New Canadian Franchisee Group Pushes for Legislation

“In Ontario, you have more protection buying a vacuum cleaner than you do a franchise,” he complained…Cunningham disputes Stewart’s notion about abuses, saying one of the reasons the Ontario lawmakers are taking their time passing disclosure legislation is that it isn’t a priority since there haven’t been a lot of problems.

Continental Franchise Review
January 23, 1998

New Canadian Franchisee Group Pushes for Legislation

Canadian%20Alliance%20of%20Franchise%20Operators%20Les%20Stewart.jpg

MIDHURST, ONTARIO – A newly formed franchisee advocacy group in Canada is looking to help move along the agenda for franchise legislation – something that is surprisingly missing in a country that seems generally to have more regulation than other countries, said Les Stewart, who is spearheading the group.

“In Ontario, you have more protection buying a vacuum cleaner than you do a franchise,” he complained.

The main issues facing franchisees in Canada are misrepresentations during the sale of a franchise and little or incorrect disclosure. “People see this as a legal problem, but leaving things to lawyers is not, in the long run, beneficial to franchisors or franchisees,” he said. Stewart and his fledgling group (currently about six people are involved in setting up The Canadian Association of Franchise Operators) want to see more regulation in place to combat franchise abuses.

Richard Cunningham, president of the Canadian Franchise Association (CFA) which represents about one-third of the 1,000 franchise systems in the country, doesn’t see the franchisee group as being a major force in Canadian franchising. “He’s a disgruntled franchisee getting some press,” he said.

But, Cunningham does agree that some regulation is in order. “We’d like to see Alberta-style legislation in Ontario,” he said, defining it as requiring disclosure documents be given to prospective franchisees 14-days prior to signing. The documents do not have to be registered with the government. The franchisor-only trade group has a similar document for its members. (CFA members tend to be the larger franchisors, Cunningham pointed out, accounting for half of all franchise outlets in the country.) Once Ontario gets around to passing disclosure legislation – it has another year after this year on its mandate – Cunningham said he believes other providences [sic] will follow suit. “We’re lobbying for consistency,” he said, “so one document can be used in all providences [sic].”

Stewart’s group is looking for guidance in their cause from the American Franchisee Association (AFA), based in Chicago, which is seeking regulatory solutions to level the playing field in the U.S.

One of the goals of the Canadian group is to start a Web site and start contacting franchisees who have similar complaints (franchisees in Canada tend to be less organized and less vocal than U.S. ones, he claims). “The biggest rebuttal (to our charges of abuse),” he said is ‘Where are the bodies?’” Through publicizing his mission he hopes to up his body count.

Cunningham disputes Stewart’s notion about abuses, saying one of the reasons the Ontario lawmakers are taking their time passing disclosure legislation is that it isn’t a priority since there haven’t been a lot of problems.

Stewart contends that there is no institutional memory in Canada of franchise abuses because there is no advocacy group that keeps those memories out in front of legislators and the media. The terminated lawn care franchisee with degrees in political science and business views that as his role.


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Risks: Les Stewart, Canadian Alliance of Franchise Operators, CAFO, Canadian Franchise Association, CFA, Disgruntled, American Franchisee Association, AFA, Canada: least franchise-investor protection in the industrialized world, Call for franchise law, Ignore advocates and they’ll go away, Uniform national franchise law, Franchisor association not trusted by franchisees, Internet, information sharing, 5,000 new lawsuits per year in Ontario, Canada, Canada, 19980123 New Canadian

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