Letter from Great Canadian Bagel to Mark Izzard

Mark, in my opinion, your claims are frivolous and do not support your refusal to make payments to our company. We have forwarded your letter to our legal counsel for his direction.

Letter franchisor to Franchisee
March 25, 2002

The Great Canadian Bagel, Ltd.
1270 Central Parkway West, Suite 301
Mississauga, Ontario
L5C 4P4
Phone: (905) 566-1903
Fax: (905) 566-1402
Member: Canadian Franchise Association

March 25, 2002

Mark Izzard
The Great Canadian Bagel
(franchisee)
3659 Richmond Road
Nepean, Ontario
K2H 8X3

Dear Mark:

Bill provided me with a copy of your March 5th letter for my comments. They are as follows;

Re: Concern #1 – Yes, we have had stores that have failed. Other stores have prospered. Your store was sold to you at a significant discount because of the failure of a franchisee, and you were aware of that at the time you purchased the Nepean store. As you also know, the Bank Street store in Ottawa has performed well, and the owners have now purchased and refurbished the Elgin Street store. We have not claimed or held franchisees totally responsible for these failures. Our recent Open House in Ottawa demonstrated that our brand name is still very much in demand, as we attracted over 20 interested parties in our concept store at The Bay.

Re: Concern #2 - The recent Marketing calendar shows specifically what programs are being offered and when. The menu boards have been rolled out and installed in over 50 stores across Canada. However, they will not be installed in stores that are not in good current standing with our company. Serca is presently offering our frozen bagel products across Canada, but there has to be enough volume sold to justify carrying them in each branch. When I met with you several months ago, you indicated that you were only interested in carrying one or two flavours. This would not justify Serca carrying our product in the Kingston branch, but they could transfer our product from Toronto, if you will commit to a certain volume of bagels. Kevin Coles – our Moncton franchisee took the initiative to purchase bagels direct from our manufacturer, and has them shipped directly to the Maritimes. You are free to do this as well, or contact Keelie to arrange for an inter-warehouse transfer of products.

Concern 3 – We have discussed this before on many numerous occasions and although we have not agreed with your claims, as a gesture of goodwill, we have reduced your loan payments accordingly. Your wholesale business claim is similar – this business is low margin, no-guarantee business and suppliers can be switched at anytime. No one could have ever guaranteed you this business over the long term.

Mark, in my opinion, your claims are frivolous and do not support your refusal to make payments to our company. We have forwarded your letter to our legal counsel for his direction.

Sincerely,

Ed Kiatkowski
Vice President, Operations
The Great Canadian Bagel, Ltd.


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