A coffee and donut from Tim Hortons is seen at a Coquitlam B.C., location on April 26, 2018. THE CANADIAN PRESS/Jonathan Hayward

Tensions brew between Tim Hortons franchisees and parent company

U.S. Tim Hortons franchisee association sues parent company over contract clause

Ongoing tensions between Tim Hortons franchisees and the chain’s parent company have spilled over into the United States, where a dissident group of franchisees has filed a new lawsuit.

The Great White North Franchisee Association’s U.S. branch, a group claiming to represent at least half of the owners of Tim Hortons restaurants south of the border, said Thursday that it is suing Restaurant Brands International, which has headquarters in Oakville, Ont., over a contract clause forcing all disputes to be handled in a Miami court.

RELATED: The hard truth about Tim Hortons

“RBI claims to be a Canadian-based company to avoid U.S. taxes but yet when franchisees attempt to pursue legal claims against its various brands, including Tim Hortons, RBI takes a conflicting position and claims to be a Miami, Fla.-based company,” the association’s lawyer Robert Einhorn said in a statement Thursday.

“It uses its forum selection clause in its franchise agreements to force all litigation in its favoured court, the federal court located in Miami. These contract disputes are based on state law and properly belong in the state courts.”

The group, which has vocally opposed RBI strategy, argues that instead, owners should have their dispute handled in the franchisees’ home state.

The company said Thursday it cannot comment on the specifics of the ongoing legal matter, but added the allegations “are completely false.”

“We’re proud of the way we conduct our business, and nothing will distract us from our primary focus, which is serving the needs of our restaurant owners and guests,” it said in a statement.

The company has ties to Miami because it also owns Burger King, which has its headquarters in the city.

The GWNFA U.S. group’s litigation follows months of public tension between the GWNFA’s Canadian franchisees and the parent company over cost-cutting measures, a $700-million renovation plan and delays in the delivery of supplies.

The group has also backed a franchisee’s class-action lawsuit filed in Canada over the company’s alleged improper use of a national advertising fund.

The tensions pushed the franchisee advisory board of Tim Hortons to write to the GWNFA last month pleading with the group to stop airing their complaints publicly because they claimed it was damaging the brand and affecting owners’ livelihoods.

It prompted BMO Capital Markets analysts to downgrade RBI’s stock to market perform status from outperform and came as a survey BMO conducted found Canadians are choosing to frequent Tim Hortons less often as a result of the tension between franchisees and RBI.

“We believe that continued negative press on Tim Hortons, like an additional class action lawsuit, could cause ongoing pressure on the Tim Hortons same store sales results,” said BMO analyst Peter Sklar in a note Thursday.

“In addition, we also believe that further negative developments on the deterioration of the franchisee/franchisor relationship (as is implied in the class action lawsuits) may cause delays in the U.S. and international development plans for Tim Hortons.”

RELATED: Is Canada losing its love for Tim Hortons?

However, Einhorn is hoping the lawsuit will help the GWNFA U.S. win another suit it plans to file that accuses RBI of improperly using money from its advertising fund to curb overhead expenses, which he says are unrelated to advertising and the promotion of the brand.

He plans to file the U.S. advertising fund lawsuit after the Canadian case connected to allegations of the company’s improper use of its $700 million Canadian advertising fund wraps up. The GWNFA is seeking $500 million in damages for that suit, which is based on franchisees contributing 3.5 per cent of their gross sales to the fund.

The GWNFA wrote to Navdeep Bains, the federal innovation minister earlier this year, alleging that RBI failed to live up to promises made under the Investment Canada Act in 2014. Bains’s office has said it is looking into the claim.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Over $650,00 given to rural communities thanks to Rural Dividends

Five communities, including Williams Lake, are receiving $10,000 for project grants

B.C Biathlon event to be held in Quesnel this weekend

Cariboo Ski Touring club expecting athletes from across B.C.

Debate over waterslide ommission from a CRD federal grant request

Waterslide would add $2.5 million to proposed Quesnel Rec Centre upgrade

Cheng² Duo to perform in Quesnel next week

The siblings have performed all over the world

City of Quesnel’s online budget survey is open until Jan. 30

Residents are being asked to provide input into 2019 budget

B.C. opioid crisis to get same world-renowned treatment approach as HIV/AIDS

A program that focuses on treatment as prevention will roll out Jan. 17

Olympian snowboarder Max Parrot diagnosed with Hodgkin’s lymphoma

Each year in Canada, approximately 900 people are diagnosed with Hodgkin’s lymphoma

Man, 31, charged in Cache Creek fatal shooting

Corey Richard Harkness appeared on one count of murder in provincial court in Kamloops

‘Prince of Pot’ Marc Emery accused of sexual assault, harassment

Emery denied the allegations, but a Toronto woman says she is not the only one speaking out

Vancouver Island photographer makes National Geographic’s 2018 elite

Rare double honour for Marston from the 36 best Your Shots out of nearly 19,000 photos

Ex-Liberal candidate in Burnaby, B.C., says volunteer wrote controversial post

Karen Wang dropped out following online post singling out NDP Leader Jagmeet Singh’s ethnicity

Asteroids are smacking Earth twice as often as before

The team counted 29 craters that were no older than 290 million years

Canada’s arrest of Huawei exec an act of ‘backstabbing,’ Chinese ambassador says

China has called Canada’s arrest of Huawei chief financial officer Meng Wanzhou ‘politically motivated’

In limbo: Leftover embryos challenge clinics, couples

Some are outright abandoned by people who quit paying storage fees and other couples struggle with tough decisions

Most Read