Legislation is welcomed by most in franchise market

Critics, including NDP leader Howard Hampton and Les Stewart, who speaks for a small minority of disgruntled franchisees, are wrong to claim it won’t help clean up the mess in the franchise marketplace (New franchising law called a sales job, Dec.5).

The Toronto Star
December 29, 1998

Legislation is welcomed by most in franchise market
David H. Tsubouchi

The overwhelming majority of franchisor and franchisee representatives have welcomed Ontario’s proposed Franchise Disclosure Act, 1998 (Bill 93), and the government’s franchise working team has endorsed it unanimously.

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

Critics, including NDP leader Howard Hampton and Les Stewart, who speaks for a small minority of disgruntled franchisees, are wrong to claim it won’t help clean up the mess in the franchise marketplace (New franchising law called a sales job, Dec.5).

The government’s objectives for Bill 93 are clear: to help small business franchise investors make informed decisions before signing any franchise agreement or making any payment; to encourage marketplace fairness; and to promote investment and job growth in the franchise industry.

Specific disclosure requirements and a duty of fair dealing that sets a statutory standard of conduct will accomplish those objectives without burdening the economy with needless red tape.

Ontario’s proposals are generally similar to Alberta’s and stronger in significant respects. For example, it will be harder for Ontario franchisors to achieve the mature franchisor exemption- it’s not automatically granted, as in Alberta- and they will lose their exemption if they breach the proposed act’s disclosure requirements.

Existing franchisees are protected because franchisors must comply with the disclosure requirements when agreements are renewed, if there is significant change that might affect the franchisee. And all of the disclosure provisions must be spelled out in clear, concise, plain language.

Like Alberta, we have chosen to exclude mandatory dispute resolution from this legislation. During our extensive consultations, some franchisees requested mandatory arbitration or mediation, while others proposed a ban on mandatory arbitration.

Nothing prevents franchisees and franchisors from agreeing on a dispute resolution process or using any of the private mediation services currently available, and the Canadian Franchise Association is working jointly with franchisees to develop a voluntary mediation service.

DAVID H. TSUBOUCHI
Minister
Consumer and Commercial Relations
Queen’s Park


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