Show Me Hospitality versus Tim Hortons: A Broken Franchise Contract?
This critical incident describes a legal dilemma faced by a Tim Hortons franchisee in the St. Louis metro area. The franchisee, Eric Sigurdson of Show Me Hospitality, asserted the franchisor, Tim Hortons USA, attempted to force him to sign a new contract that was less favorable to him than the existing contract he signed in 2014. Mr. Sigurdson refused to accept the new contract and as a result, he believed the franchisor unjustly retaliated against him by impeding his development plan and withholding promised marketing support. As a result, he filed a lawsuit against the franchisor and closed two of his locations without its permission. In response, the franchisor immediately terminated his contract, forced the closure of his remaining four stores, and filed a countersuit against him. Students are asked to decide what course of action Mr. Sigurdson should take in response to the latest actions of the franchisor.
In completing this assignment, students should be able to:
1. Discuss the nature of franchising and the expectations placed on a franchisee by a franchisor
2. Analyze and critique how franchisors and franchisees dispute contractual obligations in a
3. Analyze and defend criteria relating to a franchisee’s response options to franchisor demands