Loeb franchisees fear corporate takeover

Local Loeb store operators Larry Cairns and Mike Williamson are feeling a little like the biblical David hoping to fell a giant with a slingshot and a pebble…Cairns and Williamson also say that Provigo Inc. breached a promise it made not to turn any Loeb franchisee in Northern Ontario into corporate stores.

The Sault Star
August 16,1996

Loeb franchisees fear corporate takeover
Chain threatening November ouster of 2 Sault store owners
Patti Murphy

Local Loeb store operators Larry Cairns and Mike Williamson are feeling a little like the biblical David hoping to fell a giant with a slingshot and a pebble.

They’re among the 21 Loeb franchisees trying to stare down the Goliath – Provigo Inc. and its Loeb Inc. division – while facing the possibility of being thrown out of business by Nov. 2. The 21 stores are in northern and eastern Ontario.

They’re two of 19 franchisees including Blind River Loeb owner Paul Monette who have received notices that their franchise agreements will be terminated in three months.

That was the latest salvo fired by Provigo in response to a $200 million lawsuit launched by 21 franchisees in the province, including Cairns, Williamson and Monette, against the parent company claiming that they were being squeezed with high costs and low retail margins.

“Ninety percent of the (Loeb) stores have financial problems, meanwhile Provigo’s profits are climbing steadily upwards,” Williamson said.

The local businessmen note that in the past 18 months Provigo has taken over the operations of 47 of the 111 Loeb franchise stores, replacing franchisees with corporate managers.

More than 400 job losses resulted in the cost-cutting that followed the corporate takeovers, Williamson said.

Ben Pino, owner of Pino’s Loeb IGA is not involved in that particular lawsuit and would not comment on it. The suit also alleges that Loeb has sought to erode franchises by jacking up wholesale costs, forcing many owners to sell back their stores in desperation at fire sale prices.

Cairns and Williamson also say that Provigo Inc. breached a promise it made not to turn any Loeb franchisee in Northern Ontario into corporate stores.

Last year, the Loeb store in Elliot Lake became corporate.

But Provigo Vice-President Marie Bernier said she’s not aware of any promises made concerning Northern Ontario stores.

Bernier also said that most of the 19 current owners facing termination agreements would be replaced with other franchisees, not corporate ownership and none are targeted for closure, Bernier said.

But Cairns says that establishing a stranglehold on retail as well as wholesale is the direction that Provigo is heading.

The Ontario franchisees are particularly vulnerable to this latest move because there is no legislation in the province that protects them, Cairns said.

Tony Martin’s bid to introduce legislation that set out minimum standards of conduct for those involved in franchise agreements failed last year.

But the two businessmen are hopeful their lawyer will be able to pursue other avenues to maintain their hold on their stores.

A lawsuit launched against the Montreal-based Provigo by 50 Quebec franchise operators in 1991 didn’t result in any terminated franchise agreements, Bernier said.

But that suit involved different issues and none of those operators were in debt to the company like those Northeastern Ontario stores, she said.

“Our staff and customers have been really supportive,” Cairns said. The stores are organizing letter-writing campaigns to provincial and federal politicians. A list of names are provided to people who wish to write and the letters can be dropped off at the store. No postage is required.

Cairns said that the franchisees involved in the suit are good retailers who want to stay in business.

He is alarmed by the prospect of being ousted from his store and says; “As of November, I might just be mowing your lawn to make money.”


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