Company puts squeeze on doughnut shops

“The way they have their agreements, it is easy for them to say a franchise breached (the contract). There are a lot of clauses they can hit you on.”

The Sudbury Star
December 6, 2001

Company puts squeeze on doughnut shops
Franchise owners say contracts limit their ability to oppose move
Bob Vaillancourt

A number of Country Style Donuts franchise owners in Northern Ontario say their parent company is forcing them out of business.

Maureen Laframboise, who has had her Country Style outlet on Lasalle Boulevard for more than 13 years, said she was told last week that her store was to close Thursday.

“I feel terrible, just terrible,” she said Wednesday.

Laframboise said she was told the store is not making enough money because it doesn’t have a drive-through service. She said she has been trying to open a drive-through for a number of years, but can’t get the property owner’s permission.

“I’m stuck,” she said.

Her contract with the parent company leaves her without any options, she said. “The way it is written, they have all the rights. We have no rights, none at all.”

Another Country Style location slated to close today was Don Moore’s store on The Kingsway. Moore said his franchise agreement doesn’t offer him any protection.

“The way they have their agreements, it is easy for them to say a franchise breached (the contract). There are a lot of clauses they can hit you on.”

Between them, Laframboise and Moore employ 20 people.

Country Style president Pat Gibbons said from his Thornhill office that these closures, and others in Northern Ontario, are part of the company’s efforts to modernize the national chain of doughnut shops.

“We just have some old real estate. Our sites need to be competitive and convenient,” he said. “You need to have convenient locations with very good access and drive-throughs. That is where 70 per cent of the business is.”

When a competing firm “comes into our market with the convenience of drive-through an we don’t have it, it puts us at a competitive disadvantage, and as a result, those sites tend to struggle financially.

“I can’t carry them and they themselves can’t carry them so the best decision is to leave the site.”

Gibbons said The Kingsway outlet will not close; instead it will be operated by different people as of today.

Laframboise said the Sudbury stores are just two of several in Northern Ontario to be affected by the company’s moves.

Last month, Country Style Donuts closed outlets in Valley East and Chelmsford. Two stores in Sault Ste. Marie were to close today as well. Laframboise said she expects more area franchise owners to get letters from the company within a week. “There won’t be one left in the North, I don’t think.”

But Gibbons said that’s not true. In fact, he said, the company is opening a new outlet this spring on Paris Street, and has taken an option on a second new site in the city.

Gibbons confirmed the outlets in Sault Ste. Marie are among more than 20 across Canada that have been given 15 days notice of overdue accounts.

But he said the notion that the franchisor is targeting Northern Ontario or smaller communities is “absolutely false.”

“We have issued a number of letters to franchisees defaulting their franchise agreements unless their accounts are brought current within a matter of days,” Gibbons said.

Sault Ste. Marie MPP Tony Martin introduced a private member’s bill at the end of November that would amend the Franchise Disclosure Act to offer more protection to franchisees.

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