Restaurant Brands International recently unveiled, in whole, its ‘Working Together’ plan to rejuvenate the Tim Horton’s brand and improve relations with its franchisees. Now, its U.S. franchisees are following the example of their Canadian cousins, filing a lawsuit against Head Office…
The whole mess started with the acquisition of Tim’s and Burger King by 3G holdings
of Brazil – which left their management to Restaurant Brands International.
We’ve posted in this space many times about the odyssey of Restaurant Brands International (RBI), the company formed by Brazilian holdings giant 3G from the acquisition and merger of Tim Horton ‘s and Burger King. While Burger King seems to be sailing along just fine in its eternal quest to challenge market leader MCDonald’s, things have been going from bad to worse for Tim’s.
Now, the U.S. chapter of the Great White North Franchisee Association, set up to fight Tim’s head office on moves that have left some franchisees feeling disenfranchised, has followed its Canadian cousin into court with a lawsuit of their own.
Similar complaints…
U.S. franchisees have complaints that mirror some of the Canadian lawsuits’ claims, notably that the head office has been using pooled funds targeted to chain-wide marketing to defray its own overheads and costs, and that RBI is inflating the cost of supplies franchisees must buy from, or through, the head office.
And the lead lawyer on the U.S. franchisees’ case says this claim is merely the precursor of ‘broader’ claims to come.
On top of that, there are already a number of smaller, non-class action suits on the go in the U.S. in which franchisees are claiming breach of contract.
RBI blames the media…
Calling the Great White North Franchisee Association (GWNFA) a ‘splinter group’, RBI says the media are responsible for recent drops in sales and popularity at Tim’s outlets in Canada, because the media have covered he conflict between franchisees and head office and generated ‘negative perceptions’ of the brand.That amounts to ‘I didn’t do it – he did it!’, the last resort of the playground bully.
Far from a splinter group, the GWNFA has signed up more than 60 per cent of Canadian Tim’s operators.
The GWNFA’s claims seem valid…
But, the rancor aside, there is much to recommend the veracity of the claims by Horton’s franchisees on both sides of the border that they have been abused, and that contractual promises made at the time Tim’s was taken over by RBI have not been kept.
I’m especially suspicious that RBI – if it is not guilty of the franchisees’ claims – has not offered up evidence to that effect, a move which would have shut down the lawsuits long ago. All RBI has done is belittle the rebellious operators as rabble rousers and an insignificant minority, and issue statements such as this:
“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. Together with our restaurant owners we are working hard to strengthen our brand, enhance long-term franchisee profitability, and provide the best possible experience for our guests.”
Time to fess up and confront reality…
I think the head office has to do much more than that desperately deny its culpability in the ongoing mess. It’s time for RBI to wither admit wrongdoing and offer proper compensation to its franchisees. But that isn’t likely, given the battle lines already drawn in the dispute. It will most likely take a long, bitter court battle to resolve the matter, and that won’t be a good thing for Tim’s head office, operators or customers.
~ Maggie J.