Tim Horton’s is one of Canada’s most well-known brands and operates quick serve restaurants under a franchise system. Franchisees operate Tim Hortons franchises pursuant to a franchise agreement with TDL. RBI is the parent corporation of TDL.
The Ad Fund Action alleges that subsequent to the acquisition of TDL and incorporation of RBI by a Brazilian private equity firm, 3G Capital (3G) around December 15, 2014, the use and administration of an advertising and promotions fund (the Ad Fund) materially changed to purposes not previously permitted or intended. The Ad Fund is funded from license fees and royalties (currently 3.5% of gross sales) paid by the Franchisees and the permitted uses are governed by the franchise agreements, statutes and common law. During the period covered by this action the Ad Fund collected over $700M in contributions from franchisees. The allegations against TDL include breach of contract and statutory breaches.
Further details are set out in the Fresh as Amended Ad Fund Statement of Claim.