Tim Hortons franchisor slammed with 2nd class action: now $500+$850-million for intimidation.

October 15, 2017

As I mentioned before, Right to Associate is the “game changer” for intelligent groups of Canadian  franchisees.

TORONTO, ONTARIO: MAY 17, 2017–TIM’S–Tim’s Horton’s location on Wyecroft Road in Oakville, Ontario, Wednesday May 17, 2017. [Photo Peter J. Thompson] [For Financial Post story by Hollie Shaw/Financial Post] //NATIONAL POST STAFF PHOTO

A good article by Hollie Shaw Tim Hortons franchisees sue corporate parent for $850M, alleging bullying, and

TORONTO — Tim Hortons franchisees who created an association to address their grievances with parent company Restaurant Brands International Inc. have filed an $850 million class action lawsuit against the company, the fast food operator is trying to intimidate its restaurant owners and force the franchisees who formed the group out of their restaurants.

And:

Les Stewart, an Ontario-based franchisee consultant, said the issuance of default notices to franchisees is highly unusual.

“This shows a predatory franchisor at its worst and it suggests (RBI) is taking a juvenile approach towards Canadian law,” he said. “It seems that they don’t understand the difference between a franchisee and an employee.”

It is not an easy legal road for master franchisors to take back healthy franchises, Stewart added.

“The Superior Courts understand how franchising works.”

I was pleasantly surprised to find out how discerning Superior Court Justices are about the David and Goliath, predatory  nature of franchising.


If John Sotos would talk to me, what would we talk about after all these years?

July 7, 2015

I took John and Susan Kezios’s picture on the first day of the public hearings that resulted in the Arthur Wishart Act (Franchise Disclosure), 2000. EPSON scanner ImageWho knows…maybe one day our widows will will talk?



There was one glorious time when the truth about Big Franchising was revealed and recorded.

July 25, 2012

QueensParkFour days in 2000.

March 6, 7, 8 and 9.

Public hearings into the franchise relationship. Four days of traveling public hearings: Toronto, Sault Ste. Marie, Ottawa and London. Ontario, Canada. Traveling public hearing: extremely rare, if not unheard of, under the Mike Harris government.

Approved by the former Ontario  Minister Robert Runciman over a beer with Tony Martin at the Queen’s Park members’ bar. Two men who share a love of democracy as expressed in the Legislative Assembly of Ontario.

I had the tremendous honour of traveling throughout Ontario as before these life stories were twisted into the Arthur Wishart Act (Franchise Disclosure), 2000. I seemed to have made an impression on the politicians.

Of the current MPPs (107), I know 29 of them. One Minister since I was 17 years old. 45 minutes from my house to their House.

It happened once.

It can happen again.

— The Legislative Assembly of Ontario, looking north to the main doors, University Avenue, Toronto Ontario


Hansard does not record standing ovations.

November 6, 2011

For what it’s worth…

The Acting Speaker (Mr. Jim Wilson): Pursuant to standing order 98, the honourable member has 12 minutes for her presentation.

HELENA JACZEK, MPP

Ms. Helena Jaczek: At the outset I would like to make sure that everyone knows that this bill, Bill 102, An Act to amend the Arthur Wishart Act (Franchise Disclosure), 2000, is co-sponsored by my colleague from Parkdale–High Park and my colleague from Parry Sound–Muskoka. I think that this type of collaboration is something our constituents expect of us. We know that in our ridings many people did not actually vote for us or our party and it is our duty to represent them in this House wherever we can. It has been certainly an interesting and very satisfying experience to work with my two colleagues on this particular bill.

I’d also like to recognize in the west members’ gallery some supporters of the bill: Les Stewart, the founder of the Canadian Alliance of Franchise Operators, and Detective Fred Kerr, the corporate fraud manager for York Regional Police’s major fraud unit.

The Legislative Assembly of Ontario
Toronto, Canada
September 23, 2010


Tupperware, Les Stewart, CAFO and freedoms, 1

January 6, 2011

Franchise freedom of speech and association in Canada, circa 2004.

Two pages of a Record of Motion filed in the Ontario Superior Court of Justice by Michael Shell and Drazen Bulat on behalf of their client, Tupperware Canada Inc. on September 23, 2004.

– and-I voluntarily closed down the “TupperWars” section of CAFO‘s website in response to this challenge (see context). This happened days after we (for the first time) sent out a series of emails to U.S. franchisees/distributors.

We received zero requests to stop the emails from franchise investors.


Gag orders distort & defeat rational investment decision making

September 30, 2010

Franchising is as healthy as its secrets.

mike right-web

Confidentiality agreements are used promiscuously:

  1. pre-sale (when looking),
  2. at any cash payment for “wrongs” during the relationship,
  3. at renewal,
  4. at listing of business for sale,
  5. when you exit, and
  6. at any lawsuit end.

In my 15 minutes of fame, I was asked a question:

[John O’Toole] Can you suggest one thing within the framework we’ve defined that would improve – not totally correct; we’ve passed that, we’re not astronauts – but one thing we could do that would make a real impact on these 40,000 victims, self-imposed victims in some cases? What could we do?

Mr Stewart: Outlaw gag orders. Outlaw gag orders.

Confidentiality agreements encourage opportunistic franchisor behavior because they conceal bad behavior to unsuspecting current and future financial market investors. They are a very large source of imperfect investment information.

Silence puts gold in only the pockets of those proposing these “agreements” that are tethered to the franchisee’s life savings.

More corrosively, they operate internally the same way a false prisoner confession works.

Psychologically they create an internal silencing mechanism, part of which is explained by the concepts of cognitive dissonance, learned helplessness, and obedience (Milgram, Stanford prison, Abu Ghraib). The experience of franchising can be engineered to provide a subtle and not so subtle method of mind control as was seen in the ’70s case of est.

The victim becomes convinced that they were the cause of their own suffering.


Franchise lenders are swill

June 17, 2010

Some systems hardly have any franchisee debt.

This is particularly true of ones that converted employees to franchisees.

That changes once franchisors listen to their bankers explain how much they both can make (ie. interest kickbacks) if they leverage as many franchisees to the teats.

The primary control method of newer (maybe more formally educated?) franchisees is debt. Hundreds of thousands of supportable debt, if the franchisor who controls their gross margins, lets them service their debt.

It’s ugly:

  1. prime plus 5% (“love to give a better rate but it’s unsecured, don’t you know“),
  2. immediately callable (demand loan = short leash),
  3. plus personal guarantees up the wazzo (“just need the missus to okay the paperwork…“), but
  4. secured by NOTHING but the franchisor”s “good faith” (ok as long as the present management stays put but all deals are off if…).

If you want to unlock the chains, start asking your “preferred” lender some questions (on a public blog, btw) about their lending duty under the Bank Act.

Franchise bankers: a breed apart.

A little more sensitive than you run-of-the-mill doofus franchisor: don’t like being fingered for loan pushing, collusion or predatory franchise lending.


Lap/watch dogs and the role of equity in franchisee groups

April 16, 2010

Evolve or die.

If I had a million dollars I would invest it in the franchise industry but not in a conventional sense.

Three types of groups:

  1. Advisory Councils: There to give the illusion of participation and to reward collaborators. Lipstick on a pig.
  2. Independent Franchisee Association, IndFA: one-vote, one-franchisee, subscription-funded, mostly short-term and knee-jerk reaction. Doomed to fail because membership penetration rate seldom above 15% nationally (aborts maturing of indigenous franchisee leaders). Great pre-trial cannon fodder for the class action franchise bar (only publicly traded targets). Only a tiny fraction of valid claims ever emerge from half-formed programs retarded by a constant burn-out of continuously begging franchisee cannon fodder leaders despite the initial Year 1 dues leveraging to 3 to 4 times for every franchisee. Fundraising ballbusting forces IndFAs into class action lawyer’s arms. A interim form of franchisee ghettoization for amateur organization men: strictly chop-down-the-orchard-for-firewood thinking. Underfunded at $1,000 a store.
  3. Attorneyless Franchisee Networks: pay-as-you-go “common members” (min. $2,000 per year) plus “preferred equity holders” (ie. current franchisees, in and out of system, angel investors). Investing (pre-set ROI, timeframes) available to 100% current members one year after initial formation. Realistic budget for national: $500,000 over two years. Plant-an-orchard mentality where franchisee leadership development can continue long enough for self-governance to incubate. True franchisee control with consultants and lawyers as sub-contractors. Overcomes credence good cheating (legal and industry) by creating a market for second opinions. Power has shifted to less than 5% of franchisee involvement because of the internet and increasing levels of franchisor paranoia.

Franchisee collaborators or house negroes  should (but won’t) pay attention as they have the most (marginally) to lose.

Sleep lost by yours truly?

Zero.


Mr. Clean Car Wash: Poo-filled franchise systems will Not do

February 11, 2009

mrcleanRichard Solomon hit this nail right on the head, I think.

Jim Amos and Procter & Gamble put their heads together to make the Mr. Clean Car Wash franchisee.

Solomon calls it a FranWhack: an “investment” that will inevitably fail for the franchisee:

Not even the best cleaners and polishes put out by P&G can possibly spit shine this turd.

The economics of this carwash concept don’t compute, and the choice of franchise leadership is dreadful.

P&G has given birth to a FranWhack here. No one in his right mind should ever consider investing in this debacle in the making.

Everyone should follow these two threads over at Blue MauMau as the pundits ridicule this latest, Is-this-the-best-they-can-do franchise offering.

  1. Controversial Amos Leads P&G to Launch Mr. Clean Car Wash Franchise Nationwide, Don Sniegowski
  2. Can Proctor & Gamble Succeed with Jim Amos at the Helm?, W. Michael Garner

Solomon is not alone in his skepticism

I have never seen such unanimous condemnation. See: Paul Steinberg, Joel Libava, Nick Bibby, Michael Webster, Bob Frankman, Guest: Brice Food litigation, and me (On the road to The Tipping Point?).


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