Will “brand strength” or hard fought-for legal provisions likely preserve Tim Hortons franchisee, staff, supplier and communities relationships?

In 2000, Tony Martin asked Tim Hortons VP Nick Javor which of their franchise agreement terms protected franchisees when a merger happens.

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In his public hearing testimony which lead up to Ontario’s 1st franchise law, Mr. Javor seems to suggest the “brand” is strong enough. He was silent on the contract provisions needed.

Mr Martin: I don’t think there’s anybody who’s suggesting that there aren’t good franchise systems around, and certainly Tim Hortons presents at this time as one of those good systems, for all the reasons you’ve laid on the table here today. What you have we want for all the systems, because when a system goes sour, as you suggest in the Pizza Pizza case, you’re all painted with the same brush. That’s unfortunate. It affects a good business relationship and ultimately probably affects the franchisee the most because they’re the most exposed and vulnerable.

My concern is when good systems get sold, and that’s happening. There’s a trend today where the bigger guy eats up the smaller guy and the relationship changes. We had that experience here in Sault Ste Marie where Provigo bought out Loeb and wiped out two of our best corporate citizens overnight. They slept in their stores for two weeks to protect their interests. That’s how difficult that was.

We’ve heard that 241 Pizza has just bought out Robins Donuts. What happens if tomorrow Pizza Pizza buys out Tim Hortons? Do you have anything in your agreement with your franchisees that protects them in that instance?

Mr Javor: That’s a very good question, Mr Martin, because this is the day of mergers and acquisitions. This is the business strategy of a lot of folks. I would answer your question with perhaps a description of our franchisee relationship. I think successful franchisors and chains and brands get successful not by accident but because of the hard work and everybody’s focused on a mutual goal. The mutual goal in our organization, and other franchisors who have been privileged to be as successful as us, is clear: to deliver customer service and realize that the way we get excellent customer service is by having franchisees who are committed to that. We have a strong culture of excellence and commitment. I think it would be very difficult for a new ownership group to come in and absolutely take away what’s taken us 30 years to earn and to grow together with our franchisee ownership.

The fact that we involve our owners a lot in our business at the advisory board level and committee level that I mentioned earlier I guess is a testament to the strength of that commitment we have to ourselves in the marketplace, and that is bigger than the contract. It takes many years to change cultures at corporations. Those of us here who have been in private business over the years understand that. Truly, yes, the top of the house or the CEO and president help set the tone – that’s well-documented research – but also when you have a strong commitment at the grassroots level in your community, where your franchisees are absolutely actively involved in supporting your community, because they know where their bread is buttered. It’s not downtown Toronto, it’s all the communities where we have stores in our particular chain across the country.

I honestly think that when a merger and acquisition comes along the strength of the brand will come through based on these types of commitments and relationships.

Mr. Javor and Tim Hortons were active in the spirited behind-closed-doors debate of the proposed amendment to the Arthur Wishart Act, Bill 102 in 2010: here, here and MPPs seek anti-swindling law for franchises.

Mr. Nick Javor, LinkedIn

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