Ontario Seeking Comment on Proposed Disclosure Legislation

Les Stewart, president of the newly formed Canadian Association of Franchise Operators, claim that disclosure regulations is, at best, only a 5 percent solution. “The real dirty tricks come out when the franchise agreement is signed,” he said in a press release calling for a much more stringent enforcement of the franchise relationship.

Continental Franchise Review
June 26, 1998

Ontario Seeking Comment on Proposed Disclosure Legislation

ONTARIO, CANADA – The Ministry of Consumer and Commercial Relations has released its consultation paper on Ontario Franchise Disclosure Legislation, including a questionnaire seeking comments from interested individuals and business associations. Legislation will likely be introduced in September or October of this year, said Frank Zaid of Osler, Hoskins & Hancourt.

The proposed legislation is similar to that already in place in Alberta, “but without any statutory duty of fair dealing,” Zaid said. Other changes might include an exemption for “sophisticated” franchisors and franchisees and possibly auditing financial statements.

Earning claims would be optional, and the U.S. Uniform Franchising Offering Circular format would be acceptable as long as the province’s specific information requirements are met. Any master license agreement for all of Canada would have to take into account disclosure requirements in Ontario.

Another proposal franchisors should be aware of is the rescission right for noncompliance, Zaid said.

Les Stewart, president of the newly formed Canadian Association of Franchise Operators, claim that disclosure regulations is, at best, only a 5 percent solution. “The real dirty tricks come out when the franchise agreement is signed,” he said in a press release calling for a much more stringent enforcement of the franchise relationship.

The deadline for comment is Aug. 15. Request for the proposal should be made to the Ministry of Consumer and Commercial Relations, and comments can be faxed to the Franchise Disclosure Consultation, at 416-326-8885.

Side Bar
Franchising in Ontario
It is estimated that franchise businesses account for close to $90 billion in sales across Canada. In Ontario alone, it is estimated that franchise businesses account for $45 (billion) to $50 billion of sales annually, representing 40 cents out of every retail dollar.

There are an estimated 500 franchisors and 40,000 franchisees in the province. Many franchise outlets employ 10 to 15 people, representing a significant proportion of the Ontario labour market.

-Consultation Paper, Ontario Ministry of Consumer and Commercial Relations, June 1998


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