Pizza owners in ‘terror,’ survey finds

“The level of fear, distrust, hate and contempt for (Pizza Pizza) is almost unbelievable,” says the report…franchisees are generally in a state of terror and feel helpless” due to threats, a lack of trust in the company and money disagreements that can never be resolved, the report said in a section called “areas of grave concern.”

The Toronto Star
January 26, 1995

Pizza owners in ‘terror,’ survey finds
It finds ‘fear, distrust, hate and contempt’
Kevin Donovan

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Franchisees at Pizza Pizza exist in a helpless state of terror, the Canadian Franchise Association says in a report sent to provincial Consumer Minister Marilyn Churley.

“The level of fear, distrust, hate and contempt for (Pizza Pizza) is almost unbelievable,” says the report, the result of a random survey a year ago by the association that represents 200 franchisors including McDonald’s, Burger King and Tim Horton Donuts.

“The (Pizza Pizza) franchisees are generally in a state of terror and feel helpless” due to threats, a lack of trust in the company and money disagreements that can never be resolved, the report said in a section called “areas of grave concern.”

The survey also found that nine out of the 10 franchisees surveyed said they broke even in their first year, but are “not profitable now.”

Pizza Pizza was kicked out of the Canadian Franchise Association last May after the survey.

At the time, the association would not release the survey results.

But The Star has obtained the report from Churley’s office under the Freedom of Information and Protection of Privacy Act. The association sent it to Churley to help in her review of the franchise industry, a multi-billion-dollar business world with virtually no controls.

Churley is weighing legislation and self-management as two options to clean up the industry. By removing Pizza Pizza, the association was telling Churley it has what it takes to self-manage.

In a letter to Churley, association president Richard Cunningham wrote that serious problems at Pizza Pizza prompted the group to conduct the survey and then enforce its voluntary code of ethics.

“As you will see, the main problem is a very poor franchisor-franchisee relationship,” Cunningham wrote.

The association conducted its survey based on a list of franchisees provided by Pizza Pizza. To be fair, the association decided not to survey storeowners among a group of 49 who have sued the company.

Some of the survey results:

  • Ten out of 10 franchisees had financial disagreements with Pizza Pizza and they said it is “impossible to resolve these problems in a satisfactory manner.” The report added: “The perception and experience of the franchisees is that the problem will not be resolved in either a timely way or a fair manner or probably at all…but the franchisee will be threatened, treated like a liar and a thief.”
  • Nine out of 10 franchisees said they broke even in the “first year or so,” but are “not profitable now.’ The 10th had just bought the store at the time of survey.
  • Franchisees had a low opinion of Pizza Pizza. The report said “almost every franchisee” made disparaging comments about the company, ranging from remarks about honesty to comparisons with certain historical leaders and military agencies.
  • Seven out of 10 franchisees would not buy the franchise again because of a “dreadful” relationship with Pizza Pizza and a “complete lack of trust” in the company. Franchisees surveyed also said they would not buy because they had found it unprofitable due to “the economy, increased competition, high food and product costs from (Pizza Pizza), unprofitable specials, franchisor greed.”
  • Four out of 10 franchisees said there were “hidden costs” in a Pizza Pizza franchise.

Two questions asked on the survey yielded positive answers on Pizza Pizza’s behalf.

  • The survey found that Pizza Pizza provided an excellent 12-week training program for franchisees.
  • The survey found no problems in Pizza Pizza’s commitment to assistance in opening business. “No promises, no problems,” the survey said.

The franchise association letter to Churley noted it has discussed the results with Pizza Pizza executives Michael Overs and Lorn Austin.

The group of 49 franchisees suing Pizza Pizza recently won a judgment awarding them $821, 495, plus legal costs and interest as high as $2.7 million. However, the figure will be knocked down below $821,495 by a series of “outstanding balances” that franchisees have built up during the lawsuit.

Pizza Pizza is appealing the award.

Lorn Austin, Pizza Pizza’s executive vice-president, did not respond to a request for an interview.

Throughout the lengthy battle between Pizza Pizza and its franchisees, Pizza Pizza management has vigorously denied all allegations made against the company.


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