Blenz Ranked as Lawsuit of the Week by Business in Vancouver (BIV)

Blenz Ranked as Lawsuit of the Week by Business in Vancouver (BIV)

Well respected and well read local business publication Business in Vancouver not only picked up on the court filing made by three former Blenz Franchisees against its former Franchisor, but ranked it as their ‘Lawsuit of the Week’ – and rightfully so.  Blenz has enjoyed for many years a natural windfall of sales produced by loyal customers who feel warm and fuzzy about the ‘local Canadian brand’. No doubt the very presence of this filing surprised the author.

Although the BIV article covers fairly well the claims of hindered store sales and lease renewal problems common to the three plaintiffs, a $6.00 download of the very large filing reveals that it didn’t even touch upon one of the most devastating claims against the Franchisor – Kormi’s doomed, mandatory, and very expensive renovation and surrounding events.  This part of the claim alone covers pages and pages and, if these claims are proven in a court of law and picked up by local media (ie. Steele on your Side), they will certainly have the potential to evaporate a good percentage of the ‘warm & fuzzy’ mentioned above.

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It is also noteworthy that there was no mention of the first court filing of 2014 against Blenz by Elizabeth Jacobo.  Reports from those who have read this filing indicate that it is on par or even more potentially devastating to the Vancouver brand than the claims found within the Taylor, Sahdra, Kormi suit.

Read our March 14th report of the growing number of lawsuits Blenz is facing in 2014.

Check back regularly for updates on this and other similar stories.

 

 

Quiznos Files for Bankruptcy

Most people reading this CBC article about Quiznos filing for bankruptcy will probably be thinking ‘where am I going to get my upscale sub?”  Franchisees, however, are probably asking “What will happen to the franchisees in this case?”

And what a great question that is.  There are lots of stakeholders in a franchise system, including, but not limited to:

  • the Franchisee
  • the vendors
  • the customers (better spend your gift card money asap!)
  • the landlord (who are you going to go after for late rent?)

One would hope that they have already formed an association that could immediately meet and start taking measures to protect their investments.  One would hope that the Franchisees are not relying on their head office to provide accurate, timely, or beneficial information at this point.  One would hope that they have their legal team lined up and ready to start work.

It will be most interesting to follow the results this event will have on the Franchisees and we hope that some of them will be able to write to us with their insight.

As always, send your comments and stories to info@vcsfa.ca.  We are here to help.

How a Few Law Suits Can Really Cripple a Franchise

Global TV aired a very, very damning broadcast about Zerona Canada today.  If you have been reading our articles at the VCSFA, you would not have been surprised at the kind of behaviour.

The summary of the lessons that one should take away from this unfortunate story are as follows:

  • Even a great product (or service) cannot make a business fly on its own
  • Franchisors make lots of claims that should be checked and then checked again
  • This pain would have continued and never been exposed if these courageous owners didn’t fight the dominant power – and yes, a franchisee is in a position of weakness before they sign up for the deal.
  • Support (or lack thereof) is *absolutely rampant* in franchising.  Amongst most cases we’ve seen you can only be sure you are getting one thing – the name.  Everything above that is [sadly] a bonus
  • Franchisors: you can only burn so many bridges before the skeletons of your past close in from all sides and you have no where to run but to the judge for mercy

As always, we are here to help franchisees of coffee shops – and beyond.  Don’t hesitate to reach out to us here at the VCSFA

Blenz Coffee Sells Off Corporate Training Centre at Prestigious Library Blenz

Blenz the Canadian Coffee Company LTD has sold their corporate training centre at Library Square to a new franchisee.  A sign reading “This location has new owners! We look forward to serving you!” was posted on the window.

new-owners

This location was a very useful component to the Blenz brand and had been the location used not only for giving new franchisees (owners) a chance to train with the public before running their own stores, but also for hosting events such as ‘That Barista Thing’.  They also used the location to do dry runs on new products and get feedback from customers.

This location has a challenging history as it was reportedly owned by a franchisee before Blenz took over the location from the upset owner.

Adding to the story of the sudden recent change of hands of this prestigious location is the simultaneous erection of a dividing wall between what was the ‘training side’ (left) and the ‘customer side’ (right) as shown in the this photo:

closed-training

This most serious corporate decision begs the following questions:

  • Where will new franchisees in the Blenz chain get trained moving forward and how will this affect the quality of the training?
  • Has Blenz protected the current owner of this Library Square location from a potentially competing business opening right next store?  There is not hint of what kind of business will be moving in to the former training space.  What if it turned out to be another coffee shop or tea shop?
  • Why did Blenz sell this location?  Did the city of Vancouver charge too much rent?  Our reports show that lease rates in Library Square are some of the most manageable in the city.  There are fewer locations with such a captive audience as library square.

This seemingly silent transaction should prompt franchisees and all stakeholders involved with Blenz the Canadian Coffee Company LTD to be on high alert if this decision was indeed not explained in advance.

As always, send us your industry information and we will be pleased to do a follow up report.  We are here to help.

Another Blenz Bites the Dust: Prestigious Landmark Robson at Burrard Location Gone Forever

Another Blenz Bites the Dust: Prestigious Landmark Robson at Burrard Location Gone Forever

2013 was clearly a tough year for Blenz the Canadian Coffee Company LTD completely losing the prestigious Cambie & 17th and Howe & Hastings locations from its previously expanding chain while experiencing temporary yet unusual and unexplained shutdowns at the Robson & Bute location as well as the Main Street location, not to mention the extremely high number of Blenz current sitting for sale on the world wide webs.  It is also the year that started just months after Blenz made the corporate decision to re-instate previous leader Mark West to steer the Blenz ship – while he remains owner of My Cup Coffee and Tea (currently their website is shown as ‘suspended’ but here is a PDF of the page that was visible until recently: www_mycupcoffeeandtea_com_Franchising_html ) which still competes directly with existing Blenz locations, one location at Georgia and Seymour which chips away at the sales of three different Blenz locations that are steps away.

blenz_closed_01

As if that battle story were not bloody enough for the Vancouver chain, Blenz finished off their year with the colossal and damaging blow of losing their most prized location: Robson & Burrard – One of – if not the – most highly visible and high foot traffic locations in the city.  Although not yet confirmed, it is rumoured that Lulu Lemon will be taking over the location.  The previous franchisee has not been availble for comments yet.  Apparently transparent stretchy pants and yoga gear are well liked by commercial landlords.

blenz_closed_03

Although the economy and ‘coffee saturation’ has been blamed by some for the challenges that franchise model brands like Blenz are facing, it has not seemed to stop corporate chains like JJ Bean and Cafe Artigiano from encroaching on their native territory.

2014 is upon us and it will be most interesting to observe how large number franchise chains like Blenz and Waves play their game.  If 2013 was any indication of the future…

 

Prestigious Blenz Gone

Prestigious Blenz Gone

Sue-Go Juice: Did Jugo Juice Juice their Franchisees?

It looks like Jugo Juice is becoming ‘sue-go juice‘.

I had been running my own coffee franchise for nearly two years when I took my first Canada Line trip.  The very first thing I noticed was what seemed like a Jugo Juice at almost every location.  The first thought that came to my mind was ‘Those rascals!’ (of course using much more colour terminology). My only surprise is that there are not more names on the plaintiff list.

As discussed in other VCSFA articles, the Franchisor is in a clear position of power and has the advantage of being the creator of some very hand-crafted – and arguably one-sided – legal documents, namely the lease, the sublease (if applicable) and the Franchise Agreement.  The profile of Franchisee that seems to be preferred by Franchisors is typically, from my experience,  someone not steeped in either franchising, or small business.  They are often accountants, teachers, retail managers, and such, but more commonly – again from my experience – immigrants who may not quite have the language skills to battle on their own should such a need arise.  The point here is that not one of Franchisees I have met over the last few years in the food and beverage business – especially in the Vancouver coffee business – came with the expertise required to make such a huge financial and time investment.  As a result, I have seen devastated marriages and families as the money is bled out of their lives.

The worst part is that British Columbia doesn’t have *any* franchise legislation to help abused Franchisees. In their often nearly bankrupt condition – the time when they most need a lawyer’s help – they are left to fend for themselves.  As in this Jugo Juice case, I’m sure that we will see that a mandatory disclosure document may have saved these Franchisees the need to file this lawsuit.

One will often come across quotes from experts in law and business saying things like, “It’s buyer beware” or, “One has to check the legal documents carefully”.  That’s very easy for someone to say who has no experience in business or business law.  To reiterate, most prospective Franchisees are not coming from a position of being savvy in business – and the Franchisors know that.

Every Franchisee I have spoken to has one thing in common – they trusted the name and the brand and their experience.  They trusted that the Franchisor would not knowingly put them (or allow them) into a bad deal.  The trust that potential buyers put in the brand is so strong that I have witnessed sound-minded, intelligent people sign documents that are so bad they would give you cramps.  I know one gentleman whose position is, “Well, they signed it.”  I disagree with this position.  If it were an independent cafe or restaurant and the people who created the documents were on the same playing field in experience, then I would steadfastly agree.  However, the very nature of a Franchise implies ‘trust’ and ‘success’ and they accomplish this image largely because of the sheer number of locations.  I will never forget a quote from my good friend.  He had just explained how he had received accounting and legal advice *not* to purchase his franchise coffee shop.  The outcome of his decision to purchase was the most devastating series of events I have ever witnessed.  After explaining his situation to someone the person asked ‘Well, why in the world did you purchase, then?”  His response?  I’ll never forget it.  It’s engraved in my mind forever:

I thought surely sixty locations couldn’t all be wrong.

They were wrong, though.  They all signed a similarly one-sided document and were reaping the reward of their folly.  Just like me.

Did Jugo Juice sincerely think – with all their experience in the retail beverage business – that these stores would succeed buried deep within the Canada Line?  Who has time, while rushing to a train, to have a nice, blended drink?  And, let’s just say you do have just enough time to grab a drink and get on the train, it says right here in the Translink Etiquette Guide (item #4) that you should ‘refrain from eating and drinking on the train’. So stopping to get one of these drinks will set you up to be a bad guy in the eyes of your co-commuters.  To me, this sounds like a business disaster waiting to happen. Just to make sure it wasn’t my personal experience and bias clouding my judgement, I started surveying my own customers to find out when was the last time they stopped and bought a nice drink at a transit station and if they would do so in the future.  The results of the mini survey were dismal: they all agreed that they would prefer to go a little further *above ground* and buy their speciality beverage.

Here’s what Jugo Juice gained out of the last few years since their 2010 Canada Line Expansion:

  • Incredible brand awareness: countless hundreds of thousands of people walked by (the key is *walked by*) those Jugo Juice logos
  • Increased probability of selling new stores: “Mr. Prospective Buyer, we are a big, well-known brand. You are buying into a big chain with a winning formula.  Look at the proof – we have stores in most Canada Line stations.”
  • Royalty payments: Did Jugo Juice offer ‘royalty relief’ during their time of suffering or was the full contractual amount continually (and probably automatically) taken from their bank accounts?  This will come to light, I’m sure.

What did the Franchisees – who likely invested all of their life-savings in these businesses – get out of the deal?  A court date?

It will be most interesting to follow this lawsuit and perhaps it will pave the way to better Franchisee-Franchisor relations in BC and ultimately the quick establishment of franchise legislation in our beautiful province.

 

 

 

Bell Mobility Gets Sued by Franchisees: A Deeper look into the Franchisee-Franchisor relationship

The Globe and Mail, on July 29th, published this article about how the Bell Mobility division of Bell is getting sued by its independent dealers.

In short, the Franchisees are suing their Franchisor for squashing their profits and looking out only for their own interests at the expense of the front line troops – the Franchisees.

This is another example of the potentially very challenging relationship a company must face if it chooses the franchise business model.  The motives, agendas, and heart of the Franchisor *must* be like a parent shepherding their flock of less experienced sheep towards a mutually profitable enterprise.  Once it is known (or suspected) that the Franchisor’s main goal is to take as much as possible from their flock and give back little, the relationship will be short-lived and it will be just the blink of an eye before court documents are filed.  Should one be surprised?  Divorce rates are well over 50% and there is much more than money to be lost in a divorce.

It must be noted that not all franchises are being sued.  In fact, we have had Franchisees of a few select coffee franchises claim boldly that they are a) making money and b) satisfied with their Franchisor.  So, it is absolutely possible to have a synergistic and win-win relationship with the Franchisor. However, when trust is breached as in the case of Bell, and if swift and serious action is not taken to repair the breach then all roads lead to the courthouse.

This is serious business, rest assured.

Sometimes Franchisors lose touch with their roots.  They don’t spend enough time in the field getting to know the customers and Franchisees personally.  They don’t know that everything is falling to pieces when a simple, transparent and humble chat would have revealed all. Perhaps the Franchisor would have to consider some compensation for past errors.  Perhaps all it would take would be a grave apology letter or speech from the Directors.  Unfortunately, the impression that many Franchisees get from their ‘shepherd’, as they suffer significant financial hardship, is that they are nothing more than mechanical cogwheels in their money-making machine, held in place by nasty and sometimes abusive contracts.

The Canadian – specifically the British Columbia – franchise world will, in the near future, see the collapse end of bad Franchise ’empires’ as associations like the VCSFA are able to help prepare potential buyers for their investment. We hope that Franchisors who are serious about maintaining a positive brand and all the goodwill their created in the eyes of their customers, will hear the voices of their front-line soldiers and take strong action.

 

 

 

What Would a Union of Baristas Mean to the Coffee Shop Owner?

If you haven’t read all about it, a recent article spoke of a group of well-meaning folk in Halifax would like to create a union of coffee shop employees.  Yep, you read that correctly – baristas – your daily latte slingers.

Unions all started with a good purpose – employees were getting abused and treated unfairly.  These kind of things still happen today.  The people trying to create this niche union feel things could be better.

The Vancouver Coffee Shop Franchisees Association formulated for similar reasons – we saw acts of injustice taking place towards Franchisees of popular coffee shop chains by their Franchisors.  The Franchisees were in a position of vulnerability and subject to gross abuse by means of hand-crafted contracts by skilled lawyers – especially in BC where there is currently no franchise legislation.  In a sense, the VCSFA is a kind of ‘union’ of like-minded people.

Do the baristas need to actually unionize, though?

It was notable to us that Second Cup was mentioned on several occasions as a possible inspiration for the union.  Second Cup is a coffee shop Franchise well known in Canada, specifically around Ontario.  Second Cup has few locations (possibly just one?) in BC and operates primarily in the other provinces, so we are not yet entirely familiar with their specific Franchisor-Franchisee relationship.  That said, we know how the relationships between staff and Franchisee can be strained as a result of financial pressures from operating a franchised coffee shop.  Perhaps this trickled down to the staff?  Perhaps the Franchisees were locked into tricky contracts that pummelled their finances and they started viewing their staff as expenses rather than prized assets?  One can only speculate but it’s important to understand both sides of this story.

The coffee shop business, with it’s high operating costs and usually severe competition, is not well suited for providing high paid jobs – at least not many of them at the same location.  The argument against this position – and it’s valid – is that you can attract ‘talent’ by paying more and offering benefits.  In the coffee business, much like the restaurant business, there is a threshold where eventually paying more is not an option. Hence the gradual acceptance of the tip jar (usually an old stained mug to be precise). In many of the coffee shops we know, a good barista will earn no less than an average of $2/hour extra just from that old stained mug.

If the customer is willing to pay more for their drink there is no reason why a unionized labour force wouldn’t work but we are not convinced that the current market will allow for such a price hike.  One can look towards Australia where tipping is not part of the culture.  Word has it that a barista makes between $12 and $16/hr.  Accordingly, word also has it that the drinks in Australia are priced higher and the volume per cup is much less.

The coffee shop needs to remain a very flexible job as it serves a very unique employment position in our country.  If the Union of Professional Baristas (or whatever they decide to call themselves) is willing to work reasonably with the owners of both franchised and independent cafes, it *could* work but we think issues can still be worked out between the owner and the barista.

What’s Going on at Blenz: Blenz at 4198 Main Street in Vancouver Silently Reopens

On June 5th, 2013, we published an article about yet another Blenz (Main Street) mysteriously closing.  For some time just brown paper could be seen on the outside.   We attempted to reach the Franchisee on record without success.

Yesterday, June 17th, it was reported to us that the location had silently re-opened and that the person operating the store was also seen operating at least one other Blenz location.  No further details have been revealed at this point.

In the past, Blenz would have celebrated the takeover of a new Franchisee with a ‘re-opening party’ including free drinks and food for the neighbourhood.  The idea was to inform everyone that the store is now under new management.  In both of these recent closures/reopenings no marketing event was performed so we are not sure what is happening with the ownership structure.  In fact, none of the Blenz Franchisees we asked about it even knew that these stores had closed, let alone re-opened.

In the Blenz ‘Fresh Brew’ publication, the only information that could be found was a new store opening in Ladner.  The Franchisees we surveyed didn’t even know there was a planned opening of a new store in Ladner until the store was open.

All of these recent events beg the question ‘What is going on at Blenz?’

 

 

 

What’s Going on at Blenz Coffee? Blenz at 4198 Main Street in Vancouver Closes

Brown paper covers the windows of this closed Blenz on Main street in Vancouver

Yet another sudden closure without notice has occurred at Blenz Coffee, this time on Main Street in Vancouver.  Customers in the area reported to us that they were attempting to patronize the location but found the store closed with brown paper on the wall (see photo).

So far we are unable to get details on what is taking place at this location.

This closure is the 4th closure of this type in the last 3 months, following quickly on the heels of Robson and Bute on May 1, and 815 Hastings on March 3, and 3297 Cambie on March 29th.