The paradox represented by Tim Hortons‘ “always fresh” frozen doughnuts got a thorough examination last week in a long Maclean’s feature examining why Archibald Jollymore, former executive vice-president, and others are launching a whopping $1.95-billion class action lawsuit against the doughnut chain. The case pits Jollymore, a cousin of Tim’s co-founder Ron Joyce, against current president (and Joyce’s successor) Paul D. House, and is laced with the family feuding, backhanded commentary, executive rivalries and all the other prerequisites for a juicy corporate scandal.
Here, five things we learned about Canada’s doughnut titan.
1. Publicly traded Tim’s just sold its 50 per cent stake in Maidstone—the Brantford, Ontario, bakery where all its “doughnut and muffin delights” are made—to a Swiss company called Aryzta AG for $475 million. More and more, the company is becoming less and less Canadian.
2. The cost of purchasing a frozen doughnut from Maidstone, which flash-freezes them using the “par-bake” method, is approximately double what it would cost franchisees to bake them from scratch on-site, according to court documents. Jollymore says this process ate into profit margins so much that he and his wife (both franchise owners) were forced to “eliminate or reduce free product donations to charities, school fundraisers and community events.”
3. Tim Hortons co-founder Ron Joyce admitted the famous donuts ain’t what they used to be. When the frozen method was introduced after he stepped down, he said, “I’ve tried them, and they’re certainly not the same.” One franchise owner who backs the lawsuit even calculated that the “always fresh” donuts are 14.3 per cent smaller than the actual fresh ones.
4. Current Tim’s president Paul D. House doesn’t have many friends—or, rather, he certainly has a lot of enemies—around the office. Joyce in particular has taken a few jabs at his successor, entitling his autobiography Always Fresh and deliberately omitting any honourable mention of House taking the reins of the company.
5. Alumni of the Joyce-era Tim’s are far from united in the lawsuit. Graham Oliver, owner of five franchises and Joyce’s nephew, is among many who oppose the suit, arguing that if the public knew how much franchisees earn, the whining rhetoric about profit margins would result in a serious blow to the company’s image, evoking franchise owners as “wealthy, greedy people.”