Sometimes, when Ontario consumers become the victims of large corporations and find it too costly to go to court, conglomerates are able to escape accountability. This is where class action litigation offers individuals the opportunity to obtain compensation for losses by putting them on an even playing field. According to the Great White North Franchisee Association, that is the aim of some Tim Hortons franchisees who recently launched a class-action suit.
The $500-million lawsuit alleges the parent company fails to manage the brand properly, making it significantly more difficult for the franchisees to remain in business. The claim statement indicates that each franchisee has signed an agreement to pay 3.5 percent of the franchise’s annual net sales to the common advertising fund, which is used for marketing the franchise as a brand. It is alleged that this fund is mismanaged.
The complaint alleges that since Restaurant Brands acquired the franchise, it had received advertising contributions from all the franchisees to the total of approximately $700 million. However, they claim that some of the advertising funds have been spent on company expenses that have nothing to do with marketing. Further allegations claim the parent company, a subsidiary and some private individuals have all received funds funnelled to their accounts.
The lawsuit was filed on behalf of the owner of two Tim Hortons franchises in Toronto who has asked other disgruntled franchisees to join the class action. Before this case can proceed, it will be up to the judge to decide whether there is enough legal basis to allow class-action status. This is a complicated area of the law and any individuals who consider class action litigation may be wise to consult with an appropriately experienced Ontario lawyer to assess viability and provide the necessary support and guidance.
Source: CBC News Business, “Tim Hortons franchisees launch $500M class-action suit against parent company“, June 19, 2017