Tim Hortons Suit 'Need Not Have Happened,' Attorney Says
The Great White North Franchisee Association is the group behind a $500 million lawsuit against Tim Hortons.
A $500-million lawsuit filed this week by Tim Hortons franchisees in Canada didn’t have to happen, says John Sotos, the attorney at Sotos LLP in Toronto who is pressing the case against Restaurant Brands International, the owner of the coffee-and-donuts chain since December 2014.
The plaintiffs, known as the Great White North Franchisee Association, are seeking class-action status for the suit. They claim as much as $300 million they contributed to an ad fund “towards the promotion of their businesses, has been converted wrongfully by RBI for the benefit of its shareholders and senior executives,” Sotos told Franchise Times.
He claimed the change in the way ad funds were handled began shortly after 3G Capital, the Brazilian private equity firm, acquired Tim Hortons and merged it with Burger King Worldwide to form RBI. “This fund has been around for probably 50 years, so it had well-established rules as to its use. There was a fairly open consultation with the franchisee community on the use of the funds, up until very recently,” Sotos said.
In a statement, RBI called it “very disappointing” that “a few restaurant owners opted to file the suit. We vehemently disagree with and deny all the allegations.”
Sotos said he did not know the current number of franchisees in the Great White North Franchisee Association, but said the group ballooned quickly when it was formed earlier this year. “They started soliciting March 10 of 2017” for members. “Within three weeks they had become the largest association in Canada, and it’s continuing to grow.” There are 3,500 Tim Hortons restaurants in Canada alone.
The suit seeks class-action status, meaning a judge has to certify it as appropriate to proceed. “That hearing is certainly months down the road,” and only after such a ruling would any litigation begin, Sotos said.
It will be an expensive way to unearth information that Sotos says franchisees were privy to before the change in ownership. “This is a lawsuit that need not have happened. Franchisors and franchisees are business partners, and when they have issues they talk to each other,” Sotos told Franchise Times. “Here there were issues that were legitimate questions, and answers were sought and answers were denied. The franchisor refuses to talk to the association.”