Franchise owners face unique legal concerns compared to other business owners. These concerns often involve their relationship with a parent company and their rights as individual locations. Some Tim Hortons franchisees have raised business law concerns over disputes with Restaurant Brands International (RBI). One of the issues is relates to franchise owners in Alberta and Ontario wanting to raise prices to accommodate the provincial minimum wage increases.
Declining margins due to this and other factors were discussed by franchisees over conference calls and emails. In response, the parent company sent notices alleging that franchise agreements have been breached by the disclosure of confidential information. Currently, the franchise group entitled “Great White North Franchisees Association” is involved in a class-action lawsuit.
Business law protects franchise owners in six Canadian provinces, including Alberta, giving them a statutory right to associate with one another. This is the basis of the class action suit. The legal question to be answered in the proceedings to come is whether the conversations involving supposedly confidential information is protected under the free association legislation. The franchise group continues to discuss issues important to members, including the tightening margins and control over their locations.
This situation is an example of a franchise agreement potentially conflicting with a local, federal or provincial business law. Alberta franchise owners should be careful to properly understand their rights and obligations under any franchise agreement they sign. If either party feels that an agreement has been breached, contacting a lawyer for counsel is a good first step.
Source: Financial Post, “The franchise law that has Tim Hortons franchisees boiling mad“, Chad Finklestien, Oct. 19, 2017