Franchisees Accuse Dunkin' Donuts Of 'Systematic Racial Discrimination'
All Reggie and Amy Pretto wanted was the opportunity to run their own Dunkin' Donuts franchise and be in business for themselves. Instead, the African-American couple claims in a new lawsuit, they were purposely "steered" to less desirable, economically challenged locations, hundreds of miles from their suburban New York City home -- because of their race.
In a complaint filed Monday in New Jersey state court, the Prettos accuse corporate parent Dunkin' Brands of lying and deceiving them into believing that there were no franchise opportunities in New York state or New Jersey, near their Westchester County home, and were instead "steered" to less favorable areas in Maryland, which ultimately failed, the New York Post reports.
And the move cost them dearly, the couple says. The failed Maryland stores cost the Prettos $750,000, and their home, which they sold in 2004 to finance the franchise purchase.
In the lawsuit, the Prettos allege that as they were being persuaded to invest in the Maryland stores, Dunkin' gave white investors the opportunity of multi-unit franchise agreements in the more lucrative New York/New Jersey region.
Reggie Pretto, a Dunkin' employee before he became a franchisee, told the Post that he walked into the business with eyes wide open but was still stunned by the company's actions.
"They can be very brutal," he told the tabloid.
The suit also charges that Dunkin' has history of discriminating against minority franchisees, noting that Dunkin' has no units in New York, Connecticut or Rhode Island owned by African-Americans, despite the company having a significant presence there. The complaint also alleges that Dunkin' gives white franchise developers prime locations for doughnut shops, while minorities are left with "economically disadvantaged or marginal areas."
Of the nearly 7,000 stores that Dunkin' has nationwide, just 50 shops are owned by African-Americans -- and those establishments are primarily situated in poorer areas. The suit charges Dunkin' Donuts with "systematic racial discrimination," particularly against Indian women of color and African Americans.
Through a spokeswoman, Dunkin' Donuts declined an opportunity to respond, saying, "We are unable to comment due to pending litigation."
Another former franchisee, Priti Shetty, is also listed as plaintiff in the lawsuit. As AOL Jobs reported in May, Shetty alleges that Dunkin' Brands is biased against "Asian-Indian American women of color."
Shetty, who owned two Dunkin' Donuts stores in New Jersey, alleges that a Dunkin' Brands manager, Wayne Miller, forced her to keep her stores open 24 hours a day, despite concerns that Shetty had about safety and profitability, and denied her the ability to open a third store.
Further, she claims, Miller told her that she wasn't "servile enough" as an Indian woman and regularly made derogatory remarks, telling Shetty, for example: "This business is not for [you]."
The Prettos and Shetty aren't the first Dunkin' franchisees to allege that the Canton, Mass.-based company discriminates against franchisees of color.
In 2007, Mahendra and Nita Patel, husband-and-wife operators of four Orange County, N.Y., Dunkin' outlets, countersued the chain after the company alleged that the couple violated franchise agreements, and labor and tax laws.
The Patels, first-generation Americans of Indian descent, alleged in their suit that the company unfairly terminates minority franchisees or forces them to sell their stores at less-than-fair market value to white, multi-unit operators.
Dunkin' has a lengthy history of legal wrangling with its owner-operators. BusinessWeek reported in 2009 that Dunkin' was involved in about 350 lawsuits with its franchisees, noting that the company has been accused of aggressively targeting shop owners in an effort to terminate franchise agreements and, in the process, collect hefty fees and penalties for alleged contract violations.
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David Schepp has spent more than a dozen years covering business news for the electronic and print media, including Dow Jones Newswires, BBC News, Gannett Co., and most recently at AOL's DailyFinance. Nearly 10 years ago, he started writing a weekly People@Work column, looking in depth at issues facing workers in today's workplace. Follow David on Twitter. Email David at email@example.com. Add David to your Google+ circles.more...