Tim Hortons is refusing to renew the licence of a long-time franchisee who has criticized the company’s management practices amid an escalating war between the coffee-and-doughnut chain and many of its restaurant owners.
A division of parent company Restaurant Brands International Inc. (RBI) told franchisee Mark Kuziora and his wife they have to “immediately vacate the restaurant premises” at a Toronto location when its licence expires on Aug. 31, despite the restaurant owners’ bid to renew the agreement for another 10 years. The division, TDL Group Corp., “will not be offering you an extension of the licence agreement,” Josh Brubacher, TDL’s counsel for franchising and real estate, said in an April 2 letter to the couple, without providing a reason.
Mr. Kuziora helped organize a group of franchisees who, more than a year ago, formed the Great White North Franchisee Association (GWNFA) to fight the new owner’s cost-cutting measures that the group says are hurting the brand, the quality of its offerings and its members’ bottom line.
Last June, Mr. Kuziora launched a lawsuit seeking class-action status on behalf of Canadian restaurant owners, claiming the company misused franchisee advertising funds. The association was also behind a second lawsuit four months later, again seeking class-action status, alleging the company is interfering with franchisees’ right to associate.
In a statement on Monday, Tim Hortons said Mr. Kuziora “has no renewal rights under the license agreement for this restaurant. We regularly onboard new restaurant owners and transition restaurants as part of our normal course of business activity.”
Tim Hortons has denied the allegations in the two lawsuits.
Responding to the alleged misuse of funds, Sami Siddiqui, president of Tim Hortons’s Canadian division, said in a letter to franchisees last year: “These types of public accusations will only hurt the brand that all of you have worked so hard to build.” Last year, the company called the second lawsuit “unfounded” and said some restaurant owners “are deliberately releasing confidential information to the media, which harms the businesses of the thousands of hard working restaurant owners who built this great brand.”
Along with rising discontent from some of its franchisees, Tim Hortons has faced criticism for the way some franchisees in Ontario responded to higher minimum wages by scaling back benefits of their employees. The franchisees countered that Tim Hortons, which was acquired in late 2014 by Brazilian private equity firm 3G Capital and then merged with its Burger King chain to form RBI, failed to help restaurant owners deal with the steeper costs.
Mr. Kuziora, a Toronto franchisee for almost 17 years who is also a member of the GWNFA board of directors, said in an interview on Monday he had gotten no hint from his talks with the company that his licence wouldn’t be renewed.
Company audits of his restaurant had shown no problems and he was ready to invest in a renovation, he said. “Plain and simple, it’s because I’m an advocate of the Great White North Franchisee Association, I sit on the board of directors and I’m the lead” person in the lawsuit against the company, he said.
“This is very uncharacteristic and out of the ordinary for this organization,” Mr. Kuziora said. “I’m shocked. I’m 46 years old. I’ve got a young son. This is my livelihood. This is what I do.”
Mr. Kuziora has one other Tim Hortons restaurant, which he’s run since 2002, and its licence agreement runs out in 2022. “They could find a reason to get rid of me before then.” Both of his locations are in downtown Toronto.
The association board said in a letter to its members that Mr. Kuziora “has shown great courage and strength of conviction” by putting his name forward as the plaintiff in its ad-fund lawsuit.
“We are appalled with this circumstance and will do everything in our power to assist Mark and his family with this situation,” the letter says. “We must also question RBI/TDL’s motives in terminating Mark’s licence agreement. We have to wonder if not renewing his licence has anything to do with his being a member of the board of GWNFA and having his name on the ad fund lawsuit … Who will be next? … It’s time for all of us to realize that ‘trust’ is not a part of doing business with RBI/TDL.”