Franchisees are entitled to protection

Many “franchises” are established because the franchisor sees franchising as an easy way of extracting money from people. With some of these franchisees, the franchisor charges so much in franchise fees, royalties, advertising fees, mark-ups on products, supplies, initial set-up costs and even on rent, that the franchisee cannot possibly make any money.

The Toronto Star
May 16, 1993

Franchisees are entitled to protection
Letter to the Editor
Colin L. Simon

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Re The Star’s articles and editorial on Pizza Pizza and the franchising industry (May 2, 3 and 4). As independent franchise consultants, regretfully we can only add to the many horror stories franchisees have experienced through their dealings with unscrupulous franchisors.

Many “franchises” are established because the franchisor sees franchising as an easy way of extracting money from people. With some of these franchisees, the franchisor charges so much in franchise fees, royalties, advertising fees, mark-ups on products, supplies, initial set-up costs and even on rent, that the franchisee cannot possibly make any money.

However, the investor who does not have a proper financial background and cannot see the flaws in the unrealistic financial information supplied is often deceived by the false promises it contains.

Many deceitful franchisors will use franchising as a tool to improve a disastrous cash flow and save their business, not as a way of expanding an established, profitable and well-run business, which is the essence of franchising.

We differ with Minister of Consumer and Commercial Relations Marilyn Churley. In our opinion, it is not “business to business” as she states, but very clearly individuals personally investing their private means in an advertised business venture.

Therefore, they should be at least entitled to protection under the Consumer Protection act, which should be amended and extended to encompass a personal investment where a contract (the franchise agreement) is required to be entered into.

Protection through legislation for franchisees is required simply because under the present system it is purely a matter of “whoever has the most money wins” and this is invariably the franchisor.

COLIN L. SIMON
President
Simon & Associates
Toronto


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