Tim Hortons-RBI battle heats up

| by S.A. Whitehead
Tim Hortons-RBI battle heats up

photo istock

The growing dispute — in both the media and the courts — between Tim Hortons U.S. franchisees and Restaurant Brands International is increasing in intensity, seemingly by the moment.

A news release today said that franchisees from the Great White North Franchisee Association have formed a U.S.-based association to represent the U.S. contingent. That branch of GWNFA is represented by the firm of Zarco Einhorn Salkowski & Brito P.A., ZESB for short. 

U.S.-based Tim Hortons franchisees are overseen by TDL Group Corp. and its parent, RBI, both of which the franchisees allege have increasingly mismanaged the chain's restaurants in the U.S., though most of the brand's stores are in its original home base in Canada. 

Last week, Canadian franchisee Mark Kuziora petitioned the Ontario Superior Court to grant class action status to his lawsuit against RBI, TDL, and executives of the two businesses, alleging a breach of their obligations to Tim Hortons store owners in Canada. The Canadian and U.S. associations are working jointly to press allegations that include: 

•    abuse of procurement powers to expropriate franchisee profits;
•    imposition of performance metrics designed to enable expropriation without compensation;
•    intimidation of franchisees;
•    inability to sell franchises at fair market value; and
•    misuse of monies from the franchisees' ad fund.

The U.S. organizations allege that the chain has been critically weakened in both countries as a result of the mismanagement and they claim that many U.S. locations are losing money. 

"The long-term success of franchise systems like Tim Hortons depends on trust in the franchisor and a fair and equitable distribution of profits," ZESB representative Robert Einhorn said in the release. "Since taking ownership, trust in RBI has disintegrated and it has aggressively imposed changes to the system without consultation and with contempt for the financial wellbeing of franchisees in the front line.

"As demonstrated by the progress of fellow owners north of the border, Tim Hortons franchisees need to stand firm and hold RBI to account. The association looks forward to bringing our collective strength to bear."

The membership of the U.S.-based association represents about half of all franchisees here in three primary states — Ohio, Michigan and New York.

However, membership is open to all franchisees nationwide, except those controlled by TDL, RBI or the owners of those two companies, the release said. 

The suit filed last week asks for $500 million in damages, claiming that RBI used national advertising funds improperly.

RBI, also the parent company of Burger King, acquired the Tim Hortons brand three years ago. At that time, U.S. franchisee Mark Kuziora alleges, TDL began to charge franchisee fees for previously uncharged services, such as training. Kuziora further alleges that funds raised through those fees were then deposited in RBI's advertising fund, without required statements. 

RBI leaders, including CEO Daniel Schwartz, have been named as defendants in the proposed class action. RBI has denied the allegations. 

Photo: iStock

Topics: Burger/Steak/BBQ, Coffee/Bakery/Donut, Franchising & Growth, Legal Issues

S.A. Whitehead

Award-winning veteran print and broadcast journalist, Shelly Whitehead, has spent most of the last 30 years reporting for TV and newspapers, including the former Kentucky and Cincinnati Post and a number of network news affiliates nationally. She brings her cumulative experience as a multimedia storyteller and video producer to the web-based pages of Pizzamarketplace.com and QSRweb.com after a lifelong “love affair” with reporting the stories behind the businesses that make our world go ‘round. Ms. Whitehead is driven to find and share news of the many professional passions people take to work with them every day in the pizza and quick-service restaurant industry. She is particularly interested in the growing role of sustainable agriculture and nutrition in food service worldwide and is always ready to move on great story ideas and news tips.

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