Swiss Chalet is among Cara's brandsKevin Van Paassen
In the 1990s, the Phelan family ranked among the country’s wealthiest clans.
Their restaurant chains – including Swiss Chalet and Harvey’s – served millions of meals and cranked out millions in profits for parent company Cara Operations Ltd., now known as Recipe Unlimited Corp. Patriarch Paul James Phelan – PJ to those who knew him – wanted the 100-year-old business to remain in family hands for another century. It wasn’t to be.
A bruising, years-long battle for control of the company pitted PJ Phelan and his son against two of his daughters, Gail and Rosemary. It ended in 2003 with the women winning control through a debt-funded buyout, then eventually handing the reins to insurer and asset manager Fairfax Financial Holdings Ltd. FFH-T.
Author Stephen Kimber captures the bitter fight for Cara in The Phelan Feud, published on Friday. Working with surviving family members – PJ Phelan died in 2002 – and with full access to court documents and private family records, he has written a book filled with intrigue, betrayal and high-living, including family-backed yachts vying for the America’s Cup. It’s a story with poignant lessons for any family, with special relevance to the privately owned businesses that are major contributors to the country’s economy.
Based in Halifax, Mr. Kimber is the author of two novels and 12 non-fiction books. He taught at the University of King’s College journalism school and co-founded the university’s masters program in creative non-fiction He spoke to The Globe and Mail last week.
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What inspired The Phelan Feud?
Two Phelan family members, sisters Gail and Rosemary, reached out with their story in 2022. I initially thought the TV series Succession must have been their motivation, but Rosemary and Gail hadn’t seen it. Although some of their friends had been encouraging them to tell their story for years, they finally felt motivated to tell their family’s story after seeing two of Ted Rogers’s daughters lose the battle for control of Rogers Communications. Because, in the Phelan family saga, the sisters won control.
But the dynamic in their dysfunctional household is fascinating. The matriarch, Helen Phelan, was part of Toronto’s Gardiner family. For years, it ran a large franchise of Kentucky Fried Chicken while her husband ran Swiss Chalet. Helen was considered something of a feminist icon, but she also championed her son, Paul David, over her daughters as the best next-generation heir. He wasn’t.
Where did things go wrong for the Phelan family?
This is a story about an entrepreneur who knew, intellectually, what he needed to do to ensure the future of his company, but just couldn’t bring himself to do it. PJ just couldn’t let go of control.
It’s the story of a leader who set up his family for conflict. PJ spent years telling his son, Paul David, he would be the successor. Then he brought his daughter Gail into the business, encouraged her to take an MBA, but never offered her a meaningful role in the company. None of the children were ever put in a position to succeed. It’s actually a sad story, for all concerned.
What are the broad lessons for family-owned businesses?
The lesson for founders is to be clear-eyed about succession. Founders have to be able to see the big picture. They need to do what’s right for both the business and their offspring. PJ never was able to do that. The reality is that most founders’ children – and their children’s children – won’t have the passion, drive or intelligence to be the next CEO. That’s something a patriarch needs to accept.
Family businesses are critically important in Canada. If you can launch a company and build it over 30 or 40 years, that is still an incredible achievement. The Phelans’ Cara survived more than 130 years. There should be no shame in handing the business over to someone outside the family.
When you started writing about the family feud, did you have to pick a side?
As an author, I am loathe to pick a side. However, this is a commissioned book, and I was working with the two surviving members of their generation, Gail and Rosemary. This is their story. But they were open about sharing documents and correspondence that offered a more balanced picture. It’s not a hatchet job on their brother. His family saw the manuscript. They are comfortable with the book.
Was the family well served by lawyers and other advisers who guided them over the years?
The lawyers in this story were creatures of their clients. Everyone had their own lawyers at family meetings, even the operating and holding companies, and understandably, all of them acted in their clients’ best interests. There were voices trying to find common ground. Eventually, one Collingwood-based lawyer who was a friend to all the players but not representing any of them, put forward a proposal the sisters accepted. Their own lawyer initially objected strenuously but then came back a few hours later and accepted. Everyone needed to put an end to the fighting.
Did the Phelan family ever heal the wounds caused by the family feud?
The sisters and their brother never reconciled. (Paul David died in 2021.) But the next generation has made up. Paul David’s wife and his children have reconnected with the rest of the family. And the family remains well-off. They have been prudent in managing their wealth.
What’s your next book?
I’m working on a novel, a Second World War detective story set around Operation Fish in 1940, when the British sent their gold reserves to Canada for safekeeping. The title is City of Ghosts, and, if it clicks with readers, I’m hoping to turn it into a series.
This interview has been edited and condensed.
Editor’s note: A previous version of this article incorrectly stated that the Gardiner family ran Kentucky Fried Chicken's Canadian operations for a while. It was a large franchisee of Kentucky Fried Chicken locations in Canada. This version has been updated.