Coffee shops go to court
Tim Hortons franchisee in St. Louis sues parent company, closes two locations
A U.S. Tim Hortons franchisee has closed two restaurants amid a dispute with the coffee shop company.
Show Me Hospitality LLC, a developer for Tim Hortons in the St. Louis area, is suing Tim Hortons USA Inc. for failing to meet its obligations.
The franchisee says after Restaurant Brands International Inc. (TSX:QSR) acquired Tim Hortons in 2014 it asked Show Me Hospitality to increase its obligations to develop Tim Hortons restaurants in the St. Louis area from 40 restaurants over five years to more than 200 restaurants over 10 years.
However, after Show Me Hospitality says it rejected the demand, it alleges Tim Hortons stopped approving locations for restaurants and failed to provide branding and advertising.
It also alleges Tim Hortons withheld approval of new partners and necessary capital investment and said that if Show Me Hospitality did not commit to the 200 restaurant program, it would terminate the area development agreement.
The allegations have not been proven in court.
In an email, a Restaurant Brands International spokesperson says the company “strongly denies” the claims brought by the franchisee, adding that they refer to a small number of U.S. restaurants.
The fight comes amid other disputes between Tim Hortons franchisees and Restaurant Brands.
In Canada, the Great White North Franchisee Association has been looking to raise franchisee concerns including the use of advertising funds and cost-cutting measures that it says impact product quality.