Tim Hortons franchises cite ‘intimidation’ by parent RBI
TORONTO — A group representing about half of Canada’s Tim Hortons franchisees has vowed to “to do everything in our power” to assist an outspoken member whose restaurant licence renewal was denied amid his ongoing tensions with the fast-food giant.
In a letter sent to franchisees on Monday and obtained by the Canadian Press, the Great White North Franchisee Association board said it is “appalled” that Mark Kuziora, who owns two Toronto Tim Hortons franchises, was allegedly told by Tim Hortons parent company Restaurants Brands International in early April that he would be denied a renewal for one of the restaurants at the end of August.
The board said Kuziora had been negotiating with RBI and TDL Group, a Tim Hortons subsidiary, since September and trusted the negotiations were being done “in good faith.” Last week it said he received an email from RBI and TDL “out of the blue,” saying they will be in touch with him in the coming weeks to discuss the transfer of the restaurant to a new owner.
The move follows months of spats between GWNFA and Tim Hortons over everything from cost-cutting measures to a classaction lawsuit lodged on behalf of Kuziora over the company’s alleged improper use of a national advertising fund. GWNFA said it considers the latest move against Kuziora an intimidation tactic.
“The management at RBI has no idea how hard we are going to hit back. We will not stand by and let a good franchisee, who cares deeply about his fellow franchisees and the brand, be railroaded this way,” the board said. “This action is unfair, unethical and a manifestation of the lack of character of RBI management. You cannot trust them. Don’t doubt for one minute that you are next.”
Tim Hortons said in an email to the Canadian Press that Kuziora doesn’t have any renewal rights under the licence agreement for the restaurant. “We regularly onboard new restaurant owners and transition restaurants as part of our normal course of business activity,” the statement said.
Tony Wilson, a Vancouver lawyer who specializes in franchising, said it’s not unheard of for franchisors to deny franchisees renewal.
He considers Tim Hortons to offer a lucrative franchise opportunity, but said when spats such as this become public it “doesn’t do great things for the brand.”
He hasn’t seen a copy of Kuziora’s agreement with the company and Tim Hortons hasn’t said why he’s being denied a renewal, but Wilson said if there was a breach of their agreement, Tims could have the right to terminate or not renew the contract.
However, if there are no reasonable grounds for not renewing Kuziora’s licence and the company is doing this because of Kuziora’s involvement in GWNFA, Wilson said the company is in the wrong. “For Tims not to renew they better have a good reason,” said Wilson. “I think it is a dangerous strategy for Canada’s feelgood franchisor.”
GWNFA president David Hughes called the fast food company’s actions “preposterous” and said Kuziora has been “an exemplary franchisee for years and has given his heart and soul to the chain.”
However, Kuziora was recently the lead plaintiff in a class-action lawsuit that alleged RBI used money from a national advertising fund improperly. Kuziora accused RBI of funnelling nearly $700 million to be used for advertising, marketing and sales promotions to itself and TDL.
At the time, RBI said it “vehemently” disagreed with and denied all the allegations.
Its current spat with Kuziora comes after the company faced fierce criticism and customer campaigns to boycott the restaurant chain in January after two Cobourg, Ont., franchises moved to offset Ontario’s minimum wage hike by cutting paid breaks and forcing workers to cover a bigger share of their benefits.
In February, tensions flared when some franchisees experienced cash register outages that forced them to partially or fully close some stores. GWNFA demanded compensation for the outages, caused by a virus, and threatened legal action if it didn’t get a meeting with RBI to discuss “deficient IT practices.”
A month later, they were sparing again over a $700-million renovation plan to bring a more natural look and open-concept seating to restaurants. GWNFA said the plans — which asked franchisees to kick in $450,000 each for renovations — were “ill-conceived.”
GWNFA’s letter said Kuziora was willing to have his place undergo renovations and called him a “good operator who has put his life savings into his business.”