Nov 28, 2017
U.S. Tim Hortons franchisee shuts two restaurants, files lawsuit as tension heats up
, BNN Bloomberg
A St. Louis-based developer is shutting down two Tim Hortons stores and suing the company as friction with franchisees intensifies.
Show Me Hospitality is suing Tim Hortons USA Inc. for alleged breach of contract as it claims Tim Hortons’ parent company, Restaurant Brands International, threatened to sever ties if Show Me didn’t agree to expand its St. Louis-area footprint to a 200-restaurant network over 10 years.
The developer alleges that shortly after Brazilian-based 3G Capital took control of Tim Hortons through Restaurant Brands in December 2014, it began demanding Show Me Hospitality increase its obligations to develop Tim Hortons restaurants.
The developer also claims that when it rejected the demands, Restaurant Brands stopped approving locations, failed to provide branding and advertising, and withheld approval of new partners and capital investment.
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In a statement sent to BNN, a spokesperson for Tim Hortons said the claim only represents a “very small” portion of its 700 stores in the U.S. and “occurred in the ordinary course of business.”
“We strongly deny the claims brought against us,” the statement read. “We know our success depends on the success of our restaurant owners and that is the driver behind every decision we make, so that we can continue to grow and evolve the brand for the long term, in Canada and around the world.”
The Great White North Franchisee Association, an alliance that formed in March to represent the interests of Tim Hortons franchisees, expressed its concern over Restaurant Brands’ increasingly tense relationship with franchisees.
“GWNFA is concerned that Restaurant Brands International is appearing to continue to disregard its obligations to Tim Hortons franchisees both in Canada and the United States,” David Hughes, president of the Great White North Franchisee Association, said in a statement. “It appears that RBI’s main priority is protecting its own interests, without regard for the sustainability of its franchisees.”
Show Me Hospitality is seeking more than US$50 million in damages to compensate for the loss of a business opportunity.
-- With files from BNN's Paige Ellis
