Newspaper article St Louis Post-Dispatch (MO)

Tim Hortons Franchisee Closing Two St. Louis Doughnut Shops amid Legal Spat with Chain

Newspaper article St Louis Post-Dispatch (MO)

Tim Hortons Franchisee Closing Two St. Louis Doughnut Shops amid Legal Spat with Chain

Article excerpt

A franchisee of Tim Hortons who once planned to open 40 outposts of the Canadian doughnut and coffee chain in St. Louis is closing two local restaurants amid a legal fight with new ownership.

The Tim Hortons on Tucker Boulevard downtown and one in the Central West End's Cortex Innovation District both were permanently closed over the Thanksgiving holiday weekend. Both locations opened in 2015, and together employed 24 people.

Tim Hortons restaurants on Lafayette Avenue in St. Louis, in Maplewood and O'Fallon, Ill., and an express cafe co-located with a Reliance Bank branch in Frontenac will remain open, said Eric Sigurdson, president of Show Me Hospitality, the St. Louis area franchisee for Tim Hortons.

A legal fight with Tim Hortons' owner prompted the closures, Sigurdson said in an interview last week at Show Me Hospitality's Brentwood office.

"We're at a standstill on development," Sigurdson said. "We had to stop development on more than a half dozen projects as a result of the lawsuit."

When Sigurdson's Show Me Hospitality signed a franchise agreement with Tim Hortons in early 2014 to bring Tim Hortons to St. Louis, the franchisee agreed to open 40 standalone restaurants and smaller spaces within arenas or hospitals in the St. Louis region over five years, with an option to add 90 restaurants in 15 years. The expansion to St. Louis at the time was part of a larger push by the chain to add 300 U.S. restaurants by the end of 2018.

Before Show Me Hospitality opened its first location, Tim Hortons was acquired by Burger King, then became a subsidiary of Restaurant Brands International, a company controlled by Brazilian investment group 3G Capital.

After the change in ownership, Tim Hortons representatives wanted Show Me Hospitality to agree to a new franchise agreement to commit to open 205 restaurants in the St. Louis area within a decade and invest $20 million in capital, which was not part of the initial agreement, Sigurdson alleges.

Tim Hortons slowed down its process for approving new sites in the St. Louis area after Show Me Hospitality refused to sign a new franchise agreement, according to a lawsuit Show Me Hospitality filed against Tim Hortons USA in federal court in Miami in July. …

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