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Steve White CP /Christopher Stevenson/ Aaron Harris CPOn a recent Thursday morning, as thousands of Canadian coffee lovers waited in line for their daily fix of Tim Hortons, the company’s head office unveiled its latest quarterly earnings report. The figures confirmed—yet again—that when your brand is the closest thing to a national religion, filling the collection plate is never a problem. Total revenue: $6. Total profit: $9. That same morning, Aug. Hortons executives made another lucrative announcement: the company had just sold its 5. Maidstone, the Brantford, Ont., bakery that mass- produces donuts and muffins for every “Tim’s” in the country.

Originally launched as a joint venture in 2. Maidstone now belongs to the Swiss food giant Aryzta AG, which paid a whopping $4. Hortons’ half of the operation (and has agreed to continue supplying the chain with fritters and biscuits until at least 2. For Tim’s shareholders, the deal is sweeter than a honey dip, as the company promised to pour every penny back into their pockets.

For the rest of Hortons’ “shareholders”—those countless loyal customers whose ownership is strictly sentimental—the bottom line is this: your chocolate Timbit, a scrumptious ball of Canadiana, is now produced by a company from Switzerland. And it is still “Always Fresh” (i. Tim’s regulars may have a hard time swallowing the news that their maple dip is no longer produced under the Maple Leaf. As national symbols go, a Hortons donut is second only to a Hortons coffee.

But Timmy’s selling baked goods from a freezer? That’s standard operating procedure, and has been for quite some time. Yes, it was certainly a scandal back in 2.

Hortons co- founder Ron Joyce confirmed the truth: that the company he built (and had recently left) replaced its in- store deep fryers with frozen globs of dough trucked in from a factory. This is not a philosophy that I would have embraced if I still owned the company,” he famously boasted. One Hortons spokeswoman, convinced that she could stop the unflattering headlines, famously told a reporter that “until I confirm or deny anything, it simply doesn’t exist.”It did exist, of course. And the backlash was swift. Joyce’s words were especially damaging. I’ve tried them,” he said of the new donuts. And they’re certainly not the same.”) In time, though, most people eventually forgot—or simply stopped caring—where their honey crullers came from.

Truth be told, many customers still have no idea that the donuts on display have to be defrosted. But that is about to change. In the coming weeks, Tim’s devoted disciples will receive a very fresh reminder about just how much their donuts have evolved. Hortons’ historic decision to go frozen is now at the heart of a proposed $1. Scheduled for a hearing in November, the high- stakes case pits store owners against senior executives, store owners versus each other, and even relative against relative. And no matter how many spokespeople try to control the message, the spat is sure to have some patrons pining for the old days, when the smell of deep- fried Dutchies hung in the air at their local shop.

Officially, the case is about a few disgruntled franchisees who claim their profits are shrinking because the company, via Maidstone, is charging “inflated” prices for those frozen goodies. But flip through the court file—through thousands of pages of exhibits and affidavits—and a much deeper storyline emerges: an old- fashioned power struggle between those who are still loyal to Ron Joyce, and those who replaced him at the top. The lead plaintiff is a Burlington, Ont., store owner named Archibald Jollymore, Joyce’s former executive vice- president (and his cousin). One of Jollymore’s primary targets is Paul D. House, Joyce’s successor as president (and a man who garnered zero praise in Joyce’s recent autobiography). Both men have different philosophies, to say the least.

House and his colleagues claim Jollymore is a poor businessman, and if his Hortons outlet is truly losing money, it has nothing to do with frozen products. Jollymore claims he has been “intimidated and bullied” by head office, and that the executive chairman personally threatened his life.

If I had a gun,” House allegedly said, “I’d shoot the bastard.”Stuck in the middle of this donut war are hundreds of other Tim’s operators who are anxious to see the whole thing tossed out of court. Many have submitted sworn affidavits of their own, insisting that the Always Fresh system was “a welcome transition” and a “necessary evolution.” A core group of “concerned franchisees” even launched a password- protected website that urges others to oppose the claim. Their biggest concern?

That their bottom lines will be disclosed in court for everyone to see. How comfortable are you sharing your profitability with the media?” the website asks. Do we want the press reporting about the Tim Hortons’ brand in a negative way?”Among those furious over the lawsuit is Graham Oliver, who owns five Hortons stores in the Kitchener, Ont., area (and also happens to be Joyce’s nephew). In an affidavit obtained by Maclean’s, Oliver says if the public ever discovered how much store owners earn—“coupled with complaints that profit margins are not great enough”—it would “create an image that franchisees are wealthy, greedy people.”As for that other image—frozen fritters in the back of a transport truck—it gets plenty of mention in the court file. One owner who supports the suit (and, like Jollymore, was a senior executive under Joyce) goes so far as to claim that some of the new donuts are “1. I only have this information,” Cyril Garland wrote, “because having noticed what seemed to me to be smaller donuts, I instructed my bakers to periodically weigh each donut in randomly selected boxes as they unpacked them.”Tim Horton opened his first coffee shop in 1. Canadian landscape is the stuff of business school textbooks.

An all- star defenceman with the Toronto Maple Leafs, Horton was the public face of the original concept, a hockey icon whose name alone could reel in customers. But his behind- the- scenes partner, Ronald V. Joyce, was the man with the master plan.

During those early years—while Horton was patrolling the blue line, and Joyce was working night shifts frying batter—the company grew from that single store in Hamilton to three dozen restaurants. Later, when Horton was killed in a tragic car crash, Joyce bought out his partner’s widow and kept on expanding. Today, there are more than 3,0. Tim Hortons outlets from coast to coast, and nearly 6. And every morning, millions of Canadians reaffirm the famous slogan: “You’ve always got time . . . ”Like every fast- food chain, Tim’s business model is built around franchisees. Every store owner pays the company a hefty start- up fee—close to half a million dollars—plus a percentage of yearly sales to cover rent, royalties and advertising.

Owners are also obligated to buy their supplies from the company, but after that, the profits are theirs. As Joyce wrote in Always Fresh, his 2. If there was ever a sure thing, owning a Tim Hortons franchise was it.”Things worked out quite well for Joyce, too (from a financial standpoint, at least). In 1. 99. 5, he famously sold his beloved company to Wendy’s, the U.

S. burger chain, in a transaction worth $6. But despite being appointed senior chairman of Hortons and given a seat on Wendy’s board of directors, he soon came to regret the deal. Convinced that Wendy’s was “poorly managed,” Joyce clashed with fellow board members so often that he eventually stopped attending the meetings. Finally, in 2. 00.

Hortons’ co- founder walked away for good, selling every last one of his shares for US$2. By then, Joyce’s successors—men he had personally hired and mentored—were in the process of implementing a drastic change.

For decades, every Hortons donut was made from scratch in the back of each store, the product of professional bakers toiling alongside bags of flour and vats of grease.