A class action lawsuit was filed by a group of Tim Hortons franchisees against the parent company for mismanagement of the brand, blaming the chain’s proprietors for making it harder for them to remain in the business.
The group of franchisees, who call themselves the Great White North Franchisee Association, say that as far back as the firm Restaurant Brands purchased the notable coffee and doughnut chain and merged it with Burger King in 2014 their expenses have expanded, however the new proprietors haven’t enabled them to raise costs to recover those expenses.
The class action lawsuit was filed on Monday, seeking for $500 million in damages. They first worked with the management in closed doors to attempt to address their worries after they opened up to the world about their protests prior this year.
“Since its acquisition,” the statement of claim reads, “[Restaurant Brands] has used various strategies to extract more money out of the Tim Hortons franchise system at the expense of franchisees.”
The lawsuit is in the interest of one franchisee, 1523428 Ontario Inc., which possesses two Tim Hortons establishments in the Toronto range, yet looks for different offended parties to join the court action.
The legal claim must be affirmed before continuing, which implies a judge must choose whether a class action is the proper course of action, from a legitimate point of view.
“Changes instituted by RBI over the past two years have shaken the system, threatened the brand and affected the ability of franchisees to carry on viable business,” the group says on its website.
Among the charges in the statement of claim is that the parent company is abusing the a large number of dollars that franchisees pay for marketing.
According to the terms of their franchise agreements, Tim Hortons franchisees are required to contribute 3.5 percent of their net sales each year into a fund used to market the chain collectively.
Canadian franchisees have contributed a sum of $700 million to the supposed advertisement fund, since Restaurant Brands purchased the chain.
The statement of claim says that since the RBI takeover, franchisees have little say in how that advertisement fund is spent, and they claim a portion of the funds in it are being spent on things that don’t help market the chain.
“RBI has funnelled this money to itself, TDL and the individual defendants at the wrongful expense of the franchisees,” the statement of claim says.
Individual executives Tim Hortons president Elias Diaz Sese, and Restaurant Brands CEO Daniel Schwartz including the corporate entities of Tim Hortons and Restaurant Brands are the ones the lawsuit is launched against.
Tim Hortons’ Canada President Sami Siddiqui sent a letter to all Canadian franchisees on Monday, echoing that tone. ”
“We vehemently disagree with and deny all the allegations that have been made about our business and the brand,” Siddiqui said. “It is very unfortunate that certain owners have chosen to make these public accusations given that we have offered to let any owner come in and review the numbers with us, line by line, as we have done in the past. As we have discussed many times before, these types of public accusations will only hurt the brand that all of you have worked so hard to build.”