Blenz Coffee: 2016 Litigation List

Blenz Coffee: 2016 Litigation List

Ever wondered who is suing who in the coffee franchise industry in Vancouver, BC, Canada?

For your convenience, we’ve put it all together for you into one convenient PDF file.

CLICK HERE TO OPEN THE 2016 BLENZ COFFEE LITIGATION LIST

As of December, 2016, just click this link for a complete download of all the lawsuits filed in BC related to BLENZ THE CANADIAN COFFEE COMPANY LTD, BLENZ COFFEE LTD, BLENZ COFFEE,

As of December, 2016, there are 49 lawsuits filed.

 

Franchisepro.ca picks up on Important Franchise Legislation article in Reputable Magazine

Franchisepro.ca picks up on Important Franchise Legislation article in Reputable Magazine

Wayne Taylor plaintiff in a lawsuit against Blenz Coffee in Vancouver, was interviewed in a reputable national magazine called Food Service and Hospitality.

Read about it here on Wayne’s Franchisepro.ca

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Read about it here

Blenz Coffee Franchise Poster Child Example of Need for BC Franchise Legislation

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In this most recent Business in Vancouver article on the topic of the need for franchise legislation in BC, Wayne Taylor briefly describes his personal experience dealing with Blenz Coffee (Blenz the Canadian Coffee Company Ltd) and just some of the claims he and two other former Franchisees have against the Vancouver franchise and its directors Sarah Kate Moen, Geoffrey Hair and Brian Noble.

Blenz Coffee and many other local Franchisors have essentially been able to do whatever they like while they hide behind their weighty franchise agreements and the shield of their pricey lawyers.

Until now.

Franchisees around BC have had enough and have figured out that the scales have not only been unbalanced but completely lop-sided in their Franchisor’s favour.

Typically what will occur is the Franchisee will enter into a binding legal agreement with the Franchisor and by the time he or she figures out that their investment is built on sand (or worse) they have no money left to fight the imbalance in court because government has been conveniently avoiding getting involved.

The result? Ruined marriages, unnecessary bankruptcies, lost homes, and serious cases of depression around our beautiful cities.

For some Franchisees there may be time to recover their financial house before retirement but for many others the clock has run out by the time the battle begins.

The government of BC needs to at least make a way for the small guy to have a fighting chance against companies that display sociopath and bully-like, in the same way that they have in other provinces.

It’s time to level the playing field.

 

Korean Franchise Chain Cafe Bene Gets Large Fine for Treatment of Franchisees

This article published on the Daily Coffee News website speaks of another classic case of abuse of power by a franchisor.

The name of the chain, is Cafe Bene which has a whopping 760 locations in South Korea and is now expanding into North America.

The are being fined for forcing franchisees to buy interior materials and equipment which created another nice profit pool for the franchisor.

One piece of silver lining to be gleaned from the story is that the fine is coming from a government agency, not a private law suit.  Hopefully this will send a strong message to franchisors that financially abused franchisees may have other resources to fight abuse franchisors with other than money from their own pocket.

British Columbia does not currently have any legislation to protect franchisees as multiple other provinces do.

 

What Will Replace Blenz Coffee at Pacific Centre?

On May 24, 2014 the VCSFA published an article called ‘Yet Another Prestigious Blenz Closes: Pacific Centre on Granville’  about the sudden disappearance of the landmark Blenz Coffee at Pacific Centre at 609 Granville Street. At that point it was rumoured that another clothing retailer had won the prized retail location ousting Blenz in a similar leasing situation as what occurred at Robson and Burrard. Both of these locations were high volume, and high visibility locations for the Vancouver brand.

For the owners (Franchisees) of these locations, they witnessed the entire value of whatever amount of goodwill they paid for their respective locations, evaporate before their eyes, leaving them with nothing more than whatever street value their aged and depreciated equipment was worth at the moment of loss – Not a pretty picture for their ‘franchise partners’ as Blenz likes to call them.
Some assumed that the loss of these prime locations and subsequent appearance of a new retailer was a deal agreed upon between Blenz corporate, the Blenz Franchisee, and the new retailer. The assumption, namely because there weren’t any indications otherwise, was that perhaps all stakeholders in the deal agreed that these locations were not well suited for coffee. Our new reports reveal that they may have assumed incorrectly and the now-stranded Franchisees may not have been involved in the lease negotiations at all.  Now wouldn’t that be a tad unfair to their ‘partner’?

Blenz Coffee, as do other Vancouver franchises, sets itself up as direct tenant in their commercial leases.  In this common franchise-model arrangement, the Franchisee is then responsible, by means of a sub-lease agreement, for cutting rent cheques directly to the landlord.  The Franchisee assumes this agreement is in place so that the Franchisor (in this case Blenz) can wield their powerful branded sword forcing the landlord into obedient submission resulting in the acquisition of prime retail locations (in this case Robson/Burrard and Pacific Centre) at rates that allow for a profitable business.  A green Franchisee typically does not understand these complex commercial arrangements and therefore trusts their Franchisor to be looking out for their mutual best interest.  In law this is called ‘to act in good faith‘ or ‘responsibility of good faith’.  In the case of Blenz, failing to renew a lease, or failing to secure a lease rate that is competitive and/or reasonable in the marketplace would equate to the fast destruction of the investment.

All eyes are now on Pacific Centre. Will it become another Lulu Lemon situation like at Burrard and Robson where a retailer from a totally separate industry takes over?

If it becomes a clothing retailer, or something completely removed from the food and beverage sector, then Blenz Coffee might be able to explain to this former (and probably rather upset) Franchisee that this location is not well suited for a retail coffee business, or their coffee brand or that the person who won the space had higher profit margins than them and are therefore able to justify doing business in Pacific Centre. It would be difficult for the former franchisee to have enough know-how to fight that battle.

If something like a Tim Horton’s were to open at 609 Granville, the Franchisee would then be able to present a good argument that Blenz Coffee just ‘let’ another similar business come in and ‘take’ their space, leaving them with nothing. However, Blenz might then be able to say something like ‘Well, Tim Horton’s is different. It’s more of a food-based model with cheaper price points – much different from the ideal Blenz customer.’

But if something were to open in the same space like a Waves Coffee, Starbucks, Take Five, Caffe Artigiano, or any other similarly-branded Italian-style coffee shop (especially those our Francouver list) with the standard espresso-based offerings and a few pastries spattered on the side, then the question will quickly become: How hard did Blenz the Canadian Coffee Company negotiate with the Pacific Centre landlord to maintain their prized location and assure the longevity of the Franchisee’s investment?

How hard did Blenz the Canadian Coffee Company negotiate with the Pacific Centre landlord to maintain their prized location and assure the longevity of the Franchisees investment?

If the answer turns out to be ‘not very hard’, then the next logical question would be “why not?”.

But only time will tell as the lease-hold improvements take place behind the boarded up windows at 609 Granville Street.

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.

 

 

Blenz Coffee Involved in Growing Number of Lawsuits

We were informed today that at least two lawsuits have been filed in the Supreme Court against Blenz the Canadian Coffee Company LTD so far in 2014 – and it’s only March!

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CLICK TO SEE DETAILS

Following our usual protocol here at the VCSFA of verifying information before sharing, we searched and confirmed the report .  A quick trip to the Court Services Online (an online service for seeing what’s going on in the courts) revealed two separate filings for 2014 already.

An individual, Jacobo (#140041), and a group of three, Taylor, Kormi, and Sahdra (#141773) are listed as Plaintiffs and Blenz Coffee as Defendants.

Also listed as a Defendant in the group case is “Moadebi“.  A quick internet search reveals this individual as a commercial agent.

We have not yet obtained the court documents associated with these listings (available for a $6.00 fee for download).

As always, please continue to share information like this with us so that we can remain the source for coffee shop franchise information in Vancouver.

 

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.

 

 

 

Sears Faces Class Action by Hometown Franchisees

In the following article covered by News 680 is the announcement that Sears is now facing class action by its Hometown Franchisees.  The Franchisees are going to go after Sears for failing them in the following ways:

  1. For competing against them in their territories
  2. For lowering local advertising budgets
  3. For dictating conditions
  4. For eroding Franchisees’ profits by corporate decisions that are not in the Franchisees’ favour

The following quote from the article summarizes the Franchisees’ situation:

“We are tired of disappointing our customers because we lack the resources to serve them properly,” – Jim Kay

The VCSFA has heard countless stories of situations where Franchisees – specifically coffee shop franchisees – have been unable to provide the right product at the right price, or, been unable to provide a consistent brand experience to meet the customers’s expectations that the customer is expecting before he or she enters their place of business.

It is paramount that the prospective buyer of an existing or new franchise investigate the ‘atmosphere of support’ experienced by existing franchisees.  A lot of Franchisees could have protected themselves against complete financial ruin, family hardship, or worse – had they only probed the managers or Franchisees of existing stores.  This is *completely free* and most Franchisees, given enough time and in the atmosphere of trust, will divulge all their good and bad feelings they have about the Franchisor which is one of the most valuable pieces of investment information you can obtain.

No matter what kind of franchise you plan to purchase, do your homework before you purchase. Multiple locations is not always an indication of a successful franchise.

As always, don’t hesitate to contact the VCSFA should you have any questions.

 

Wikid Franchise dot Org – A Possible Ouch for Franchisors

I suppose the VCSFA has become to many coffee shop franchisors in Vancouver the proverbial thorn in their side.  Word is getting out that we exist and that our purpose is to educate the public about franchising – coffee shop franchising to be specific – and that the relationship between the franchisor  and franchisee must be one of both give and take.  It must be one of both speaking and listening.  It must be one of democracy and fairness.

This video is painful to watch because its creator was obviously part of a franchise where such necessary components of the relationships were absent.  During the video the characters gave reference to a website that we had not yet stumbled upon – WikidFranchise.org – the ‘wikileaks of franchising‘ it seems.

We have not verified yet the quality or accuracy of the posts found within, but it is certainly a goldmine of ‘internet information’ that may contain truthful information posted anonymously – a franchisor’s worst nightmare and a great blessing for the purchaser of a franchise.

Call us old fashioned, but we still really believe that the franchise model could be a very profitable and amicable one.  There are surely such franchises out there.  Until they are all superb in their business dealings, it is necessary for organizations like ours to make sure that the public is aware of what’s out there.