Pizza joint locked out after 17 years in Toronto
A pizza joint was locked out by their landlord after 17 years in the same location and developing a loyal following in their neighbourhood.
People have been posting on social media about how their local Mamma's Pizza in the Beaches has been locked out by their landlord, the staff staging protests outside the restaurant.
Mamma's Pizza is a chain operated by franchisees that's famously been around since 1957.
"They showed up to work, doors locked," one person wrote on their Instagram story. "They've been a staple in the Beaches for 17 years."
Another person posted a screenshot of the Instagram story to a neighbourhood Facebook group with the caption, "Mama's Corporate increased the franchisee rate by 70% during a pandemic. Now they are locked out because that’s not financially sustainable."
"This is a damn shame," one person commented on Facebook. "Best slices in the Beaches bar none."
Mamma's Pizza Corporate Office tells blogTO that they appreciate the concerns for the Beaches location and that the franchise agreement for the location expired on March 31, 2019.
"We attempted to work with the now former franchisee for two years to execute the five-year renewal agreement as contemplated by
the franchise agreement," Mamma's Pizza Corporate Office tells blogTO.
The franchise agreement that expired in 2019 had flat rate royalties of $346 per week, approximately 2.5 per cent of the location's monthly sales, and royalties for all Mamma's Pizza franchises are between 4 per cent and 5 per cent per month of average net monthly sales.
The renewal agreement presented in 2019 included a flat rate royalty of $1,575 per month, an increase of $75 per month.
"The now former franchisee persistently refused to sign the renewal agreement. The now former franchisee has only paid $1,500 per month in royalties since April 1, 2019 and has not paid the $5,000 renewal fee, which Mamma’s offered to further discount by 50%," says Corporate Office.
"Upon our last meeting to try and mediate with the former franchisee, he requested to not contribute any money to the advertising fund and to create his own independent menu and standards. The former franchisee also requested that corporate office give up the location so that they could turn the location into their own independent pizza store."
While Mamma's Pizza says they regret the current situation, they say they also have a responsibility to operate their system fairly "with each location paying their fair share of royalties." They plan to reopen the Beaches location with new franchisees.
Owner/operator of the Beaches location Ajmal Anwari, who says he's the longest serving franchisee in the history of the company, sees things very differently.
"I have done everything in my power not to fall behind on a single payment of fees, whether that is our rent, royalties, or any other fees we owed the franchisor," Anwari tells blogTO.
"This lockout is not about my failure to pay rent or other fees and it not with the landlord but rather with the franchisor, who also happens to be the head tenant and I am its subtenant."
He says the franchisor as the head tenant renewed a lease agreement at the same time as the franchise agreement in 2019 with a rental increase well above market rate, and didn't want to sign both agreements when presented together.
"I though it was unfair to pay such high rate and so I had to directly go back to the landlord and renegotiate the rent myself, which cost me about ten thousand dollars to do so even though I was the sub-tenant," says Anwari.
"I managed to decrease the rent. I also had to replace the exterior business sign, which was another few thousand dollars at my expense."
He says after that new owners took over the company in October 2020 he received a new franchise agreement with different terms "including roughly raising the royalties by about 73 per cent and asking for a $10,000 signing fee and a 10-year term."
"I was paying $1,500 in royalties, which was suppose to increase by 5 per cent upon renewal to $1,575 and the new agreement was demanding $2,200 plus HST, plus increasing our advertising fee and other restrictive measures, like taking control of our accounts and bringing their own credit card terminals," says Anwari.
"When I raised this issue with the new owners, they simply stated that because I didn't put ink to the paper, the agreement that the old owner had presented to me prior to selling the business no longer existed."
When he refused to sign the new agreement, he says he was sent a letter of termination and the store was taken from him, private bailiffs changing the locks in the middle of the night on June 28.
"Overnight I've lost my livelihood and my business that I have dedicated two decades of my life to, not to mention the financial uncertainty my employees are facing, and the thousands of dollars of product that is currently spoiling inside the store," says Anwari.
"What makes it worse and that much more painful is that the old owner is working during this transitional phase with the new owners and can easily remedy the issue but has stepped back arguing that its no longer in his hands."
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