TORONTO (Reuters) - A group of Canadian coffee chain Tim Horton’s U.S. franchisees said on Thursday it is suing parent company Restaurant Brands International (QSR.TO), escalating growing tensions between the company and owners of its U.S. and Canadian coffee shops.
The Great White North Franchisee Association-U.S. is challenging a clause in Restaurant Brands’ franchise agreements that requires all disputes to be resolved in Federal Court in Miami, according to an emailed statement from the group.
Once this is resolved, the U.S association said it plans to file another lawsuit claiming improper use of an advertising fund franchisees pay into. It said the company had used the fund to pay overhead expenses unrelated to promoting the brand.
“We can’t comment on the specifics of any ongoing legal matters, however, these allegations are completely false,” Restaurant Brands said by email. “We’re proud of the way we conduct our business, and nothing will distract us from our primary focus, which is serving the needs of our restaurant owners and guests.”
The moves by the U.S. franchisees are the latest in a long-running feud between Tim Hortons’ parent company and its franchisees, which has now drawn the attention of the Canadian government.
Tim Hortons fell to 50th from fourth on an annual ranking of brand reputation in Canada based on surveys between Dec. 19 and Jan. 29 by market research firm Leger. Tim Hortons has 729 locations in the U.S. and 4,258 in Canada, according to its website. Restaurant Brands also owns the Burger King and Popeyes Louisiana Chicken chains.