Country Style Donut franchisees want out

Several former franchisees have already signed deals with former Country Style Donut landlords at a lower monthly rate. Significant operating savings, such as a 59 % less for a 16 oz. cup, have been achieved as independents so far.

News Release
February 17, 2002
Country Style Donut franchisees want out
Call on President Pat Gibbons to keep to his promise of releasing them.
Les Stewart, CAFO

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February 17, 2002

BARRIE, ON - Current and former Country Style Donuts announced today in Markham the establishment of the CSD Franchisee Association (CSDFA). The CSDFA represents the business interest of over 42 doughnut franchise operators from Ontario to British Columbia.

The CSDFA has joined with the Canadian Alliance of Franchise Operators (CAFO). Until the termination letters stop flying, the CSDFA executive has asked Les Stewart of CAFO to speak for them.

“Pat Gibbons said in a Toronto Star article on Dec. 15th that ‘a number of (franchisees) may elect to continue as an independent doughnut coffee store and we’re doing everything we can to help facilitate it’”, said Stewart. “We formally accept Mr. Gibbons’ offer and take him at his word.”

“We anticipate an orderly disengagement, including the waiving of post-contract non-compete clauses, waivers of legal rights and gag orders”, said Stewart. Former outlets in Sudbury, Sault Ste. Marie and Alliston have been allowed to become independent.

The CSDFA encourages any existing or former Country Style Donut franchisees to join them. They will benefit immediately from the Buying Group Program and have their disengagement negotiated from a collective rather than individual basis.

Several former franchisees have already signed deals with former Country Style Donut landlords at a lower monthly rate. Significant operating savings, such as a 59 % less for a 16 oz. cup, have been achieved as independents so far.

It is appropriate that the CSDFA and buying group are announced at the Creditor’s Meeting. The unsecured creditors can agree to the 20-cents-on-the-dollar proposal but the franchisee investors get zero.

“CAFO expects the Plan of Compromise to be accepted as a routine step in CSD’s New York–based parent company, CAI Capital Partners and Company II, LP, plan of selling the 150 remaining locations to a new buyer once the dust settles” says Stewart. “The only mystery is which logo.”

A reliable source informs CAFO that the Ministry of Consumer and Business Services refuses to appoint a forensic auditor or fund a legal investigation of the destruction of 50 to 200 franchisees’ life savings. Their position is that federal insolvency law trumps or over-rides provincial franchise law.

CAFO appreciates the Ministry’s efforts to improve the business prospects for insolvency lawyers and CAs. Ontario’s 40,000 franchisees are sure that the Dylex-Stikeman Elliott issue is a misunderstanding and that Deloitte & Touche has really separated their audit and consulting practices.

Meanwhile, Argentina has proposed a state-of-the-art franchise law.

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Les Stewart MBA is the founder and President of the Canadian Alliance of Franchise Operators (CAFO). CAFO provides franchisee business consultancy, advocacy services and monitors Canada’s $100 billion a year sales franchise industry. Stewart is a former franchisee and an advisor to the CSD Franchisee Association. He has had one non-meeting with the Minister of Consumer and Business Services since CAFO started in 1997.

For more information contact:

Mr. Les Stewart
Canadian Alliance of Franchise Operators
http://www.cafo.net
705-737-4635 tel

Mr. Patrick Gibbons
President
Country Style Food Services Inc.
http://www.countrystyle.com
905-764-7066 tel


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