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

Competition offers $2,000 to Ladysmith and area playwright

Yellow Point Drama Group continues focus on supporting and nurturing local arts scene in 2019

Editorial: Federal byelection, if it happens, is no reason for voter fatigue

If indeed a byelection is called to choose a Nanaimo-Ladysmith MP, we might as well embrace it

Two of Chemainus photographer Marston’s images picked among National Geographic’s 2018 elite

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

Strong winds up to 100 km/h for parts of Vancouver Island

Wind warning in effect for north, east and west Vancouver Island into Saturday morning

Police officer recounts wild car chase through downtown Ladysmith and Duncan

B.C. Supreme Court trial of Armaan Singh Chandi hears of pursuit following Nanaimo drive-by shooting

VIDEO: Students in MAGA hats mock Native American at Indigenous Peoples March

Diocese in Kentucky says it is investigating the matter, caught on video by onlookers

CONSUMER REPORT: What to buy each month in 2019 to save money

Resolve to buy all of the things you want and need, but pay less money for them

Want to avoid the speculation tax on your vacant home? Rent it out, Horgan says

Premier John Horgan and Sheila Malcolmson say speculation and vacancy tax addresses homelessness

UPDATE: B.C. woman and boy, 6, found safe, RCMP confirm

Roseanne Supernault says both she and her six-year-old nephew are fine and she has contacted police

PHOTOS: Women’s Marches take to the streets across B.C. and beyond

Women and allies marched worldwide protesting violence against women, calling for equality

Anxiety in Alaska as endless aftershocks rattle residents

Seismologists expect the temblors to continue for months, although the frequency has lessened

Women’s March returns across the U.S. amid shutdown and controversy

The original march in 2017, the day after President Donald Trump’s inauguration, drew hundreds of thousands of people

Federal Liberals announce former B.C. MLA as new candidate in byelection

Richard Lee will face off against federal NDP leader Jagmeet Singh

No winning ticket in $10 million Lotto Max jackpot

No win in Friday night’s draw means the next Lotto Max draw will be approximately $17 million

Most Read