The reporter characterized the IPO as “destined to go down as the most popular IPO this country has seen to date” and “The frenzy around this doughnut deal is putting Google to shame”. Is the author over embellishing? Tim Horton’s IPO buzz seems to be more in line with fellow Chipotle’s enthusiastic IPO, not the crazed delirium over Google’s IPO.
Is going public good for franchisees? I haven’t explored arguments on both sides, but my initial impression is no. The pressure to increase margins, meet analyst expectations, and pay for the increasing regulatory costs is going to increase the pressure for franchisors to squeeze more money and profit from their relationships with franchisees.
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
Are there any negatives to franchising with a company in Canada? Would any labor requirements be different to comply with Canada’s stricter rules?
#1 / I don’t think so, but I’m just guessing. They probably setup a Hortons USA and it operates like any other USA business, not taxed or regulated extra somehow by Canada.
Most of the labor issues facing a Hortons-type franchisee would be regulated under the laws of the state in which the franchised outlet is located. There is a federal (US) Dept of Labor, but they normally don’t deal with the mom-and-pop businesses. I don’t see how Canada would have a legal basis for extraterritorial application of Canadian labor law, nor do I see that they would be interested in doing so.
On the matter of whether a publicly-traded franchisor is better/worse than a privately-owned zor: Ryan’s points are well-taken, but the flip side is that publicly-traded companies are (other factors being equal)necessarily more image-conscious and subject to pressure from institutional shareholders, who don’t like bad press. Plus, a publicly traded zor has to hold an annual meeting– an occasion for both shareholders and franchisees to hold the company to account. Burger King sought to mend fences with a view towards an IPO, but Quiznos seems to be following the opposite track: I would say that there are examples in support of both sides.
Go check out the sites http://www.thetdlgroupltd.com and http://www.timhortonslies.wordpress.com and see what this company is all about. How does someone else own the name of the company that owns Tim Hortons, how can a company this big let that happen? Interesting story.