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.

 

Checklist to Evaluate a Potential Franchise with bonus VCSFA commentary

Thank you very much to our member who found this article on The Business Link website and recommended that we share it.  Indeed it is a great article and worthy of some VCSFA commentary.

It is likely a fearful thing to many franchisors that potential buyers would obtain this list and actually start asking these questions.  For many of them it would likely mean the beginning of the end of their reign of folly while for the solid ones further credibility and free word-of-mouth marketing to other potential buyers.

While all of these questions are worth finding the answers to, there are some that need further expansion.

  • Is there a franchisee association or council? Who belongs?

Comment: This is the most important question you need to answer.  All the rest of the answers can be found and worked through if there is an FAC.  If you don’t know what this is or need help starting one, we at the VCSFA are here to help.  Read this article for starters.

  • How many years has the franchisor been operating?

Comment: Do not be deceived into believing that just because an organization has been franchising for a long time and has many stores that it is healthy.  Just because a hamburger chain has thousands of locations doesn’t make the burgers healthy. It may have at one time been good and now rotten.  Do your homework.

  • How many units are corporately owned?

Comment: How many of them are there, why are they owned by corporate and if they were at one time owned by corporate or are currently, what happened to the previous franchisee?  Note that you probably want to look in much more detail at a store that has been owned by corporate especially if you find out that a previous owner just ‘disappeared’ – and they do – regularly.

  • What is the franchisor’s financial condition? Have you received its most recent audited financial statements?
  • Will the franchisor provide franchisees with a statement of the disposition advertising funds?

Comment: The VCSFA members and directors will all eat their hats if a coffee shop franchisor will provide you with this information.  They typically do not open their books even to their ‘franchise partners’.  We wish you all the best of luck with this one and please email us if they do this and we will give them front page advertising on our site for a week and all the directors can swing by for a free latte at member locations!

  • Is the franchisor a member of the Canadian Franchise Association?

Comment: You can find the search field here to check.  To our surprise we found one major Vancouver coffee shop franchisor in this list that we didn’t expect to find while its major competitor was not.  Membership in these kind of associations is a good indication but we now know that it is not a totally reliable guage.

  • Has the franchisor litigated with franchisees previously? What was the outcome of such litigation?
  • Is there any pending litigation against the franchisor? What is the nature of such litigation? The status? The likely outcome of the litigation?

Comment: You can learn how to get some fast information by reading this previous article called “Does your Franchisor Hang out at the Supreme Court” and this CANLII tool (We’ll do a separate article on this beauty soon!).  To our surprise, the big Vancouver coffee player that was a member of the Canadian Franchise Association was quite readily found in court while its competitor was not a CFA member yet absent from court documents.  Just do your own homework and consult the VCSFA for any help you need.

  • Does the franchisor have a recognition program for exceptional performance? What does it involve?

Comment: The only recognition most franchisees want is money so we would recommend asking ‘Who’s makin’ money here?” instead.

  • Does the franchisor have plans for expansion or diversification? What effect will these plans have on your dealings with the franchisor?

Comment: Very important.  We have heard rumours of one Vancouver coffee shop franchisor who is starting to consider opening tea shops.  Where will that tea come from?  Will it compete against the tea sold in their coffee franchises?  Will they merchandise it at grocery stores taking away sales from franchisees?  These questions are relevant especially in the coffee shop industry during a tough economy.

  • Has the franchisor introduced any innovations since it began its business?

Comment: Think of Research in Motion (RIM). You can only ride on the success of your past for so long.  This is a fact, not opinion.  You need not only look at whether a coffee shop franchise has launched innovative new products but also – and maybe especially so – whether they have done any creative marketing.  Or are they just doing the same ol’ same ol’ (ie. contra advertising in the free paper and event sponsorship? We would also recommend adding a further question to this “Do these innovations help the franchisor and hurt the franchisee?”  Some ‘innovations’ are merely created to create more revenue for the franchisor at the expense of the franchisee.

  •  Is your franchise territory exclusive? If not exclusive, is there any territorial protection? Will there be other outlets opening near your territory? Does the franchisor sell its products through other channels? If so, what are these channels? How will they impact on the profitability of the franchise?

Comment: As touched upon above, be careful that the franchisor is not in the middle of diluting the brand with similar businesses or distribution channels.  As mentioned, there is one Vancouver coffee shop franchisor that is rumoured to be in the middle of opening a tea shop (or more).  This is a definitely ‘similar business’ – in fact that’s the terminology used in the franchisor’s contract with franchisee in the non-compete section.  Make sure your franchisor is not planning to compete with you in the same way that you agree not to compete with them!

  •   Questions to Ask Current Franchisees

Comment: This ENTIRE section is worth reading.  If you can get the current franchisee to open up about these questions, you’ll learn a lot – probably too much.  Don’t expect perfection from any franchisor, but it’s reasonable to expect reasonable.  Reasonable is reasonable.

  • The Contract

Comment:  This section is also important to completely read and understand.  The contract is the ‘heart of the franchisor’.  You can learn a lot about their past as well as their future plans via the franchisee agreement.  One question I did not see listed which has caused enormous amount of pain for Vancouver coffee shop franchisees is “Do I have to renovate?  When?  How much will it cost? What are the details?”  If the answers are vague, run away.  Run fast.

 

Does your franchisor hang out in the BC Supreme court?

Usually a franchise is sold to someone based on the brand and/or the wow-factor.  I know several current franchisees who purchased their franchise just because, ‘There’s no way fifty other owners could be wrong!’  In fact, it’s very possible that fifty other owners could be wrong.  But the question is how do you get accurate information about your current franchisor, or a prospective franchisor?

You would think that you could get this information by simply asking a current franchisee the famous question “So how do you like ___ [insert franchisor name here]?”

I originally thought this question would suffice if you go around and ask a few owners.  In fact, some coffee shop franchisors even require this step of their prospective buyers to make it appear that everyone is gung-ho. However, this method is not sufficient because what most people don’t know is that a good number of franchisees are living under fear of hypothetical retribution from the franchisor.  They think that if they say the truth about their bad experience that the franchisor will just show up and take their investment away from them like a dirty dish at a restaurant…and…without involvement in an organization like the VCSFA, I suppose this could happen in an indirect way.

One surprisingly unknown way of doing a bit of free background work on your franchisor is the BC Supreme court of all places.  With this great online tool, you can just pop your franchisor’s (or their suppliers) company names into the ‘keywords’ field and badda-bing-badda-bang – you can see their cases.  Granted you can’t see all the details but it will certainly show you if they have a tendency of getting sued.  You can also dig deeper later if you want.

In defence of the franchisor, very nice and beautiful people and companies are getting sued every day.  This doesn’t by any means give conclusive evidence of nefarious deeds, but it does give an ‘indication’ of whether you should do further research on these folks. And hey!  You can also look up your friends, family and coworkers to see if they’ve been hanging out there as well.

NOTE: You may have to try a few variations on their name in the keywordds field as they have a tendency of having multiple names or name changes.

Here’s your link

There is another Supreme Court link somewhere else that is useful but I can’t find that right now.  Stay tuned for part 2.