John O’Toole Government Statement

Although regular data are not collected by any government in this area, industry estimates suggest franchises in Ontario account for an estimated $45 billion to $50 billion in annual sales. That's 40 cents out of every retail dollar spent in the province.

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Legislative Assembly of Ontario
March 6, 2000

Government Statement
Toronto, Ontario, Canada
Mr. John O’Toole, MPP

Standing Committee on Regulations and Private Bills
1st session, 37th Parliament

FRANCHISE DISCLOSURE ACT, 1999
Consideration of Bill 33, An Act to require fair dealing between parties to franchise agreements, to ensure that franchisees have the right to associate and to impose disclosure obligations on franchisors

JOHN O'TOOLE

Mr O'Toole: With that, on behalf of the minister, it's my privilege to make opening remarks, and then I'll turn it over to Mr Hoffman, if he has any technical comments or input.

Before I begin, I know members of the committee who are not currently in attendance are en route, and we certainly will be looking forward to their attendance.

It's an important opportunity to be here on behalf of Minister Runciman to start the hearings on the Franchise Disclosure Act. Although regular data are not collected by any government in this area, industry estimates suggest franchises in Ontario account for an estimated $45 billion to $50 billion in annual sales. That's 40 cents out of every retail dollar spent in the province.

Franchising is a powerful engine for economic growth and the creation of jobs. Moreover, many men and women in this province see the purchase of a franchise business as a way to reach their dreams of a better tomorrow. It is important that individuals and companies doing business continue to see Ontario as a good place to do business. They need to see Ontario as the place that promotes, and indeed encourages and rewards, entrepreneurship.

The Franchise Disclosure Act fulfills the government's throne speech commitment to introduce franchise disclosure legislation to foster an even stronger and more competitive marketplace. The government believes this bill is an important facet of a fair, safe and informed marketplace that supports a competitive economy in the province of Ontario. This is the first governing party in Ontario to follow through on its commitment to introduce franchise legislation. Both opposition parties had the opportunity to do so and chose to treat franchise problems as a lower priority.

This bill reflects the government's desire to find the right balance between distinct needs. There is a need for marketplace fairness. Potential investors in franchises need more information and transparency to make wise business decisions. On the other hand, there is an equally compelling
need to avoid unnecessary or cumbersome regulations and respect the rights of private parties to freely conduct business and contract with one another.

To find this balance, Minister Runciman and the consumer and commercial relations staff conducted extensive consultations with business groups and individuals. These consultations included the Franchise Sector Working Team, a group of franchisees, franchisors and franchise legal experts who have literally committed years of effort to improving franchising in this province. While each member had a different idea of what a perfect franchise bill should contain, the entire team expressed support for the balance struck in this bill.

Extensive consultations were held with business associations and the franchise community. A consultation document was developed and sent to more than 300 organizations. The ministry asked for comments, and more than 95% of those responding said they support this approach.

We know that some people would like the bill to be different. Some would like the government to legislate business relationships, constraining the ability of private parties to freely contract things such as termination clauses. Some would argue for no legislation at all, allowing the market alone to deal with the issues, as it does in all but one other province in Canada.

The government chose a balanced approach between these views. This bill will achieve its goal. The government believes this legislation will encourage a fair, open and competitive marketplace. It will encourage more investment opportunities for both franchisees and franchisors. It will set standards for the disclosure of information by franchisors. It will require fair dealing between the parties to a franchise agreement. And it will ensure that franchisees have a right to associate, reflecting a fundamental principle that goes beyond the franchising industry itself.

The Mike Harris government, supported by many people in the franchise industry, believes this legislation will reduce the kind of problems that have arisen in the past. This proposed legislation is consistent with the approach taken by Alberta, the only other jurisdiction in Canada with franchise legislation. It also reflects the best practices in the marketplace today. It will raise some franchises to this standard and compel those unwilling to act fairly to leave the marketplace. Moreover, this bill will bring us closer to harmonizing legislation across the country.

I now want to hand the microphone to Mr Hoffman, the director of MCCR's policy and agency relations branch, who will take us through the bill. Thank you.

This document is a verbatim copy of this witness’ oral testimony. To review the original transcript: http://www.ontla.on.ca/web/committee-proceedings/committee_transcripts_details.do?locale=en&Date=2000-03-06&ParlCommID=1&BillID=740&Business=&DocumentID=19737

Copyright (c) 2000
Office of the Legislative Assembly of Ontario
Toronto, Ontario, Canada


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Risks: Ontario Public Hearings, Canada, 2000, Joseph Hoffman, Robert Runciman, Ministry of Government and Consumer Services, Ontario, Canada, 20000306 John O’Toole

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