Loeb fax says takeover unlikely to cost jobs

Two local operators – Larry Cairns and Mike Williamson – are among 21 franchisees who launched a $200 million lawsuit against Provigo Inc. and its Loeb Inc. division – and among 19 who face a possible corporate takeover.

The Sault Star
August 1, 1996

Loeb fax says takeover unlikely to cost jobs
Linda Richardson

Sault Ste Marie’s outpouring of support for local Loeb franchisees has twigged interest at corporate headquarters.

A company official contacted municipal politicians by fax during Monday’s council meeting – where Mayor Steve Butland had indicated he would table a resolution asking the province to take a look at the situation – to outline Loeb’s stance in the dispute.

Two local operators – Larry Cairns and Mike Williamson – are among 21 franchisees who launched a $200 million lawsuit against Provigo Inc. and its Loeb Inc. division – and among 19 who face a possible corporate takeover.

Jim Robertson, Loeb’s vice-president of operations in Ottawa, said the case is before the courts and it will be resolved by the courts.

Denying the move to return control of the stores to Loeb Inc. has anything to do with indebtedness, he said the franchise agreements allow either party to terminate the agreement with three months notice. The franchisees say they have been notified that their franchise agreements will be terminated by Nov. 2 because of debts they have incurred with the company.

Their lawsuit against the parent company claims they were being squeezed with high cost and low retail margins.

Roberson said Loeb hopes the termination will not affect customers or employees and it will remain a contractual matter between the parties.

“It is our intention, wherever possible, to continue to have our stores in Northern Ontario operated by franchisees,” he said.

“You should note in those stores that have returned to Loeb Inc. management in Ontario, there have been no changes in employment levels.”

The Loeb vice-president also promised support for local charities and volunteer groups will be in no way be diminished in the Sault or other communities where Loeb operates.

With petitions and a stack of letters, including one from the United Steelworkers of America, supporting Cairns and Williamson on his desk, the mayor read a resolution calling on Loeb and the franchisees to make all reasonable attempts to settle the dispute.

The resolution – unanimously endorsed by council – points out the important role the franchisees have played in the community and "expresses serious concern about the deteriorating relationship” between the two parties.

Butland told council he was uncomfortable going ahead with a planned resolution calling for provincial legislation – because “I don’t think it will happen” and because of the court case.

Following the meeting, Butland said the strategy he had in mind was to raise the profile of the Loeb franchisees’ issue and elicit some kind of response from Provigo.

“I’m somewhat flattered to think that the city of Sault Ste. Marie via a resolution would prompt a fax this evening for our meeting from the vice-president of Loeb Inc. indicating there will be no reduction in staff levels,” he said.

“I think we’ve accomplished probably all we can do given the fact this is about to go into litigation and then you have to be very, very cautious at that point in time.”


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