Local Loeb owners fighting attempts to shut them down

“Provigo has used this type of legal intimidation in the past in Ontario and recently in Quebec and we will not stop our $200 million legal action against them.”…lawsuit accuses Loeb of “reckless disregard for the financial interests of the franchisees,” and argues “there is a conspiracy by Loeb Inc. to terminate as many franchise agreements as possible and to convert the terminated franchises to corporate stores.

The Sault Star
August 2 1996

Local Loeb owners fighting attempts to shut them down
Sandra Paul

Loeb Korah Road owner/operator Mike Williamson and Golden Mile Loeb, owner/operator Larry Cairns, could lose their franchises and be kicked out of their buildings by the end of October. Loeb’s parent company, Provigo, Inc. of Montreal, terminated the franchise agreements and subleases of the two stores on Aug. 2 along with 19 others in the province, giving them 90 days notice. Those 19 Loeb franchisees are among 22 Ontario stores which filed a $200 million lawsuit on June 28 against the company for ongoing breaches of contract. Lawyer for the franchisees, Charles Gibson, said in a recent news release “Provigo has used this type of legal intimidation in the past in Ontario and recently in Quebec and we will not stop our $200 million legal action against them.” Gibson is currently exploring the group’s legal options.

The franchisees’ statement of claim in the $200 million lawsuit accuses Loeb of “reckless disregard for the financial interests of the franchisees,” and argues “there is a conspiracy by Loeb Inc. to terminate as many franchise agreements as possible and to convert the terminated franchises to corporate stores. To implement this conspiracy, Loeb, Inc. is knowingly decreasing the value of the franchises by manipulating gross profits downwards therefore eroding profit and equity of the franchises.”

Cairns is convinced that Loeb is trying to turn independent franchise stores into corporate stores so the company can retain more of the profits for itself.

Williamson agreed, “they’ll want to buy our inventory and equipment. They’ll probably be replacing us with corporate managers. Over the last two years, out of 111 stores, they’ve taken 47 corporate. There’s been no good faith and now there’s no trust at all.”

While the company has said it would speak to individual owners separately about their agreements, Cairn is suspicious, regarding the offer as a “divide and conquer” strategy. Loeb has said it has opened new corporate stores and bought out franchise operators in an effort to be more competitive in tough market conditions.


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Risks: Lawsuits, group, Franchisor takes franchisee stores, Termination of franchisee, mass, Fear, distrust, hate and contempt, Symbiotic relationships (industry, banks, lawyers), Cash grab, Bad faith and unfair dealings, Intimidation, Canada, 19960802 Local Loeb

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