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

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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The Nisga’a Valley Health Authority reported an isolated cluster of COVID-19 cases among non-direct care staff at the New Aiyansh Health Centre. (Gary Fiegehen/Nisga’a Lisims Government)
New Aiyansh Health Centre experiencing COVID-19 cluster among non-direct care staff

Nisga’a Valley Health Authority asking residents to cancel appointments outside the Nass Valley

A photo of the CervixCheck at-home test kit, developed by Eve Medical. (Submitted Photo/Katina Pollard, Métis Nation British Columbia)
Pilot project puts cancer screening into the hands of northwest B.C. women

Métis women experience barriers to cervical cancer screening

Brett Alexander Jones is wanted on several warrants province-wide, in connection with multiple charges. Jan. 21, 2021. Kitimat RCMP photo
Kitimat RCMP searching for man wanted on several warrants province-wide

Jones is described as a five-foot 10-inches Caucasian man, with blond hair and blue eyes.

The Nisga’a Lisims Government has extended its state of local emergency. (File photo)
Nisga’a state of local emergency extended, vaccines delayed

There are 21 active COVID-19 cases in the Nisga’a Valley Health Authority

Businesses continue to struggle under COVID-19 restrictions as the pandemic reaches the one-year mark. (B.C. government)
Another 564 COVID-19 cases, mass vaccine plan coming Friday

15 more deaths, community cluster declared in Williams Lake

A specialized RCMP team is investigating a suspicious trailer, which might have connections to the illicit drug trade, found abandoned outside a Cache Creek motel. (Photo credit: <em>Journal</em> files)
Police probe U-Haul trailer linked to illicit drugs left outside Cache Creek motel

Hazardous materials found inside believed to be consistent with the production of illicit drugs

Premier John Horgan leaves the podium following his first press conference of the year as he comments on various questions from the media in the Press Gallery at B.C. Legislature in Victoria, B.C., on Monday, January 13, 2020. THE CANADIAN PRESS/Chad Hipolito
Interprovincial travel restrictions a no-go, Horgan says after reviewing legal options

The B.C. NDP government sought legal advice as concerns of travel continue

Gem Lake Top, at Big White Ski Resort, seen at Jan. 8. (Big White Ski Resort)
Big White cancels $7.3M in lift tickets, accommodations due to COVID-19 orders

Since November, the ski resort has been forced to make several changes

Darlene Curylo scratched a $3M ticket, BCLC’s largest ever scratch and win prize. (BCLC)
Kelowna woman in shock after winning BCLC’s largest-ever instant-ticket prize

Darlene Curylo couldn’t believe her eyes when she saw the amount of money she’d won from a scratch ticket

While each person has different reasons for becoming homeless, a UBCO study shows they learn through their interactions with different services to perform ‘as homeless’ based on the expectations of service providers. (Contributed)
Kelowna homeless forced to ‘perform’ for resources, says UBCO study

One participant in the study said ‘It is about looking homeless, but not too homeless’

Gov. Gen. Julie Payette takes the royal salute from the Guard of Honour as she makes her way deliver the the throne speech, Wednesday, September 23, 2020 in Ottawa. THE CANADIAN PRESS/Fred Chartrand
Gov. Gen. Julie Payette resigns, apologizes for ‘tensions’ at Rideau Hall

Payette, who is the Queen’s representative in Canada, has been the governor general since 2017

Grounded WestJet Boeing 737 Max aircraft are shown at the airline’s facilities in Calgary, Alta., Tuesday, May 7, 2019. WestJet will operate the first commercial Boeing 737 Max flight in Canada today since the aircraft was grounded in 2019 following two deadly crashes. THE CANADIAN PRESS/Jeff McIntosh
Passengers unfazed as WestJet returns Boeing 737 Max to service on Vancouver flight

After a lengthy review process, Transport Canada cleared the plane to return to Canadian airspace

The top part of the fossil burrow, seen from the side, with feathery lines from the disturbance of the soil – thought to be caused by the worm pulling prey into the burrow. (Paleoenvironntal Sediment Laboratory/National Taiwan University)
PHOTOS: SFU researchers find evidence of ‘giant’ predatory worms on ocean floor

Fossils found the prove the existence of an ancient Taiwanese worm as long as two metres

Most Read