No plan to oust pizza chain, franchise association says

Pizza Pizza chairman Michael Overs has called disclosures in The Star about he company’s operations and senior management “blatantly false and irresponsible.”…that The Star’s reports about Pizza Pizza create a false impression that he industry is rife with franchisors running roughshod over franchisees. “You can count on one hand the franchisors that have had problems at all,” he said. While 80 per cent of businesses fail in their first three years of operation, 80 per cent of all franchisees succeed in that same period…

The Toronto Star
May 8, 1993

No plan to oust pizza chain, franchise association says
Tony Van Alphen

PizzaPizza%20logo.jpg

The Canadian Franchise Association says it has no immediate plans to toss out the Pizza Pizza chain despite an extensive criminal record of a key company executive and widespread complaints from franchisees.

Its code of ethics does not contain any provisions for expelling a franchisor if an executive has a serious criminal background, association officials said Thursday.

Officials said the group doesn’t want to consider any disciplinary action until it completes a mediation effort to solve problems between the chain and franchisees.

Association chairman Nick Javor said, however, it is possible the group’s board could still banish Pizza Pizza if directors find the company has not followed the code governing franchisor conduct after further analysis.

“As of today we don’t have the information to make that decision,” Javor said.

The code does not explicitly state that franchisors must divulge the background of key personnel but says no members shall offer, sell or promote the sale of a franchise in a way that is “likely to have a tendency to deceive or mislead prospective purchasers…”

It also says prospective franchisees receive “full and accurate written disclosure of all information considered material to the franchise relationship” before an agreement become effective.

It adds, “fairness shall characterize all dealings” between a franchisor and its franchisees, including appropriate notices of contractual breaches and reasonable time to remedy defaults.

The association, which represents about 170 franchisors, is overhauling membership requirements that would lead to detailed disclosure of a company’s history, major shareholders, key personnel, business experience and financial health. The group’s board will consider the changes this fall.

Until the association passes those changes, it has no right to oust a member because of inadequate disclosure, Javor said.

Javor, also head of Mr. Lube Canada, and association president Richard Cunningham said the association can’t pass judgment on Pizza Pizza becuase3 one if its key officers has a criminal record related to business.

“Whatever his criminal past was, it’s exactly that – his past, and we can’t be involved,” Cunningham said. “W have to be concerned about Pizza Pizza.”

The Star reported earlier this week that Lorn Austin, a convicte4d con man and racketeer, is at the helm of Pizza Pizza and helps to oversee thrust accounts worth millions.

Store owners suspect mismanagement of those trust accounts and have gone to court seeking $7.5 million in damages and an accounting of how Pizza Pizza has handled their money.

Regarding the lawsuit, Javor said it would be improper for the association to comment on the franchisee charges because the issue is before the courts. Any remarks might indicate support for one side before mediation starts, he said.

The 250-store Pizza Pizza chain has been an association member since 1990.

Pizza Pizza chairman Michael Overs has called disclosures in The Star about he company’s operations and senior management “blatantly false and irresponsible.”

Cunningham said earlier this week that The Star’s reports about Pizza Pizza create a false impression that he industry is rife with franchisors running roughshod over franchisees.

“You can count on one hand the franchisors that have had problems at all,” he said.

While 80 per cent of businesses fail in their first three years of operation, 80 per cent of all franchisees succeed in that same period, he said.

The association’s members include McDonald’s Restaurants, Tim Horton’s Donuts and Swiss Chalet.

Ontario Consumer Minister Marilyn Churley said earlier this week that her ministry will continue to monitor the industry for abuses but has no plans for legislation to protect franchisees.

The association argues the industry can regulate itself through proper disclosure and internal mediation.


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Risks: Lorn Austin, Lorne Austin, Lawrence Austin, Racketeering, Fraud, Convicted fraud artist, Pooled money, Code of ethics, a joke, Code of ethics, almost never enforced, Public perception of sleaze and greed, Ministry of Consumer and Commercial Services, Ministry of Consumer and Business Services, Ministry of Government and Consumer Services, Ministry of Government Services, Ontario, Success rate, we don’t know, Hates publicity, Towers of gold, feet of clay, Government as system’s ultimate liar, Industry in disrepute, Hates publicity, Sham of self-regulation, Wild West of the business world, Canadian Franchise Association, Sincerity, Call for franchise law, Excuse du jour, Disclosure laws: 10 per cent solution, Misrepresentations, Academic scorn, Survivability (franchisee and franchisor), Canada, 19930508 No plan

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