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Thursday August 13, 2009

The 'idea guy' behind Tim Hortons saw others get rich while he went bankrupt

Entrepreneur was the ill-fated hockey player's first partner in the little doughnut chain that grew

Special to The Globe and Mail

Jim Charade is an unknown visionary in the annals of Canadian business.

It's a shame he never got to savour the dizzying financial success of Tim Hortons, because he was the one who started the chain.

Yet few, if any, link him to the famous brand, which now comprises close to 3,000 outlets in Canada and nearly 500 in the United States.

People think of Tim Horton and Ron Joyce, but it was Mr. Charade who suggested to Mr. Horton that they start a doughnut and coffee chain.

"It wasn't Tim Horton. It wasn't Ron Joyce. It was Jim," Mr. Joyce said in an interview upon learning of Mr. Charade's death on July 23 in Jonquière, Que. "Jim was the gambit behind the concept. He doesn't get enough credit, but I have always acknowledged him. Without him, it would never have happened."

Mr. Charade, who was born in Montreal in 1934, moved to Toronto at 18 to pursue a career as a jazz drummer. But he soon discovered it wasn't a revenue-generating occupation.

Instead, he found employment in a factory before becoming a receiver and salesman in 1955 for Vachon, the Quebec snack-food company known for Jos. Louis chocolate cakes. Paul Vachon, one of the company's owners, had actually offered the job to Jim's brother Paul but Paul didn't want it, so he gave it to Jim.

In no time, Mr. Charade was making every attempt to coax Mr. Vachon into opening a chain of doughnut shops across Canada. But his idea went nowhere. The company's niche always had been supplying stores, caterers and restaurants with its products.

"Paul Vachon thought doughnut shops would hurt doughnut sales in supermarkets like Steinberg and Loblaws," Mr. Charade's brother's Pierre said.

Mr. Charade even travelled to Mister Donut's Boston headquarters in 1960 in the hope of securing a franchise north of the border, and also visited California to check out operations there.

"I was impressed with Mister Donuts and wanted a franchise, but on my way back to Toronto, I thought, 'Why do I want a franchise? I can do that myself,' " he told Douglas Hunter, author of Open Ice: The Tim Horton Story.

While still working for Vachon, Mr. Charade opened Your Do-Nut Shop on Lawrence Avenue in a strip mall in Scarborough in 1962.

Not long afterward, with the doughnut business not doing as well as he thought it would, he was in a nearby barbershop when he ran into a man with a Superman physique, a hockey player who had dropped by for his customary crewcut. His name was Tim Horton.

Later, Mr. Charade would buy a Pontiac from Mr. Horton, who sold vehicles at a Scarborough lot in the off-season to augment his NHL salary.

Eventually, Mr. Charade got the idea that a celebrity name could be a vital link for the doughnut business. There was only one problem: Mr. Horton wasn't gung-ho about the idea. He was more interested in hamburgers. But the two agreed to join forces in Timandjim Ltd.

They opened hamburger joints in North Bay and the Toronto area, but the business fizzled. Soon, Mr. Charade persuaded Mr. Horton to go for doughnuts, and the first Tim Hortons franchise was established in April, 1964, on Ottawa Street in Hamilton on the site of an old Esso gas station. Coffee cost 25 cents and doughnuts were 69 cents a dozen.

The franchise was a fantastic success.

So the marriage between Mr. Charade and Mr. Horton continued and several other franchises were set up, mostly under the guidance of Mr. Charade because Mr. Horton wasn't around much, especially during the hockey season.

Mr. Horton had also become a heavy drinker and his marriage to Lori Horton was far from amicable. When he returned from a cruise to South America at the end of the 1963-64 hockey season, he found the half dozen restaurants operated by him and Mr. Charade near bankruptcy.

It was a matter of not enough working capital.

In any event, Mr. Charade had to sell his house to make ends meet. As related in Mr. Hunter's book, he sat down with Mr. Horton and said, "Tim, you've got it made. It's me that's got trouble. I'm not a hockey player. Nobody's going to want my autograph anywhere."

By this point, Spencer Brown, the original franchisee in Hamilton, had sold to an unknown Englishman, who was skimming the profits, a situation that helped prompt Mr. Charade and Mr. Horton to form a new company called Tim Donut Ltd. on Jan. 27, 1965.

In about a month's time, Mr. Charade ran into Mr. Joyce, a Hamilton police officer who operated a Dairy Queen outlet. Almost immediately, Mr. Joyce became the new franchisee.

Despite Mr. Charade's financial problems, he and Mr. Horton continued their business relationship for a few more months, although Mr. Joyce complained that he was getting no support, especially from Mr. Charade.

By early 1966, it became apparent that Mr. Charade had to leave, and he resigned. His deal with Mr. Horton amounted to about $10,000 - but there was no cash. Mr. Horton assumed a lot of debt and Mr. Charade walked away with next to nothing to show for his pioneering efforts.

"Dad was in dire straits," his son André said. "The banks ruled you."

As Mr. Joyce recalled, "Jim was an ideas guy. He had the idea for this company, the basic fundamentals, but he didn't execute. Jim didn't have any money and relied on employees, but you need to depend on leadership."

It took a few months, but Mr. Horton and Mr. Joyce agreed on a partnership in September, 1966. Mr. Horton became president and Mr. Joyce vice-president.

Mr. Charade worked as a salesman for two years with Manufacturers Life Insurance - until doughnuts lured him away again. He went on to direct franchise sales for Mister Donut in New England and Canada, a move that irritated his former business associates.

At one point in 1970, some four years after he had initially departed, Mr. Charade was hired back by Mr. Horton and Mr. Joyce to sell franchises, a period that covered nine months. He even took over operation of a store.

Then, for the next 20-odd years or so he worked at a number of sales jobs, suiting up for AAMCO Transmission in Philadelphia, MAACO, the auto-body and auto-painting company, and Meineke Car Care Centres out of Atlanta, Houston and Charlotte, N.C. He was a franchise sales manager for Ron Smythe, a friend from the AAMCO days, who expanded Meineke from 100 shops to 1,000.

"Jim was very genuine, very sincere and very personable," Mr. Smythe said. "That's why he was so good at franchising."

Then a life-shattering event happened on Feb. 21, 1974: Mr. Horton died after flipping his sports car near St. Catharines, Ont., while driving from Toronto to Buffalo, where he played for the Sabres. Before he jumped into his car, Mr. Horton had been drinking at Mr. Charade's apartment in Toronto.

"When Tim died in the car accident, my father was so distraught he spent the whole day in the bathroom," his son André said. "I remember coming home from school and my dad did not want anyone to see him with any trace of tears in his eyes. I didn't see him for two days. He lost his friend and a link to the chain he helped start that day. I can't imagine what he was going through."

Upon Mr. Horton's death, Mr. Joyce assumed control of the company along with Mr. Horton's widow Lori. In 1975, Mr. Joyce bought Mrs. Horton out for $1-million.

In 1993, Mr. Joyce was having dinner and drinks one night at Hy's, a downtown Toronto playspot, when who should he see on the drums but Mr. Charade?

Mr. Joyce asked him if he would come and work for him in what would be his third stint with the company. Mr. Charade said yes and accepted the job of finding and negotiating leases for restaurant sites.

Coincidentally, 1993 was the year Mrs. Horton's $10-million lawsuit against Mr. Joyce was being heard and Mr. Joyce had asked Mr. Charade to offer evidence on his behalf. Mrs. Horton was seeking to overturn the 1975 agreement with Mr. Joyce, claiming that $1-million wasn't enough for her share in the company.

With great reluctance, Mr. Charade gave evidence at the trial and it was deemed important to the outcome. Mrs. Horton lost the case and was declined on appeal in 1995.

"That was difficult for my father to do, to testify. He didn't want to do it but he did," André said. "He didn't want to be in that kind of position.''

In 1996, when Mr. Joyce sold out to the Wendy's hamburger chain, Mr. Charade was fired by Wendy's head honcho Dave Thomas, who wanted his own people to take over the real-estate end of the business. It was a move that devastated Mr. Charade, and shortly thereafter he suffered a heart attack.

What helped was a severance cheque for $75,000, which he used in part to start a tanning-salon business - against his son's wishes. He lost a lot of the money over the course of a year. Around that time, the idea man behind Tim Hortons had to declare bankruptcy when Revenue Canada told him he owed the government about $60,000.

According to André, his father lamented what had happened back in the 1960s and how Mr. Joyce had gotten rich while he did not.

"I think Ron has always wanted to be noted as the co-founder of Tim Hortons and that frustrated my father a bit," his son said. "I told him, 'Ron was a vital piece and so were you.' My dad wanted to be known as the key person at the start and it was very difficult for my father to accept that he left the company before it became successful. He was like the fifth Beatle, not getting enough credit. He's the forgotten one in the founding of the chain."

JIM CHARADE

Jim Charade was born in Montreal Sept. 2, 1934. He died July 23, 2009, in Jonquière, Que., after suffering from Alzheimer's and Parkinson's diseases. He was 74. He was predeceased by his wife Claudette. He leaves son André, two grandchildren and brothers Paul, Eddy and Pierre and sisters Margerie, Hazel and Lillian.

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