Pizza Pizza kicked out of franchise association

Pizza Pizza, one of Canada’s largest fast-food chains, has been kicked out of the Canadian Franchise Association…When the Pizza Pizza story became public last year, provincial consumer ministry critics called for government legislation. But the association opposes government intervention, preferring a system of self-regulation.

The Toronto Star
June 1, 1994

Pizza Pizza kicked out of franchise association
Controversial firm scores poorly in random survey
Kevin Donovan

PizzaPizza%20logo.jpg

Pizza Pizza, one of Canada’s largest fast-food chains, has been kicked out of the Canadian Franchise Association.

The pizza firm scored poorly on a random survey by the association that asked Pizza Pizza franchisees what they thought of the company.

“We chose not to renew (Pizza Pizza’s) membership this year,” said Richard Cunningham, president of the 200-member association which includes such franchisors such as McDonald’s, Burger King, Tim Horton’s and One-Hour Moto-Photo, winner of the association’s award of excellence last year.

Pizza Pizza will now be forbidden from using the stamp of approval of the association, which both represents franchisors and helps prospective franchisees decide whether to invest their money with a particular franchisor.

Among the questions asked:

  • Did Pizza Pizza live up to its promises in such matters as assistance in opening the business, advertising and promotional support?
  • Were there any hidden or unexpected costs, any financial surprises?
  • Were the financial projections accurate?
  • Have there been disagreements with Pizza Pizza and, if so, how were they settled? Were you satisfied?
  • Knowing what you know now about the company, would you buy your franchise again?

Cunningham said the results of the survey must remain confidential to protect the franchisees who responded. He would only say the decision to remove Pizza Pizza related to the association’s code of ethics.

The code of ethics adopted by the association calls for franchisors to make full and accurate disclosure of all information to prospective franchisees; to ensure fairness characterizes all business dealings; and to ensure nothing in the way a franchise is promoted is “likely to have a tendency to deceive or mislead prospective purchasers.”

Cunningham said his membership committee opted to carry out the survey earlier this year after hearing complaints about Pizza Pizza, which as been a member since 1990.

“We went through the same process with Pizza Pizza as we do with any other company that has had a number of problems, or complaints I should say,” Cunningham said.

Pizza Pizza has been locked into a legal battle for over a year with 48 of its 250 franchisees who say they have been unfairly treated.

Complaints filed in court by franchisees include allegations that Pizza Pizza charges unreasonable amounts for rent, store renovations, and supplies; that Pizza Pizza has not properly managed “pools” that hold millions of dollars of franchisees monies for advertising, rent, delivery and telephone order charges; and that franchisees have been the subject of harassment by company officials.

Pizza Pizza has denied the allegations.

The matter has been the subject of secret hearings before a court-approved arbitrator since last summer, with results expected within a month.

A series of stories published a year ago by The Star documented many of the allegations, Pizza Pizza also denied allegations in The Star. Company president Michael Overs called them “blatantly false and irresponsible.” Overs could not be reached for comment yesterday.

Cunningham said his association was careful not to send survey questionnaires to any of the franchisees involved in the lawsuit. Instead, they conducted a random sampling of about 10 per cent of non-litigant franchisees around Ontario.

However, sources among franchisees surveyed say their complaints to the association mirrored complaints in the legal action.

When the Pizza Pizza story became public last year, provincial consumer ministry critics called for government legislation. But the association opposes government intervention, preferring a system of self-regulation.Pizza Pizza, one of Canada’s largest fast-food chains, has been kicked out of the Canadian Franchise Association…When the Pizza Pizza story became public last year, provincial consumer ministry critics called for government legislation. But the association opposes government intervention, preferring a system of self-regulation.


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Risks: Code of ethics, almost never enforced, Canadian Franchise Association, CFA, Threats of lawsuits, Veil of secrecy, Sham of self-regulation, Canada, 19940601 Pizza Pizza

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