Business

Sharing the dough

Dunkin’ Brands has found a new way to make nice with its franchisees.

In the new year Dunkin’, one of the most litigious major franchisers in the country, is going to start offering outsized referral bonuses to the same owners it has focused on suing.

Starting in January, Dunkin’ is offering franchisees $25,000 if they refer a new store owner who opens one to five locations — and $50,000 if they open more.

The company needs to meet certain financial targets, including new-store openings, to be on track to meet its debt payments in 2011. Private-equity firms Bain Capital, Carlyle Group and THL Partners bought Dunkin’ in a $2.4 billion leveraged buyout in 2006.

Experts said while referral programs are not uncommon in the franchise business, Dunkin’s new program is unusually generous.

“A $10,000 product credit is the most I’ve seen from a major franchiser,” said a lawyer familiar with major restaurant chain agreements.

This referral represents more money — and is paid in cash.

“This is big money,” one Dunkin’ franchisee told The Post. “They must be really desperate to grow.”

Dunkin’ spokeswoman Karen Raskopf said referral programs like theirs are standard in the industry.

But this is also the latest in a series of moves by Dunkin’ to try to improve relations with its franchisees.

Dunkin’s detractors have said the company is one of the most litigious franchise systems in the country. Attorneys and franchise operators contend that Dunkin’ targets store owners over minor violations in an attempt to terminate their franchise agreements and pushes them to pay big penalties.

Dunkin’ denies that it is at odds with its franchisees. Even so, Dunkin’s former chief legal counsel, Steven Horn, announced in October that he would retire after a spate of reports scrutinizing the company’s behavior. President and Chief Brand Officer William Kussell, who oversaw store expansion, also stepped down.

Since then, CEO Nigel Travis has indicated that Dunkin’ would be willing to consider changes to the franchise agreement that would give store owners more say over their business, sources said.

The new referral program caught some Dunkin’ franchisees off guard.

“They are waiting for the franchise agreement to be renegotiated and all of a sudden this comes out,” said a franchise attorney.

Dunkin’ spokeswoman Raskopf said despite the new referral program, Dunkin’s expansion effort is going well.

“We opened approximately 160 Dunkin’ stores on a net basis in the US in 2009,” she said. “There are very few franchising concepts that opened that many net locations last year. A large percentage of those stores were opened by existing franchisees, and we like to see organic, internal growth.”