Tim Hortons U.S. franchisees launch suit against parent

TORONTO A group of Tim Hortons’ franchisees in the U.S. is taking parent company Restaurant Brands International to court, following in the footsteps of unhappy Canadian franchisees who have done the same.

The U.S. chapter of the Great White North Franchisee Association has filed suit in Miami, Fla., over a contract clause that they say forces all litigation between franchisees and their parent company to be handled in a federal court in Florida rather than disputing them in the states where the restaurant owners are based.

The suit will serve as a precursor to a broader franchisee lawsuit, the franchisees’ lawyer says, that alleges RBI has misused money from a franchisee advertising fund in order to defray its own overhead expenses and squeezed franchisee profits by artificially inflating the price of commodities that franchisees are required to buy from head office.

Last year, the corresponding group of Canadian franchisees filed two class action lawsuits against RBI, alleging misuse of the ad fund and harassment and intimidation from head office. Both actions have yet to receive court certification.

“The (U.S.) franchise agreements all require the litigation to be filed in Tim Hortons’ principal place of business,” said Robert Einhorn, a Miami-based lawyer for the U.S. franchisee group, whose membership includes 50 per cent of the franchisees in the country. “These are state law issues and we don’t believe they belong in federal court.”

He said the corporation, formed in 2014 when Brazilian investment firm 3G Capital merged Tim Hortons with Burger King and relocated head office to the Canadian chain’s homeground of Oakville, Ont., purports to be a Canadian-based company in order to avoid U.S. taxes, “but when franchisees attempt to pursue legal claims … RBI takes a conflicting position and claims to be a Miami, Florida based company.”

There are multiple ongoing court actions in the U.S. between the parent company and its franchisees over issues such as breach of contract.

“We can’t comment on the specifics of any ongoing legal matters, however, these allegations are completely false,” Restaurant Brands International said Thursday in a statement responding to news of the U.S. litigation.