certified trainers and
began a collaborative training initiative for GMs and AMs
within the DMA. We hosted monthly classes, and within
a year, have made great operational improvements in the
market as a result. We even created our own Austin DMA
logo! (see below)
Sher, Chris & Family
How does your membership with the DFA benefit you?
The DFA is beneficial to Franchisees of all sizes, because
of its relationship with DPLLC. Their relationship enables
them to facilitate communication between the collective
Franchise body and our leadership team on issues that are
important to us in a more effective fashion than we might
be able to individually. There is also a wealth of resources
the DFA has made available such as: legal business advice,
cost savings, and operational best practice resources.
TEAM MEMBERS
How do you train and retain?
We’re creating lead positions in each TM position category.
One of their primary duties is to be the lead in training
new hires. This lightens much of that load from the GM.
How do you handle rising employee costs (payroll,
healthcare, etc.)?
Retention is truly the best way to mitigate rising employee
costs, and increased emphasis on training is the best way
we have found to improve retention. We do use HPU
for new hire training, but in addition to that, we have
implemented a training program where Chris teaches biweekly classes for employees interested in running shifts,
becoming managers, or who would just like to earn raises.
Our pay scale is dependent upon the level of training each
employee has completed, which gives them an incentive
to participate in the program voluntarily. All employees
are allowed and encouraged to attend the classes. It has
definitely reduced turnover in our company, which has
reduced costs (as have the improvements in employee
efficiency).
How do you recognize top performing team members?
We have created a Driver Manger position at each store
so we can promote our best drivers. Their pay is then
changed from split pay to a straight wage. They become
responsible for assisting in new driver training and are
expected to take a leadership role in enforcing high
standards and setting an example for other drivers. Of
course they get the honor of the Lead Driver Title and
bragging rights.
28 DFA
We are also in the process of developing a similar position
for our top insider staff. They will be called the “Smiles
Coach” and will assist in the implementation of our
Hospitality Initiative we are working on here in the Texas
stores. (Similar to Brent Medder’s Friends First Program,
but with a Texas twist!)
BOTTOM LINE
How are you doing on your 2013 goals?
AWUS: $19,200
PCYA: +16.5%
Orders: +20.5%
OLO: 56.7%
(in other words... Great!)
Where do you want to be in 5 years?
Aside from Austin maintaining its spot as a top 40 market,
we anticipate becoming the dominant player pizza
category here. Chris and I would like to grow our own
company by at least a few stores, split one store, and reimage all of our stores to pizza theater design. We will
be consistently operating stores at 4-5 star levels and, of
course, want to have more than one Gold Franny under
our belts by then!
Are you experiencing economic growth/recovery in your
market?
Austin is one of the top cities in the country in terms of
economic indicators. While we do struggle with hiring
issues as a result of that, we have enjoyed robust sales
(above the national average) with positive growth for
the past 5 consecutive years (Austin DMA is positive 13%
YTD). As a large tech city, we are also the #1 market in the
country for OLO.
Is there anything else you want others to know about
you, either personally or professionally?
We love Domino’s! We work hard... but we play hard too!
Legal Update
It’s always quietest before the storm...
Trey Darby
V
isions of Neo from the movie
The Matrix… contorting backwards as
bullets whiz by his head and beside his
body… he has avoided getting shot,
but you know for certain that the bad
guys have more bullets.
Sound familiar to the recent ‘reprieve’
from the regulators on the Affordable
Care Act? In some ways we did
avoid a fatal shot... but for how long?
While I was concerned with the
financial impact of compliance in
2014, I am downright terrified about
2015. Why you ask? Didn’t we just
bend backwards and avoid the Matrix
bullet? Well maybe not.
The way the regulations are currently
written, companies with more than
200 employees will be required to
auto-enroll their employees into an
employer-sponsored health plan
beginning in 2015. Why is this a big
deal you wonder? When we project
the financial impact ACA in 2014, most
experts have anticipated between
15%-25% of newly eligible employees
would elect to enroll in our health
plans. How might that change with
auto-enrollment?
Participation rates among lower income African American and Hispanic
While not a direct comparison (mainly
because we are charting new territory
here), clearly the 15%-25% uptake we
were anticipating for 2014 may be off
the mark. Way off the mark. What
if this percentage doubles? You know
your employees. How many do you
think will take the time to understand
their options, and ‘unenroll’ in
coverage that you automatically
enroll them in? If the 401(k) autoenrollment statistics carry over to
auto–enrollend medical plans, not
many.
So what does this mean, in dollars,
to you? Well, let’s take a look. For
illustration, let’s assume that you
currently insure only your store
manager. Beginning in January of
2015, you will be required to
automatically enroll all employees
that work over 130 hours a month
(this may average 6-10 per store) in
medical coverage. If you ask them to
contribute to the cost of coverage at
an amount that is deemed ‘affordable’
in an effort to avoid the $3,000
exchange subsidy penalty this will put
your net cost per covered employee
at approximately $3,500 (though this
number will vary widely based on
your particular demographics and
underwriting). So here is the math:
10 new enrollees auto enrolled
@ your net cost of $3,500/year = $35,000
If 25% of them unenroll = $24,500
If 50% of them unenroll = $17,500
If you are currently providing coverage
for just a manger of your store you
are probably paying $3,500 to $5,000
per year for their coverage. If 50%
of the newly eligible people take the
time, and initiative to opt out of the
coverage that you auto enroll them in,
that could be 500% increase in your
current cost. Not a 5%. Not 50%. A
500% percent.
The numbers above are based on a
per-store basis. You can do the math,
but if you own multiple stores, this
could be a game-changer.
There is a silver lining in this very
dark cloud. The reprieve, if nothing
else, gives us time to put programs
in place to mitigate some of this risk.
But it requires you, the operator,
to get involved now. The steps take
time and a commitment from you
and your leadership team. But they
are workable. And, under the current
iteration of the Affordable Care Act,
they are legal. They include:
1. The determination and communication of your 2014 strategy
2. Development and distribution of
required Exchange communications
by 10/01/2013
3. Using a measurement and stability
period for variable hour employees
4. Developing low-cost MEC plans to
use as your auto-enroll option
5. Performing financial analysis to
better gauge anticipated cost impact
Knowing that Domino’s operators are
always on the run, I have provided you
a task list and dates that they should
be completed (See list on next page.)
Two more issues to be aware of:
Compliance and CommunicatIons.
DFA 31
One can look to 401(k) participation
for anecdotal evidence. McDonald’s
shifted from a traditional “opt–in”
401(k) to one where all employees are
automatically enrolled in a plan, and
must take steps to ‘UN-enroll’. Their
participation jumped dramatically to
as high as 98.6% of eligible employees.
workers had the highest increase in
participation rates from roughly 35%
participation to around 93% participation.
Compliance on this animal is big. The
fines are huge and they are hiring
agents by the droves to enforce the
law. The task has not been made
easier by the constantly changing set
of rules, interpretations, regulations
and optionions. Don’t rely on an
insurance company or your insurance
agent to keep you in compliance. You
may think it is there job, but legally it
is your risk.
Smart companies are not resting on
their laurels. They are anticipating
2015 and investing in cutting edge
communication
and
education
programs to ensure that, even if
employees are auto-enrolled into
a health plan, that they are given
adequate education and support
to decide if they really do want and
need their employer’s health plan.
While some of these may require an
investment on your part, the rate of
return by helping employees make
appropriate decisions (not just stay in
your health plan because they don’t
know any better) will be substantial.
Yes, there will be changes to the rules
and the law. The movement to
increase the eligible hours from 30/
week to 40 a week may be successful.
But please, don’t let this planning
opportunity pass you by. You have
a real opportunity to dramatically
decrease the cost of complying with
the Affordable Care Act if you take
this time to get your ducks in a row.
By the way... Neo eventually brokered
a deal with The Matrix to save
humanity. Maybe there is hope.
Trey Darby, Senior Vice
President
Lockton Dunning Benefits
32 DFA
E
Sam Hishmeh
SSENTIALS
NAME: Sam Hishmeh
TITLE: President
COMPANY: Hishmeh Enterprises
Inc. Team Arizona Inc. and Team
So, Cal Inc.
AGE: 47
FAMILY: Wife, Lena and Children:
Samantha and Tyler
YRS WITH DP: 27
YRS AS FRANCHISEE: 24
STORE LOCATIONS: California and
Arizona
# STORES: 76
# TEAM MEMBERS: 1600
BOARDS: Blue Print for Profits and
Distribution Boards
AWARDS/ACCOLADES: Gold
Franny
34 DFA
Your Domino’s Career Path:
I started as a driver in 1986 in
Los Angeles County, California. I joined the management
ranks in 1987, was promoted
to general manager in 1988
and bought my first store
in Santa Paula, California in
1989.
We grew at a rate of one store
a year for the last 20 years and
we made the big leap in 2012
and 2013 by buying an 11 store package in Northern California and a 22
store package in Tucson, Arizona.
In 2012, we signed a development agreement with DPLLC becoming
one of the first Franchisees to be a Strategic Growth Partner. With this
agreement, we have committed to build 10 stores within a specific time
frame. We have completed 2 of the stores, we have 2 under construction
and we are identifying locations for the rest of the stores.
Today our company owns and operates 76 stores in California and Arizona
with a short-term goal of growing the company to 100 stores.
Key Accomplishments:
I have built a true family owned and operated business that consist of
5 brothers, a sister, parents, spouses, children and approximately 1,600
team members who are also considered family.
We have always run the company responsibly with an eye on sales, safety,
and profitability.
Favorite Quote/Advice:
Your success is not measured by how far you go, it is measured by how
many people you bring along with you.
This business is not for the passive investor. It is not for the light hearted or
for a person who is not willing to put in the hours and make the sacrifice.
As a Domino’s Franchisee, you must be willing to keep your eyes on many
balls at the same time. Sales, profitability, marketing, staffing, training,
and pricing are just a few of the things you must continuously keep an
eye on.
Best Advice You Ever Got:
My parents once told me, “In life, you must pay the price, you can pay it
upfront or you can pay it in the back.” I have decided to pay it upfront. I
focused on my career at a young age while I was going to college in order
to have a more comfortable life when I become old.
Biggest Mistake:
I cannot think of a biggest mistake I have made, but I do remember a big
mistake that I almost made. Shortly after we bought our first store, which
was a very low volume store, we almost gave up and we put the store up
for sale. A buyer offered us little money for it and we accepted his offer.
It fell out of escrow and that was the best thing that ever happened to
us. Sales started to pick up and that store made everything else possible.
Local Organizations Involved In:
Throughout our career, our partners have and continue to
serve on many boards and organizations. Local Chamber
of Commerce, Boys and Girls Club, The Food Bank, Rotary,
and The Police and Fire Foundation are a few of them.
Three Highest Priorities in your Life:
Family, Health, Faith
MANAGEMENT
As an operator, what are the two most important things
you rely on from DPLLC?
Marketing and Brand Management are, in our opinion, the
most important services corporate provides us.
Is social media affecting your business operations? If so,
how?
We believe social media, if used properly, can humanize
your business and connect it with people in a more
personal way. My partners and I are connected with a
good size of friends and fans through Facebook, Twitter,
Instagram… etc.
We believe that by mixing up your interactions between,
personal, humor, current event and business you keep
people engaged and you get them interested in your
business.
Why do you feel DFA membership is important?
My brother, Tareq, was elected to the DFA Board
representing the Western Region earlier this year. Our
membership is key as it allows us to stay connected in
Hishmehs
receiving Gold
Franny
Award in
London
ways that allow us to continue to improve this Brand.
Can you recommend a resource for other Franchisees?
The best resource for Franchisees is other Franchisees.
We are in this together. We share the same opportunities
as well as challenges. Many mistakes could be avoided
if we communicate with each other and many solutions
could be found as well. You will find the best ideas from
Franchisees, but only if you participate. You must attend
all DMA meetings, World Wide Rally, Co-op events, DFA
meetings… etc.
If you are in a DMA that is inactive or a DMA where the
Franchisees do not meet and communicate, you will need
to take a leadership roll and initiate the communication.
Can you recommend a service/technology that has had
the most impact on your profits?
Pulse and PWR are by far the most important tools you
have in your business. Unfortunately, many of us are not
utilizing them to their maximum potential.
We have to make sure our inventory files, coupon files,
employee files and all other key areas are programed
correctly in order to get the most out of this tool. This
is an area where we have seen a lot of weakness in the
stores I have acquired over the last few years.
DFA 35
What is your management method/style?
We are hands on operators. We are physically in our stores
on a daily basis despite the layers created with the growth.
We fully understand our money is made in the stores and
behind the counter. That is where most of our attention is.
What has been your greatest challenge?
As a family business, our biggest challenge has been
balancing between the family and the business. We are
a very close family which makes the chain of command
difficult to manage. Our strong family foundation and our
genuine care for each other has helped us to overcome
this challenge.
What has played a key role in your success as Franchisees?
One of our biggest assets is our family and the different
perspectives each one of us bring to the table. Within
our organization, we have the entrepreneurs who want
to grow, we have the conservative financial experts
who apply the brakes when necessary, and we have the
operational experts who make it all work when the deal is
put together.
TEAM MEMBERS
Do you recruit? If so, how?
As far as hourly team members,
we have not spent a lot of money
recruiting. Most of our recruiting
takes place using Craigslist and
posters on the front windows.
As far as management, most, if not
all, of our managers were drivers and
pizza makers who worked their way
up.
How do you train and retain?
Training on D.Live is becoming an integral part of our people development.
We participate in all corporate training programs and we have our own
in-class training programs that take
place throughout the year.
In addition, each one of my stores gets
a minimum of one OER inspection per
week. We use these inspections as an
opportunity to train our management
and team members.
How do you handle rising employee
costs (payroll, healthcare, etc.)?
Pulse Scheduler has been a great tool
for us. We are convinced that if your
computers are programmed correctly
and if your managers are trained on
scheduling properly, you will save a lot
of money on wasted labor.
How do you recognize top performing
team members?
Aside from our bonus programs, we
also have an annual holiday party
where we recognize and award our
top performers.
36 DFA
BOTTOM LINE
How are you doing on your 2013
goals?
We are exceeding our goals in
most of our markets despite a lot
of competitive intrusion in several
markets.
How do you measure your growth?
Same unit sales as well as new acquired stores sales increase is our
most effective measure.
Where do you want to be in 5 years?
Within 5 years, our goal is to be at
above 100 stores averaging $18,000
per week.
Are you experiencing economic
growth/recovery in your market?
The economy is improving in all of our
markets at different levels. In a few
of our markets such as Northern California, we are experiencing explosive
growth. Other markets have been
more measured.
What did you change or do differently
in this economy, which you plan to
continue doing?
We’ve had a laser focus on our
expenses both at a personal as well as
business level.
The Hishmeh “next generation”
Is there anything else you want
others to know about you, either
personally or professionally?
It is important for everyone to know
the main reason behind our company
success is the fact that we are a family
business with 6 equal partners who
do their best day in and day out to
steer the ship.
The Boy’s and Girls Club of Ventura
Business Strategy
Wage and Hour Issues
T
he DFA has been recently been involved with some
Franchisees on Wage and Hour issues occurring in their
organization. While every state has specific regulations
concerning wage and hour compliance, the article below
from SESCO Management Consultants is a good starting
point of the basics for all Franchisees to use for their
organization. If you have specific questions or concerns
for your operations, please discuss with your local legal
counsel familiar with your state and federal labor laws.
If you need a recommendation from the DFA on who to
contact about Wage and Hour issues, please contact Ken
Peebles at [email protected] for contact info for
SESCO or one of our labor lawyer partners.
Wage and Hour Myths
DFA 37
Although the federal law governing workers’ wages and
hours of employment is among the oldest legislation on
the books, it is perhaps the one least complied with by
employers. According to National Economic Research
Associates, employers spent $467 million settling wage
and hour lawsuits at both the state and federal level
in 2012. That’s nearly half a billion dollars on lawsuits
related to wages and salaries and overtime.
More often than not when wage and hour laws are
violated, it’s not an intentional act by an employer, but
rather a misunderstanding of the rules. It may be a
surprise to some managers to learn that a few commonly
held beliefs and practices are actually illegal.
Below are three myths related to wage and hour laws and
suggested steps human resource (HR) professionals can
take to make sure their companies stay within the law.
Myth #1: Employees paid a salary are not entitled to OT
It’s not just employers that have this misconception.
Many employees wrongly believe that if they’re salaried,
they don’t have the right to ask for overtime. But salary
is only part of the equation when it comes to determining
whether or not an employee is entitled to overtime pay.
Generally, under the Fair Labor Standards Act (FLSA),
employees are considered “exempt” from overtime
if they are paid a salary of at least $455 per week
and they perform certain duties falling within one of
the exemptions as defined by the FLSA. Therefore,
HR professionals should closely review the roles and
responsibilities of all of their employees as well as all new
hires before assuming that offering a salary eliminates the
need for overtime pay. A careful reading of the FLSA will
make it clear which employees are “exempt” and which
employees are “non-exempt.”
Myth #2: Employees who take work home for
convenience are not entitled to OT
False again. Any non-exempt employee who takes work
home, even if the employer has not encouraged them
to do so, is entitled to overtime pay if the work at home
results in total time worked for the workweek in excess of
40 hours.
This may have been less of a concern a decade ago, but in
an age when employees are constantly “connected” via
the Internet, mobile phones and tablets, employers need
to be extremely mindful of when their employees are
engaging in work related activities.
HR professionals can protect their companies by outlining
overtime and clear remote work policies and establishing
consequences for employees who bring work home when
they are told not to do so.
Myth #3: Employers can give comp time instead of
overtime
For many employees, the idea of receiving time-off
for extra hours worked instead of additional pay is an
attractive option. In fact, it’s something that many
employees request.
Unfortunately, under the FLSA, it’s not a legal practice for
private sector employees. It should be noted that a bill
that has been proposed in Congress that would enable
private sector employees to choose between receiving
overtime pay and comp time.
In the public sector, this choice already exists for
state and federal workers. But as it stands today, it’s
something that private sector employers must stay away
from.
It should be noted that “comp time” should not be
confused with “flex time.” If a non-exempt employee
works 10 hours in one day and an employer wants to give
them the ability to work six hours on a day later in the
week, it is completely acceptable as long as the employee
does not work more than 40 hours total in a given week.
Once that threshold has been crossed, the employee
must be paid overtime.
Dominic’s Training Room
Profit Driven Managers
keep dwindling
because I need
to change how
I do things. I’m
just not sure I
can take this
leap without
knowing for
sure what kind
of results I can
see. Perhaps
you can update
this in your next
article.”
The letter went
on to summarize
some of the
risks of opening
the books to
managers... some
valid, others I
don’t agree with.
L
ast issue I dedicated this article to
EBITDA. I explained how we rolled out
training to our managers focussing on the
P&L beyond just F&L. After that article
hit, I got my normal amount of emails
( which by the way I truly appreciate).
Most were supportive and asked for
detail and some guidance. One, however,
was a bit skeptical.
Here is an excerpt from that letter.
“ you are suggesting that I go against all
my business beliefs with regards to my
finances. I have always believed that my
P & L’s are my business. My managers
don’t need to see them. I am always
honest about what they make for
bonus. That being said, I have come to
realize that maybe the reason my profits
38 DFA
The purpose
of this story
is not to open
a debate on
whether or not
you should get
your managers
heavily involved
in your P&L. It’s
to honor the
request of my
skeptical friend and update results. I
wrote that article on May 23, 2013. At
that time, I had shared that our EBITDA
for 2012 was just under 13%. As of June
30, 2013, we hover just under 16%. Now
that’s not the big news in my book. I
expected those results as I saw what
was happening with this program. What
I didn’t expect was what happened
a few days after our June P&L’s were
finalized. David asked me to come into
his office. We work closely together so
I really wasn’t expecting anything earth
shattering, judge for yourself.
David brought up our January to
December profit and loss statement for
2012 and put it on one of his computer
screens. He then, brought up our
January to June profit and loss statement
on a second computer screen. He sat
there leaving me to figure out what he
was trying to say. My brain at first said,
“brother, I don’t have time for this... spill
it!”, but my eyes scanned both screens.
When I got to the EBITDA lines I did a
double take. The EBITDA for 2013 in just
six months had EXCEEDED the EBITDA
for all of 2012. That put us on pace for
a 100% increase in EBITDA as a dollar
amount. Let me say that again... we can
double last years EBITDA!
Now your gonna wonder how sales are.
They are up. We are up about 10%.
Same number of stores as 2012. A
few manager changes... cutting some
deadwood. Here’s the thing, our sales
were decent in 2012. We were positive.
This year being up 10% and adding an
average of 3% to EBITDA (more in some
months) has helped us give out record
bonus’ and have record profit months.
26 weeks into the year we had only 4
weeks of profits lower than last year and
3 of those were before or during the
rollout period. The 4th was a carryout
special week (cough cough).
With profits being driven by managers
now, I can focus on bench strength with
assistants and OER performance and
sales. I hope this update helps with
any doubts that any of you may have.
Remember, this was manager training
and accountability with the entire P&L
and not any one thing we did. It was
numerous things managers choose to do.
Now for those of you newly interested
who don’t feel like digging out the last
issue of The Voice, here is a recap of the
program.
First and most importantly, I TOLD the
managers the labor they would run. I
gave them the number. (remember that
because it’s significant.) Second, I gave
them their supply budget and lowered
many other budgeted percentages. I
then broke them out monthly as usual,
but from there, I did not give these out
in a manager’s meeting. Instead, I had
a one-on-one budget meetings with
each manager and trained them on the
concept of BUYING costs. I explained the
labor dollar amount they were looking
at was all the money I was giving them
for the year to buy labor. If they ran out,
where do they think the money was going
to come from to pay for it? The answer
was the profit their bonus was projected
from. Sounds simple, but until presented this
way the average manager will not see it that
way. Yes, in order to do this I have to show
them P&L numbers, If you are still of the
antiquated school of thought that your profits
are your business and your managers can’t
see them, then turn the page because this
article can’t help you. It’s not until you make
your managers partners in profits that they
will increase them for you.
Anyway, I continued down all controllable line
items explaining if they saved money in these
items then it goes to profit or to cover areas
they may go over. I stressed it was a goal to
have all managers under budget and through
the year we would not allow manager
indifference to the budget. Two significant
things came from these meetings. First,
managers got excited about the ability to
increase bonuses by how they ran the store
and could see it in a way that made sense.
I laughed as one of my managers crumpled
a piece of paper. I found out it was an E&S
request list for some small wares she would
rather just take better care of and not spend
the money on. Remember the labor numbers
I gave them? All 16 of them requested it be
lowered! The second thing was that instead
of getting these and losing them in a pile of
paperwork, they asked for a monthly update.
We created a running budget P&L showing
YTD numbers each month vs budget. For
the first time EVER, our company YTD is
exceeding our budgeted EBITDA.
In our first meeting in July, I did a 6 month
review. In that review I recognized all
managers for being under budget in costs
and all stores were over the projected budget
amount for the first half of the year.
If you would like help in launching a program
like this, my email is [email protected].
As always, feedback is welcome and
appreciated.
Dominic Benvenuti
Vice President
Boston Pie, Inc.
[email protected]
DFA 39
Business Strategy
Traits of Poor Managers
I
n the spirit of trying to help drive exceptional customer
service to create customer loyalty, the DFA is sharing
a top ten list of what constitutes a bad manager from
SESCO Management Consultants. This list is just another
industry example supporting a key portion of the recent
message that Franchisee Brent Medders has been
sharing about the importance of our stores excelling
at hospitality. Part of Brent’s Wowing the Customer
message is the importance of taking exceptional care
of our team members so they are motivated to take
exceptional care of your customers. Brent has gone as
far as recommending we add a new fourth priority to our
long standing Product, Service and Image (PSI) priority
objective to form a new acronym SHIP which stands for
Service… Hospitality… Image… and Product.
Here is the article we received permission from SESCO to
share with our readers.
Traits of Poor Managers
Managers help shape your business. So, the last thing
you want to have are leaders who don’t inspire others to
success.
The Manpower Group asked
thousands of workers to
name the traits that lead to
disrespect and outright dislike
for their bosses.
In the spirit of David
Letterman’s Top Ten Lists, here
are Manpower’s Top 10 traits
for bad bosses, in reverse
order:
10. Complicated
communication. Employees
always want to be informed,
but not confused.
9. No employee input into
decisions. Everyone wants to
give an opinion and feel that it
matters.
8. No feedback or delayed
feedback - especially for good
work. Too many bosses fall
into the thinking of “Unless I
criticize you, assume you’re
doing OK.”
40 DFA
7. Too few one-on-one meetings. People crave the
boss’s time and attention.
6. No flexibility. Rules that are in place because “We’ve
always done it that way” are dangerous.
5. Lots of talk and little listening. A manager whose
talking time outweighs listening time will lose employee
loyalty and attention
4. Just plain bad and uncaring supervisors. Employees
know who cares and who doesn’t.
3. Not playing to strengths. Employees want a chance to
shine at what they do best.
2. Not showing employees how they’ll benefit
personally. Everyone wants to know – “What’s in it for
me?”
Drum roll… And the worst trait, according to the poll, is …
1. Failure to show dignity and respect. Treat people as if
they’re machines, and you’ll end up with robots.
When it comes to taking care of \RXU business
KRUQHGHOLYHUV
Since 1962, clients have relied on HORNE LLP as a trusted advisor and problem
solver. Today, our team of more than 100 CPAs serves businesses nationwide.
Our franchise team of more than 70 professionals works with 50 brands and 2,000
locations. We know the many roles you juggle as an owner every day. Let HORNE
take care of all of your back office financial needs while you focus on what you
do best — raising sales and increasing order counts. With HORNE, make
decisions at the moment you need to with the right financial information.
HORNE is more than an accounting firm.
ZHDUH\RXUWUXVWHGIUDQFKLVHDGYLVRUV
Learn more about HORNE LLP’s franchise services and meet members of our team at
www.hornefranchise.com. For more information, contact HORNE
Partner Michael Sassano at 866.281.3950 or [email protected].
Legal Update
Focus On Recruits To Avoid The Next Lawsuit
J. Hagood Tighe and Karen L. Luchka
against older applicants. Similarly,
some jobs are highly physical and it
is lawful for employers to identify
the physical requirements of the
position. Advertisements, however,
that use gender limiting language
or references to a certain physical
characteristic could be grounds for
a sex discrimination or disability
discrimination lawsuit.
I
t is often said that 5% of employees
cause 95% of the problems in the
workplace. For many employers
and franchisees, the hiring process
often involves two steps: a cursory
review of an individual’s application
and one important question - “How
soon can you start?!” However, most
employment lawsuits start with one
common mistake - the employees
who file lawsuits never should have
been hired in the first place.
The consequences of making a bad
hiring decision exceed the cost of
hiring a replacement. In particular,
hiring the wrong employee can
decrease productivity and morale in
the workplace and monopolize the
time of managers. This mistake can
be prevented through hiring practices
that screen out the trouble employees
and “serial plaintiffs” and screen in
good ones who will make positive
contributions to the company. The
following are the five most common
hiring mistakes employers make in the
42 DFA
hiring process that wind up costing
them time and money:
1. Recruiting Wrongs: Franchisees
who only hire new employees from
candidates who walk into the store
may be missing the best talent.
Actively advertising and recruiting
from diverse sources can improve
the caliber of candidates and,
therefore, contribute to an improved
workforce. However, advertisements
or recruiting practices that appear
to screen out one or more protected
classes of individuals could lead to a
discrimination lawsuit. Therefore,
franchisees should carefully review
all advertisements and recruiting
materials to eliminate phrases or
descriptions that could be construed
as thinly veiled discrimination.
For example, a high energy employee
can be a great addition to any
workplace. However, advertisements
or recruitment material that indicate
the employer is looking for a “recent
graduate” or “fresh face” could
be construed as evidence of a bias
2. Form Application Faux Pas: An
effective employment application is
the best way to identify and screen
out future problem employees.
However, employers must make
sure to use an up-to-date, lawful
application tailored to state and
federal laws and the needs of the
position. Employers often download
or obtain form applications that are
updated with legal developments
and are not customized to identify
the most important criteria needed
to screen candidates. For example,
the Equal Employment Opportunity
Commission
recently
released
guidance on best practices for
considering arrest and conviction
history in the hiring process. Most
form applications do not reflect
the most recent developments in
this area of the law. Additionally,
some states limit an employer’s
ability to ask about arrest or criminal
conviction information. Therefore,
using a standard application found
on the internet or one from another
employer could subject an employer
to a legal headache. Every franchisee
should review applications to ensure
that the questions asked are not only
appropriate for the position sought,
but are lawful under both federal and
state law.
3. Application Errors: Nearly every
single employee who turns out to be
a bad hire had “red flags” in his or
her application materials that were
missed in the screening process.
However, too often the employer
either allowed the candidate to
substitute a resume for an application
or did not take the time to carefully
review the application and, as a result,
missed the red flags. Every candidate
should be required to complete an
application. This is important for two
reasons. First, an application often
requires critical information omitted
from a resume, such as the reason
an individual left a prior position
and his/her hourly rates at prior
positions. Without this information,
an employer does not have a clear
understanding of an individual’s
employment history. Second, most
applications have a candidate sign
the application and affirm that all
of the information contained in the
application is true and accurate to the
best of his or her knowledge and, if it
is not, the individual could be subject
to disciplinary action. A resume lacks
such an affirmation.
5. Ineffective Orientations: The first
day of work can be overwhelming
for both the new employee and the
employer. Often times, both try
to wade through large quantities
of paperwork and training as fast
as possible in order to get the new
employee working.
However, an
effective orientation process is an
important way to set expectations and
establish a tone for the relationship.
Orientation should be conducted on an
individual’s first day of employment.
One of the most important things
to review with the individual is the
employee handbook or manual. The
new employee should be provided
with a copy of the handbook and given
an opportunity to review and ask
questions about the policies. Explain
problem resolution, no harassment,
and other important policies with
the new employee.
After being
given an opportunity to review the
handbook, the new employee should
sign an acknowledgment that he or
she received it. It is also important to
review with the employee the work
rules and attendance policy. This will
put the employee on notice from the
beginning of the expectations for the
position.
Avoiding these five common mistakes
will decrease your risk of employment
litigation and improve the quality
of your workforce. For assistance
in reviewing your hiring materials,
please contact the authors or your
employment attorney.
Hagood Tighe and Karen Luchka,
attorneys with Fisher & Phillips,
concentrate their law practice
exclusively in the labor and
employment area. Hagood Tighe can
be reached at htighe@laborlawyers.
com or (803) 255-0000.
Karen
Luchka can be reached at kluchka@
laborlawyers.com or (803) 255-0000.
Fisher & Phillips, founded in 1943,
is one of the oldest and largest
labor and employment law firms
concentrating its practice exclusively
upon representation of employers.
For more information, please visit our
website at www.laborlawyers.com
J. Hagood Tighe
[email protected]
803-255-0000
Karen Luchka
[email protected]
803-255-0000
DFA 43
Once received, every application
should be reviewed for possible “red
flags” that could signal the individual
has a spotty employment record.
For example, employers should
review the application for disguised
references to prior terminations (e.g.
disagreement with management
practices), declining wages over the
course of a career, unexplained gaps
in employment history, and lack of
personal references. Additionally,
an employer should review the
application
for
any
omitted
information, such as blank responses
to questions on criminal convictions
or a failure to sign the application.
Blank responses often mean the
individual lacks attention to detail, at
best, or is being intentionally evasive.
A careful review of the application
could save an employer from hiring
the next “walking lawsuit.”
4. Interview with Intentionality: It
is tempting for many employers to
skip the interview stage of the hiring
process in order to fill a position
quickly. However, an interview gives
an employer an opportunity to get
a more complete picture of the
applicant’s employment history and
evaluate whether he or she could
contribute to a franchise’s success. For
the best results, ask applicants openended questions and inquire about
past experience. Take time to not only
listen to the responses given, but to
also observe the body language of the
applicant to determine whether he
or she was uncomfortable answering
a particular question. Some good
interview questions include: “What
are some of the things you wish to
avoid in a new job?,” “What policies of
your current employer do you disagree
with?,” and “How would your current
supervisor respond to a request for
reference?” Employers should avoid
asking questions about an individual’s
protected status. For example, do
not ask about an individual’s ethnicity
or accent and do not inquire about
whether an individual has childcare
responsibilities. Questions on an
individual’s protected status are
improper and could expose the
employer to claims of discriminatory
hiring practices.
Business Strategy
Women’s Leadership Forum
WFF Annual Leadership Development Conference
From April 14 - 17, women across Domino’s represented
the company at the 2013 Annual Leadership Development Conference hosted by The Women’s Foodservice
Forum (WFF). The WFF is a professional development
organization dedicated to leadership building for women
across the industry. The conference included keynote
speakers, panel discussions, educational sessions and
WFF recognitions including the, “Women Making Their
Mark” award.
It comes as no surprise that Domino’s own Michelle Hook
and Julie Wigley were both esteemed as two of only
eleven women to be named with this national honor. The
award recognizes up and coming females in the foodservice industry who have demonstrated extraordinary
leadership characteristics, significant professional accomplishments and a unique “It” factor.
What is their ‘It’ factor?
Patti Wilmot, executive vice president of PeopleFirst at
Domino’s Pizza, described Michelle by saying, “Clearly she
is not hesitant about taking on new challenges and seeks
out projects outside of her comfort zone that will allow
her to grow and develop.”
companies can provide customers solutions for what’s
next.
Domino’s Women’s Leadership Forum
WFF encourages companies to consciously plan for the
development of women in their pipeline. Domino’s WLF
exemplifies this with its mission statement, “to provide a
forum for women at Domino’s Pizza to learn, share best
practices, mentor and promote the professional growth in
a leadership role within our system.”
Domino’s WLF offers a variety of resources and programs
including mentors, grant opportunities, a book club, professional workshops and a host of events and seminars.
The WLF offers open membership to Domino’s franchises
and spouses/partners, general and assistant managers,
and corporate team members.
Information about WLF is available on LIVE or via email at
[email protected].
Michelle also mentors several women challenging them
to take control and develop their careers.
“Julie took a concept from an idea and grew it into what it
is today… 500 members strong”, said Wilmot, Julie’s participation in the Women’s Leadership Forum at Domino’s.
“… and we are now more focused on growing women
leaders.”
Julie is also the Domino’s ambassador for the WFF.
Key Learning from WFF Conference
-Focus on removing any obstacles with the team
from the beginning and evaluate along the way.
-Successful people are disciplined enough to do
things they know they should do, even when they
don’t want to.
-To have influence is to push team members beyond
their current state and turn potential into results.
-Building trust builds strong relationships on a foundation of trust, loyalty and authenticity.
-Find one thing that differentiates us from others.
When promoting our personal brand, we communicate that differentiator to others.
-Networking with other leaders in our industry can
only help us.
-Always tackle the toughest problems head-on, immediately.
-Identify trends for the future and determine how
DFA 45
46 DFA
DFA 47
Your DFA Board Members
For complete Board Member bios, terms of service and election process, please log onto dominosdfa.com.
M idwest C hapter
John B. Glass
25 Stores in OH
513.886.2639 (office)
[email protected]
Reece Arroyave
4 Stores in Chicago
847.846.9491 (office)
847.846.9491 (cell)
[email protected]
N orth C hapter
Chris Reisch
DFA Board Vice Chair
7 Stores in KY
502.867.7087 (office)
502.316.3456 (cell)
[email protected]
Peter D’Andrea
11 Stores in TN & VA
740.905.9220(cell)
[email protected]
Rob Rivard
8 Stores in Boston
978.697.4396 (office)
978.697.4396 (cell)
[email protected]
Bill Graves
DFA Board Officer
94 Stores
612.306.0679 (cell)
320.235.8277 (office)
[email protected]
Seth Gollhardt
9 Stores in Wilkes/Barre-Scranton
570.639.5579 (office)
570.262.0204 (cell)
[email protected]
S outh C hapter
Alan Murph
37 Stores in San Antonio
DFA Board Treasurer
210.657.4043 (office)
512.844.4594 (cell)
[email protected]
Brent Medders
10 Stores in AR
501.753.4111 (office)
[email protected]
W est C hapter
Tareq Hishmeh
76 Stores in AZ & CA
805.901.7407(cell)
[email protected]
48 DFA
Mike Brown
6 Stores in Seattle
253.474.4831 (office)
253.468.8557 (cell)
[email protected]
Jim Gerety
20 Stores in TX, AZ
DFA Board Chairman
432.570.1990 (office)
432.967.3030 (cell)
[email protected]
F o r u m R e p re s e n ta t i v e s
Daniel Dain
8 Stores in Corpus Christi
361.937.6364 (office)
361.438.7682 (cell)
[email protected]
B o a rd A p p o i n te d
Art Hurteau
Brian Edler
13 Stores in MO
417.353.1726 (cell)
[email protected]
6 Stores in OH
419.425.1130 (cell)
[email protected]
Your DFA Staff
Ken Peebles
Chief Executive Officer
210.845.1072 ext. 1 (office)
[email protected]
Amy Villastrigo
Office Manager
Membership Coordinator
210.845.1072 ext. 2 (office)
[email protected]
Jamie Reams
The Voice Editor & Designer
210.845.1072 ext. 4 (office)
[email protected]
Advertisers Index
Page
Advertiser
Page
Advertiser
7
Cintas
25
Monterra Franchise Services
2
Coca-Cola
21
My Domino’s Insurance
44
Connect Marketing
3
Paychex
3
Direct Capital
12
PLI
12
ECO Energy
52
Ross PrintMarketing
39
First Franchisee Capital
29
SBM International
33
Hightech Grafix
32
Sprint
41
Horne LLP
24
Sterling
40
Lloyd Pans
15
The Bottom Line (TBL)
17
MaSSCorp
51 XLT Oven
20
Mercedes USA
13
Middleby Marshall
Follow DFA
on Facebook
Bookmark our website
for up-to-date news
and information!
DFA 49
dominosdfa.com
Vendor Partner Directory
Log onto dominosdfa.com for the most current list of partners.
Accounting & Tax
Horne, LLP
Michael Sassano | 866-281-3950
Monterra Franchise Svcs
Susan Burhans | 800-481-8990
The Bottom Line (TBL)
Direct Capital
603-433-9476
Human Resources
Paychex
Karen Sladden | 877-216-3655
Marnie Feinour | 800-237-0704
Automotive
GreenTech Automotive
Marianne McInerney | 703-666-9001
Mercedes-Benz USA
Ben Thomas | 201-573-3669
Sterling Info Systems
Kara McConnell | 800-853-3228
Insurance [Business]
MaSSCorp
Jeff Murphy | 800-766-5677
My Dominos Insurance (MDI)
Jason Upton | 800-251-7407 | 256-738-6752
Renaissance Dental
Labor Lawyers
Bunzl
Tom Dobat | 810-936-2030
Ecolab / SSDC
Philip Perry | 859-312-4041
Marketing Services
Ross PrintMarketing
Eileen Bromwell | 800-421-1684
Plasticard-Locktech Intl (PLI)
Tracy Morris | 800-752-1017 ext.1299
Valassis- RedPlum Media Solutions
Michele Maxfield | 866-577-4628
Energy Savings
ECO Energy
Brian Kalan | 727-331-5075
Finance & Lending
Business Financial Svcs
Ovens
Middleby Marshall Oven
Doug Bagnasco | 516-361-3769
GRP Funding
877-571-7999
50 DFA
Traci Rennaker | 800-748-6251
John Livers | 785-295-6602
Technology
Hightech Grafix/dpReporting
BR Technologies
Bryan Nichols | 817-268-4040
SBM International
Wizardline Technologies
Shawn Brunelle | 978-423-0875
Is your company
interested in
partnering with
the DFA?
Log onto dominosdfa.com
and visit the Vendor section
for information about:
Jason Bireta, Sam Fauser or Larry Bireta
248-302-1199
• Partnerships
XLT Ovens
• Advertising
Nick Roths | 316-719-3722
Scott Kantor | 866-914-4030
CapitalSource
Lloyd Pans
Fisher & Phillips, LLP
Cleaning Products
Mike Hoffman | 513-701-2342
Midwest: Lisa Mayer | 248-318-7630
Northeast: Jennifer Goodyear | 410-330-4434
Southeast: Ryan Cochell | 404-403-7183
West: Stephanie Somenek | 480-797-4527
Rafael Lee | 855-726-4685
Hagood Tighe | 803-255-0000
Cintas Corporation
Coca-Cola
safeTstep / Payless ShoeSource
Tom Dimmer | 517-381-4222
Background Checks
Supplies & Products
Phone Service
Sprint
Gale Wilcox | 248-388-0014
• Sponsorship
or contact
Amy Villastrigo
210-845-1072 ext. 2
[email protected]

behind every play there is a thought

Transcription

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