The Bulk Barn company manual promises its dealers the lowest available regular wholesale price. Doshi’s troubles with Ofield began in 1991 when he said Bulk Barn was charging 25 per cent too much for the product Almonds Natural Supreme. Ofield responded with frequent inspections of Doshi’s store, accusations that he was buying around and, as the disputes continued, threats to discontinue Doshi’s franchise agreement.
The Toronto Star
August 14, 1999
Bulk Barn saddled with class action
Franchisee wins right to sue for overcharging
Suresh “Sam” Doshi, owner of the Bulk Barn store in Richmond Hill, has mounted a precedent-setting class action against the franchisor’s head office.
Judge Jack Jenkins of the Superior Court of Justice in Newmarket this week certified the lawsuit on behalf of all 57 franchisees in Bulk Barn’s Canada-wide chain, the first such suit to get the green light in the province.
Doshi claims Bulk Barn, a private franchisor controlled by Carl Ofield of Richmond Hill, systematically overcharges for goods that franchisees are required by contract to buy through Ofield’s distribution system.
Doshi told the court his family has a combined $1 million invested in three stores; that prices have been padded in violation of the franchise agreement, depressing the incomes and asset values of all the franchised stores; and that head office uses threats to suppress complaints about the alleged overcharging.
Doshi is forbidden by his franchise agreement from speaking directly to The Star or any other media outlet about Bulk Barn without written permission from the company’s head office.
The Doshi lawsuit is a joint venture of David Sterns of Sotos & Associates, a specialist in franchise law, and class-action specialist Michael McGowan.
Sterns said the decision to allow a franchisee class action to go forward “should herald a new era in franchise litigation.”
Ofield and Bulk Barn declined to comment on the ruling.
Judge Jenkins said he approved the class action to serve the purposes of affordable access to justice, conservation of court resources and possible modification of the franchisor’s behavior if a court finds it improper.
The revenues of Bulk Barn stores range from $650,000 to $2 million a year, and the cost of inventory is by far the largest single expense.
The Bulk Barn company manual promises its dealers the lowest available regular wholesale price.
Doshi’s troubles with Ofield began in 1991 when he said Bulk Barn was charging 25 per cent too much for the product Almonds Natural Supreme. Ofield responded with frequent inspections of Doshi’s store, accusations that he was buying around and, as the disputes continued, threats to discontinue Doshi’s franchise agreement.
In 1995, as the Bulk Barn franchisees were trying to organize an association and complaining about overpricing on 150 items, Ofield admitted “there are several categories where we are out of line with wholesale prices on the street.” He fired Bulk Barn’s purchasing agent and installed his son in the job.
“Prices fell noticeably” for a few months, the association threat subsided, and then prices rose to previous levels, Doshi’s affidavit said.
Doshi told the court that a class action is the best way to shield franchisees from reprisals while allowing legitimate complaints against a franchisor to be redressed.
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Risks: Personality disorders, Grocery, Must buy only through franchisor (tied buying), Lawsuits, class-action, Class-action dead end, Gouging on supplies, Can’t talk to media, Termination threats, Intimidation, Retaliation, Franchisee association, independent, Refusal to acknowledge independent franchisee association, War of attrition, Code of ethics, refusal to accept complaint, Imminent death, Justice, if not in this world, Intimidation, Can’t talk to media, Refuses to accept complaint, Refuses to investigate complaints, Canada, 19990814 Bulk Barn