A bitter fight between a rebellious Tim Hortons franchisee and his parent company has been settled, prompting the restaurant owner to sell his two stores back to the company for an undisclosed amount.
Duncan Fulton, new chief corporate officer of Restaurant Brands International Inc. of Oakville, Ont., which owns Tim Hortons, revealed on Monday it has come to an agreement with long-time franchisee Mark Kuziora “that we believe is in everyone’s best interests. He will be selling his two restaurants back to the company, and the financial terms of the settlement will remain confidential."
Mr. Kuziora’s lawyer, Peter Proszanski, confirmed on Monday that a settlement was reached, but did not provide details.
Mr. Kuziora and his wife were told in April by a division of RBI it would not renew the licence of one of their two restaurants when it expired on Aug. 31, even though the couple wanted to keep it for another 10 years. Initially, Mr. Kuziora was not given a reason for the non-renewal, he said. But later, Sami Siddiqui, president of Tim Hortons Canada, told The Globe and Mail their restaurant had “a documented history of problems … including food-safety violations and not meeting a number of other Tim Hortons operating standards.” He did not elaborate and Mr. Kuziora denied the claims and sued the company.
The case underlined the growing discontent among franchisees at Tim Hortons about a year after a group of them formed the Great White North Franchisee Association to push back against what they considered to be unfair and unrealistic operating standards by a new owner. They said the changes were making it difficult for restaurant owners to succeed, eating away at their bottom line and hurting the brand.
Mr. Kuziora, who is active in the association, last year signed his name to a lawsuit seeking class-action status on behalf of the franchisees and accusing the company of misusing the franchisees’ advertising money. The association had backed Mr. Kuziora’s own lawsuit over the non-renewal of his restaurant licence.
Mr. Fulton, a former Canadian Tire Corp. executive who joined RBI last month, said Mr. Kuziora reached out a couple of weeks ago to Alex Macedo, the president of Tim Hortons. Mr. Fulton said Mr. Kuziora wanted to discuss “settling his outstanding issues."
“They met, had a very productive conversation and that led to the settlement,” Mr. Fulton said.
Mr. Kuziora did not comment on Monday.
Mr. Fulton acknowledged that RBI has seen a “moderate increase” in the past year in the number of Tim Hortons franchisees who have sold their restaurants.
He said the increase is because the company has adopted a more favourable valuation methodology that made it more attractive for franchisees to sell. He said the change was made last summer after Tim Hortons’ franchisee advisory board told the company that restaurant owners were advocating for better valuation.
“Every year for decades at Tim Hortons, there have been a number of restaurant owners that advise us of their wish to change over the ownership of their restaurant to a new owner,” he said.
Patti Jameson, spokeswoman for the franchisee association, said the group hopes Mr. Kuziora is pleased with his settlement, thanking him for his “tremendous commitment” to both the Tim Hortons chain and the association. “He will be greatly missed, and we wish him the very best as he moves into a new phase of his life with his family,” she said.
Under Mr. Macedo, Tim Hortons is launching a flurry of new initiatives, including all-day breakfasts, to help bolster its lacklustre sales growth amid strong profit gains at its parent company. The gains come despite multiple lawsuits from many of the chain’s franchisees who say they’re being gouged and the brand is suffering.