Beyond the Brand: Rob Branca is a Tireless Advocate for Franchising
Rob Branca and his extended family of in-laws, siblings, children, and cousins own and operate more than 1,200 Dunkin' Donuts locations throughout New England and a few expansion markets. This mega franchisee, licensed to practice law, was the family business lawyer before becoming a franchisee, and has relied on that experience to benefit the businesses of his family and fellow franchisees. He and his partners also operate a real estate development and construction company and a manufacturing business. Branca is also a private equity investor, has served as chair of several industry organizations, and plays an active role in his brand.
In September, Branca was named a 2016 Franchisee of the Year by the IFA for his "outstanding achievements and accomplishments." The announcement was made during the Franchise Action Network annual meeting in Washington, D.C.
When we profiled him in 2011, Branca and his partners in the immediate family empire were operating 70 Dunkin' locations and 5 Baskin-Robbins stores, while the extended family was operating a "mere" 700 units. Today, Branca and his team operate 85 Dunkin' stores with two more scheduled to open before year-end.
During the past 5 years, he's become increasingly involved in advocating for and defending his family's stores, the Dunkin' brand, and the franchise business model from external threats. In that role, he has served as chair of the Dunkin' Donuts Franchise Owners PAC, vice chair of the Coalition of Franchisee Associations (CFA), chair of the 2015 Multi-Unit Franchising Conference, an active member of the IFA, and currently is the franchisee chair of the Dunkin' Donuts Government Affairs Committee and an elected leader on the Dunkin' Brand Advisory Council. Perhaps his biggest achievement during this period came just last year, when he was part of a successful effort in California to pass Assembly Bill 525, a significant pro-franchisee law.
"It took four years and a great group of franchise business owners, representatives from the CFA and IFA, lawyers, and consultants, but we were able to amend California's franchise law and the result was a more level and certain playing field for franchisees and franchisors at common friction points," he says. Franchisees in the state now have protections that allow them to monetize the equity they have invested in their brands in terminations, sales, and transfers. The successful initiative was, Branca says, an example of dedicated franchise forces working together to create better solutions for all parties. "There were outside groups trying hard to insert their hostile interests into our bill after we painstakingly negotiated it, but we, franchisors and franchisees, stuck together and received a unanimous vote to pass the California legislature."
Outside his Dunkin' interests, Branca is involved in numerous investment deals and partnerships, including his investment in NRD Partners, the franchise investment group formed and led by his friend Aziz Hashim, whom he followed as chair of the MUFC. "The opportunity is to play a role in the growth of other organizations by providing funds, direction, and leadership," he says. And there's more.
Branca says he and his brothers-in-law "accidentally" entered the manufacturing business. "We entered into stainless steel manufacturing when a vendor company near us went out of business. My partner who runs our construction company, Matt Doyle, was just trying to save costs but turned it into a thriving enterprise with some great team members," he says. By not taking any salary out of the company for themselves, the plant is back in the black--and manufacturing parts they can purchase and use in the family's Dunkin' locations and other businesses.
Last year the business decided to sell some Dunkin' locations in Florida, including their five Baskin-Robbins locations. Although they had been successful in the Sunshine State, their expansion model relies on business partners living and working in the markets they operate. "In this case it was my sister-in-law and her husband. They decided they were ready to have children and wanted to raise them in New England, surrounded by family," he says. Together, they decided to sell and realized a healthy profit. "We were able to avoid a large breakup fee on our loan deal by trading a LIBOR-based swap, so it ended up being a solid win for our business and for our family."
Branca, never content to sit still, is always searching for the next strategic move and remains open to all opportunities and possibilities. While much of the next 5 years remains unknown, Branca plans to keep fighting for the future of franchising and the investments of those in it as they face a continuing barrage of governmental overreach and regulation at the local, state, and federal levels.
Name: Robert Branca, Jr.
Title: President and general counsel for Branded Realty Company and Branded Management Group
No. of units: 85 Dunkin' Donuts
Family: Wife Lisa and 3 daughters
Years in franchising: 29
Years in current position: 15
The Dunkin' Donuts franchise owners that I represented as an attorney. I learned so much from their example that is critical to our success today. My father was a very successful serial entrepreneur who was astute enough that he was able to retire at an age only a few years older than I am now, and my father-in-law was a wildly successful founding franchisee in the Dunkin' Donuts system. I am very fortunate to have them as guides on this journey.
Participating in passage of California's amended franchise law to protect and enhance franchise owner equity. We have started a new manufacturing business and become partners in various private equity vehicles, including NRD Partners, formed by my friend and current IFA Chair Aziz Hashim. I have also invested in businesses with other Multi-Unit Franchising Conference board members who have become my friends. We have expanded our real estate development company fairly substantially and added more than 20 Dunkin' units since last being profiled here.
Biggest current challenge:
Franchisee chair of the Dunkin' Donuts Government Affairs Committee. We routinely encounter important people who lack even a basic notion of the franchise business model, and some who know it but openly seek to destroy it.
Next big goal:
Establishing legislation nationally and locally to moderate the rapid escalation in labor costs and needless litigation.
First turning point in your career:
Becoming a partner in a law firm.
Best business decision:
Leaving a law partnership to become a Dunkin' Donuts franchise owner.
Hardest lesson learned:
As an attorney, your inventory is naturally limited to 24 hours in a day. Growth is extraordinarily difficult in that industry. I suppose this is why legal fees have skyrocketed for very good attorneys.
It varies, but can involve long days followed by permit hearings on new projects, or spending time in the pool with the kids. I see a lot of airports some weeks.
High-intensity interval training mixed with weight training.
Best advice you ever got:
Become a franchise owner.
What's your passion in business?
Finding new, diversified, but synergistic avenues for our businesses to grow. Meeting new people with new ideas.
How do you balance life and work?
Having children is a natural balancing agent in our family, but we all tend to naturally outwork our competition.
Having a full gym right in my home.
The next one.
"Good Will Hunting" right now. I recently re-watched it and enjoyed the Dunkin' product placements (which were unpaid!).
What do most people not know about you?
I am a very early riser.
Government overreach by people with no experience or bad intentions for my family's livelihood.
What did you want to be when you grew up?
I'm still growing up!
São Miguel, Azores, Portugal.
Person I'd most like to have lunch with:
Our next U.S. president, whoever that turns out to be. He or she will be faced with enormous challenges. People in power need to understand franchising's issues. The industry is too important to the country for them not to know more.
Always be learning. Show up. Say yes. Network relentlessly.
Management method or style:
Be consistent. Give praise. Make connections. You will need them. Connect others when they need it; they won't forget it.
Uninformed, misinformed, and even some malevolent government regulators.
How do others describe you?
One thing I'm looking to do better:
Hire more great, talented people.
How I give my team room to innovate and experiment:
We allow them to own certain community relations and guest loyalty-building initiatives in their own neighborhoods. For example, we routinely sponsor large, popular ethnic, civic, or church-based festivals, parades, fundraisers, and tournaments. We encourage our team members who are members of those communities to be the public face of our brand and take leadership positions in those events. That elevates their personal status in those communities and involves them in community-building, giving back, and helping those in need, which is often its own reward. It instills a sense of pride to be part of the team and helping others.
How close are you to operations?
Not as close as I had been in the past, given our growing non-Dunkin' Donuts businesses. I also spend a lot of time interacting with our franchisor's management team on various initiatives and committees.
What are the two most important things you rely on from your franchisor?
Product innovation and gatekeeping on encroachment. Perhaps more than those two are protecting our highly collaborative franchisee-franchisor relationship.
What I need from vendors:
A recognition that we have probably already made some investigation into what they are pitching, and that we may need a pretty big reason to stop doing business with an existing vendor that has served us well.
Have you changed your marketing strategy in response to the economy? How?
Yes. We have engaged in deeper research and entered the CPG (grocery) business. Two of my family partners, Greg Califano and Flavio Raposo, also got some specialized marketing and motivational training and have actually lit our managers and crew on fire to increase top-line sales in this really tough climate. They are rock stars.
How is social media affecting your business?
It is a huge opportunity and has done very well for Dunkin' Donuts. It allows us to send deeper, longer messages, as we did with the Gronk/Big Papi iced coffee campaign. That engaged consumers in a way that no one really has before. Their YouTube serial videos and songs last year were the second most-viewed on the planet in their debut week--and won two CLIO awards for our brand's ad team. They were brilliant.
How do you hire and fire?
Right now hiring is difficult because there is a disappearing workforce. We sometimes can't fire.
How do you train and retain?
Patiently. Dunkin' Brands offers us tools we use to supplement the experienced personal touch of our long-term team members.
How do you deal with problem employees?
Ideally very quickly, but the tight labor market makes it difficult to do that. A growing problem is the new regulation that intentionally pits employees against their employers and encourages discord and litigation. We constantly manage our relationships to strengthen them from outside interference.
Fastest way into my doghouse:
Waste my time. It is a non-renewable resource.
Growth meter: How do you measure your growth?
EBITDA and transaction count in our Dunkin' business.
Vision meter: Where do you want to be in 5 years? 10 years?
Ideally, having added dozens of profitable units and new Class A properties full of successful tenants. Realistically, surviving the regulatory environment and litigation onslaught enabled by it, and taking market share from the smaller competitors and chains that will not be able to weather this storm.
How is the economy in your regions affecting you, your employees, your customers?
Prices are rising because of intrusive regulations piling on to all aspects of our economy. Real estate taxes and rents are rising, labor is tight, and service is suffering. The tensions between employees and employers fostered by the new regulations and outside actors has put stresses on our team at all levels. These things are decidedly not helping entry-level workers. Quite the opposite is happening. We have been able to cut costs by vertically integrating many things that other people pay for, like legal work, general contracting, HR and repairs. We are often our own landlord, which helps. Others don't have those resources available to them, and we see businesses closing or scaling back in every market where we operate. The big will get bigger, which is exactly the opposite of what these outside forces say they want.
Are you experiencing economic growth in your market?
We are innovating new products and seeking new specialized sales training to successfully drive transactions, but our population base in the Northeastern U.S. is not growing and costs are. Our Midwestern market is growing nicely.
How do changes in the economy affect the way you do business?
We manage our labor hours relentlessly, and we innovate products with a top screen on taking labor hours out of the business. If we can automate something, we will do it. Efficiency has always been important in business, but today it can be the difference between a business dying or living to fight another day. We also invest more in businesses that are not employee-intensive.
How do you forecast for your business?
We look at previous sales, the competitive set, pending legislation, the credit environment, and our ability to increase transactions with existing capacity. We try to expand capacity and efficiency with any remodels we do.
What are the best sources for capital expansion?
Retained earnings. We try to acquire and develop property with our own capital and then seek low-cost financing later to recapitalize. The deals are easier and less costly that way.
Experience with private equity, local banks, national banks, other institutions? Why/why not?
We are involved with all of this. We are lenders/investors in the private equity space and borrowers with regional, national, and international banks. We continually negotiate terms with our lenders and compare them. We have been blessed with some really good relationships in that space. While you can say that our lenders are literally invested in our success in a legal sense, it also feels that they are personally as well.
What are you doing to take care of your employees?
We try to model our benefits programs to meet their needs. In one example, we provide up to three weeks of paid leave (in addition to required paid sick leave). This allows certain employees to travel to "the old country" for an extended period without losing income, and we in turn get their kids who are on school break to work with us. The household gains extra income, our people get to go back to see family and experience the births, weddings, and other important family life events, and we get trusted people who are trained from their previous school vacations, knowing that they have a waiting job. If we can achieve these win-win scenarios, that is the best situation, especially with such high youth unemployment.
How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)?
We have pushed to grow top-line sales and reduce labor and other costs. Retaining good employees is a critical focus. We have also aggressively renegotiated leases where we don't own the property and renegotiated interest rates with lenders. The current low interest rate, fuel, and commodity cost environment has helped, as have some modest price increases and reduction of labor hours. We have automated some really expensive labor procedures.
How do you reward/recognize top-performing employees?
We use traditional bonuses, but we also have helped key performers by leveraging our construction company to do things like remodel their homes or provide at-cost services.
What kind of exit strategy do you have in place?
More growth! Seriously, though, we have all done robust estate planning in the hope that we can pass our businesses on to the next generation. Our real estate strategy and lobbying on things like the death tax is a big part of that.
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