Tim Hortons frozen doughnut lawsuit
Franchise owners Archibald and Anne Jollymore from Burlington, Ont., are hoping Ontario Superior Court Justice G. R. Strathy will certify their two-year-old, $1.95-billion class action lawsuit against Tim Hortons after pleading their case on behalf of hundreds of franchisees in Toronto on Monday.
The chain's 2003 decision to par-bake doughnuts, Timbits, muffins and cookies at a factory in Brantford, Ont., before freezing them and re-baking them on location in special ovens cuts into franchisee profits, the couple says. Par-baked goods are only partially baked before being frozen.
Before 2003, doughnuts were completely prepared on site at each Tim Hortons from a mix, and deep-fried in batches twice daily.
Tim Hortons Always Fresh strategy also forced café owners to offer a lunch menu, which has not been profitable since at least 2003, the plaintiffs say.
Archibald is a former Tim Hortons executive and his wife is a pastry chef. They own separate locations. In court documents, their lawyers say the price of an unfinished doughnut tripled to 18¢ after the Always Fresh conversion.
What franchisees lost, the corporation gained, lawyers at Adair Morse LLP argue.
At the time the lawsuit was filed in 2008, the Brantford factory, known as Maidstone Bakeries, was partially owned by Tim Hortons along with IAWS Group plc. Tim Hortons sold its stake in the facility in 2010, but the company will continue to order from Maidstone until at least 2016.
"In stark contrast to the franchisee losses, the defendants' financial gains from the Always Fresh conversion were projected to be, and have been, spectacular," a plaintiff court filing reads. They estimate Tim Hortons raked in at least $665 million from the scheme and sale of Maidstone on a $75 million investment.
Oakville, Ont.-based Tim Hortons has said the claim is "frivolous and completely without merit."
Lawyers say the company doesn't guarantee profit levels for its franchisees. They are hoping to get the case thrown out.
Source: canoe
