Ontario grocers suing Sobeys

…16 of its IGA grocery store franchisees in Ontario are suing it for as much as $262 million, accusing the company of breaking their contract.

The Toronto Star
June 15, 2000

Ontario grocers suing Sobeys
IGA franchisees seek $262 million in damages
Sandra Keeley

Sobeys Inc., Canada’s Number 2 supermarket chain, said 16 of its IGA grocery store franchisees in Ontario are suing it for as much as $262 million, accusing the company of breaking their contract.

The franchisees question the way the company interprets a section of their agreement dealing with payments, chief financial officer Allan Rowe said.

The agreement was signed with the Oshawa Group Ltd. in 1979. Sobeys bought Oshawa Group in December, 1998.

Sobeys, based in Stellarton, N.S., called the claims “frivolous and without merit.”

“We anticipate that this will be no cost to us, besides the legal fees,” Rowe said.

In a release, the company said the legal action “violates the spirit of good faith, trust and mutual respect that has characterized Sobeys’ relationship with its franchisees.”

Sobeys, which is majority-owned by Empire Co Ltd., has more than 950 locations across Canada.

Its brands include IGA, Knechtel, Food Town and Bonichoix.

Sobeys shares closed up 10 cents at $24.10 yesterday on the Toronto Stock Exchange, while Empire shares fell 15 cents to $34.10.

Canada’s biggest supermarket chain is Loblaw Cos., a majority-owed unit of George Weston Ltd.


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