Brian’s shattered dream

“Based on the sheer number and intensity of the procedural motions brought by TCGI and Novus, they have clearly chosen to litigate this action as a war of attrition so as to cause us to deplete our very limited resources before every reaching trial,” he said.

The Toronto Star
August 9, 1999

Brian’s shattered dream
Auto glass repair franchises seemed like the road to prosperity to Brian Thurston and others. But when a firm in the replacement business bought their parent company, something seemed to crack
Tony van Alphen


WHOSE FAULT? Brian Thurston blames TCG International for failure of his auto glass business but the firm says it met all its obligaitons. SIMON WILSON FOR THE TORONTO STAR

Brian “Fuzzy” Thurston sat beside the Welland Canal and cried.

The 42-year-old entrepreneur had parked his silver station wagon beside the waterway in St. Catharines after another business call ended in disaster.

Thurston had come to a stark conclusion as he wiped away tears that spring day in 1995. His franchise business repairing auto windshields, would soon fall apart and die.

There was no hope. His life would be in tatters with nothing to show for all his work. No job, no future.

“I was destroyed”, said Thurston, married and a father of three children. But what troubled Thurston more was that he believed the pending failure wasn’t his fault.

‘I bought the franchise to grow it, sell and retire. But it has torn our family apart. We’ve had to downsize our lives’— GREG HENSHER, A FORMER NOVUS FRANCHISEE

In fact, Thurston and several of his fellow franchisees in the Novus windshield repair and replacement network blamed their parent company for effectively driving them out of business.

They had grown edgy a year earlier when TCG International, which already owned the rival Apple and Speedy auto glass replacement businesses, bought out the Novus chain in Canada and the United States.

It meant the Novus franchisees had competitors in their own house, battling for the same customers and the attention of their parent.

The Novus franchisees said everything changed after the TCG takeover in late 1993. They charged Vancouver-based TCG was discriminating against the newcomers and squeezing them to death in Ontario.

Before long, the Novus name had faded in the province. Many franchisees closed as business dried up.

The number of Novus franchisees dropped from 20 in 1994 to eight this year. Apple franchisees own three of them.

The Novus experience drained the Ontario franchisees financially and emotionally.

They lost their savings. Some gave up homes. At least one declared bankruptcy. Others struggled to keep marriages and families together.

“I was 10 days away from losing my house,” says former franchisee John Van Deurzen of Gilford, near Bradford. “I lost all my credit. I owe my parents money and I’m behind in all my taxes. The kids suffered. I would have to put off simple things like buying them a pair of shoes.”

“It has taken years out of me,” said Thurston of Lynden, west of Hamilton. “We’re all emotional wrecks over this.”

“I bought the franchise to grow it, sell and retire,” said Greg Hensher, a former franchisee from Sudbury. “But it has torn our family apart. We’ve had to downsize our lives.”

But Hensher, Van Deurzen and Thurston, whose franchises withered, didn’t walk away entirely. In late 1995, they joined three other franchisees and sued TCG and Novus in Ontario Court for allegedly breaching the franchise agreement, hindering business operations and forming a conspiracy to interfere with the franchisees’ economic interests. The three are seeking more than $4.8 million, including punitive and aggravated damages.

TCG has denied the allegations and said it met all obligations under franchise agreements. In a statement of defence, the company said the franchisees “entirely caused or substantially contributed” to their losses by failing to aggressively market the Novus products and conduct repairs properly.

“The plaintiffs’ claims are frivolous and vexatious and these proceedings are an abuse of process,” the company added.

In the counterclaim, TCG has sought thousands of dollars in royalties and equipment from the former franchisees plus an accounting of their profits.

Almost four years later, the case is still alive and winding its way through the legal system. Mediation is scheduled today before George Adams, a retired judge and prominent mediator. If mediation fails, the franchisees plan to pursue their claim at trial later this year.

Their experience in franchising has turned out far different from what they envisaged. Thurston had wanted to give franchising a shot after years as a construction labourer. He was a handyman and the idea of building a business instead of laying brick for blast furnaces appealed to him. Novus looked like a nice fit.

The company’s American founder invented a process of windshield repair more than 25 years ago using a special resin and application technique. The process, which stressed repair over replacement, grew into a major force. Mobile units increased its popularity.

Thurston bought a franchise in 1991 for $12,500 with the understanding that Novus, which had strong brand recognition in the United States, would target Ontario for growth. He paid for equipment, supplies, training, royalties and monthly fee to an advertising fund. By 1992, his business was growing significantly through dealers, insurers, repair shops and individuals.

“I worked at it,” he said. “I put my heart and soul in the business.”

Novus recognized him as the top franchisee in Ontario one month in 1992. In 1993, Thurston won the monthly award six times.

“His volume has been incredible,” the company said in a memo to franchisees. “Brian’s customers are obviously very loyal to him and by continually adding new clients his business shows not signs of slowing down. Fantastic job, keep it up.”

In December, 1993, TCG International, a major player in the auto glass replacement industry, bought out Novus in the United States and Canada, including the Ontario region’s master franchise.

Privately held TCG has more than 2,500 glass replacement operations in 27 countries. The company also manufactures glass and holds interests in wireless communications.

In statements, the company assured Novus franchisees that they had a strong future.

Novus recognized Thurston as the top franchisee in Ontario one month in 1992. In 1993, he won the monthly award six times.

“We believe the growth of Novus will be maintained through the expansion of the franchise network,” the company said.

In the United States, TCG embraced the new Novus franchisees. But skeptical Novus franchises holders in Ontario wondered about their survival because TCG owned Apple and Speedy, the two prominent competing chains in Ontario.

TCG also focused on replacement of auto glass, not repairs, which is Novus’ forte.

“I remember going to our first meeting with TCG after the takeover and seeing the Apple and Speedy signs, but not the one for Novus,” said Thurston. “That worried me.”

The franchisees began noticing a drop in TCG’s marketing and advertising to promote Novus repair work.

“I was paying into an ad fund that was doing nothing for me,” Thurston said.

A few months later, a TCG executive sent an internal memo that suggested a shift in the company’s direction.

The executive advised other company officials that “we have suspended the sale of new Novus franchises in Eastern Canada; that we are developing a package that might make available the Novus franchise to both Apple Auto Glass and Speedy Auto Glass, and that those Novus franchisees currently in operation who remain in good standing will continue to function,” said the memo.

Another memo, which TCG produced after the franchisees demanded internal documents during litigation, said company vice-chairman Allan Skidmore described Novus as a “low end provider” whereas Speedy and Apple concentrated on “insurance” work.

TCG eventually signed lucrative contracts with insurers that steered more glass repair and replacement work to Apple and Speedy, according to court documents filed by the disgruntled franchisees. The franchisees including Thurston, Van Deurzen and Hensher said their revenues dropped as work from insurers moved to the two other chains.

Van Deurzen added he lost other business with key dealers after TCG promoted Speedy repairs and other arrangements with them.

The Novus franchisees said in their claim TCG also put them at a disadvantage with a requirement to invoice insurance companies $65 for the first repair, even though the company was well aware most insurers paid a maximum $50.

At the same time, Speedy and Apple provided repairs at lower prices through exclusive supply arrangements with insurance companies, according to the claim. Furthermore, the franchisees noted that at the time of the TCG purchase of Novus, they found defective resin batches that resulted in poor repairs. Thurston said customer’s lost confidence.

“Sometimes the resins wouldn’t work at all,” he said. “Can you imagine what that does to your customers and the business?”

The new company said the franchisees caused or substantially contributed to their own losses by failing to aggressively market the Novus products and conduct repairs properly.

Thurston said his inability to repair glass at one car lot after one complaint call and the other problems with TCG triggered his breakdown beside the canal.

“With everything that had happened after TCG took over, I felt I just couldn’t go on,” said Thurston.

After struggling for several months, he closed his franchise at the end of 1995 and now relies on odd jobs for survival.

TCG, in its defence statement, countered that it had supplied quality products and blamed the franchisees for not following appropriate methods in windshield repairs and scratch removals.

TCG also claimed more than $6,000 from Thurston in outstanding royalty payments and ad fund and franchisee fees, and an accounting of profits. The company claimed about $2,700 from Van Deurzen and another $5,500 from two other franchisees. The company has also requested an injunction stopping Van Deurzen from doing windshield repairs until the end of November. Van Deurzen currently runs his own windshield repair business.

TCG sought binding arbitration to resolve the dispute last year but Van Deurzen said TCG has never offered a settlement. The franchisees pursued disclosure of the company’s strategy for Novus in litigation.

“I’m glad we did,” he said.

TCG would not comment specifically about the slide in the Novus chain because of the pending mediation.

“We want to resolve this situation as quickly as possible in front of an impartial reviewer and get back to building the business,” said John Trigardi, TCG’s senior vice-president of corporate affairs and franchise operations.

Van Deurzen said TCG has also deliberately dragged on legal proceedings.

“Based on the sheer number and intensity of the procedural motions brought by TCGI and Novus, they have clearly chosen to litigate this action as a war of attrition so as to cause us to deplete our very limited resources before every reaching trial,” he said.

Risks: Ineffective marketing, No franchisor support, Award-winning franchisees, Lawsuits, group, Symbiotic relationships (industry, banks, lawyers), Broken relationships, ruined lives and alienated children, Sabotage, Franchisor abandonment, Franchisee decision,bankruptcy, Corporate stores competing with franchisees, Lost homes, Mediation, Emotional collapse, Franchisee decision, abandonment, Franchisee decision, independence, War of attrition, Must buy only through franchisor (tied buying), Cannibalization of sales, Corporate stores competing with franchisees, Bankruptcy, Lost homes, Life savings gone, War of attrition, Mediation as information gathering, Symbiotic relationships (industry, banks, lawyers), Canada, 19990809 Brian’s shattered

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