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Oct 26, 2017

Restaurant Brands earns $91.4M in third quarter, boosts dividend

Tim Hortons

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VANCOUVER -- The parent company of Tim Hortons says its latest quarterly earnings increased nearly six per cent despite an ongoing battle over the coffee chain's management with an unsanctioned franchisee group that's resulted in multiple lawsuits.

"It's never helpful to have, you know, negative media attention for the brand," said Daniel Schwartz, Restaurant Brands International (QSR.TO) CEO, in an interview. He said he won't speculate on how The Great White North Association and RBI's fighting in the public eye impacts the chain.

The group, which incorporated in March to air franchisee concerns, recently announced its membership now accounts for half of the chain's franchisees.

"A lot of things have been said. We don't know what's true and what's not true," Schwartz said when asked if the group's growing numbers would change how the company deals with it.

Schwartz made the comments after the company released its third quarter earnings.

The company, which keeps its books in US dollars, says it earned US$91.4 million in the quarter ending Sept. 30 as sales at its Burger King restaurants improved. That's up 5.91 per cent from US$86.3 million in the same period the previous year.

Schwartz, who recently assumed the responsibilities of the chain's president, reiterated that the company has worked with its franchisee-elected advisory board for decades and will continue to do so going forward. Additionally, Schwartz said he and his team travel across Canada meeting with restaurant owners.

The GWNFA has indicated at least one of its members plans to run for a spot on the advisory board in the next election, even though the group doesn't believe the board is effective.

Anyone who thinks they can contribute collaboratively is welcome, said Schwartz.

The group and the company, which is also the parent to Burger King and Popeyes Louisiana Kitchen, disagree on a number of management decisions, including cost-cutting and use of money from a national advertising fund.

In June, the GWNFA filed a lawsuit alleging RBI improperly used money from the fund. The allegations have not been proven in court, and RBI disagrees with and denies them.

The company responded with its own legal action in September when subsidiary TDL Group Corp. served the association's board members with default notices. It accused the board of providing confidential information to former Tim Hortons CEO Don Schroeder, who then allegedly passed it on to a reporter. The association and Schroeder have denied these claims.

The GWNFA then filed a second lawsuit. This time alleging RBI, TDL and several executives continually subvert their right to associate. None of the claims have been proven in court.

"It's unfortunate that, you know, some folks chose to sue us," Schwartz said, adding the claim is baseless and the company will defend itself.

The company remains focused on growing the brand with its restaurant owners, he said, highlighting the company's plans to release more innovative latte drinks and lunch menu items, as well as its recently launched pay-and-go mobile app.