How frequently does Tim Hortons terminate their franchised stores in the United States?

February 24, 2015

Termination of a franchise agreement is the most financially devastating action a franchisor can take.

Terminations 2013

It is the “weapon of mass destruction” for mom-and-pop franchisee life savings and employment

Terminations 2012

 

Responsible franchisors avoid this too because it is such a red flag to the investment community.

Terminations 2011

It is only fair to compare it to their peer group and to best practices.

Terminations 2010ie. Tim Hortons terminated their U.S. franchisees 22.9, 1.1, 2.1, and 9.4 times more frequently than McDonald’s had done in the same year (2010 to 2013).

The frequency that the franchisor chooses to terminate a franchisee is a material fact to any buying or renewing franchisee.

Source: Information from Franchise Disclosure Documents (see for example Wisconsin Department of Financial Institutions). Free download for U.S. filed documents. One of 4 online sources.

Canadian information is unavailable because no provincial law requires these CDN documents to be (1) publicly filed or (2) put online.

Alberta, Ontario, New Brunswick, Prince Edward Island, Manitoba and soon-to-be British Columbia

Posted also on ConcernedTimHortonsFranchisees.ca.


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

February 23, 2015

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

lao

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


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.


Are there 10 worthwhile spouse/clients in the +1,000 CDN Tim Hortons franchisee group?

February 18, 2015

Not likely because of their husband’s pride and material success.

Talent Vonnegut

If anyone can “save” Tim Hortons from the pirates, I can.

Conditions

  • 10 franchisees/business partners (both partners, self-organized),
  • introductory meeting at one of their homes (with 3 couples plus Les),
  • confidentiality and exclusive agreement,
  • $50,000 each deposited in trust for litigation fund,
  • $5,000 per month per family (pre-authorized withdrawal), and
  • a percentage on the end (vig).

Why I would want to work with any franchisee (ever again in my entire life) is a very, very good question.

“There is no reason why good cannot triumph as often as evil. The triumph of anything is a matter of organization. If there are such things as angels, I hope that they are organized along the lines of the Mafia.”


The second-order, knock-on economic effects of franchisor insolvencies are very profound.

February 11, 2015

Target and Tim Hortons franchisees, staff, and equity are invisible to CDN insolvency law.

Click here for a no charge SSRN download of the Ansett case mentioned in the video: The Domino Effect: How Ansett Airlines’ failure impacted on Traveland franchisees. Dr. Jenny Buchan, University of New South Wales broke this discussion open in 2006. This is the CPA study she mentions in the video: download at no charge at WikiFranchise.org.

When the franchisor fails

Chapter 6 of her book that franchisees (v. franchisors) are handicapped in defending themselves by the following asymmetrical sources of vulnerability: information, adviser, education and regulator, risk and reward, resource, contract, and regulatory.

Chapter 6

Click here for a full Table of Contents of Dr. Buchan’s book, Franchisees as Consumers.

Franchisees as Consumers

Will the ON and CDN governments choose (or be forced) to make “informed informed policy to respond to some very real issues” (start at 8:25)?


Obedience makes a “great” franchisee in profitable peace time, but sucks when war has been declared.

February 9, 2015

Deference to authority is a very highly selected-for and regarded trait within franchising.

banksy greatness

Surviving as a franchisee wires your brain in a certain way.

Over time, especially when you’ve prospered like in Tim Hortons guys have done in 50 years, you’re trained to behave in a certain way.

You’re taught and you accept to learn to be helpless.

Martin Seligman


Is the Tim Hortons takeover primarily a designed to fail, pump-and-dump, engineered financial product?

February 8, 2015

Canada has a well-earned, international reputation for franchise investors.

Tim Hortos one share

Image by John Fewings

Mom-and-pop Tim Hortons franchisee investments:

  1. $1.8-Billion of current CDN franchisee cash flow is removed from +1,000 Canadian family’s life savings, and
  2. replaced by a government guaranteed “liar loan” program (moral hazard) which will be the debt trap for the next-generation of CDN immigrant Tim Hortons franchisees?

see William K. Black and an criminogenic environment,

Weak Ontario franchise law + lapdog CDN insolvency law + predatory franchise lendingCanadian securities regulation weakest link into North American capital markets


What advice might Taleb give the CDN Target and Tim Hortons franchisees who are thinking of “lawyering up”?

February 4, 2015

Someone once called me franchising’s black swan.

Taleb Kahneman

In science, you need to understand the world; in business you need others to misunderstand it.

What does Nassim Nicholas Taleb define as a “sucker”:

The sucker’s trap is when you focus on what you know and what others don’t know, rather than the reverse.

Suckers think you cure greed with money, addiction with substances, expert problems with experts, banking with bankers. economics with economists, and debt crises with debt spending.

We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract. What they call “risk” I call opportunity; but what they call “low risk” opportunity I call a sucker problem.

I have no pecuniary interest in these schmozzles, only a few friends and their staff that I care about.

You are rich if and only if money you refuse tastes better than money you accept.


What is the Canadian Franchise Association doing to protect the 1,100 CDN franchisees and 96,000 employees at Tim Hortons?

February 1, 2015

The Canadian Franchise Association says it …advocates on behalf of franchisors and franchisees in Canada

CFA

Tim Hortons is a member of the CFA. The CFA’s Code of Ethics says that their members’ should treat each other with fairness.

Tony Martin former ON MPP and MP made certain recommendations from his experiences during the public hearings which led to Ontario’s 1st franchise law.

News Release
April 4, 2000

Investigate Franchise Association Abuses: Martin

Tony Martin, MPP

Tony Martin, MPP, Sault Ste. Marie
New Democratic Party
News Release
Legislative Assembly of Ontario, Canada

INVESTIGATE FRANCHISE ASSOCIATION ABUSES: MARTIN

TORONTO – The Consumer and Commercial Relations Ministry should investigate the Canadian Franchise Association over its failure to help Ontario franchise holders, NDP MPP Tony Martin said today.

The CFA is advising the Conservative government on proposed changes to provincial laws governing franchise agreements. But the association is under fire from hundreds of its own members for its indifference to their complaints, the NDP Critic for Consumer and Commercial Relations said in the Legislature today.

“The CFA has been of no help to many hundreds of entrepreneurs who lost their shirts in shoddy franchise deals,” Martin said. “Instead of taking the CFA’s advice this government should be sending in ministry staff to thoroughly investigate this association’s failures.”

Martin raised the case of Brenda Hope, a mother of two from Coldwater who lost $90,000 as a Chemwise Inc., franchisee. For more than a year, the CFA has refused to look into Hope’s complaints, although it endorsed Chemwise as a member.

Similarly, the CFA has refused to accept a registered letter from Bulk Barn franchisees who have a series of complaints against the franchisor. Martin was also refused when he tried to deliver the letter. The Sault Ste. Marie MPP called on Consumer and Commercial Affairs minister Bob Runciman to act now to protect small businesspeople.

“Perhaps the minister can convince the CFA to live up to its responsibilities to mediate franchise disputes. If he can’t, we need a full-scale probe of this group. It’s the least we can do for hard-working families who lose everything in dubious franchise deals,” Martin said.

The MPP has proposed his own legislation, Bill 35, that is far tougher than the government’s Bill 33. The Martin Franchise Bill would require full-disclosure of franchise contracts, a dispute resolution mechanism, the right to associate and the freedom to source products outside of the chain when not trademark related.

-30-

Also: Martin’s questions directed to the CFA during their Mar 2000 expert witness testimony.

Source

CFA National Sponsors


Why do stressed franchisees often look so stupid, so “frozen”?

January 31, 2015

Like a “deer caught in a car’s headlights”?

Waking the Tiger

Dr. Peter A. Levine in his 1997 book, Waking the Tiger: Healing Trauma, suggests that under threat, franchisees are behaving perfectly naturally:

Chapter 1: Shadows From a Forgotten Past

 Nature’s Plan

A herd of impala grazes peacefully in a lush wadi [valley]. Suddenly, the wind shifts, carrying with it a new, but familiar scent. The impala senses danger in the air and become instantly tensed to a hair trigger of alertness. They sniff, look, and listen carefully for a few moments, but when no threat appears, the animals return to their grazing, relaxed yet vigilant.

Seizing he moment, a stalking cheetah leaps from its cover of dense shrubbery. As if it were one organism, the herd springs quickly toward a protective thicket at the wadi’s edge. One young impala trips for a split second, then recovers. but it is too late. In a blur, the cheetah lunges toward its intended victim, and the chase is on at a blazing sixty to seventy miles an hour.

At the moment of contact (or just before), the young impala falls to the ground, surrendering to its impending death. Yet, it may be uninjured. The stone-still animal is not pretending to be dead. It has instinctively entered an altered state of consciousness shared by all mammals when death appears imminent. many indigenous peoples view this phenomenon as a surrender of the spirit of the prey to the predator, which, in a manner of speaking, it is.

Physiologists call this altered state the “immobility” or “freezing” response. It is one of the three primary responses available to reptiles and mammals when faced with an overwhelming threat. The other two, fight and flight, are much more familiar to most of  us. Less is known about the immobility response…

Tim Hortons franchisees know enough not to race to any brand lawyer to solve their problem.

  • They know that the franchise bar serves only franchisor interests: just like the lapdog franchisee advisory groups.

They stick with the few peers they trust and watch.


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