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Tim Hortons, a Tale That’s Hard to Believe!

November 12, 2012 9 comments

 

A great quote to start;

The essence of due diligence is to provide the information that is needed for the franchisee to make an informed decision about the business investment.  If that information is not available for any reason – or is not sought out – then the ‘angels who fear to tread’ start getting nervous. 

The problem with ‘informed decisions’ is that it relies heavily on objectivity – which is often in short supply with an excited, ready to rock’n’roll, prospective franchisee.  Sometimes ‘don’t do it’ is the best, and only, advice you can give that cuts through.”  -By Simon Young

This has been an ongoing struggle now for 14 years that have brought this to the point where we are today. That is the releasing of information pertaining to the operation of a low volume Tim Hortons (as much as 75% of the entire chain falls into this category). These low volume stores are being re-sold over and over (1 store as many as 18 times!) without the next operator knowing the true facts of what happened. So to move us to today’s date, we have now gathered court evidence (all in .pdf format) of these facts and can trace all answers back to sworn affidavits in Court of Queen’s bench documents (all in .pdf format). The most glaring to any prospective franchisee would be the pro-forma of sales. In essence this is the document Tim Hortons supplies you with in the final stages of purchasing the store. It’s the breakdown of sales and will be the ultimate deciding factor in your purchase of the franchise.

Take note; Tim Hortons uses the caution in court.

With that in mind, the Manitoba Court of Queen’s bench has a document from head legal counsel Steve Kahansky that states Tim Hortons does not know anything about the document of the breakdown of sales. They do not know who made the document, what geographical location was used, what time it was made, Tim Hortons knows nothing about the document they supply to potential franchisees.

The far document is asking why Tim Hortons has no accounting on past operations, with a struggle to get anything from Tim Hortons you will require 10 years to produce the documents you require. This is their tactic, to stall, stall, stall until you run out of money!!

Questions about Steve Kahansky's AffidavitSo we have comments from “operators’ of stores who claim in a few years that they have brought up the sales of the store from 700k to over a million. Well if Tim Hortons didn’t reduce your rent or completely change the agreement you originally signed you would have no chance of paying the bills. This example is easy to understand that an actual store owner didn’t write the comment. If your sales change a half million dollars in 3 years the problem would be that you could not support the payments of your bills upon taking the store over. You would have had to know prior to the purchase that the sales are not strong enough to support the payments required and you would not have signed a contract that states that as everyone signs the same 500 page contract that has no inclusions of changing rent or royalties like your comment states.

******if you are purchasing a store, ask for actual sales and tax records!!!  You will be told “no” they can’t do that as it’s a private business, even if it’s a corporate store, which they will tell you they can’t run the same as a owner….hence the system doesn’t work if they can’t operate it profitably themselves!!!****** 

Equipped with this knowledge and the fact that they won’t give you actual sales numbers and the contract they have you sign is personally guaranteed, do you think that this is a good investment for you and your family?? Remember that the person selling you the franchise gets a cut of what you pay….in essence they will tell you whatever you want to hear in order to get you to sign on the dotted line (except ACTUAL sales and profitability!!) What the contract and what Tim Hortons does not tell you is that by law, they are not required to actually sell you a store that makes money. They can omit those important details and assure you of everything but do not have to deliver in any way, shape or form. In essence you have signed a contract that enables Tim Hortons to make you sell lunch item menus at a loss every time, or for that fact anything they want to do they can. Like for instance control who can operate the business, who can answer a phone, and even if they want you to fire your own partner.

Controling Owners .pdf  One partner is pushed out, one can’t answer the phone. Tim Hortons controls YOU. Tim Hortons can tell you the OWNER, you cannot answer your phone!!!

Outstanding Store Letter from VP .pdf  Above partner that is pushed out of his business runs a great store stated in this letter from the Vice President.

Tim Hortons can get you out of the store you own by a district manager simply scoring you low on a Always Fresh report. Basically once you sign the contract, Tim Hortons have nothing to deliver on, you are at their mercy for any help, and when they realize that you no longer have any money to fund the losing business they commence legal action against you and take the franchise back. Again, only to resell it to another family that has no idea as to what just happened. To also note, Tim Hortons profits on all rent paid by Tim Hortons owner/operators and the fact that they blank out the entire Lease Agreement shows that even in court that they do not need to show all information. Judge Joyal granted all of these motions by Tim Hortons and all these documents where hidden in court and were not allowed to be discussed. They are professionals and know all the court secrets that you don’t even know about until you are at trial. If you have received any letters with “without prejudice’ and Tim Hortons is instructing you to do certain things with your business, those documents will not be allowed to be evidence in a court of law.

Tim Hortons playing dumb .pdf  Tim Hortons can just play dumb when the business is failing.

When the trial for my family started my brother was suing Tim Hortons and we had a cross claim against my brother (Tim Hortons sold our brother a separate Tim Hortons location that he owned on his own but was supplied by a store we owned as a family).

bullying .pdf  Even when the 2 partners are forced out, the other is being bullyed and laughed at by Tim Hortons Executives right inside the store.

Here are some ‘hard facts’ about Tim Hortons and their business practices backed by court documents and court transcripts;

* Buyer beware. Not all locations are successful!!!!
* There is another side to the iconic franchisor that is not publicly known.
* Low volume stores keep being resold as subsequent owners go broke.
* Franchisor profits not only on Rent, Royalty, and Advertising as owner goes broke but profits on resale of equipment and leaseholds.
* NO HELP
* Once franchisee exhausts all sources of cash to keep the business afloat, franchisor mounts a systematic negative evaluation of the operator to use against them in the termination process.
* Franchisor advocates financial aid to struggling owners but this is only lip service.
* Systematic bullying undermines confidence, self-worth, and positive outlook needed to motivate staff and build sales.

After years of being involved in this and now with the threat my family is dealing with as we try to regain our lives back. An excerpt from the letter my family received;

So this is what me and my family have been dealing with. So we are prepared to take whatever action Tim Hortons deems necessary in order for them to try to shut this site down and to not have any documents posted that show the truth.

The truth has been hidden behind confidentiality agreements and gag orders. My own brother signed one of these. All I want to accomplish with this site is the truth and share information to help you make an informed decision if you are a family looking at purchasing one of the 1000 stores they plan on building in Western Canada or any existing store that they are re-selling.

Promissory Note, Guarantee Letter; Never, Ever, sign these!

Promissory, Guarantee, Demand Letters .pdf  In court Tim Hortons said this was an isolated case, Judge Joyal believed Tim Hortons yet they have generic copies of these letters. Also the demand note to continue operating the business, they want these documents signed and cash.

Of note lately is the large number of former district managers who are now becoming “owners” of stores. This “ownership” is false and it inflates the numbers of actual franchises run by owner/operators. These district managers make approx. 35k per year and is obvious they do not have the liquid capital to purchase a franchise. Also traffic for same stores is down but Tim Hortons says average tickets are up. The reality is every time they open another store its extra dollars and traffic and the real example of corruption is how they report same stores being re-sold. (we have sworn affidavits from former owners who are paid either nothing or owe money when they leave the store. This is stated right in the contract you sign that you cannot sell the store.)

We have a mountain of documents and transcripts from the trial that we have put on PDF and the site will release them and we can also have requests for posting of documents that anyone feels they would like to see. Since we have nothing to hide and only the truth to expose.

You will see us on Facebook soon as we have connected with many former owners who have all had the same things happen and we have the current addresses of failed former franchisees that we will post on our Facebook page so we can connect with them and gather many others just like our family.

Since the launch of the class action lawsuit in Ontario we have noticed some concerning facts with the decisions the judges are having in different provinces. In Manitoba the contract you sign is only considered a regular commercial agreement, in Ontario the judge ruled that this is not the case in the class action and ruled the contract is binding even though what happened in Manitoba would constitute a breach and the contract should be allowed to be amended. This is something that the higher courts should look into as Tim Hortons is influencing how franchising is being regulated. With their deep pockets they get the judges to interpret the law differently in provinces that are side by side. In Quebec there has also been different decisions. The site will post the links below for comparison and for the lawyers representing clients can see and use the decisions in a way to help them achieve their goals.

Want to release any Tim Hortons Documents go here ; http://www.sec.gov/about/offices/owb/owb-tips.shtml

We urge anyone who has had a similar experience to do the same. You can also file a registered complaint for false accounting practices at ; http://www.sec.gov/complaint/tipscomplaint.shtml

or if you are an investor and want to protect yourself from this as the truth will be getting out no matter what the consequence to my family as we have been silenced for far too long;  http://www.sec.gov/complaint/question.shtml

all investors should also read this; http://business.financialpost.com/2012/08/15/tim-hortons-stock-held-back-by-growth-concerns-lack-of-new-ceo/

The definition of desperation; to open more locations, Tim Hortons opens first restaurant in Oman!!!! Check it out at; http://news.ca.msn.com/top-stories/tim-hortons-opens-first-restaurant-in-oman

Cold Stone Again Amongst the “Worst 25 Franchises to Buy with the Highest Failure Rates, 2012”

Most importantly, Tim Hortons is forcing current owners to put into their stores a Cold Stone franchise that Tim Hortons purchased. They already employed the same tactics so it was a match made in heaven. On a side note it’s costing current store owners 100k to put a Cold Stone in their store, no increase in traffic and Tim Hortons is pocketing over 80k as all they do is retrofit a freezer and counter. Great benefit for the franchisee ; https://sites.google.com/site/coldstonefacts/

With the millions and millions spent on Advertising here in Canada, they can buy the image they wish. If anyone can afford to take them to court, they will win every time as they have the deepest pockets to squash any possibility of a judgement against them and they basically own the media. My family has all the documentation on PDF and many names and addresses of failed franchisees that can expose all of this but no TV, radio, or newspaper in Canada wants to jeopardize the millions they collect. This is why the internet is so important as well as social media to connect the failures. Remember it’s portrayed as a money-making machine or as I’ve heard so often ‘a license to print money’. If this was the case a family would never sell or give up a store. It would go from family member to family member, and as the contract states the only person who can purchase the business from you when you want to sell is Tim Hortons. In the contract you sign (and personally guarantee) it states that the only person who can buy the business is Tim Hortons and the contract also states that no goodwill is paid. So in the case of the ‘owner’ who commented he built the business up, he should take note that he will receive zero (that’s correct ZERO dollars for his hard work and effort building the business!!!) for his ‘goodwill’ he put in the business. My family was paid $1 for the store (correct that’s ONE dollar and the same store re-sold 4 more times for a half million dollars and each consecutive operator received the same thing….NOTHING) we have sworn affidavits from other store owners who were paid the same thing, we even have a sworn affidavit from a former Executive that was paid 25k (yes twenty-five thousand) and then the next month Tim Hortons enters into a new agreement with another ‘owner’ with a 80/20 agreement (we’ll get into all the different “contracts” they have and show you some) and lease the equipment for a fee that is greater in the first year than what the former executive was paid.

Buyback .pdf  Tim Hortons depreciates the franchise at a rate of 20% per year. This is the Actual letter from Vice President. This means your entire investment is wiped out after 5 years, and you get paid nothing for building the business….you just bought yourself a job (a very expensive job), who would buy a store knowing this ahead of time?

The court documents speak for themselves as do the transcripts of the trials that have already taken place. The mountain of evidence is there but the threat of lawsuits and what will happen to you if you expose the truth is clear in the latter above sent to my family. Tim Hortons spent close to $800,000.00 to take my family to trial and to convince a judge that the 500 page contract isn’t a contract of adhesion but one that is the same as when you buy and sell a car. The judge believed the 7 lawyers from Tim Hortons instead of the one man we had representing us. If they can convince a judge (Royal Joyal) that the contract is a simple commercial one and that the law that dates back to the 1960’s is more relevant to franchising than what has happened in the courts with respect to franchising since the 1990’s and in to the 2000’s. They have the money to defeat anyone so I am willing to risk what little freedom I have to expose the court documents and to show the public that almost all these stores are failures being re-sold over and over again.

We have the names of over 120 people who have lost their stores but we know there are thousands more that we need to gather so the truth can come out once and for all. The documents back up the facts, Tim Hortons will do what they can to hide this information but my family is not afraid. If we can help stop the sale of franchises to other families then it’s worth whatever will happen to us knowing I stopped other families from being destroyed. The truth comes in many forms, but in our case the only way to show it is through the Court of Queen’s bench documents that we have put together.

Like this comment left on our site, this is what this site is intending to accomplish;

October 25, 2012 at 3:51 pm | #13

Thank you for this very informative site. Me and my family were looking into getting a Tim Horton franchise, but after doing my research it is not as nice as they describe it in their website. I would not go in business with a corporation that does not show me all the numbers of a store before I invest my money.

We live in a democratic country and as such we should be allowed to express our experiences free of fear of being shut down from big bullying corporations.
We as people made this corporations by buying their products, and we can also boycott them as well.

Thanks again for enforcing my research.
Like they say in the Dragons Den, I am out.

I hope to see more and more comments like this!! With updating the search engines our new site will come up every time Tim Hortons is punched in a search engine. Anyone looking at purchasing a store will come across this site. The problem with the original site was that it was just our story, no Court of Queens bench documents or posted transcripts. It came across as us whining and didn’t have anything to back up the facts. We are new to this so we are also learning how to do this as we go along. We thank everyone who has helped us and appreciate any feedback you have on what we should do on our new site.

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