The Brands that Shaped Franchising: Dunkin’

America runs on Dunkin’, but what does Dunkin’ run on? In a word: franchising. 

With over 11,300 international locations as of 2021, Dunkin’ is the world’s eighth-largest franchise and has a dominant presence in the franchising industry at large. But this is nothing new — since the brand started franchising in 1955, Dunkin’ has played a major role in the formation of the industry, acting as a guiding light for many other fast food chains to follow. So, how did it happen?

The History of Dunkin’

Dunkin’ was founded by William Rosenberg, a Massachusetts-born, 8th-grade dropout who always knew he wanted to be an entrepreneur. While working at the Quincy Shipyards during World War II, Rosenberg realized the workers needed lunch options. Rosenberg borrowed $1,000 and used $1,500 in bonds to start Industrial Luncheon Services, which served sandwiches, coffee, donuts and snacks out of old telephone company trucks.

Rosenberg quickly realized that coffee and donuts were his biggest sellers, so he decided to open a restaurant called Open Kettle. He sold coffee for ten cents and donuts for a nickel. The Quincy-based shop proved to be an overnight success, but there was one thing Rosenberg was not happy with — the name. Since customers seemed to always dunk their donuts in their coffee, Rosenberg naturally renamed the Open Kettle to Dunkin’ Donuts in 1950.

Over the next few years, Rosenberg began opening corporate-owned Dunkin’ Donuts stores across Massachusetts. When it was time to expand outside his home state, Rosenberg took inspiration from Howard Johnson and his chain of franchised ice cream stores, deciding to franchise the Dunkin’ Donuts concept in 1955. By 1963, the company had opened its 100th restaurant and grew to over 1,000 locations by 1979. Today, the brand has 11,300 locations operating worldwide with 3,200 international restaurants in 46 countries.

The Right Growth Strategy

A franchise brand as big and successful as Dunkin’ doesn’t get there by accident. Over the decades, Dunkin’ has come to master an international franchise development strategy that many concepts today follow like a blueprint. Much of the initial success came in 1963, when Rosenberg’s son Robert took over the management of the chain at the age of 25. The Harvard Business School graduate led until 1999, during which time he completely streamlined the brand’s menu offerings, introduced a national advertising program and optimized the store format. 

As a part of this strategy, Dunkin’ became a go-to franchise concept for non-traditional locations like airports, stadiums and train stations. The new leadership also prioritized selling franchises to multi-unit operators, introduced satellite locations and later a commissary system. All of this helped fuel growth, especially as locations no longer needed to be big enough to manufacture donuts in-house.

When it comes to international development, Dunkin’ has always been a pioneer, committed to fitting the tastes and wants of local consumers. For example, the brand offers caramel macchiato with coffee cubes in South Korea, as well as kimchi-stuffed donuts to meet the local spice preference. Since the brand is completely franchised, the team is able to leverage the local expertise of franchisees — a practice that was uncommon when the brand started — to gain a competitive advantage over other global brands. 

The International Franchise Association

While Rosenberg is responsible for creating one of the largest franchise systems in history, it may not actually be his biggest contribution to the industry. The Dunkin’ founder is also one of the masterminds behind the International Franchise Association (IFA), far-and-away the world's largest membership organization for franchisors, franchisees and franchise suppliers.

In 1959, the IFA was created when Rosenberg got together with about a dozen other franchisors to talk shop over a kitchen coffee table in Chicago. The concept of franchising was getting a bad rap during that time due to an influx of bad practices and litigation. Rosenberg knew legislative actions needed to be taken to save the industry’s reputation, so he challenged his fellow franchisors to each invest $100 into creating a membership organization that could fight for the rights of those in the industry. In 1960, the IFA was officially born. 

With a commitment to improving the franchise model and the experiences of franchisors and franchisees, Rosenberg spearheaded several IFA initiatives, including the establishment of the group’s Education Foundation in the 1980s. The foundation has a course of studies that offer Certified Franchise Executive certifications, which is the principal source of continuing research and education for franchising.

Over the years, the IFA and Rosenberg worked with legislators to ensure new laws being passed kept the needs of franchisors and franchisees in mind. Those efforts played a huge role in shaping franchising into what it is today. With this impact, as well as the brand’s steadily-growing footprint, there is perhaps no other concept that has come to define franchising more than Dunkin’.