TORONTO — Tim Hortons franchisees who created an association to address their grievances with parent company Restaurant Brands International Inc. have filed an $850 million class action lawsuit against the company, alleging the fast food operator is trying to intimidate its restaurant owners and forcing those who formed the group out of their restaurants.

Filed on Friday, it marks the second class action lawsuit from unhappy Tim Hortons store owners this year against their corporate parent. It comes after months of escalating animosity between management and franchisees who have taken the veteran brand’s Brazilian-based owners to task for allegedly passing added costs on to the store owners.

“Since the time of the corporate takeover of Tim Hortons, the relationship between Tim Hortons and its franchisees has become more adversarial than amicable,” says the statement of claim filed in Ontario Superior Court on behalf of two store owners, one in Ontario and one in Alberta, who are board members of the Great White North Franchisee Association.

The franchisees say that Restaurant Brands (RBI) and its Ontario-based Tim Hortons operator TDL Group Ltd. issued default notices to them — essentially, a legal claim by a master franchisor to take away a franchisee’s restaurants — after management claimed that they and seven other owners who make up the association’s board group leaked confidential corporate information to the press. Last month, TDL issued default notices to all nine of GWNFA’s board members, eight in Canada and one in the U.S.

Restaurant Brands has said the franchisees should enlist the company’s elected franchisee board to bring their concerns to management.

Daniel Schwartz, chief executive officer of Restaurant Brands International.

The association was formed in March after franchisees grew frustrated with the elected franchisee board for failing to address their complaints. Beyond questions about the use of the advertising fund, they have accused management of offloading costs onto franchisees by eliminating regional area managers and increasing the wholesale prices that franchisees are charged.

In the suit filed Friday, the plaintiffs called those allegations false and allege that the company has been interfering with franchisees’ legal right to form an association.

“Franchisees who have sought to or have joined the association have been subject to intimidation and bullying by the defendants both in private and in public,” have been “threatened with adverse dealings by TDL and RBI,” and who are fearful of being targeted for joining the group, the suit says.

After the association was incorporated, the claim says, the defendants “acted jointly and in concert in engaging in a pattern of conduct which constitutes a breach of its duty of fair dealing and directly or indirectly seeks to interfere with, restrict, penalize, or threaten franchisees from exercising their rights to association.”

The statement of claim Friday also names Daniel Schwartz, chief executive of RBI; Sami Siddiqui, president of RBI; Andrea John, head of finance for RBI and Jon Domanko, head of legal for RBI as defendants, and is seeking $300 million in individual damages for alleged breach of duty.

In June, Tim Hortons franchisees in Canada launched a $500-million class action lawsuit alleging mismanagement of an advertising fund and rising costs.

In August, Restaurant Brands International’s Schwartz called the suit “baseless,” and said he did not want to speculate on whether or not the franchisee outcry was hurting the Tim Hortons brand.

Both proposed class actions still require certification.

Restaurant Brands did not immediately return a request for comment Friday.

Financial Post

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