Ontario loath to impose arbitration to resolve disputes, min

“Many U.S. states have good systems in place to ensure that there is fairness in the system and speedy resolution of disputes,” said one franchise operator.

The Ottawa Citizen
July 17, 1996

Ontario loath to impose arbitration to resolve disputes, minister says
Franchise legislation
Bert Hill

The Ontario government is considering franchise legislation, but it is unlikely to fix the problems engulfing the Loeb supermarket chain.

Consumer and Commercial Relations Minister Norm Sterling said Tuesday he is reluctant to impose an arbitration system to resolve contract disputes in the $50-billion franchise industry.

Twenty-two Loeb franchise operators, including 11 in Ottawa and Eastern Ontario, have started a lawsuit against Loeb. They charge that Loeb has breached franchise contracts by inflating supply and franchise costs.

Loeb said the suit lacks merit and blames the lawsuit on tough competition in local markets shrinking profits.

Loeb franchisees complained that a regulatory vacuum in Ontario forces unhappy franchisees in the industry to engage in long, expensive lawsuits to resolve problems.

“Many U.S. states have good systems in place to ensure that there is fairness in the system and speedy resolution of disputes,” said one franchise operator.

Sterling said he hopes to release a new franchise policy this fall. But he is reluctant to impose arbitration or other dispute-resolution system on the franchise industry.

“We’re interested in leveling the playing field to some degree between the big guys and the little guys in the franchise industry. There may be a need for a stick to wave at the franchisors, but I would prefer to see each industry voluntarily develop its own alternative dispute-resolution system.”

He said it appears that only the courts can resolve the differences between Loeb and its franchise operators because of the complex issues.

Following complaints from many Pizza Pizza franchise operators about unfair franchisor treatment, the former NDP Ontario government established a working committee of franchisors, franchisees and government officials in 1994.

It recommended legislation last August for full disclosure in franchise contracts of costs and obligations.

But the committee was unable to reach consensus on numerous key issues including arbitration and self-regulation similar to those systems now in place in the legal, medical, homebuilding and funeral sectors.

Sterling said he expects to make a statement on government intentions on franchises this fall after consulting with his counterparts in other provinces and his cabinet colleagues.


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Risks: Big Grocery, Ministry of Consumer and Commerical Services, Ministry of Consumer and Business Services, Ministry of Government and Consumer Services, Ministry of Government Services, Ontario, Justice only for the rich, Gouging on rent and equipment, Gouging on supplies, Sham of self-regulation, Franchise Sector Working Team, State sanction, Futility of taking legal action, Franchisor takes over franchisee store, Arbitration, Influence, covert, automotive, grocery and petroleum, Old-fashioned idea that politicians are relevant, Canada, 19960717 Ontario loath

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