International Law

Tim Horton's Class Action

Image by *annette* via Flickr

Interesting problem in a franchisee class action against the franchisor Tim Hortons.

"The substance of the action is the erosion of franchisees' margins.

The plaintiffs allege breaches of license agreements with the defendants ("TDL") as a result of the conversion from a scratch bake system to an Always Fresh system in or around 2002 and/or as a result of the introduction of an expanded lunch menu.

It is alleged that these changes violated provisions in license agreements entered into before these changes were introduced and that they have resulted in reduced margins and reduced profitability for franchisees operating under these agreements.          

The moving parties are twenty Tim Hortons' franchisees who have come together as the Executive Committee for the Concerned Franchisees Group (the "CFG") to oppose certification of the class action.

CFG launched a web-site and solicited memberships from like-minded franchisees who operate about 450 Tim Hortons stores across Canada.

It brings this motion for leave to intervene as an added party in the action under Rule 13.01 of the Rules of Civil Procedure and seek rights as a party in respect to any interlocutory motions up to and including the certification motion."

This is an interesting development, which would be too easy to write off as the CFG group is just a stooge for the franchisor.

But how has CFG demonstrated that is capable of negotiating this problem with franchisor? Isn't there some irony that CFG wants to be included as a party in a class action even though it is opposed to litigation?

Given that the Judge found that there was misleading material at CFG's closed website, that is a problem for CFG, if they are trying insert themselves as a bargaining agent into the litigation process.

My overall sense is that Tim Horton's ought to have been dealing with this systematic change by negotiating in the first place.

Full post as published by Misleading Advertising Law on December 09, 2008 (boomark / email).