A supply interruption at the Guelph, Ontario distribution center left more than three-quarters of Tim Hortons’ 1,750 franchisees in Ontario scrambling to source some of the unavailable items from third-party retailers such as Walmart, instead of buying them directly from head office as part of the franchise agreements.
However, Ontario franchisees are worried about losing sales. Some of the items on shortage are Tim Hortons branded coffee and tea, and those aren’t available at Walmart.
This post is based on the Financial Post article, Buy from Walmart, Ontario Tim Hortons franchisees told, as a shortage hits Guelph warehouse, by Hollie Shaw, April 16, 2018. Image source: Erik Isakson/Blend Images LLC.
1. Why does Tim Hortons require its franchisees to buy items directly from its head office?
Guidance: Centralized purchasing (should) enable lower costs, standardized quality, improved inventory control, and more efficient sourcing.
2. How could Tim Hortons improve the relationship with its franchises?
Guidance: Suggestions may be to decentralize purchasing for items that are non-essential to restaurant operations such as vinyl kitchen gloves and garbage bags; build long-term partnership relationship with franchisees by involving them in strategic decisions such as changing menu items.