Country Style Restructures

Les Stewart…There’s little franchisees and landlords can do about it, they have no rights whatsoever.” Gibbons doesn’t deny the problems of the past. He says “The CCAA is not an easy route to take but the majority of people will benefit.”

The INFO Franchise Newsletter
April 1, 2002

Country Style Restructures

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Country Style Food Services, Inc. has used the Canadian Companies’ Creditors Arrangement Act (CCAA) to restructure. Final approval came from an Ontario judge last month and The Richmond Hill, Ontario, company expects to complete restructuring this month.

The company received approval of 93 percent of its 319 creditors on February 18th to be paid between 12 and 15 cents on each dollar owed as well as $1,000.

Taragon Financial Inc. of Toronto which had been demanding a $100,000 re-payment of a deposit for a master franchise in Cuba, and opposing the re-structuring, settled a few hours before the court approval. The only secured creditor, the Bank of Nova Scotia, will be paid $3 million now and the rest of its $16 million debt in the near future.

This concludes a chapter in Country Style’s story which began last year when the company hired Patrick Gibbons to turn the company around. Gibbons had been chief marketing officer for Burger King of Canada.

Gibbons faced a monumental task with Country Style’s many outdated units suffering from poor locations, no drive-through windows, and enormous competition from Tim Hortons, the Second Cup, Timothy’s, Starbuck’s and Coffee Time. He says, “The company was insolvent, the only way to save the company was through the CCAA process, this meant many landlords and franchisees would suffer in order that the stronger units, and the company, could survive.”

Many landlords had 10 year to 15 year leases. Some had spent up to $500,000 on renovations. Franchisees had invested their life savings and years of 16 hour days. Approximately 150 outlets have been shuttered.

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Les Stewart of the Canadian Alliance of Franchise Operators (Tel: (705) 737-4635) says “There’s little franchisees and landlords can do about it, they have no rights whatsoever.”

Gibbons doesn’t deny the problems of the past. He says “The CCAA is not an easy route to take but the majority of people will benefit.”

Country Style was started almost forty years ago. It grew to almost 300 units and 60 Buns Master bakery franchises.

The company has another 100 outlets in Malta, Indonesia and Brazil which are not affected by the restructuring.

Contact: Country Style Donuts, Tel: (416) 925-3705.


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Risks: Access to justice, Bad faith and unfair dealings, Bank of Nova Scotia, Fraud, Independent franchisee association, Les Stewart, Canadian Alliance of Franchise Operators, CAFO, Companies’ Creditors Arrangement Act, CCAA, Independence, Intentional franchisor insolvency, Termination of franchisee, mass, Must buy only through franchisor (tied buying), Lease controlled by franchisor, Industry in disrepute, Public perception of sleaze and greed, Franchisees are pawns in insolvency flip, Opposition to fake franchisor insolvency and ownership flip, Conflict of interest, Canada, 20020401 Country Style

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