Delivery delays hit Tim Hortons franchisees as company announces new HQ

Some Ontario Tim Hortons franchisees are experiencing a delay in receiving deliveries from the company's Guelph warehouse, the latest irritant between franchisees and the coffee shop's parent company Restaurant Brands International.

In recent months, the two sides have tussled on several fronts including cost-cutting measures, cash register outages and a $700-million renovation plan to spruce up its restaurants and franchisees recently voiced their concerns to Ottawa.

Tim Hortons president Alex Macedo told The Canadian Press on Tuesday that upgrades and changes to its distribution centre were causing trouble with shipping out products.

Macedo said the company recently "fell behind" on getting products out to franchisees. He expects things to be "back to normal" within the next five to seven days.

"These delays and deliveries are within the acceptable range of a transition like this," he said. "There's no shortage of any of the critical items."

An email sent by Ontario Tim Hortons manager Greg Hiltz on April 14 to franchisees in the province and seen by The Canadian Press said 45 products are "temporarily unavailable." They include a handful of cold beverages, take home coffee products and sanitation supplies.

"For items like vinyl gloves, we are obviously OK with sourcing these from third parties for the next week. They are typically available at Wal-Mart or other retailers," Hiltz wrote, noting that restaurants will not be penalized for not buying them from head office as their franchise agreements require.

On Tuesday, Macedo said Tim Hortons has a "good" rapport with the franchisee advisory board that represents all the owners.

"We still have a lot of work to do, but as we drive profits and sales we expect the relationship to get better," he said.

The remarks came days after a spokesperson for Innovation Minister Navdeep Bains said Ottawa would look into allegations that RBI failed to live up to promises made under the Investment Canada Act in 2014 to secure approval for the deal to acquire the company.

A letter to Bains from the Great White North Franchisee Association, a group representing at least half of the franchisees, cited commitments to maintain franchisee relationships, the rent and royalty structure for five years and existing employment levels at franchises across Canada as issues.

"We have reported into Ottawa each and every year with everything we have done and we are happy to co-operate if anything comes up," Macedo said.

Earlier in this year, Macedo and Tim Hortons faced criticism after two Cobourg, Ont. franchises moved to offset Ontario's minimum wage hike by cutting paid breaks and forcing workers to cover a bigger share of their benefits. The move caused some customers to vow to boycott the brand.

Tensions flared again in February when GWNFA threatened legal action against Tim Hortons after some franchisees experienced intermittent cash register outages that forced them to partially or fully shut down some stores.

And earlier this month, they were arguing over an outspoken franchisee, previously involved in a class-action lawsuit over the company's alleged improper use of a $700-million national advertising fund. GWNFA accused the company of intimidation after it allegedly denied the franchisee a licence renewal for one of his two Tim Hortons locations.

Macedo didn't directly refer to any of the incidents when asked whether Tim Hortons was doing anything to smooth over relations with the restaurant owners, but he stressed that the company "works closely" with franchisees.

HQ to move

The company is moving its headquarters from Oakville, Ont. to a 6,000 square-metre (65,000 square-foot) space in the Exchange Tower in Toronto's financial district.

Macedo said the move will bring it closer to business partners, enable it to better use technology to serve customers and help it keep abreast of industry trends.

"Consumer trends are changing very fast. We want to remain an innovative company," he said. "We want to be able to react to guest changing behaviours so we thought being positioned in Toronto would allow us to do that."

Macedo said all 400 employees at the Oakville headquarters will be transferred to the Toronto location at the end of the year, but the company's "Tims University" training centre will stay put.

The company, he noted, has been situated in Oakville for more than 50 years, making the move a "very exciting moment."

"We feel this is a big investment on our part, but we feel it is the right thing to do to get closer to our guests and to make sure we run the business well for our restaurant owners in the future," he said.