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.

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!

blenz_lawsuits_2014

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.

 

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

Franchise Legal Advice Featuring Blair Rebane of Borden Ladner Gervais

This article published by the Canadian Franchise Association is an absolute must-read for anyone considering the purchase of a franchise.  What is not mentioned in this article is the fact that franchise law differs from province to province.  In British Columbia, for example, you need an especially higher level of legal advice and protection when dealing with Franchisors because there does not yet exist any form of franchise legislation.

One of Mr. Rebane’s wisest pieces of advice from the article is as follows:

“It’s key to get someone experienced in franchising because they not only tell you what the agreements mean, but what is standard and what is not,” says Rebane. “As someone who has drafted and read hundreds of agreements, I can quickly spot atypical clauses and point them out.” He notes that finding a lawyer with years of experience will also save money. “Someone experienced can get through the documents quickly because they know what they’re looking for without having to research it.”

One of our members gave his account of why this advice is so important:

When I bought my brand-name Vancouver coffee franchise, I was naive and assumed that all I needed was a lawyer who understood business.  How wrong was I!  Franchising is a completely different beast.  I chose a very expensive law firm, and I’m sure that my expensive lawyer was experienced in some form of business – he said he was but I didn’t check any credentials -but it wasn’t Franchising.  As a result, I ended up in a really bad deal with clauses that only came to life after I ran the day-to-day business and saw the business practices of the Franchisor.  Perhaps my endless headaches could have been avoided…

 

For more information on this and other related topics, be sure to search our site and the variety of different categories.

 

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.

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.

 

Article by Tony Wilson about Franchise Legislation in BC

Tony Wilson is respected around town (Vancouver) as a Franchise Lawyer which is why when he writes an article in the Globe and Mail, the VCSFA pays attention.  In this recent article “Franchising is Big in BC – So Where’s the Legislation?”, Mr. Wilson talks about the British Columbia Law Institute’s (BCLI) consultation paper on franchise legislation in BC.  He explains BC’s odd position of being one of few provinces that remains without franchise legislation and even brings up an argument that the legislation may not bring notable changes as follows:

But will it [bring change]? If most franchisors in Canada – including those headquartered in B.C. that are selling franchises in Ontario, Alberta, Manitoba, PEI or New Brunswick – must comply with the legislation in effect within the disclosure provinces anyway, it is arguable this will add little more in terms of compliance costs to B.C.-based franchisors. They will simply adapt their FDDs to include B.C. Franchisors in other provinces will do the same.

Thankfully the VCSFA has had the honour of meeting with some of the people involved in this consultancy report and have been able to express our position on the matter.

Although Mr. Wilson is correct that many reputable Franchises are currently operating in compliance with other province’s franchise legislation and that they will be able to quickly adapt to any implemented BC legislation, this doesn’t take into account the fact that there are BC-born Franchises that have been operating without it for years *here in BC* and continue to sell stores.  Take for example the following ‘bigger name’ coffee shop franchises from our Francouver list that are either BC-born or operate primarily here:

  • Bean Around the World
  • Blenz Coffee
  • BG Urban Cafe (formerly “Bread Garden”)
  • Serious Coffee
  • Take 5 Cafe
  • Wave’s Coffee
  • Wired Monk

We have received local Vancouver reports from current and previous Franchisees involving horrific business practices that have resulted in bankruptcies, broken families, or other similar tragedies. In fact, some of the stories are so bad that you would be hard pressed to believe that the events could have possibly taken place in Canada.  Some people have been begging us to bring some of these stories to light and the companies behind them, but we are convinced that by means of the current court systems and eventual Franchise legislation in BC, that nasty people will be unable to continue in their nasty ways.

Do not think that just because a Franchisor is complying in other provinces that they will play nice and follow suit in BC.  We need clear and reasonable legislation right here at home.

In conclusion, let it be known that the VCSFA takes a very strong position *in favour of immediate Franchise legislation* so that it becomes very difficult for Franchisors to commit premeditated acts of business atrocities in our beautiful country, and especially in our province of British Columbia.

 

 

 

Vancouver’s Best Coffee Bars and What it Means to Coffee Franchising

A few months ago the VCSFA published an article called ‘Do Customers Like Coffee Shop Franchises?’ and it was one of our most popular articles.

In February the Vancouver Sun published another article called ‘Vancouver’s Best Coffee Bars’ which helped cement our suggestion that although Vancouverites outwardly appear to prefer to spend their money at big chains, the chains don’t generate any ‘wow-factor’ for them.

The closest thing to a chain in this list is JJ Bean and 49th Parallel Cafe – neither of which are either a Franchise business model or dabbling in the rapid expansion practiced by most ‘successful’ large chains and franchises.

For someone considering the idea of opening an independent cafe versus a franchised cafe, we hope this Vancouver’s Best Coffee Bars article will open your ideas to the idea that an independent cafe may not be any less successful than paying dearly for the right to use someone’s name.