Pizza Pizza ‘at the table’ with the rebel franchisees

Besides eliminating what has become a black eye for franchising, the CFA hopes to forestall regulation which is now occurring in the U.S.

National Post
April 15, 1993

Pizza Pizza ‘at the table’ with the rebel franchisees
Pizza Pizza franchisees and member of the United Food and Commercial Workers union protest the termination of a Mississauga, Ont., franchise this week.
Paul Brent

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DETERMINED to keep legislation out of the still-growing industry, the Canadian Franchise Association has waded into the messy food fight between Pizza Pizza Ltd. and 34 rebel franchisees.

“We’ve stayed quiet in this, doing our work in the background and bringing both parties to the table,” said CFA president Richard Cunningham. “The fact that both are at the table shows that our process has worked.”

The group of Toronto-area franchisees, originally numbering 17, turned up the heat on the Toronto company in February by taking it to court. It is seeking $7.5 million in damages and demanding an accounting of how its money has been used.

A month later, participants in the action doubled to 34. The group, Southern Ontario Pizza Franchisees’ Alliance Inc., claims support of a silent majority of the 250 stores in the Ontario chain.

“I guarantee you there would 150 [coming forward] if they weren’t so intimidated,” said Toronto franchisee Tony Fammartino.

Since buying the franchise for $190,000 in 1986, Fammartino said he has seen his income from the store steadily drop from $60,000 a year in the 1980s. “Last year, my income was $13,000 – and I’ve been working 80 to 90 hours a week.”

Few expect thing to get better quickly in the hotly competitive pizza business.

After riding to market domination in the mid-1980s with innovations like a central phone number, a “30-minutes-or-free-delivery” promise and a telephone number made memorable by relentless advertising, the chain finds itself up against rivals that have copied many of its former advantages.

No stranger to courtroom battles or fast food fisticuffs, Pizza Pizza widened its fight with franchisees last month when it sued the Toronto Star over its coverage of the latest conflict, claiming general damages from libel of $1 million.

Besides eliminating what has become a black eye for franchising, the CFA hopes to forestall regulation which is now occurring in the U.S.

“In my conversations with the [Ontario] government, they agree with us that it would be better if we, like the insurance industry, would regulate ourselves,” Cunningham said.

“Our message has been quite consistent,” said Duncan Brown, director of business regulation at Ontario’s Ministry of Consumer and Commercial Relations. “The best way to keep government out of your industry is to make sure you run a clean shop. The CFA has been trying pretty hard to make sure that franchising has a good reputation.”

The CFA, which represents about 150 of 500 active franchise systems, wants to be the industry watchdog. “This whole side of the CFA is very new,” Cunningham said.

The franchisees’ court action consists of three core demands: an accounting of the money they pay for things like advertising and rent; that Pizza Pizza “stop overcharging the franchisees for supplies they must buy from PPL; and that the company cease “withdrawing unauthorized funds from the franchisees.”

For its part, Pizza Pizza said it has provided an accounting of spending and vigorously denies the other charges. “We have complied with the requests and we have given more than has been asked for,” executive vice-president Lorn Austin said.

He said PPL has yet to file a statement of defence, but is confident the company will win if the dispute has to be settled in court. “We’re right,” Austin said, “and we know the defence will show that.”


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