Province might help franchise owners Premier tells MPPs

Rae made the comments after Pizza Pizza franchisees protested outside the Legislature building, demanding a law to protect other franchise buyers from the business nightmares they claim have forced them to the brink of bankruptcy.

The Toronto Star
September 30, 1993

BobRae.jpg

PIZZA WAR: Franchise industry lacks rules, Liberal Steve Mahoney, left, told Premier Rae.

Province might help franchise owners Premier tells MPPs
Jim Wilkes and Leslie Papp

The province is considering taking action that could help disgruntled owners of Pizza Pizza franchises.

Premier Bob Rae told the Legislature yesterday there is no instant answer to the concerns raised by upset franchise holders, but added a review of all consumer and commercial rules is under way.

“We don’t have a magic wand to wave.”

But the Pizza Pizza matter remains “a very live issue” and one followed with “a great deal of interest and concern” by government, he said.

“We are reviewing all of the consumer and commercial legislation, and that review is on-going.

“We are looking at what can be done realistically.”

Rae made the comments after Pizza Pizza franchisees protested outside the Legislature building, demanding a law to protect other franchise buyers from the business nightmares they claim have forced them to the brink of bankruptcy.

“We want to get the ball rolling so that the government acts to get something done,” Dave Michael, president of the Southern Ontario Pizza Franchisees Association, told about two dozen protesters.

“The NDP is supposed to be the government of the small guy,” he said. “Well, we’re a bunch of small guys who need help.”

Fifty of Pizza Pizza’s 250 Ontario franchisees have been battling their company’s management over money they pay for food supplies, rent, advertising and other charges.

They have complained of threats, harassment and working long hours with little to show for it.

A forensic accounting report commissioned by angry franchise owners has questioned up to $8.5 million paid out of Pizza Pizza trust accounts.

The report probed the use of franchise trust funds to pay executives, give free pizza handouts, hold lavish parties for head office staff and franchisees, earn bank interest, develop computer systems for sale to competitors and send franchisees on supposedly free trips to Mexico and Puerto Rico.

The company says there were valid reasons for the spending.

Measures the franchisees want in legislation include:

  • Mandatory pre-sale disclosure of information by franchisors, including the number of stores in existence, the number of franchise failures or seizures in the company’s history and criminal convictions or bankruptcies of the franchisor and its principal officers.
  • An obligation to perform and enforce the franchise agreement in “good faith.”
  • An obligation to renew a franchise agreement, unless there’s good cause for not doing so.

New Democrat MPP Peter Kormos (Welland-Thorold) met with protesting franchisees yesterday and promised to help push for legislation.

He said he has already raised the issue with Consumer and Commercial Relations Minister Marilyn Churley, but “clearly the ministry, up to this point, has taken a hands-off position.”

In the Legislature, Liberal Steve Mahoney (Mississauga West) told Rae: “These small business people have invested their life savings and in fact have mortgaged their homes to the hilt to buy these businesses.

“There are no rules governing franchises. It has been referred to as the wild, wild west of the business world.”

“You are supposed to be the champion of the little guy,” he said.

With files from the Canadian Press


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Risks: Ministry of Consumer and Commerical Services, Ministry of Consumer and Business Services, Ministry of Government and Consumer Services, Ministry of Government Services, Ontario, Franchisee revolt, Renewal/refusal to renew, Bad faith and unfair dealings, Call for franchise law, Protest, rally and demonstration, Wild West of the business world, Evergreen renewals, Canada, 19930930 Province might

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