Not a ‘rogue group,’ franchisees insist as association grows in battle against RBI
Coalition sends letter to owners as it pursues lawsuits vs. Tim Hortons parent
The organization of Tim Hortons franchisees that is suing its corporate parent has recruited half of the coffee-and-doughnut chain’s Canadian restaurant owners to its ranks.
A letter sent Friday to all Tim Hortons restaurant owners from the Great White North Franchisee Association intends to dispel Restaurant Brands International Inc.’s contention that only a small number of store owners are unhappy with management’s practices, saying 50 per cent of the chain’s roughly 1,100 franchisees have now joined the group.
“We are certainly not just a ‘rogue group of franchisees’, or ‘a small group of disgruntled store owners’ that RBI would have you believe,” reads the letter from association president David Hughes, a copy of which was obtained by the Financial Post.
The group of aggrieved Tim Hortons owners formed the GWNFA in March to address concerns they say were being ignored by an elected franchisee board that deals with management.
Since then, the group has grown to about 550 of the company’s roughly 1,100 Canadian franchisees, who operate more than 3,500 restaurants across the country.
Tensions have been building between the franchisees and Restaurant Brands since Tim Hortons was taken over in late 2014 by Burger King owner 3G Capital, a Brazilian private equity firm that merged the two in late 2014 to form Restaurant Brands International.
In February, Restaurant Brands bought the Popeyes Louisiana Kitchen chain for US$1.8 billion.
While Restaurant Brands has been pursuing an aggressive growth agenda with Tim Hortons internationally since the takeover, striking deals to open units in the Philippines, Scotland and Mexico, more than 80 per cent of the brand’s restaurants are located in Canada.
Earlier this month, GWNFA filed an $850-million class action lawsuit against RBI, alleging bullying and intimidation on the part of the fast food operator, who they say is attempting to force the franchisees who formed the GWNFA out of the system.
The suit followed a move last month by Tim Hortons’s corporate parent, which issued default notices, a legal attempt by a master franchisor to take away a franchisee’s restaurants, to all nine of GWNFA’s board members. The franchisee group members also allege that the company is interfering with their legal right to form an association.
RBI has said repeatedly it will not deal with GWNFA directly, and that franchisees should discuss any grievances with the elected franchisee board.
“We recently issued default notices to a small group of restaurant owners who we believe are deliberately releasing confidential information to the media, which harms the businesses of the thousands of hardworking restaurant owners who built this great brand,” the restaurant chain said in response to the lawsuit filed in early October.
“This latest tactic of filing another unfounded lawsuit and sharing it with the media is yet another example of their disregard for the brand and our restaurant owners.”
The same group of Tim Hortons franchisees filed a $500-million class action lawsuit in June alleging head office has mismanaged their advertising fund and had vastly increased the costs of the products they are required to buy from the corporation.
In the letter issued Friday, the GWNFA says it will defer fee payments to join the group over a six-month period in order to allow store owners who are struggling financially to be part of the association.
Hughes could not be reached for comment on Friday.