Waves Coffee: 2016 Litigation List

Waves 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 WAVES COFFEE LITIGATION LIST

As of December, 2016, just click this link for a complete download of all the lawsuits filed in BC related to WAVES COFFEE, WAVES COFFEE INC,

As of December, 2016, there are 7 lawsuits filed.

British Columbia Law Institute (BCLI) Releases Report on a Franchise Act in British Columbia

Members of the VCSFA had an opportunity to meet with Greg Blue of the British Columbia Law Institute (BCLI) approximately one year ago where we had the chance to hear more about the plans for a proposed Franchise Act for BC.  We created this post shortly after this meeting.

At this point, it was in the ‘consultation phase’ where feedback was being gathered by stakeholders in the franchise industry.  To read the original document, you can click this link and download it directly or go to the Franchise Act Project page at the BCLI.

We are pleased to announce that the conclusions from the consultation phase have now been compiled into this document: Report on a Franchise Act for British Columbia which can also be viewed/downloaded from the BCLI project page above.

In the near future, we will write a report with our feedback on the report.

The VCSFA would like to extend our most sincere thanks to Greg Blue and all the others who contributed to this worthwhile project as it has already contributed to the exposure of the oftentimes questionable nature of the Franchise-Franchisor relationship in general, but especially in BC, and will most certainly help any potential buyer (who does their due diligence) avoid some of the common pitfalls prevalent in the industry,

 

 

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.

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.

 

New Service – Free Contract Review

Thinking about buying a coffee shop franchise but you don’t want to spend money on a fully qualified lawyer?

Already bought one and don’t understand what you signed?

Why not schedule a time to meet with a VCSFA Coffee Shop Franchise Volunteer Consultant, get some free advice from an experienced Franchisee who understands the contract well?  After reviewing your contract they will be able to point out areas of concern so that you can make the best choice for you and your family.

Although our volunteers are not lawyers, they have themselves worked with a variety of lawyers on a variety of topics related to these contracts and are well aware of how these oftentimes confusing contract clauses can significantly affect your future.

Not in Vancouver but still need our help?  Don’t let distance prevent you from reaching out to us.  We’ll find a creative way to help you because we are passionate about what we do.

Although this is a free service run by volunteers, we do hope that you will find a huge value and, after receiving your advice consider making a contribution to the VCSFA so that we can continue our work bettering the lives of coffee shop franchisees.