2007 Franchise of the Year

Who's in Second Place?

When most people think of Dunkin' Donuts, they think maple bars and chocolate glazed. But thanks to an aggressive expansion effort, the 57-year-old doughnut-lovers' favorite is experiencing new life. With impressive growth of 765 units and a leap from No. 6 in last year's Franchise 500® ranking to No. 2 this year, Dunkin' Donuts is well on its way to becoming a fast-food powerhouse known for more than its glazed treats.

President Robert Rodriguez attributes Dunkin's success largely to the power of the brand and a strong set of franchisees. "Our franchisees are our best ambassadors," Rodriguez says. They're the company's best advisors as well. "When there's something not done right, they're the first to let us know. When we do it right, they're the first to tell us, too. When you have that kind of passion, it's a great partnership."

The company has set the bar high for new franchisees, requiring at least five years of managerial experience. By bringing in new franchisees with more expertise and continuing to educate existing ones, Rodriguez says, "I think we'll create a phenomenal blend."

Changes to the system play a big role in its growth, but as it expands, the franchisor always keeps the importance of the brand in mind. For example, Rodriguez points out that while Dunkin' facilities are being designed to be more modern and user-friendly, they won't be losing the traditional pink and orange colors that make a Dunkin' Donuts easy to recognize.

They will be introducing new products, however. "Our business is about innovation," Rodriguez says. Though its name won't be changing anytime soon, Dunkin' Donuts is now focused on more than just its doughnuts-coffee in particular has taken center stage at the franchise. Dunkin' has introduced lattes, espressos and cappuccinos in the past few years, and beverages now account for 64 percent of the company's sales.

This, of course, brings up obvious comparisons to Starbucks. But Rodriguez isn't worried. "It's not about competition," he says. "It's about the consumer. The people who really love Dunkin' love us for who we are, not for who we're not." Rather than worrying about competitors, Rodriguez is most concerned with fulfilling Dunkin's particular niche: providing fast and affordable products that appeal to a wide demographic.

The appeal is set to pay off: Dunkin' has goals to triple its U.S. store count to 15,000 within the next 10 to 15 years.--Tracy Stapp

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This article was originally published in the January 2007 print edition of Entrepreneur with the headline: Full Speed Ahead.

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