Minnesota franchisee files lawsuit against Tim Hortons

A Tim Hortons franchisee accused the coffee chain on Wednesday of baiting him into spending “millions” on an ill-fated expansion, according to a lawsuit filed in Minnesota district court.

The franchisee — Tim-Minn Inc. — is wholly owned by an Ontario company led by Paul Durigon, a Canadian whose construction firm helped build several Tim Hortons locations across Canada. Though Durigon’s company served as a landlord to “a few” of the franchises, according to the lawsuit he had no experience in franchising or the restaurant industry. In 2016, his Tim-Minn group nevertheless spearheaded Tim Hortons’s ambitious push into Minnesota, agreeing to open 280 franchises in a state where previously there had been none.

In the complaint Wednesday, Tim-Minn said Tim Hortons USA Inc. and its parent, Restaurant Brands International Inc., “took advantage” of the new franchisee’s inexperience, allegedly charging high markups on supplies and selling used equipment to Tim-Minn restaurants “at current market value for new equipment.”

Tim-Minn said the expansion has stalled, with only 14 of 280 stores actually open — none of which are as profitable as Tim Hortons USA allegedly signalled they would be in a “data pack,” according to Tim-Minn’s lawyer. “They baited my client with these figures from the data pack, which had no basis in reality,” said the lawyer, Jerry Marks of the New Jersey-based Marks & Klein LLP.

On Wednesday, Restaurant Brands International dismissed the claims, casting Tim-Minn as a rare failure among thousands of successful franchisees. “This is an issue of a restaurant operator in the U.S. who says he did not find success with a proven business model that thousands of others in Canada have already succeeded with," RBI spokeswoman Jane Almeida said in a statement. She did not answer questions Wednesday.

The franchisee seeks monetary compensation and damages. No amount was specified. It accuses Tim Hortons of 10 counts of wrongdoing, including fraud, negligent misrepresentation, breach of contract, unjust enrichment, and breach of implied covenant of good faith and fair dealing. None of the claims have been proven.