Richtree Inc. and its subsidiaries (Richtree) commenced legal proceedings today against its Master Franchisor Movel Restaurant Holding A.G., a unit of Movenpick of Switzerland.
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The Notice of Application filed today in the Superior Court of Justice will ask the court to clarify certain material aspects of the Franchise Agreement. “Movel has ceased or failed to provide any support for the Marche and Marchelino concept restaurants in Canada and the Unites States,” states the notice of Application filed today.
As a result of Movenpick’s failure to abide by the terms of the Franchise Agreement, Richtree will ask the court to rule that the Marche and Marchelino restaurants more properly fall under the existing License Agreement and are therefore subject to a lower license fee of 2% and not 4%. Richtree’s traditional service restaurants are currently governed by the License Agreement. Richtree’s action is also seeking a repayment of more than $1.8 million in fee payments to recognize the difference in the two rates over the past four years.
Jorg Reichert, principal shareholder and CEO of Richtree and his team spent more than five years developing and perfecting the unique market restaurant concepts for the North American market, which it began to operate in 1991. These concepts, says Richtree, have not been supported by Movenpick despite its contractual obligation to do so because they dismantled their franchise department at the end of 1997 and have not been capable of support since then.
Reichert said “There has been no discernable difference in the level of support Movenpick has given us for the Movenpick restaurants we operate under the License Agreement and the market concept restaurants we operate under the Franchise Agreements. Actually, we are simply using their trademarks. Our discussions with Movenpick have failed to resolve the matter, so we are pursuing a remedy in the Courts.
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By GlobalDataColin West, Richtree’s Vice President said: “Our relationship with Movenpick has placed limits on our ability to expand. This application to the court is an important initial step in removing impediments to the company’s overall efforts to increase shareholder value and expand our market restaurant concepts throughout North America.” West added, “We have decided to press ahead by sub-franchising or licensing our Marchelino restaurants in Canada and the United States so that we are able to meet the quota requirements under our agreements by the end of 2001.”
Richtree, which employs just under 2,000 people in North America, owns and operates four Marche restaurants in Toronto, Montreal, and Boston and six Marchelino restaurants in Toronto, Ottawa, Montreal, and Boston. The company operates eleven Take-me Marche operations in partnership with Loblaws, four in Montreal and seven in Toronto. Richtree has three full-service restaurants in Toronto operated under the Movenpick name. Richtree is listed on the Toronto Stock Exchange under the symbol MOO.b.
Richtree has scheduled a conference call for investors, analysts and the media on Thursday December 14, at 10:00 a.m. ET. To join the call, please dial 416-641-6690 or toll free, 800-387-2917 at approximately 9:50 a.m. on December 14. The call will be available in post view format from 1:30 p.m. December 14 by dialing 416-626-4100, access code 17238336 or toll free 1-800-558-5253, access code 17238781.
For further information contact Colin West, Vice President, Secretary Treasurer, Richtree Inc. (416) 366-8122 Ext. 232 cwest@movenpickcanada.com
