Price Chopper franchisees and Sobeys face off in lawsuit

Just a year after settling a legal action with its Ontario IGA franchisees, Sobeys Inc. is facing another action, this time from seven of its Price Chopper franchisees.

The Price Choppers claim that Sobeys’ franchise contracts place controls over the franchisees, including determining margins, that prevent the franchisees from making a profit and investing in the equity of their businesses.

Sobeys in a counterclaim says the franchisees were in breach of their contract when they took funds from their businesses, that exceeded their allowable limit, for legal fees, presumably to launch this action.

Sobeys argues that it advances many hundreds of thousands of dollars to the franchisees for inventory and equipment, and the contracts with the franchisees clearly spell out the terms required for repayment.

The seven Price Choppers claim they will never make enough profit to pay back the loans, against which they have mortgaged their homes for collateral.

More details of this action will appear in George Condon’s "Checking Out" column in the December issue of Canadian Grocer.