When the parent company of a franchise changes hands, it can cause a ripple effect through independently owned locations. While some changes and behaviour may be permitted under an agreement, franchise law gives owners certain protections and rights in Ontario. Several Tim Hortons franchisees have brought an $850 million class action lawsuit against their parent company, Restaurant Brands International Inc, alleging bullying and intimidation.
The legal action from store owners is the second class-action suit this year. In June, a group of franchisees filed a $500-million class action lawsuit citing mismanagement of advertising funds and offloading costs onto franchisees. The same association of store owners is now alleging that the parent company’s treatment of store owners and major operational changes does not follow franchise law.
Two Canadian store owners are involved in a statement of claim that has been filed in Ontario Superior Court. They allege that the parent company sent default notices to everyone involved in the initial lawsuit on claims that they leaked confidential information to the press. A default notice is a claim to take away a franchisee’s restaurants. The plaintiffs in the most recent lawsuit say this action is intimidation and that people are fearful of being targeted for joining the group.
Under Ontario law, franchisees have certain rights. The plaintiffs in the recent Tim Hortons say that one of their rights, that of association with other franchisees, was threatened by the action of their parent company. While these proceedings are ongoing, they raise questions about the rights of franchise owners across the province and country. Those with inquiries about franchise law are advised to speak with a lawyer.
