Settlement within reach

TIM HORTONS, FRANCHISEE GROUP CLOSE TO SETTLING TWO CLASS-ACTION LAWSUITS

Tim Hortons and an association representing some of its frustrated franchisees are close to reaching a settlement in two class-action lawsuits the group filed against the coffee-and-doughnut chain.

Tim Hortons and the Great White North Franchisee Association submitted a term sheet signed by their respective legal counsel to justice Edward Morgan at the Ontario Superior Court of Justice Wednesday.

“I think both parties, we’ve worked really hard to reach this point and I think that it’s going to be positive for the Tim Hortons brand moving forward and for our guests and for Tim Horton franchisees,” said Mark Walker, the GWNFA’s president.

The three-page document, which comes after weeks of negotiations between the two parties, is nonbinding, but outlines the key points to a future settlement in the two cases.

The first lawsuit, filed in June 2017, alleged Restaurant Brands International, the parent company of Tim Hortons, improperly used funds from a national advertising fund. It sought $500 million in damages. RBI denied the allegations and they have not been proven in court.

The second lawsuit, filed in Oct. 2017, alleged RBI subverted the franchisees’ right to associate by denying future store opportunities to franchisees “not aligned” with the chain’s interest, for example, or setting aside a $2-billion fund to buy out the GWNFA’s current and future members. RBI also denied these allegations and they were also not proven in court.

The key terms of a future settlement address some of these concerns, said Walker and a source familiar with the case.

The parties agree that the coffee chain’s elected advisory board remains the only organization that represents the franchisees’ interest. Though, that does not mean the dissolution of the GWNFA, which Walker said will continue to serve its membership and help franchisees in whichever way it can.

The term paper states Tim Hortons has not interfered with any franchisee who joins or participates in an association, and will not do so in the future.

Tim Hortons will shorten members’ terms from four years to three and will shift to electronic voting. Previously, only franchisees who attended the chain’s convention could cast a ballot.

Additionally, four members of the advisory board will review substantial details of the advertising fund spending at least four times a year in an apparent effort to increase transparency of the disputed monies.