Serving up a surprise for U.S. franchises, Jeff Gray

More McSh!t for the lazy, obese, hard-of-thinking…Buying a franchise is volunteered slavery…What total bunk… and a poorly researched article as well. The US has had "full disclosure" laws on pro - forma(s) (expected revenues/earning, based on real examples) for franchise operations for DECADES. Only Alberta does the same in Canada, and much watered down at that…They had a popeyes in Coquitlam, it only lasted three years…Abbotsford…short life as well

The Globe and Mail
December 21, 2011

Serving up a surprise for U.S. franchises
Legal hurdles await some American chains hoping to expand into an attractive Canadian market
Jeff Gray

Larry%20Weinberg%20Popeyes%281%29.jpg

Tough Canadian laws might deter U.S. franchisors looking to head north, says lawyer Larry Weinberg, whose firm represents fast-food chain Popeyes in Canada. Weinberg is seen here Dec. 13, 2011 in Toronto. Deborah Baic/The Globe and Mail

Popeyes Louisiana Kitchen is hardly a household name in Canada, unlike U.S. fast-food franchise royalty such as McDonald’s Corp. (MCD-N98.950.130.13%) or Burger King Corp. But the mid-sized U.S. restaurant chain and others like it have their sights set on expansion to the north.

Andrew Skehan, international chief operating officer for Atlanta-based Popeyes, said his chain now has 63 locations in Ontario, most of them clustered in the Greater Toronto Area. New outlets, including one in downtown Toronto’s east end that opened recently, keep cropping up.

“Canada is certainly one of our growth markets. Our business is very healthy up there,” Mr. Skehan said in an interview. “Compared with the U.S., your economy has weathered the recession much better.”

While Mr. Skehan says Popeyes’ U.S. business is still thriving despite the tough times, many franchise companies seeing slower growth in the United States are now looking to Canada. Lawyers and industry observers say the move is driven by Canada’s healthier banks, which are more likely to lend prospective franchisees money, and its healthier economy, which means consumers may have more money to spend on guilty pleasures such as fried chicken.

However, some U.S. brands expanding into Canada for the first time could be in for a surprise, lawyers who represent franchisors here say. Relatively new laws in several provinces impose different, and some times more complex, rules on companies seeking franchisees to open branches of the business.

The laws are designed to protect mom-and-pop franchisees from being exploited by their more powerful corporate franchisor partners. It has resulted in court challenges involving some of the most popular fast-food brands, including the iconic Tim Hortons, from franchisees who allege their corporate parents of unfairly squeezing them for profits.

In many recent cases, lawyers who practise in this area say, judges have favoured franchisees.

Despite this, U.S. chains are increasingly interested in moving into Canada, said Larry Weinberg, a lawyer with Cassels Brock & Blackwell LLP in Toronto who acts for franchisors, including Popeyes. In the past few months, he said, he has attended conferences in Baltimore and Las Vegas where scores of U.S. brands expressed interest.

Other clients of his that are planning moves into Canada include Qdoba Mexican Grill, which has 700 U.S. locations; and Famous Dave’s of America Inc., a barbecue chain based in Minnetonka, Minn., that recently signed a deal to open its first Canadian restaurant in Winnipeg.

Mr. Weinberg said the stronger dollar and the relatively health economy have made Canada attractive for U.S. chains. But he and other lawyers who work for franchisors warn that the legal climate in Canada around franchising could end up scaring away investment.

Ontario, Alberta, PEI, and New Brunswick all have franchise laws that force franchisors to produce disclosure documents, which resemble mini-prospectuses, to prospective franchisees. Soon, Manitoba will have a similar law.

Although such laws are common in the U.S., the requirements in Canadian provinces are different. Mr. Weinberg said that if the costs of redrafting the U.S. disclosure documents to meet various standards across Canada are too high, some U.S. brands might not want to make the effort to expand here.

“They are creating more of a hurdle or a barrier to entry,” he said of the various provincial laws. “And if they make it too complicated, you’re liable to find that big brands, either from Canada or from the U.S., are going to say, ‘Why bother? I’m not going to go there.’ ”

Jennifer Dolman, a Toronto litigator with Osler Hoskin & Harcourt LLP who acts for franchisors, said recent “harsh” rulings have seen judges favour franchisees in disputes.

“A lot of U.S. companies want to come here, because they do the research and they understand that there’s the market and large customer base,” Ms. Dolman said. “But they get very nervous about our laws. Very nervous.”

Another concern for U.S. franchisors is their trademark, she said. If another restaurant in Canada is already using a name similar to a U.S. chain, expansion could involve expensive litigation. For example, Minneapolis-based Buffalo Wild Wings Inc., which recently expanded into the Toronto area, has faced litigation over its name in a battle with Wild Wings, of Aurora, Ont.

Despite potential pitfalls, the flow north continues.

Andraya Frith, Ms. Dolman’s colleague in Osler’s franchise law group, said business from U.S. franchisors has picked up dramatically after going into “pens-down mode” during the 2008-2009 financial crisis.

“Certainly in the last 12 to 18 months it started to [move] up again in a big way,” Ms. Frith said. “I chalk it up to them recognizing that the Canadian economy is stronger.”

Mr. Weinberg agreed that concerns about regulations and litigation aren’t deterring his U.S. clients: “People are still coming. … Franchising thrives, nowhere more so than in the U.S.”

Comments

(1) peter1906, 7:16 PM on December 20, 2011
"they get scared about our laws" that's a good thing! less junk food…

(2) Jeremy, 7:36 PM on December 20, 2011
Why would you care if you don't eat there?

(3) Grampa Canuck, 9:09 PM on December 20, 2011
Because all that greasy, salt-laden food drives up our medical costs due to heart attacks and diabetes.

(4) Ericka from America, 7:19 AM on December 21, 2011
Read the G&M article ''Era of cheap food' is over for Canadians".

It's possible to eat at Popeye's and get the same 'nutrition value' as a typical sandwich from a good old Canadian deli.

So low-income families that want to go out to eat are restricted from doing so until they save up enough money to dine at one of the Grandpa Canuck Approved eateries.

(5) MattersKnot, 9:30 AM on December 21, 2011
Correct Erika, they are restricted from doing so as our health regulations are stricter than the U.S regulations…keep your obesity causing eateries to yourselves.

I do believe it's into 'epidemic' proportions down there now, isn't???

Cheers

(6) Thepuckdrops, 9:43 AM on December 21, 2011
Sorry Ericka,

Peter, Grampa & Matters have a strong point. Here's the latest Statistics Canada health survey - "Among men, obesity and low household income were associated with higher odds of functional limitations" - meaning, low-income and poor, fatty foods are a dangerous combination that cost one's health (and the health system)

(7) Ericka from America, 10:19 AM on December 21, 2011
Sorry Ericka,

Peter, Grampa & Matters have a strong point.

Therefore a segment of Canadian society has determined that because
"Among men, obesity and low household income were associated with higher odds of functional limitations"
all Canadians, including fatty boys in the upper household incomes as well as the physically fit in any household income class should be denied the choice of eating in a Popeye's Chicken place.

Because fat Canadians of low incomes lack the discipline to control themselves in a land that has fast food 'restaurants' every Canadian will be prevented from eating at one. And without any evidence that poor fat Canadians got chubby as a result of fast food.

Ridiculous and simplistic.

(8) MattersKnot, 11:51 AM on December 21, 2011
"Because fat Canadians of low incomes lack the discipline to control themselves in a land that has fast food 'restaurants' every Canadian will be prevented from eating at one.:"

No, actually Erika, it's because of fat American's that we don't want your crap….can you process that simple logic instead of spinning it upside down??

(9) Ericka from America, 12:02 PM on December 21, 2011
Good point mastersknot. Great post.

(10) D N, 6:47 PM on December 20, 2011
Clearly our franchising regulation does not go far enough if US chains are proliferating.

(11) Far Side, 10:19 PM on December 20, 2011
Oh gosh - we are already big and fat as a nation and now we have more reason to get fatter?????

Prefer Canadian grown home made food any day!

(12) Omnibot 2000, 10:04 AM on December 21, 2011
Oh mah friend then you ain't never tried them red beans and rice. Or them biscuits. Make yo toes curl.

(13) ToC2, 5:53 AM on December 21, 2011
If American fast food chains find Canadian laws too onerous, they can go somewhere else.

(14) Redmaple, 7:59 AM on December 21, 2011
"Although such laws are common in the U.S., the requirements in Canadian provinces are different. Mr. Weinberg said that if the costs of redrafting the U.S. disclosure documents to meet various standards across Canada are too high, some U.S. brands might not want to make the effort to expand here."

Does anyone really care? I don't think that any of the existing or proposed fast food outlets has even one item on its menu that's fit to eat!!

Government took on the tobacco industry and won. It is time to do the same thing with the fast food industry.

(15) ElLector, 11:52 PM on December 20, 2011
I'd say, keep them US food franchises away, with McDo, KFC and the like, we have more than enough in Canada, more than enough junk food. Although I don't eat there, their crappy food endanger the health of patrons which means more health care expenses.

(16) Winston Churchill, 8:51 PM on December 20, 2011
Just say no. There's enough silly business up here.

(17) Monashee11, 8:20 AM on December 21, 2011
I visited Europe this year for the first time in half a lifetime and I loved to see how the mom and pop restaurants thrive. Here we walk like mindless drones into the next Tim Horton's on the block, the latest US-born fat-food restaurant, or the mega-mall franchise or corporate clothing store.

(18) Chazz Michael Michaels, 9:05 PM on December 20, 2011
halal meat? I'm sorry I like my meat to have no religious affiliations

(19) Taxenof, 7:32 PM on December 20, 2011
It's nice to see that American franchises are looking north for expansion but at the same time, they should also realize of the many closures of Subway restaurants, Quiznos, KFC and others just to name a few. There's not that much gold in 'them thar hills'. Wake up America.

(20) Smokezz, 7:15 AM on December 21, 2011
New fast food chains will do well… for a short time. People will go check out these new places because they're new. Then suddenly they'll be wondering why the place isn't full. It happens in fast food, diners, fancy restaurants…

(21) Gardiner Westbound, 7:09 AM on December 21, 2011
"Mr. Weinberg said that if the costs of redrafting the U.S. disclosure documents to meet various standards across Canada are too high, some U.S. brands might not want to make the effort to expand here."

They can draft franchise agreements for each of 50 U.S. states, but drafting them for 12 Canadian provinces may be insurmountable. What crap!

(22) PvB, 11:43 PM on December 20, 2011
Mmm…Greasy fast food…About as exciting as a pedicure

(21) life's journey, 9:36 AM on December 21, 2011
The 'food' looks gross (checked out their website), but hey, what's wrong with a pedicure? It may not be exciting, but it doesn't make you fat, clog your arteries, or raise your blood pressure, in fact it can feel great!

(22) GrassCutter11, 9:41 AM on December 21, 2011
More McSh!t for the lazy, obese, hard-of-thinking.

(23) Terminalcityman, 7:26 AM on December 21, 2011
They had a popeyes in Coquitlam, it only lasted three years.

(24) zackzoo, 7:30 AM on December 21, 2011
Abbotsford…short life as well

(25) Doc Demento, 8:49 PM on December 20, 2011
"Our business is very healthy up there,” Mr. Skehan said in an interview. “Compared with the U.S., your economy has weathered the recession much better.”"

Nonsensical claims otherwise …

(26) Ninetonite, 6:50 AM on December 21, 2011
"Our customers are very healthy up there…" Not for long.

(27) Mick Dundee, 9:42 AM on December 21, 2011
This kind of food should be banned from Canada and the world.
It's fried crap.
It is worse than alcohol or cigarettes which are taxed heavily.
I propose a FAT FOOD TAX of 30%.

(28) redcliffe1, 8:36 PM on December 20, 2011
"Halal chicken"…that's kinda neat. Do the chickens know? Do they have a choice of halal or non-halal? What about the food they eat? is it halal too? I gotta check up the religous history of this halal idea. Might be something to it. Maybe the chickens relax more under halal conditions and the meat is then nicer.

God surely must be great if he can see and hear all those chickens being done in every day.

(29) "internationalist", 6:50 PM on December 20, 2011
Anyone eating out…plays with fire,as far as the health is concern.

However the best reastaurant is "LA CASA DE LA MONNA"!!!!

Translation: GRAND MOTHER'S HOME!!!

(30) Silver Phoenix, 9:00 AM on December 21, 2011
Our love of junk food knows no bounds.

(31) justsayin', 9:03 AM on December 21, 2011
"only in America"….keep defending our "freedoms" with the government telling us what we can have and not have. this is food we speak of, not arms. Some freedoms are worth protecting but with the jist of these comments, most are indoctrinated into whatever works for Tims.

(32) John Fedup, 8:49 AM on December 21, 2011
If Canada wants to improve health care here, banning these new fast-food franchises would be a place to start and will save a $hitload of money down the road. If not, look for increased obesity and higher transportation costs as we upsize to larger cars.

(33) Silver Phoenix, 9:02 AM on December 21, 2011
Charging a fat tax is ok. Provided that there is an offsetting subsidy for fresh vegetables.

(34) Pincushion Man, 10:03 AM on December 21, 2011
Buying a franchise is volunteered slavery.

(35) Captain Sarcasm, 8:52 AM on December 21, 2011
OK, so honestly what is the truth here? In yesterdays story on rising food prices in Canada the G&M states: "…Mr. Porter does not believe the pressure on food prices will ease as some raw commodities prices continue to rise, just as a weaker Canadian dollar makes imports more expensive."
In this story it states: "…Mr. Weinberg said the stronger dollar and the relatively health economy have made Canada attractive for U.S. chains."

So which is it? how can the Canadian dollar be stronger and weaker at the same time?

(36) Factcheck, 9:32 AM on December 21, 2011
Yes. It depends on the time frame. Stroger than ten years ago. Weaker than six months ago.

(37) Lamont Cranston, 9:48 AM on December 21, 2011
What total bunk… and a poorly researched article as well.

The US has had "full disclosure" laws on pro - forma(s) (expected revenues/earning, based on real examples) for franchise operations for DECADES.

Only Alberta does the same in Canada, and much watered down at that…

In other words, Canada in many ways is the "open Market" and the USA the highly regulated one…

(38) agememnan, 11:08 AM on December 21, 2011
Bring on Famous Dave's!!!!! wicked BBQ!!!!

(39) mandango55, 12:06 AM on December 21, 2011
Two words…Carl's Jr.

Whereforth art thou?

(40) exxtian, 6:55 PM on December 20, 2011
Popeye also serves "halal chicken", really delicious!!

(41) Stayingcalm, 8:35 PM on December 20, 2011
As Canada's largest independent, family-owned chicken processor, Maple Lodge Farms is also one of the largest producers of Halal food products.

(42) John Fedup, 8:52 AM on December 21, 2011
@stahingcalm…which is why I don't buy chicken from this Islamic appeaser company.

(43) festina lente, 8:16 PM on December 20, 2011
These controls are not just for American franchises but also for small Canadian businesses with controls galore that weaken the revenues with fees for this and that and no Canadian can get an honest meal at a reasonable price. Hence a Canadian cross border shopper usually has a nice meal when shopping in the US.

(44) Custard Pie, 7:39 AM on December 21, 2011
You mean like that $50US eggs benny for two I had in Seattle back in'99?

(45) festina lente, 8:37 AM on December 21, 2011
Custard Pie, you must have dined down at Wright's Pier where every visitor gets stiffed but with a white table cloth. You cannot argue that restaurant fares cost less in Canada but if you do it is because you do not know to travel.

http://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/canada-serves-up-a-surprise-for-us-fast-food-franchises/article2278307/


Brought to you by WikidFranchise.org

Risks: Advertorial, Comments on article are interesting, Lapdog journalism, Only one side presented, Canada, 20111221 Serving up

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License