Franchising The Kosher Way

OU Kosher Staff

Franchising accounts for almost 50% of all retail business done in America and kosher consumers too are eager to literally take a bite into this boon. Notwithstanding for reasons soon to be outlined, these same consumers should know to proceed with caution before indulging. Most assuredly, there is indeed a kosher acceptable way to reap the benefits of the franchise business, but kosher consumers need to be aware of the nature of the industry and the consequent halachic considerations that must be met.

FranchiseHailed by Nation’s Restaurant News as “the father of franchising as we know it today”, a Jewish entrepreneur named William Rosenberg, had founded in 1950 the leading retailer of coffee, donuts and bagels – Dunkin’ Donuts. He also established The International Franchise Association (IFA) in 1960. Despite these achievements, the origins of franchising preceded William Rosenberg and Dunkin’ Donuts by almost a hundred years at the end of the American Civil War, with the creation of the Singer Sewing Machine Company.

With the advent of the 1950’s though, a more mobile American public was brought about due to the growing interstate highway system and increasing automobile ownership. William Rosenberg brilliantly exploited this trend through an organized franchised business, as Americans were now traveling more often and further from home while seeking familiar names with a standardized service. Hence Dunkin Donuts was the familiar name and standardized service that was to begin dotting the American landscape.

Franchising accounts for almost 50% of all retail business done in America and kosher consumers too are eager to literally take a bite into this boon. Notwithstanding for reasons soon to be outlined, these same consumers should know to proceed with caution before indulging. Most assuredly, there is indeed a kosher acceptable way to reap the benefits of the franchise business, but kosher consumers need to be aware of the nature of the industry and the consequent halachic considerations that must be met.

Nature of the Industry

The category of franchise business that concerns the kosher consumer most is known as “product and trade name” franchises. In this business structure, the franchisee pays an initial fee to the parent company or franchisor, to operate a store exclusively promoting certain patented stock and trade brand products owned by the franchisor. The franchisor in turn sells these products at wholesale prices to the franchisee for resale. Additionally, the franchisor offers the franchisee continuous training and counseling to help make the franchisee’s business more lucrative. In this arrangement, while the franchisee owns his store independently and controls his own profits, he is only allowed to sell the uniquely formulated patented brand products of the franchisor. In Dunkin’ Donuts case, each Dunkin’ Donuts store is obligated to sell exclusively the Dunkin’ Donuts brand donuts, coffee and bagels. A store found selling any other brand donuts, coffee or bagels would render the franchisee in violation of his contract with the franchisor, and would be grounds for being disenfranchised. Still the economic savings on generic brands over the company brand products is quite substantial, and there have been cases where this incentive has caused some franchise stores to take a risk and violate their contract.

In contradistinction, supermarket chains are quite distinguishable from franchises mostly because a franchise store is independently owned by the franchisee, whereas a supermarket store remains the property of the parent company. However another salient indicator is the fact that supermarkets proudly sell other brand products along with their own. Consequently Shoprite for example, will sell both Shoprite and Tropicana brand orange juice etc. In effect at any given supermarket, there isn’t a single product that needs to be an exclusive supermarket brand, which is directly in contrast to the case of a franchise store.

Halachic Considerations

In view of the above, there are several issues that must be properly addressed before kosher certifying any particular franchised eatery. First and foremost is the question of ingredients. Most franchises can automatically be excluded from being kosher since their patented brand products are real treife. The few franchises that have their patented brand products manufactured under reliable kosher certification and are thus eligible for becoming kosher certified include among others: Dunkin Donuts, Carvel, Krispy Kreme and Seven Eleven.

Many of the base donut and muffin mixes, icings, and fillings used to make Dunkin’ Donuts and Krispy Kremes, do in fact come from commercial plants around the country that have reliable kosher certification; albeit chalav stam. The same can be said for the Carvel ice cream mixes, wafers, crunch, and assorted toppings; the Seven Eleven slurpees syrup, as well as for the Dunkin Donuts bagels, coffee and coolatta drink mixes. The plants then ship these specially formulated base ingredients that have their respective kosher designations on the packaging, to various distribution centers across the country owned by the franchisor. The franchisor in turn sells and supplies the franchisee at the franchise store level with these same ingredients in the original manufacturers packaging still bearing the proper kosher symbols. Nonetheless, if the individual store is not under reliable kosher certification, the consumer can not assume that the product is kosher for a variety of reasons. Most fundamentally, while many ingredients are certified, there is no guarantee that this is the case for every source of supply, since there is no kosher supervision of the corporate entity. There then arises a justifiable concern that their patented brand products may be manufactured at a factory that is either not kosher certified or under a questionable kosher certification. This of course seriously compromises the kosher status of any franchise store that purchases these same products.
Secondly, even when the workers at the franchise store open the packaging of kosher certified ingredients to apportion and batch them in order to prepare their uniquely formulated products, a critical juncture is reached vis a vis the kosher status of these ingredients. For at this moment when the ingredients are taken out of their original packaging, they are no longer endorsed by their former kosher certification. Reliable kosher agencies only certify their kosher supervised commercial products when they are in sealed packaging that bears their respective kosher logos. The primary reason for this is that an unsealed package can easily have its contents replenished with something that’s not kosher. A third important reason that directly relates to the franchised stores is the issue of processing. Since these ingredients will be further processed, either by frying for the donuts or baking for the muffins and bagels for example, the equipment used for this processing can’t be shared with any other products that are not kosher like the non-corporate brand products such as eggs, soups, sausages etc., that are being prepared in the same franchise store.

Hence it is imperative that each franchise store be supervised independently by a reliable kosher agency. The kosher agency will ensure among other things, that all packaging of the specially formulated ingredients have the proper kosher designations from the kosher certifications that they recognize. They will also monitor that the patented finished products are being processed on equipment that is used to prepare exclusively kosher products. Fourthly, they will keep tabs on a franchisee that may be unscrupulous and purchase non-kosher generic brands over the licensed kosher corporate brands.

By the same token, kosher consumers must be careful when they see concession stands, trade shows, bakery displays at supermarkets, or franchised stores that publicly exhibit Letters of Kosher Certification listing their products. Products that are loose or in unsealed packages, are not covered and in fact precluded from this kosher certificate. It may very well be that the products at one time were kosher certified, but outside their sealed packages there can be no assurances, as non-kosher product may have been substituted for kosher or products may have been finished on non-kosher equipment. The only kosher assurance for outfits such as these is for their premises to be separately supervised by a reputable kosher agency.

Another consideration that must be attended to before a franchise store is kosher certified is the matter of ownership. Perchance the franchisee is Jewish, there are several issues that must be handled properly before kosher certification is granted. For beginners, the franchise store should be closed on Shabbos and Yom Tov. Secondly where applicable, a system for hafrashas challah may need to be implemented, as the case may be. Moreover a valid mechiras chometz with the franchisee will have to be transacted to circumvent the problem of chametz sheavar alav haPesach.

Where the franchisor or parent company is Jewish, a wholly complex problem arises. Even if the franchisee is a non-Jew, an arrangement must be made to ensure that his store is not supplied chometz product from the Jewish franchisor during Pesach. This involves the franchisor to desist from manufacturing or distributing chometz during Pesach. Parenthetically, William Rosenberg sold his Dunkin Donuts business in 1990 to Allied Domecq and it appears that today the principle owners are not Jewish.

Then there is the question of the non-Jewish franchisee or any of his hired non-Jewish workers who will perform the cooking in the franchise store. What about the prohibition of bishul akum – cooking performed by a non-Jew?

Before addressing this problem, we must first understand what is being cooked to begin with. Baked products are subject to the leniency of pas paltar (non-Jewish commercial baking), and are permitted for those who are not particular to eat only foods baked by a Jew (pas Yisroel). Hence Dunkin Donuts muffins for example, are permitted for those who eat pas paltar, since the muffins come from a batter that is strictly baked in an oven. A more interesting question arises in relation to bagels. Bagels have a glossy smooth crust and are chewy because their dough is baked in the oven only after it is first proofed by boiling it in a kettle. Rav Moshe Feinstein zt”l (Igros Moshe Yoreh Deah vol. 2 siman 33), ruled that the boiling of the bagels in the kettle doesn’t constitute bishul akum, since at the time the dough is boiled, it still is inedible. It’s only the subsequent oven baking per se that makes the bagel edible. As such the bagel is to be considered a baked food and not a cooked food.

We are now left with the issue of donuts. Donuts are made by deep-frying their dough in oil. The Shulchan Aruch considers frying in the category of cooking and is subject to the prohibition of bishul akum. There are those that are lenient here too however for the following reason: The opinion of Rabbenu Tam (Pesachim 37b) is that fried thick dough is considered pas (bread) and not bishul (cooked). Accordingly it follows that like all baked dough, challah should be separated, and one would recite hamotzi on bread that came from fried dough. However, the Shulchan Aruch in both these cases adjudicates for the opposite position; i.e. fried dough has no obligation of challah (Yoreh Deah 329:1,3) and one should not recite hamotzi on fried dough even if it has the appearance of bread (Orach Chaim 168:13). One can then deduce that according to the Shulchan Aruch, fried dough is to be considered cooked and not baked, and that there should be a prohibition of bishul akum, contrary to Rabbenu Tam. However curiously, the Shulchan Aruch doesn’t explicitly opine either way in reference to bishul akum for fried dough. In accordance with this conspicuous omission, the Aruch HaShulchan (Yoreh Deah 112:31) brings the opinion of the Pri Chadash that in fact thick fried dough is to be considered a baked product (afiah not bishul) in reference to bishul akum and is not subject to its prohibition. It so happens to be that most donuts are made from thick dough that is yeast based. However, the Pri Chadash himself bases his decision on the opinion of the Rivash who follows the ruling of Rabbenu Tam for all matters that relate to fried dough (i.e. challah, hamotzi, bishul akum). The reason for this must be that the ruling of Rabbenu Tam is not to be rejected altogether, and can be followed in limited cases where there is a safek d’rabbanan such as in the prohibition of bishul akum (Yehaveh Daas Volume 5 Siman 53). Add to this the fact that donuts are generally not served at elaborate functions (i.e. weddings), and therefore qualify for the dispensation of ano oleh al shulchan melachim, which is excluded from the prohibition of bishul akum.

At any rate, while there is solid ground to be lenient with donuts, there are kashrus agencies that make sure the flames of the fryolators used to fry the donuts at a Dunkin’ Donuts franchise store for example, are ignited by a Jew. This then offsets entirely the issue of bishul akum.

The upshot of the above is that there are indeed concerns that must be addressed when making a franchise store kosher. However, as we have seen, it is quite feasible to kosher certify a franchise store by means of a reliable kosher agency being true to the task.