Former Dunkinâ€™ Donuts franchisees have been awarded a total of $16.4-million in damages from the company for losses suffered because of the â€œTim Hortons phenomenon,â€ in which the donut shop saw almost all of its Quebec stores close in less than a decade as it lost market share, according to a superior court decision released Thursday.
The Quebec Superior Court ruled that Dunkin Donuts Canada Ltd. failed to protect and enhance its brand at the cost of the 21 franchisees and misled owners to get them to buy into a new strategy that ultimately failed.
â€œIn this case, you have a very large franchisor with a successful chain and itâ€™s facing a competitive threat by another large chain, i.e. Tim Hortons,â€ said Toronto-based franchise lawyer David Sterns of Sotos LLP. â€œAnd the judgeâ€™s view is that the franchisor couldnâ€™t just cede the territory to the competitor, that it was incumbent on the franchisor to hold the ground for the system.â€