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A long-time Tim Hortons franchisee whose licence renewal has been denied by the company after he criticized its management practices is suing the coffee-and-doughnut chain for acting in bad faith.

Mark Kuziora and his wife were officially notified last month by a division of parent company Restaurant Brands International Inc. (RBI) they have to leave their Tim Hortons restaurant in Toronto when their licence expires on Aug. 31 – without being given a reason. The restaurant owners wanted to renew the agreement for another 10 years.

Tim Hortons executives’ actions “were callous, wanton and in total disregard of the rights of [Mr. Kuziora] … such as to justify an award of punitive damages,” says the lawsuit, which seeks $4-million in damages.

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Mr. Kuziora’s case reflects the franchisees’ broader battle with the company over what they call its overaggressive cost cutting and management style, which they say is hurting their bottom line, product quality and the brand itself.

However, Sami Siddiqui, president of Tim Hortons Canada, said in an e-mail Monday that among other issues, Mr. Kuziora’s restaurant has “a documented history of problems … including food-safety violations and not meeting a number of other Tim Hortons operating standards.” He did not elaborate but said his team has shared the matters with Mr. Kuziora in the past.

A franchisee for 17 years, Mr. Kuziora countered he has “never contravened my licence agreement in relation to food safety violations or operational standards. As well, I have passed every inspection done by the City of Toronto over the past 17 years. I have always operated compliant and successful stores since I first became a franchisee.

“I am deeply concerned that Mr. Siddiqui has chosen to make public otherwise confidential information that is entirely false and done to personally malign and embarrass me in public and to other franchisees,” Mr. Kuziora said.

Mr. Siddiqui noted that Mr. Kuziora remains a franchisee at his second Tim Hortons restaurant whose licence doesn’t expire until 2022. At that location “we will continue to help him be a successful operator,” Mr. Siddiqui said.

“We have fully embraced the importance of the Tim Hortons franchisee network and have spent the last two weeks travelling the country to share our vision for growing their businesses,” Mr. Siddiqui said. “The reaction from our franchisees is very positive.”

Mr. Kuziora helped organize the Great White North Franchisee Association more than a year ago to spearhead burgeoning opposition to the company’s strategy from many restaurant owners. He is also on the association’s board of directors. The franchisees have criticized the company for creating operating standards that are unrealistic as a way to get rid of some restaurant owners, particularly those who don’t operate a large number of restaurants to achieve more economies of scale. The company has denied the claim.

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Richard Quance, a lawyer at Himelfarb Proszanski, which represents the association, said in an interview it is backing Mr. Kuziora’s lawsuit. The group’s bigger concern is its allegation that the company is improperly using franchisees’ advertising money, Mr. Quance said. But it is also concerned the company is targeting activists such as Mr. Kuziora.

Last June, Mr. Kuziora launched a lawsuit seeking class-action status on behalf of Canadian restaurant owners, claiming the company misused franchisees’ ad funds. The group filed a second one seeking class-action status in October, saying the company was interfering with their right to associate.

The association is organizing a demonstration of franchisees and their customers next month at RBI’s head office in Oakville, Ont. to protest the treatment of Mr. Kuziora, restaurant owners said on Monday.

In his latest lawsuit, Mr. Kuziora said he had talks with a company executive and that “he was going to remain on as a franchisee.”

Mr. Kuziora said the company’s reversal of those discussions “were taken in bad faith and unfairly and were motivated” partly by his class-action filing last year, his activities with the association and his criticism of the company’s direction.

Since Tim Hortons was taken over by Brazilian private equity firm 3G Capital in late 2014, it has been moving in a direction “which would decrease the profitability of the franchisees with a view to having franchises owned by large multi-unit operators rather than smaller operators” such as Mr. Kuziora, the lawsuit says.

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Last month, Tim Hortons told The Globe and Mail it had denied Mr. Kuziora’s licence renewal because he had no renewal rights under his agreement and “we regularly onboard new restaurant owners and transition restaurants as part of our normal course of business activity.”

However, on Monday Mr. Siddiqui said while the company would ordinarily not comment about individual franchisees in the media, “we are concerned that this issue will be misconstrued if we don’t offer a comment.”

The association asked rhetorically in a letter to its members last month: “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.”

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