Loeb showdown

Staff were also urged to “consider the implication of their actions” and that encouraging customers to become involved would “hurt sales” and “any decrease in sales affects the future of your store.” “The letter was full of innuendo…My staff are really nervous.”

The Ottawa Citizen
September 24, 1996

Loeb showdown
Customers support embattled franchise operators
Wes Smiderle

It began as a showdown between the Loeb supermarket chain and its franchise operators. Now employees and their customers are getting involved in the struggle.

Nineteen store owners, including six in the Ottawa area, are facing expulsion from the supermarket chains and will either be replaced by new franchisees or corporate managers by Nov. 2.

That could be a particularly grim day for Loeb Meadowlands in Nepean because it also marks the store’s ninth anniversary. “Morale is terrible,” says Denise Righetto, store manager and bookkeeper for the Meadowlands store. “I don’t know how Provigo (Loeb’s parent corporation) can expect a smooth takeover.”

The feud started In June when 21 Loeb franchisees banded together and launched a lawsuit over alleged breach of contract and unfair business practices. They claimed the corporation was building up its own profits at the expense of franchise operators by charging high wholesale prices and franchise fees while keeping retail prices artificially low.

“Once it’s out of their warehouses, they don’t care,” says Richard Ladas, franchise operator for the Lincoln Heights store.

In response to the suit, last month Loeb gave 90 days’ notice to 19 of those franchise operators. Now, several stores in Ottawa – along with some in Rockland, Arnprior, Kingston and Sault Ste. Marie – are gathering petitions to protest Loeb’s decision.

Staff at the Meradowlands store are going even further in defending their boss, Bruce Marshall. Besides petitions, they’ve started a letter campaign and many staff members have bought T-shirts with messages proclaiming “It’s time to back the Marshall.” Eight T-shirts have been sold, and although they were originally meant for staff, some customers have started buying them, too. On top of all that, a rally in support of Marshall will be held at Loeb Meadowlands on Oct. 6.

“I really didn’t expect this outpouring of support,” says Marshall, who has owned the store for three years.
”It’s very overwhelming.”

But Loeb isn’t as impressed. It says Marshall and other owners involved in the petition are taking advantage of staff and customers by using them to put pressure on the corporation. “It’s really unfortunate that they’re being dragged in to this disagreemeent,” says Loeb senior vice-president Jim Robertson. “It hurts everyone.”

But Marshall says he’s played no part in organizing his staff’s activities and was actually unaware of the planned October rally until recently.

Righetto says she was compelled to act out of loyalty toward her employer, although she believes her job is at risk because of it. “It’s not a concern for me. I just felt I had to do something.”

She says a letter from Loeb was sent to stores at the end of August. “It wasn’t a nice letter,” says Righetto. “The next day, employees who had been wearing T-shirts weren’t wearing them anymore.”

The letter, faxed to the Citizen anonymously, was sent to staff at all stores involved in the petition. It stated the stores would not be closed and explained Loeb’s decision was based on the franchisees’ belief that their business relationship didn’t work. “To protect its market share, Loeb Inc. had to respond.”

Staff were also urged to “consider the implication of their actions” and that encouraging customers to become involved would “hurt sales” and “any decrease in sales affects the future of your store.”

“The letter was full of innuendo.” Says Earl Milks, who’s been owner of Loeb Rockland for 15 years. “My staff are really nervous.”

But Robertson says none of the over 2,000 employees involved is risking their job by supporting their franchise owners. “They’re in an uncomfortable position,” says Robertson. “But it’s not their disagreement, it’s Loeb’s.”

Righetto also denies customers are being dragged into anything. “The customers are asking us questions,” says Righetto. “They’re concerned, so they’re involving themselves.”

It seems a lot are involving themselves. As of last week, Meadowlands has generated 2,354 signatures on its petition and 1,394 letters. The reasons for his popularity in the community aren’t hard to figure out.

“He helps out local charities, sponsors sports teams and attends their games,”says Righetto. “And he’s always there for customers to speak to. It makes a difference.”

Marshall also started a seniors’ bus three years ago. The bus provides free transportation to and from the store for seniors who would otherwise have to take a taxi. Many seniors expressed concern the bus will be cancelled if Marshall leaves.

“Whether it’s a corporate store or a franchised store, our commitment is the same,” says Robertson. “Involvement in the community will stay the same, if not improve.”

Righetto acknowledges Loeb is a community-based store but has her doubts about whether a corporate manager would be capable to staying as involved as Marshall has been. “Owners are also more flexible than corporate managers to do those kinds of things.”

In fact, some owners have speculated Loeb intends to gradually rid itself of all franchise stores. “I feel ’lve been manipulated into a disastrous financial position,” says Milks.

Robertson denied Loeb has any intention of getting rid of franchisees and says that although new ownership for the stores hasn’t yet been determined, some will be corporate and some will be franchisees.

Ladas says this confrontation with Love and Provigo has been a long time coming, in part because of the lack of adequate franchise legislation in Ontario. “Right now, the strength is with the franchisor,” says Ladas. “The franchisee can’t do anything.”

“Compared to places in the U.S., we’re really in the boonies,” says Milks.

A spokesman for the Ontario Ministry of Consumer and Commercial Relations says Alberta and Quebec are the only provinces with any franchise legislation. However, he expects Ontario will pass a franchise bill later this fall. There is no federal legilsation.

Ladas says he’s been pressing the provincial and federal government to implement legislation for a couple of years. “We need to have a binding alternative dispute-resolution mechanism.”

Robertson disagrees. “There’s already a mediation system in the franchise agreement, and they (the franchisees) decided not to use it in favour of the courts.”

He says legislation would only be useful in clarifying issues at the beginning of a contract, but that once problems arose it would be up to the courts to settle disagreements in interpretation.

“No franchise legislation in all of North Amercia would have prevented this dispute.”

And it doesn’t seem any legislation will end it, either. Motions of support for franchisees passed by city councils in Ottawa, Arnprior and Rockland are, essentially, only symbolic gestures. Furthermore, Robertson says he doubts any kind of petitions or protests will have an impact on Loeb’s decision. “It’s not going to change our resolve.”

Meanwhile the franchisees – and those supporting them – will keep trying. “I hope all this will have some effect,” says Righetto. “I hope they swallow their pride so we can go on with business.”

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