Disenfranchised Pizza Pizza owners take fight with head offi

The 34-year-old Farahani who worked for Pizza Pizza as a manager for four years before buying a $190,000 franchise, says the owners “need some protection from the behavior of the franchisors. They can walk into the business, take over your store and leave you with nothing.”

The Mississauga News
April 14, 1993

Disenfranchised Pizza Pizza owners take fight with head office to the street
John Stewart

PizzaPizza%20logo.jpg

Pizza Pizza means double trouble to Mississauga resident Abbas Farahani.

Farahani and a group of disgruntled Pizza Pizza franchise owners got together in Port Credit Easter Monday to picket and protest what they say is unfair treatment by the pizzoria chain.

Until last week, Farahani was the franchise operator of the store on the south side of Lakeshore Rd. just east of Stavobank Rd. He was told on Thursday that Pizza Pizza was not renewing his contract for the store he has operated for the past five years. He was out of the store Monday.

The Erin Mills resident says the chain’s decision not to renew his agreement may be related to his involvement with a group of 34 franchise owners, calling themselves the Southern Ontario Pizza Alliance, who are challenging the entire issue of how Pizza Pizza controls its franchisees. However, Lorn Austin, Executive Vice-president of Pizza Pizza, says the company’s decision not to renew Farahani’s agreement had no connection to Farahani’s involvement with the alliance. “None whatsoever,” said Austin, adding it was a matter of quality control. “His standards were not up to company standards.” Austin said Farahani sued Pizza Pizza when the company decided not to renew his agreement in the best interests of other franchisees. The judge, said Austin, sided with the chain. “He breached the franchise agreement. The judge made that decision.”

“It’s not him against us,” said Austin. “It’s him against 240 other franchisees” whose livelihood depends on maintaining a standard of quality.”

Tony Fammartino, a Toronto franchisee who expects to lose his business any day too, says the owners have joined together and are taking legal action to try to force an improvement in their industry. They want changes in the law to make chains such as Pizza Pizza more responsible in their dealings. “Franchising in Canada now is where it was in the ‘70s in the U.S.,” says Fammartino.

The alliance questions a number of the chain’s practices, including forcing owners to buy their supplies from Pizza Pizza at prices sometimes higher than they would pay in any local store; no written annual accounting from head office stipulated in their contract; and no accounting for the expenditures of the “pools” of money the franchisees contribute for rent, advertising and central telephone services. Pizza Pizza is collecting $6 million annually in advertising fees, but there’s no sign of how it’s being spent, charged Fammartino.

Both franchise owners admitted they were not aware of a clause in their 20-year contracts that stipulated they were required to give six months notice if they wanted their franchises extended beyond five years. They did not do that and Pizza Pizza did not renew as a result. But Fammartino says the clause is only enforced when it’s to the firm’s advantage. The 34-year-old Farahani who worked for Pizza Pizza as a manager for four years before buying a $190,000 franchise, says the owners “need some protection from the behavior of the franchisors. They can walk into the business, take over your store and leave you with nothing.”

Farahani says he has about $90,000 in equity in the Lakeshore Rd. store. He has no idea if he can recover it. He says he was paying 13 per cent interest on his loan from Pizza Pizza and $700 a week rent which far exceeds the going rate in the area.

Austin said Pizza Pizza offered Farahani “the opportunity of staying in the store for another six months” while they tried to sell the store, but “he refused.”

Among the pickets Monday were striking Pizza Pizza union members who have been on strike since the firm contracted out its telephone ordering work and let two-thirds of its unionized staff go last year.


Brought to you by WikidFranchise.org

Risks: Lorn Austin, Lorne Austin, Lawrence Austin, Labour unrest, Gouging on rent and equipment, Must buy only through franchisor (tied buying), Call for franchise law, Intimidation, Retaliation, Renewal/refusal to renew, Fear of poverty, Sweatshops, Canada, 19930414 Disenfranchised Pizza

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License