Company plan not so grand

…says the Arthur Wishart Act, which regulates franchise operations in Ontario, is terribly flawed in favour of the corporations. “There isn’t a law that prevents them from doing this,” he said. “There is no place other than the courts. It’s the small franchisee against the Goliath.”

The Barrie Examiner
December 6, 2001

Company plan not so grand
Barrie Grand & Toy owners say they are out of business without compensation
Margaret Bruineman

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Operators of two local Grand & Toy stores say a system which allowed them to be ousted without compensation is flawed.

As of Dec. 31, Roy Stuart’s 20 years at the downtown store will come to an end. Grand & Toy decided not to renew licence agreements with about 23 operators. Instead, the company will take the stores back into its corporate fold.

The office goods retailer franchised about one-third of its stores, most of them in 1998. But some, including the two in Barrie, were franchised in 1993.

“I wasn’t disappointed with the program, I was disappointed with the program ending,” said Stuart, who runs the Dunlop Street Grand & Toy store with his wife, Kerry. “They’re going to buy up our inventory and that is it.

“I feel that we should be compensated for our years of building it up.”

Stuart and other Grand & Toy licensees have launched a lawsuit.

They charge the company, a subsidiary of U.S.-based Boise Cascade, did not deal with them fairly in their dismissal.

Grand & Toy has yet to respond to the suit with a statement of defence.

Brian Ward, Grand & Toy’s vice president of retail, said the licensing program no longer works in this changed corporate world.

And after taking the stores back into the corporate fold, Grand & Toy has no plans of ever going back to a similar arrangement.

“We had a fixed-term contract agreement with our licensees,” said Ward. “It was a three-year contract and it’s over Dec. 31 for most.

“The business model no longer worked for us.”

Ward said the operators were given the chance to run the stores, half with a $5,000 investment and the other having just to invest in inventory.

And he said they have all done well.

But both sides were expressing disappointment, he said. Grand & Toy was improving its corporate stores and now there’s the issue of doing business on the Internet.

“From an operations point of view it’s costly running two different programs (licensee and corporate stores),” said Ward.

Stuart says the refusal to renew, announced in June, is akin to a dismissal.

And he feels he should receive some compensation as he hits the streets, looking for a new job in January.

Stuart has been at the downtown store through three incarnations.

He arrived when it was Janes Stationary, then United Janes and in 1988 Grand & Toy purchased it.

He said he signed up to operate the store when the company approached him, or “otherwise be without a job”.

And, running the store has had its tough times. The stores took a hit when the “big box” office retailers set up business in the south end. Stuart said he soldiered through and maintained some market share.

“We’ve done a good job all the way through. Now… things are relatively good,” he said.

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The plight of the Grand & Toy operators is not unique, said Les Stewart, who founded the Canadian Alliance of Franchise Operators after his own Barrie franchise battle with its head company led him to bankruptcy.

He says the Arthur Wishart Act, which regulates franchise operations in Ontario, is terribly flawed in favour of the corporations.

“There isn’t a law that prevents them from doing this,” he said. “There is no place other than the courts.

“It’s the small franchisee against the Goliath.”

He says the courts are swamped with franchise cases.

An attempt by NDP MPP Tony Martin to change the law has failed.

He said Country Style Donuts has followed suit by sending out 30 termination notices to franchises across Northern Ontario. His office said he believes Barrie is one of the targeted areas.

“This is becoming an epidemic,” he said in a press release.

“There is nothing to protect the hard working people who buy their own franchise to support themselves and their families.”


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Risks: Converted managers into franchisees, David and Goliath story, Les Stewart, Canadian Alliance of Franchise Operators, CAFO, Expropriation without compensation, Refusal to renew contract, Bad faith and unfair, Bankruptcy, David & Goliath, Canada, 20011206 Company Plan

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