A group of Tim Hortons franchisees have launched a $500-million class-action lawsuit against the parent company for mismanagement of the brand, accusing the chain’s owners of making it harder for them to stay in business.
The group of franchisees, who call themselves the Great White North Franchisee Association, say that ever since the firm Restaurant Brands bought the iconic coffee and doughnut chain and merged it with Burger King in 2014 their costs have increased, but the new owners haven’t allowed them to raise prices to recoup those costs.
They went public with their complaints earlier this year, but after working with management behind the scenes to try to address their concerns, they launched the class-action lawsuit on Monday, seeking $500 million in damages.
“Since its acquisition,” the statement of claim reads, “[Restaurant Brands] has used various strategies to extract more money out of the Tim Hortons franchise system at the expense of franchisees.”
The suit is on behalf of one franchisee, 1523428 Ontario Inc., which owns two Tim Hortons franchises in the Toronto area, but seeks other plaintiffs to join the court action.
The class-action lawsuit must be certified before proceeding, which means a judge must decide whether a class action is the appropriate course of action, from a legal perspective.
“Changes instituted by RBI over the past two years have shaken the system, threatened the brand and affected the ability of franchisees to carry on viable business,” the group says on its website.
Marketing money misspent
Among the allegations in the statement of claim is that the parent company is misusing the millions of dollars that franchisees pay for marketing.
As per the terms of their franchise agreements, Tim Hortons franchisees are required to contribute 3.5 per cent of their net sales every year into a fund used to market the chain collectively.
Since Restaurant Brands bought the chain, Canadian franchisees have contributed…