SDM Franchisees launch $ 1 Billion lawsuit against SDM.

[tjthemanto]

Old news but didn't see it posted.

http://business.financialpost.com/20...ers-drug-mart/

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About a month ago we told you about the dispute brewing between Shoppers Drug Mart and its franchisees. Legal Post has learned that disgruntled pharmacists have decided to heat things up a notch by officially launching a $1-billion class action lawsuit that accuses Shoppers Drug Mart of breaching a franchise agreement and unfairly seizing profits.
The case was filed in the Ontario Superior Court of Justice on Monday. The 42-page lawsuit claims that tensions between Shoppers and its “associates” or franchisees started around 2001, just after the retailer made an initial public offering and became a publicly traded company. Since then, the suit claims, Shoppers has been putting the squeeze on the “associate” owners who’ve signed franchise agreements and joined the retailers network:

“In effect, the Defendants now treat all the Class Members not as peers in a joint enterprise, but as assets to maximize shareholder value without regard to the Defendants’ legal obligations. [...]
The Defendants’ actions represent a systematic attempt to increase their share of the profits earned by Class Members at the expense of and to the detriment of the Class Members.”

As was expected, a huge part of the dispute centres on how Shoppers has been handling the so-called “professional allowances” it collects from generic drug manufacturers on behalf of the associates. But the Statement of Claim also spells out some other bones of contention. The plaintiffs claim Shoppers charges more for advertising that it is supposed to. They also claim take issue with the “penalties” Shoppers allegedly charges franchises that fail to make annual profit targets.
None of the allegations has been proven in court, and the lead plaintiffs have yet to convince a judge to certify the lawsuit as a class action.
When the Notice of Action was filed, Shoppers described the proposed class action as being without merit.
Drew Hasselback

[tjthemanto]

http://www.theglobeandmail.com/globe...article563548/

Shoppers Drug Mart Corp. , reeling from profit-pinching drug reforms, says it has been hit by a $1-billion lawsuit from two of its drugstore owners alleging breach of contract.
The store owners, who operate much like franchisees, are seeking class-action status, claiming that Shoppers collected or kept money or benefits beyond what was permitted by their contracts.
Although Shoppers provided few details, such as identifying the store owners involved, lawyer David Sterns, an expert in class-action franchisee cases, said such disputes often are touched off by a change in a corporate business model.
"Whenever you have a material change to the business model, it's quite common that people go back and start looking at their agreements and start figuring out where it is they can perhaps try to change things in their favour," he said.
Toronto-based Shoppers moved quickly last summer to overhaul its business strategy after Ontario adopted generic-drug reforms that squeezed pharmacies' bottom lines. The changes banned an estimated $750-million annually in professional allowances that generic drug companies paid to drug stores in exchange for shelf space. Chains such as Shoppers counted on those fees to help bolster their profits.
To offset the financial pain, Shoppers has looked for cost savings at its stores. For example, it has increased the number of hours that the owner-pharmacists must work behind the counter to 32 hours a week from 28 hours, according to an analyst. Shoppers has also shaved capital costs by cutting other labor expenses and scaling back expansion plans.
The need for new initiatives became apparent in Shoppers' third quarter, the first to feel the squeeze of the Ontario drug reforms. Its profit fell 6.7 per cent to $159-million, while sales grew 2.6 per cent to $3.09-billion.
Although courts in the past have been reluctant to sanction class-action cases, recent judgments probably opened the door for franchisees to obtain class-action status, said Mr. Sterns, who is not involved in the Shoppers matter.
Quiznos franchisees, for example, obtained class-action status after the Ontario Court of Appeal ruled last summer that such system-wide franchisee disputes are "exactly the kind of case for a class proceeding." Mr. Sterns represents Quiznos franchisees.
Tim Hortons franchisees, meanwhile, have sued the restaurant giant after it changed its business model several years ago by introducing "flash freezing" of baked goods rather than making them from scratch in the stores.

[Tabby40]

wow!

[debragirl31]

Well they better be prepared for a Class action lawsuit by the Shopper's Optimum holder's too. I got all my receipts and I've got all the evidence to support a claim. Seriously it's been 3 weeks now and still no response from HQ about the 'card error' on my card. They have outright frozen my account and are refusing to even call me back or answer my email except to say we are looking into it and will get back to you.

[littlebean]

^ yikes!! put em in their place, debra! lol
that is just beyond ridiculous!

[redhdlois]

I still don't understand how they got away without explaining how customers points were stolen last year.

[carlyincanada]

Yup I was one of them...never got points back $500 worth! Needless to say I cut my spending by 75% this past year.

[littlebean]

^ did they take them away?? what happened?

[torontogal12]

There is already a class action lawsuit by Optimum card holders in Quebec

Well they better be prepared for a Class action lawsuit by the Shopper's Optimum holder's too. I got all my receipts and I've got all the evidence to support a claim. Seriously it's been 3 weeks now and still no response from HQ about the 'card error' on my card. They have outright frozen my account and are refusing to even call me back or answer my email except to say we are looking into it and will get back to you.

[Marteli]

OMG !!! I'm struggling with somenthing similar ! I opened my RBC optimus debit card and they had a promo going on sept that you would get an extra 8,000 pts for the 50 annyeversay and until this day they have not added to my account and what is even worst when I told them they DIDN"T EVEN KNOW ABOUT IT, I had to sacan the page (that i printed) to them so it says it .. until this day I have not got answer from shoppers at all ! I have sent e-mails and NO ANSWER ! it has been almst 2 months since I opened the account and I'm not happy with them !

Well they better be prepared for a Class action lawsuit by the Shopper's Optimum holder's too. I got all my receipts and I've got all the evidence to support a claim. Seriously it's been 3 weeks now and still no response from HQ about the 'card error' on my card. They have outright frozen my account and are refusing to even call me back or answer my email except to say we are looking into it and will get back to you.

[screamy]

Those of you who are calling and emailing about stuff like this need to send registered letters with proof of signature and delivery requests via Canada Post. Send them to their head of Marketing and Legal with a cc to the President's office. I did that with a company with which I was having difficulties and it was remarkable what a difference they made. I've since done it any time I've had a serious problem with a retailer.

[Marteli]

That is not a bad idea !

But everytime I send an e-mail through their website I received a confirmation e-mail .. I just never get a replay back from them ...

Those of you who are calling and emailing about stuff like this need to send registered letters with proof of signature and delivery requests via Canada Post. Send them to their head of Marketing and Legal with a cc to the President's office. I did that with a company with which I was having difficulties and it was remarkable what a difference they made. I've since done it any time I've had a serious problem with a retailer.

[tjthemanto]

^ did they take them away?? what happened?

Its so easy to steal those points

http://forum.smartcanucks.ca/258822-...e-read-canada/

http://smartcanucks.ca/attention-sho...-points-theft/

[tjthemanto]

Well they better be prepared for a Class action lawsuit by the Shopper's Optimum holder's too. I got all my receipts and I've got all the evidence to support a claim. Seriously it's been 3 weeks now and still no response from HQ about the 'card error' on my card. They have outright frozen my account and are refusing to even call me back or answer my email except to say we are looking into it and will get back to you.

They are so quick to freeze your account and not do anything about it even for small things.

But when it comes to points worth hundreds of dollars stolen from your account , they do nothing .

http://forum.smartcanucks.ca/258822-...e-read-canada/