• by Nina Lentini  @Nina_Lentini, February 15, 2008

Dunkin' Donuts franchisees in New England and New York are publicly opposing the company's partnership marketing strategies involving P&G, Sara Lee and Hess, asserting they will "ultimately devalue the iconic coffee brand," that franchisees' cash flow is down and shows "little sign of improving," and that the partnerships will have a negative impact on Northeast markets.

In a statement released on Thursday, the DD Independent Franchise Owners (DDIFO) said 98% of surveyed franchise owners oppose the Sara Lee partnership that calls for the installation of self-service stations in office building break rooms, cafeterias and other venues with large food-service operations.

It also said that 97% oppose the Hess partnership, which calls for the installation of self-service coffee, hot chocolate and donut stations within Hess gas-convenience stations from New Hampshire to Florida.

Last year, Dunkin' Brands partnered with P&G to sell packaged coffee in supermarkets, drug stores and off-price retailers. DDIFO says those 12-ounce packages of coffee compete directly with the 16-ounce packages sold at Dunkin' Donuts shops. "To date, franchisees have received no financial benefit from P&G sales," it says.

"These deals will negatively impact their businesses and the Dunkin' Donuts brand over the long run," said the franchise owners group.

For its part, Dunkin' Donuts, which was named 2007 Restaurant Marketer of the Year by Marketing Daily, said in a statement: "Our goal is to increase franchisee profitability by responding to 'on-the-move' consumers' desire for their brand of coffee wherever they go, and we're confident that these partnerships will achieve this goal--quite simply, if our franchisees do not do well, then we do not do well."

Stephen J. Caldeira, chief communications and public affairs officer for Canton, Mass.-based Dunkin' Brands, said: "Dunkin' Brands and our senior leadership team communicate broadly and directly with our entire Dunkin' Donuts franchisee system about all of our strategic partnerships, which are designed to build out the Dunkin' Donuts brand for the long-term."

But Mark Dubinsky, president of the DDIFO, said: "There is little doubt in my mind that the Dunkin' Brands Management Team either failed to understand or did not much care about DDIFO member sentiment as to the Hess and Sara Lee distribution deals."

The DDIFO survey was conducted in January 2008 through Zoomerang, a division of Market Tools, Inc.

Within the past year, the company has launched plans or entered into agreements for significant expansion in Las Vegas, Indianapolis, Phoenix, Dallas, Austin and Houston, among other locales.

There are more than 7,200 franchised Dunkin' Donuts restaurants in 31 countries.