Franchisees united for fair franchise law

He said a lot of the major companies Islanders deal with are out of the United States and upper Canada, and unless P.E.I. sets up its own legislation concerning franchise law, those companies will continue to keep all the legal control in their own realms.

The Guardian
October 22, 2001

Franchisees united for fair franchise law
Legislation seen needed to protect franchisees and franchisors equally, and public hearings on the issue will be held Oct. 25.
Nancy Willis

SOURIS – A group of 70 Island franchise operators is making a united bid to see a fair franchise law become a reality on Prince Edward Island where thee is currently no protection from the strong arm of the international big boys.

IGA owner Alan MacPhee of Souris is one of the franchisees who says it’s time P.E.I. acknowledges its own entrepreneurs and takes the lead in Canada by putting legislation in place that protects franchisees and franchisors equally. On Thursday, Oct. 25, public hearings will give the province a taste of what both sides have to say.

A current battle with Loblaws has MacPhee walking a thin line, and when his existing contract with the international grocery giant expires this winter that line could vanish altogether. MacPhee is not alone in his effort to protect franchisees in their own domain.

Rundell Seaman, owner of Seaman’s Beverages Limited, and Burger King owner Bush Dumville began lobbying the provincial government to bring in fair franchise law seven years ago.

“MacPhee is right, what is being proposed to the province is only logical,” said Seaman, who runs one of the oldest and most respected businesses in P.E.I.

“But sometimes logic doesn’t seem to count and I guess I come from a logical background. Why P.E.I., as an individual province, doesn’t have protection is beyond me.”

Seaman says he has respect for the franchise system.

“It can be a real good thing, and most of the time it is, but clearly it would be better if the franchisees were protected at the local level,” he said.

A key issue for franchise holders here, and other areas without appropriate local legislation, is that any disputes with the head company have to be settled in the head office jurisdiction.

“That means I have to go out of province to settle disputes with my head office and I am subject to the laws of that province, not the laws of P.E.I. where I do business,” said MacPhee.

Seaman agrees. He said a lot of the major companies Islanders deal with are out of the United States and upper Canada, and unless P.E.I. sets up its own legislation concerning franchise law, those companies will continue to keep all the legal control in their own realms.

“And it is obvious that this is strictly for their convenience,” said Seaman.

Situations involving legal dispute are where Island franchisees take it on the chin. Seaman says most franchisors are very big companies and their in-house legal abilities are huge.

“In fact, their legal costs often amount to the largest portion of their expenses, and that leaves any franchisee in a very vulnerable position,” he said.

Dumville said back when he and Seaman unsuccessfully brought their demand to the Liberal government or the right to argue disputes in the franchisee’s home province, it was extremely important.

“We wanted the right to argue it in our own province instead of going to Ontario, hiring a lawyer there, staying in a hotel, and arguing our case in a strange land,” he said.

He feels it is even more important now.

“The need for a balanced, fair legislation law in Prince Edward Island is imperative with the huge increase in the number of businesses that are under franchise agreements here now,” he said.

Although most franchise holders in P.E.I. have found themselves in similar positions, there has not been a truly united voice until now.

Seaman says it has been difficult to get individual franchisees to participate in public discussions because it’s an intimidating issue. In fact, some agreements between franchisor and franchisee forbid discussing it, he said.

“No question they can put you out of business,” said MacPhee.

Elaborating on the agreement issue, Dumville said when one goes to a lawyer for advice in signing any franchise agreement in general, the lawyer will usually advise you not to sign because it is slanted towards the franchisor.

“But having said that, he will also tell you that if you want the franchise you had better sign it because there are 10 others standing in line to grab it. In other words, there is no option for signing a balanced agreement unless there is third party local legislation in your own province,” he said.

MacPhee said P.E.I., above any other province, should understand the ‘little guy versus big guy’ scenario.

“By enacting this legislation, Prince Edward Island can show its value as a national leader by bringing in legislation that is fair for both parties, instead of allowing corporate head offices in Ontario to dictate what law in the provinces should be,” he said.


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