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A group of Tim Hortons franchisees in Quebec is suing the brand’s owner for $18.9 million

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Several Tim Hortons franchisees in Quebec are suing the brand’s owner, blaming what they describe as unreasonable constraints in the company’s licensing agreements for lower-than-expected profits.

In a lawsuit filed Thursday in Quebec Superior Court, 16 companies holding Tim Hortons franchise licenses allege that TDL Corp. Group’s contracts. “put him in a position of absolute dominance” over their combined 44 restaurants.

“Through these licensing agreements with Tim Hortons…TDL controls all the essential levers involved in the operation of a restaurant,” from supplier agreements to equipment,” the plaintiffs claim in their motion.

TDL also sets prices for menu items and the ingredients restaurants need to prepare them, the lawsuit claims.

However, TDL’s pricing policy has not adapted to the market, franchisees say. They argue that the franchisor’s rules leave them “no room to maneuver” and impose costs that they cannot match in terms of sales. The hit to their profits reduced the value of their restaurants and made it difficult for them to afford the cost of renovations and other investments expected by TDL, they say.

Prior to 2019, franchisees’ profitability largely matched the forecasts TDL provided to them, the lawsuit states. But then profits began to fall. And between 2021 and 2023, the 16 franchise businesses say they lost a total of $18.9 million.

At the same time, calls for reforms, such as flexibility to set prices for certain products within an agreed range, have failed, the statement said.

The suit contends that TDL therefore breached its contractual obligation to assist and cooperate with franchisees.

“As a result of TDL’s failures, plaintiffs are unable to generate the adequate profitability they are entitled to expect,” court documents state. “TDL failed to assist plaintiffs and act reasonably and diligently to work in concert with the franchisee to achieve their shared goals.”

The franchisees are seeking compensation from TDL to cover 2021-2023 losses.

Tim Hortons rejected the lawsuit’s allegations, which have not been proven in court.

“Tim Hortons franchisees operate one of the most profitable and popular restaurant concepts in Canada and Quebec,” the company said in an emailed statement. “In the last three years alone, we have seen 24 Tim Hortons franchisees purchase 77 restaurants in Quebec – because it is well known that franchisees have the opportunity to make substantial profits when they operate restaurants well and according to standards of our brand.

Lawyers for the plaintiffs did not respond to a request for comment Saturday.


This report by The Canadian Press was first published March 31, 2024.

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