Owners of Sears Hometown stores slated for closure plan to fight for compensation

Grant Russell is struggling to accept that his Sears Hometown store in Fort McMurray, Alta., is slated to close and there's nothing he can do about it. 

"I'm devastated," says Russell, who has run his appliance store in partnership with Sears for 3.5 years. "I haven't been able to sleep, I haven't been able to eat. I've lost 17 pounds in the last two weeks."

Russell says the stress has been so bad, his doctor has put him on antidepressants. "You're watching something that you've built, you're watching something that you've put together yourself be taken away."

Cash-strapped Sears Canada announced in June it's laying off 2,900 staff and closing what now totals 54 stores as part of a court-supervised restructuring process.

Seven of the locations on the chopping block are smaller Hometown stores, which are owned and operated by independent dealers. They sell Sears appliances and furniture, earning a commission on each sale.

CBC News spoke with owners of five of the ill-fated Hometown stores — all located in Alberta. None of them, including Russell, wanted to close, and all but one said their store was consistently profitable.

'Completely helpless'

The owners also claim that they aren't being fairly compensated by Sears for the loss of their business. That's because they signed contracts with the retailer stating that if the company terminated the deal early, they'd get compensation, based on six or 12 months commission.

But because of the court-approved restructuring, the dealers say they won't be getting their cash.

"It does impact us significantly," says Russell.

He estimates the six months of commission he's losing out on totals between $400,000 and $500,000. He also claims he's already lost tens of thousands of dollars in commission due to Sears's current lack of inventory, and having to sell what's left in his shop at a discount during current liquidation sales.

"I've watched Sears wipe me out," says Russell. "This is the first time that I'm experiencing a complete business failure, and I feel completely helpless."

Russell says store sales were good and that the business was an important part of the Fort McMurray community; he even set up a gallery in his shop where local artists could display and sell their work. Once his liquidation sales are finished later this month, the paintings will go, along with his nine employees.

"Liquidating our stores from my own perspective is a heartbreaking experience," says Russell.

'No respect'

Shawn Nawaz also finds it painful to hold liquidation sales at his St. Albert, Alta., Hometown store. He claims he's so cash-strapped due to lost commission, he needs to shut his store now instead of the end date Sears has given him, Aug. 17.

"I'm done. I can't afford to stay here," says Nawaz, who at the time of his interview, was still sitting on about 20 large appliances.

He showed CBC News his email correspondence with Sears Canada. In it, the retailer warns him if he closes his location early, he'll be billed $500 for each unsold major appliance in his store.

"These people are bullying us at the moment," says Nawaz. "It's killing me, putting me further in debt and more stress. There's no respect left."

Nawaz says he never wanted to close his store, which he has operated for almost nine years in total. But now that he's been dealt a blow by Sears, he wants nothing more than to sever ties with the retailer.

"I don't want to be here actually. That's how I feel when I come to this place — when is this going to be over?"

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Sears Canada told CBC News it doesn't discuss its business relationships with individual Hometown dealers. But it did say that deep financial troubles left it with no choice but to seek court protection from its creditors while it restructures and closes some stores.

The retailer added that a number of factors were involved in deciding which stores to shut down, including performance, operating costs and the market it serves.

"While this led to a very unfortunate outcome for a number of our partners (and people), the company made these decisions so that it is best able to emerge from the [restructuring] process as a strong and viable retailer," said spokesperson Peter Block in an email.

The explanation isn't good enough for disgruntled Hometown dealers. The five whom CBC News spoke with are now planning legal action to fight for compensation from Sears Canada. 

"All of the dealers have been working in the best interest of Sears," says Russell. "What I'm hoping for is that Sears is held to the same standard."