Pizza Pizza’s books come under scrutiny

“Pizza Pizza is trying to bury us,” said franchise owner Tony Fammartino. “But we’re not going to opt for a quiet funeral.” “The harassment never stops,” franchise owner Dave Michael said.

The Toronto Star
July 1, 1993

Pizza Pizza’s books come under scrutiny
Kevin Donovan


A top forensic accounting firm hired by Pizza Pizza franchise owners is probing millions of dollars in disputed payments from the fast food company’s trust accounts, court documents show.

But the franchise owners battling Pizza Pizza in court – and paying the accountants’ fees – have just been issued termination notices by head office.

“Pizza Pizza is trying to bury us,” said franchise owner Tony Fammartino. “But we’re not going to opt for a quiet funeral.”

“The harassment never stops,” franchise owner Dave Michael said.

Pizza Pizza executives would not comment.

Fammartino and Michael are among about 50 franchise owners seeking an accounting of how Pizza Pizza spent more than $80 million they have paid since 1988 into pooled trust accounts for advertising, rent, delivery and telecommunication expenses.

To get the answers, they hired Linquist, Avey, Macdonald, Baskerville, Forensic and Investigative Accounting firm, top accountants and former police officers who specialize in following twisted money trails.

The investigators are trying to determine whether the franchise owners are correct in their allegation, filed in court, that the trust funds have been mismanaged and their money misspent.

As part of an agreement arranged by a retired judge mediating the dispute, a team from Lindquist was allowed into Pizza Pizza’s Jarvis St. headquarters Tuesday to begin a four-week review.

They brought an atmosphere of uneasy calm to the six-month-old dispute, as the franchise owners, content they finally had access to the trust account books, relaxed.

Then the termination notices came, many delivered around midnight Tuesday to the stores and homes of most of the original 34 franchise owners on the court action.

“We hereby request that you vacate the premises by 10 a.m. on Monday, July 5, 1993,” the notices read.

Pizza Pizza spokesperson Stan White would not comment on the notices, or any other part of the dispute.

“My understanding is that neither party, and both parties have agreed to this, is allowed to comment in this regard,” he said.

Franchise owners say they were given termination notices because they allowed their “outstanding balances” owed head office to creep up too high in the last week, an average of $3,000 more than Pizza Pizza executives think they should be.

But the owners say they paid their phone, gas, hydro and other bills last week, in addition to paying for the accounting review by Lindquist.

“We didn’t pay for a trip to the Riviera,” franchise owner Leon Peterson said. “We paid our bills so we could keep selling pizza.”

Franchise owners also argue that their outstanding balances are high because Pizza Pizza takes too much money from their bank accounts. That allegation is part of their ongoing court action.

The termination notices prompted a trip back to the mediator yesterday.

After a tense discussion with the mediator present, it was decided that Pizza Pizza would not padlock any stores on Monday, but both parties would meet the following Friday to discuss the outstanding balances.

Even though the termination orders have been temporarily stayed, Pizza Pizza head office has told the franchise owners they must pay cash on a daily basis for the thousands of dollars worth of cheese, pepperoni and other supplies they are contractually bound to purchase from Pizza Pizza.

Normally, that money is withdrawn weekly from their bank account by Pizza Pizza.

That means Pizza Pizza truck drivers now have to do double duty as delivery drivers and cash collectors.

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