The owner of a franchised art school for kids says she is shutting down her Ottawa studio next week over a dispute with the head office in British Columbia, described as "predatory" in legal documents.
The sudden closure of 4Cats Arts Studio in Hintonburg, which has about 350 students, could leave parents who paid in advance for future sessions struggling to get a refund.
"We are in a really rough situation right now," said owner Emaly Galeano. "The last thing we wanted to do was shut down the studio but we feel we are being forced out."
Galeano and 10 other franchise owners in B.C., California and South Carolina launched legal action against the head office claiming the franchise agreement makes it impossible to make a profit.
"Put simply, 4Cats is a predatory system designed and operated by 4CE to extract all of the available profits from the operation of the system in favour of the franchisor and leave nothing for the franchisee," the parties claimed in an arbitration notice.
The claimants are collectively demanding more than $4 million in compensation.
"There have been some misrepresentations for profitability — there's been no profit whatsoever. No return on investment," Galeano said.
No money left for refunds: Galeano
The founder and CEO, Joey Simons, posted a notice on the Hintonburg studio's website confirming the franchise agreement has ended and that the location will close at the end of its session on June 17.
"We know how important 4Cats is to the community, and we hope to be able to announce the opening of a new 4Cats in the Ottawa area soon," the notice states.
It also states that "the former owner of 4Cats Hintonburg will be in touch to arrange refunds" to anyone registered beyond June 17.
But Galeano told CBC News that the money she has received for future sessions has already been spent.
"For us to get terminated with 10 days notice. We are left with nothing to compensate those future classes because it's been used to sustain us through our spring session," she said.
Gautam Kwatra paid $250 for fall lessons for his son.
"Well, obviously we're not happy about it because he loves coming here. Also the fact that we've paid and we're not sure if we're going to end up getting our money back or not," he said.
Statement from 4Cats Arts Studios