Sault business supporting new franchise legislation

…4,600 families have had their lives destroyed in this province, due to the unseemly, unethical behaviour of some franchise systems. In my view, they are indentured. They end up working seven days a week, 24 hours a day just to protect their investment. They work their hearts out, investing everything they have. They are not looking for special privilege, just equal opportunity…

Sault This Week
March 8, 2000

Sault business supporting new franchise legislation
Sandra Paul

A handful of members of the Sault business community took part in public hearings being held this week by the Standing Committee on Regulations and Private Bills looking at franchise legislation.

As the NDP critic for consumer and commercial affairs, Martin sits on the committee and has issued a news release that says. “There are 40,000 franchise operators in Ontario and too many of them are being taken advantage of by franchise owners. The courts are full to overcrowding with 5,000 civil suits every year. Legislation to ensure a measure of fairness for franchisees is long overdue and if it finally comes, will be the measure of the success of these hearings.”

Martin is hoping for full disclosure in all franchise agreements; a dispute resolution mechanism; the right to associate; and freedom to source product outside of the chain where it is not trademark related.

Martin said “…4,600 families have had their lives destroyed in this province, due to the unseemly, unethical behaviour of some franchise systems. In my view, they are indentured. They end up working seven days a week, 24 hours a day just to protect their investment. They work their hearts out, investing everything they have. They are not looking for special privilege, just equal opportunity…”

He points out that business people who have been hurt by a franchise system will not go public. Many have signed a gag order after settling with the company. Others fear less formal reprimands. However, he expected that some would be in attendance to show support for the cause.

Ben Pascuzzi, legal counsel for the Chamber of Commerce said in a pre-hearing interview, he expected to include a number of recommendations. They hoped the new legislation would require “full discourse at the front end,” when the parties sit down to negotiate a deal and penalties for non-compliance. Fair dealings and standards of conduct are also a high priority with the chamber.

Pascuzzi says the ability of franchisees to purchase local products is a huge issue, especially here in the Sault, however, very often the franchisor will not permit it. This is referred to as tied-buying. Franchisees acknowledge the need to purchase from the franchisor when the item affects the essence of the franchise, after all, a particular restaurant products must taste the same everywhere in North America.

“What I’m really going to stress with the committee, especially being up here in the North in the Sault, is that local suppliers and tradespeople – it’s those people who come into your (franchise) restaurant and buy your burgers or your donuts. Keeping as much money circulating in our community as possible is important to us and to our members.”

In addition, a dispute resolution mechanism is needed – mandatory mediation or in some cases compulsory arbitration. Pascuzzi planned to recommend a cooling off period of 60 to 90 days after a contract has been signed when the franchisee can cancel the agreement without penalty.

The right for franchisees to associate is another recommendation.

Exit strategies should be worked out if franchisee/franchisor relationships break down, Pascuzzi said.

Local businessmen Vic Fremlin of Lock City Dairies, was also scheduled to speak at the hearings, to tell the committee how, despite all his well-intentioned efforts, franchisor decisions at the corporate level had prevented local grocery stores from selling his dairy products for the past eight years, even when local franchisees wanted to carry a full line of those products.


Brought to you by WikidFranchise.org

Risks: Can't buy local producers' products, Ontario Public Hearings, Canada, 2000, 5,000 new lawsuits per year in Ontario, Canada, Indentured servants, Gag order (confidentiality agreement), Retaliation, Must buy only through franchisor (tied buying), Local suppliers with no shelf space, Alternate dispute resolution, ADR, Affordable, early and non-legal dispute resolution mechanism, Canada, 20000308 Sault business

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License