Who is best to consult to a few Tim Hortons franchisees in their relationship with 3G Capital?

January 18, 2016

I did the franchising industry forensic accounting (diminishing gross margins) for the National Bread Network.

20160118 NBN card front

A membership program was developed and executed. The initial ROI leverage was impressive to 100% of the Canada Bread franchisees. See one of three direct mail pieces.

20160118 NBN card back

In the end, the few elite investors made much, much more.


Where will the real “fat” be trimmed at Tim Hortons: the head office or on franchisees’ bottom lines?

February 23, 2015

Tim Hortons1

The Globe and Mail reports on the new Tim Hortons president, Mr. Diaz Sese:

…Mr. Diaz Sese, who has law and business degrees and previously worked for French sporting goods retailer Decathlon, is moving from Singapore to Oakville, Ont., to take the Tim Hortons job, the company said last month.

Mr. Diaz Sese’s experience heading up Burger King’s expansion overseas fits in with Burger King’s goal of global expansion for Tim Hortons. The company says he tripled Burger King’s annual rate of restaurant growth in Asia.

Mr. Fisher said the new CEO, Mr. Schwartz, is part of a new breed of young leaders in the food service industry. “He’s got a reputation for cutting the fat and running lean operations.”

Yes, 3G Capital cut head office costs at Burger King in that takeover in 2010. But they had also had many corporate stores to sell for a quick cash hit.

This time, there are almost no Tim Hortons corporate stores to sell.

Just 3,800 franchised stores.


Tim Hortons franchisees should not let 50 years of prosperity blind them to new normal.

February 9, 2015

Black Swan event(s) can happen simultaneously, be compounded, and quickly result in a negative (less than $0 value) to your personal net worth.

Taleb thanksgiving turkey

Franchising is unique in that the rational small business person will continue to throw good money after bad (sunk costs).

The Risk profile has changed.

3G Capital takeover x threatened/actual CCAA x gross margin erosion x organized labour x Fightfor15.org x equity appropriation x personal guaranteed = degradation to a negative gross margin business?

Nassim Taleb‘s Thanksgiving Day Turkey analogy:

Consider a turkey that is fed every day,” Taleb writes. “Every single feeding will firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race ‘looking out for its best interests,’ as a politician would say.

“On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief.”

Business Insider

Taleb blowup franchisee

Consider that the turkey’s experience may have, rather than no value, a negative value. It learned from observation, as we are all advised to do (hey, after all, this is what is believed to be the scientific method). Its confidence increased as the number of friendly feedings grew, and it felt increasingly safe even though the slaughter was more and more imminent. Consider that the feeling of safety reached its maximum when the risk was at the highest!


How long will CDN organized labour & the NDP fiddle while 96,000 Tim Hortons franchisees’ staff and management burn?

January 31, 2015

Makes a citizen democrat want to burn up his orange card.

ndp card

How about the nearly 1,100,000 other Canadian employees/families that work in franchised outlets?

Don’t the union and NDP brainiacs understand that 3G Capital will be forcing the franchisees to do their dirty work by laying off tens of thousands of their hourly and managers, many of them personal friends? Hello: jacking up franchisees cost of goods to +32%, driving their “equity” into the red, makes layoffs inevitable.

Franchisees dislike unions true. But the fear and loathing for the vulture capitalists is profound, notwithstanding the company-man, shill franchisees.

Smart, silent current franchisees know the sewer they’re being sent into: Country Style, Second Cup, Coffee Time, Bakers’ Dozen, etc.

Franchise Industry Statistics, 1998

  • Number of Employees: Ontario 400,000 to 600,000 (Canada 760,000 – 1,140,000)
  • Annual Retail Sales: Ontario $45 to 50 billion (Canada $90 billion)
  • Number of Franchisees: Ontario 40,000 (Canada 76,000)
  • Total Investments: Ontario $2 to 8 billion (Canada $3.8 – 15.2 billion)
  • Number of Franchisors: Ontario 500 (Canada 1,300)
  • Franchised Retail Sales (% of Total Retail): 40
  • Number of new lawsuits per year in the Ontario Franchise Industry: 5,000 Ontario Government

I’d like to know:

  1. How many NDP executive positions in joint provincial/federal ridings (Simcoe Grey and Barrie-Springwater-Oro-Medonte) do I have to volunteer/toy with to get an audience from the ON NDP? Monthly payer?
  2. Maybe Ms. Nash MP should ask Charlie Angus ($15 per hour minimum wage?) about the work that Tony Martin former MPP and MP and I did,
  3. Or maybe Mr. Singh and Ms. Horwath need to check their egos and start bragging about what the entire Hampton caucus did to get Ontario’s 1st franchise law and the de facto Canada-wide statute after 30 years of all-party broken promises?
  4. Maybe check with the Fightfor15.org people to find out why they are very, very interested in knowing more about franchising?
  5. btw: McDonald’s (franchisor and franchisees) has just been fined by the U.S. National Labor Relations Board because they judge McDonald’s as a “joint employer” (see here, here).

Full Disclosure: I was a franchisee (twice), studied poli sci, a member of the Teamsters’ union, and continue to be viewed as a “union organizer” by franchisors and their toadies.

Based on the theory that your enemy’s enemy, is your friend, you’d think it’d be Palm Sunday for Mr. Stewart and the Canadian Alliance of Franchise Operators rather than a type of amateur hour.

Kathleen Wynne Les Stewart

With friends like this, it almost makes a guy see red.

Dale Carnegie moment: Of course, saying you care about the lost jobs is a lot easier than having to co-operate with people that have, like, technical knowledge of the most sophisticated form of international commerce: business format franchising.


How can 3G Capital guarantee “no staff cuts” at the 3,600 CDN Tim Hortons franchisee-owned stores?

January 29, 2015

Industry Canada may not understand franchising: who actually employs these 96,000 Canadians.

Tim Hortons Youve been fired

Theo Moudakis / Toronto Star

But how can 3G Capital (buyers of U.S. Burger King in 2010) offer any assurances that the 1,100 or so CDN franchisees won’t be forced to lay off their staff once their gross margins and equity are “right-sized?

Is 3G Capital:

  1. incompetent,
  2. willfully misrepresenting things to Canadians and our duly elected politicians, or
  3. admitting that they are “joint employers” (with the franchisees) of those 96,000 franchisee employees?

Note recent charges against McDonald’s by the U.S. National Labor Relations Board: NLRB Charges McDonald’s as Joint Employer with Franchisees.

The National Labor Relations Board filed 13 cases against McDonald’s Corp. (NYSE:MCD) and its franchisees this month, alleging they violated the rights of employees, who worked at McDonald’s restaurants at various locations across the country.

The government agency’s complaints state that McDonald’s and its restaurant owners made statements and took actions against fast food workers for engaging in activities that aimed to improve their wages and working conditions. They accuse the parties of interfering with nationwide protests organized by unions over the past two years over their terms and conditions of employment.

Protect franchisees and they will protect their staff.

  1. Are Canadian federal officials either 1. or 2. (see above)?
  2. Is organized labour and others who wants a $15 minimum wage for the 1,140,000 franchisee-employeed staff in Canada?
  3. How about Industry Canada who risks public taxes while guaranteeing $1.4 billion of franchisee business loans (1999 to 2007).

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