Martin Undue Influence Statement

I'm tabling a request to the ministry, through the committee, to explore the relationship between the Canadian Franchise Association and legal counsel to franchisors in legal conflict with their franchisees…I suggest to you that is only one example of the dismissive attitude of this association to franchisees, which further heightens my concern that we have conflict of interest all over the place here

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Legislative Assembly of Ontario
March 9, 2000

Public Hearing Testimony
London, Ontario, Canada
Mr. Tony Martin, MPP, Sault Ste. Marie

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

TONY MARTIN

The next deputation is on at 3 o'clock, the Fauberts. Are they here? We'll wait till 3 anyway, but we've got some time to discuss what Mr Martin was concerned about earlier. Do you want to bring those points up now? We have about 20 minutes here.

MR TONY MARTIN: I don't want to be confrontational or adversarial. We've had four pretty extraordinary days here where we've heard from some folks about an issue that I think has some tremendous seriousness attached and ramification for the way that business is done in this province and the effect that has on the economy of the province and in particular regions of the province.

When we were in Sault Ste Marie we heard about supply issues and the fact that tied buying in the franchise industry was in many very specific instances having a tremendously negative effect on the ability of local producers to get their product on the market so that it could be available to consumers and consumers could make a choice.

This was affecting the franchisee, the small business person, because if he or she were allowed to go out and purchase where they could get the product at a competitive price, they could put it on the shelf and improve the potential for them to make a profit and be successful.

It affected the local business community because there were people in that area who were producing milk, for example, who were having an awful time getting their milk into the market and on to the shelves, not because they weren't producing a quality that was of high standard and their prices weren't of a competitive nature, but simply because an arrangement was made at a higher level they couldn't afford to play at, their product is off the shelf.

That's taken its toll on the communities within which those businesses operate and, I suggest, on whole regions of this province, the further you get away from the centre and the Toronto area: northern Ontario, in particular, in my instance.

So I'm putting on the table the possibility of perhaps the ministry, in preparing for second reading of this bill or of a bill that they might consider amending, or a bill they might put out that those of us who have worked hard at this might bring in amendments to, might consider doing an inquiry of some sort on the implications on the economy, on local economies and communities, on small businesses and franchisees of having 80% of the food industry owned and controlled by two major entities and the tied buying that goes with that reality.

I would also, as we mentioned yesterday, recommend that the committee, through the ministry, seek status in front of the federal bureau of competition so that we might present some of the findings that we've gotten here over the last three or four days and encourage them to, with us, do the right thing to protect small business and to protect a spirit of competition in this province, particularly in this instance because those are the people we heard from the most, the grocery industry. That's one piece.

The second is equally as important as far as I'm concerned. It's concerned with the influence that the Canadian Franchise Association has obviously had in the development of Bill 33, and the protected image that's out there that this association speaks for the industry and acts, when requested, on behalf of both franchisor and franchisee to try to settle disputes. I'm concerned that the perception that that in fact is happening has unduly influenced the development of Bill 33, to the point where the government may consider not accepting amendments we might make to this bill for fear of offending that particular organization.

We've seen, over and over again over the last three or four days, members of the Canadian Franchise Association - some of them members of the board of directors, some of them counsel, some of them the president and executive director - speak to us and very clearly indicate that it would not be in the best interests of franchising in the province to go any further than what's in Bill 33. It flies in the face of the evidence that we've seen - anecdotal, however it may be - from some of the folks who have found themselves caught up in that vortex and are now struggling to try to make sense out of it, to try to protect investment that they've already made and that is in jeopardy, and in some instances to put in place something that would be protective of others coming down the road. Not to speak of the need for us to make sure that there is a level playing field, access to justice etc for those who might be considering getting into the franchising business, considering, as I've said before, the economy that we're in that's shifting very rapidly and sometimes leaving people out there with a package of money, sometimes by way of severance, that they're looking to invest. Certainly franchising presents as an easy turnkey possibility that they may be wanting to get into.

I think that as government we have a right and a responsibility to make sure that we have proper regulation in place to protect those folks, as was mentioned to me yesterday evening as we watched some of the media coverage of the now infamous Marty McSorley case in hockey. In business, it's been made clear over the last few days, it's tough and you've got to be good at what you do. You've got to have the fundamentals down, and when you go in the corners you've got to be willing to exchange a few body checks and elbows, but a two-hander to the side of the head is obviously beyond the pale. What we've found here is that in many instances in the franchising industry today, some of the little guys in the business are getting, very clearly, a two-hander to the side of the head.

The criminal justice system has stepped in the Marty McSorley case. I think that we as government have a responsibility, in this instance, to make sure that we're playing the game according to the rules and that everybody knows what the rules are and that at the end of day, if we do the right thing, we practise hard, we bring our intelligence to the job, we have some chance of at least staying in the game and having some success.

I'm tabling a request to the ministry, through the committee, to explore the relationship between the Canadian Franchise Association and legal counsel to franchisors in legal conflict with their franchisees. Some of you will remember that yesterday I delivered a letter to the president of the Canadian Franchise Association here. A company that is having a dispute - mind you, a legal dispute, a litigated dispute - the franchisees are having a legal dispute with their franchisor. They've tried to deliver a letter of complaint to the association. The association won't receive it. I gave this to the president yesterday on record and later in the day he returned it to me, saying that because this matter was under litigation, he couldn't receive it.

I suggest to you that is only one example of the dismissive attitude of this association to franchisees, which further heightens my concern that we have conflict of interest all over the place here. The Canadian Franchise Association deserves to be looked into to see if in fact they're doing the job that, under the auspices of the Ministry of Consumer and Commercial Relations, they've been licensed to, as I'm sure they are probably a non-profit organization.

Those are the two issues I put on the table here this afternoon.

MRS BOYER: I think it is a question of order. I understand where Mr Martin is going. As I read the report of the subcommittee, it says that if the time permits on the fourth day of hearings, the committee members may make statements and proposals for the method of proceeding during further consideration and clause-by-clause review. I don't think this is the forum right now to do whatever we want to do. I think we did say that we could have more days. I thought that number 4 was just saying that together today we'd decide when we're going to meet again. Of course, we've got a lot of things to say, and I want to discuss it with the critic of this bill. I have no authority right now to do it. I thought today we were going to decide on a date and a time that we would meet again to go through this bill.

MR O'TOOLE: I know there's a certain dynamic around any public forum, and I respect members' rights to express differences in the public forum on the record. I think that's been done. Whether it's appropriate within the approved minutes of the subcommittee is questionable. Nonetheless my own belief is that there is a time and a place. I believe the subcommittee should convene. We have not had the privilege of having the regular full Chair in attendance at any of these public hearings. I think she would need time to review the record and the debate and call a subcommittee meeting after April 3 between the subcommittee members representing all parties.

The intention here is to find that balance between the needs of all parties and the commerce of this province, and I think we're that close to it. I've heard in the discussions a lot of willingness to find a balance that will help us to have a better place to live, to work and to raise a family in this province. That's kind of how I see it. I could be polarized as well, but I'm not. At this point, I'm just digesting what I've heard after four days of public hearings, much of which has been a very valuable insight that can only add to a better piece of legislation.

MR GILCHRIST: There's nothing for me to add save and except to assure Mr Martin that, speaking only for myself, I brought no bias into this. Minister Tsubouchi asked my views going back three or four years ago based on my retail experience. I'd never even met anyone from the CFA until the first day of hearings here.

Again, speaking only for myself with a completely open mind, I think the testimony we heard from both sides, franchisor and franchisee, gives us pause for further consideration. You've heard already that the working group has considered and approved five more amendments that I hope you find favour with. I think you have already expressed that you have, and I'd like to think in that spirit we're going to continue to move forward.

I think we should each be pressuring our respective House leaders to ensure there's no impediment to the committee meeting again very quickly after April 3, the next time we're legally allowed to come back as a group, and to move quickly to do a clause-by-clause that's definitive enough that we can do it once at this stage and preclude the need to come back again after second reading.

I don't think there's anything to be learned beyond what we've already learned today. We'll be able to distill down, all of us, our respective positions when it comes to various amendments. I think if they're brought forward with a good business case, I'm quite confident that we're going to leave that round of clause-by-clause with a pretty harmonious feeling around this table based on how close we are right now. If we do that, our second appeal to the House leader should be a very fast second and third reading.

There is nothing, I would submit to all my colleagues, to be gained by belabouring this. We've heard of issues that are outstanding right now, particularly in the grocery sector, where there are negotiations taking place that might very well be positively impacted the moment this bill is passed. I think to indulge in our traditional propensity for more talk at Queen's Park simply adds an impediment to those people getting the kind of justice and fairness, in both directions, that I would hope is the goal of all the members on this committee.

I'll give you a personal commitment that not only in the appeal to the federal government, I would certainly join with my colleagues opposite in suggesting the Competition Bureau has a big problem that they should be confronting in a far more public way, but also in terms of pressuring our House leader. You certainly have our commitment that we will move expeditiously to reconvene, do clause-by-clause, then debate this bill and hopefully bring it to a mutually agreeable conclusion as quickly as possible.

THE VICE-CHAIR (Mr Garfield Dunlop): That sounds good.

MRS BOYER: No problem with that.

THE VICE-CHAIR: I don't know if the Fauberts are coming or not. We have to wait around for about five minutes in case they do show up. A five-minute recess.

The committee recessed from 1457 to 1510.

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=2000-03-09&ParlCommID=1&BillID=&Business=Bill+33%2C+Franchise+Disclosure+Act%2C+1999&DocumentID=19723

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


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