Al White, PEI Public Hearing Testimony

I know what fear is in people, I’m not a businessman. My background is in law enforcement. For 20 years, I served this country, mostly as a drug investigator in Toronto, and I know what fear is in people’s eyes and I thought when I retired in 1995, that I would not have to deal with people coming up to me and saying, "I have some information for you, but you can’t tell anyone, because I fear." No, perhaps they’re not fearing for their life, but they’re fearing for their livelihood. And is that real? Yes. And can I judge that? Yes. And do I put my experience and my name behind that? Yes, I do. And that’s what I bring to the table.


Legislative Assembly of Prince Edward Island
October 25, 2001

Public Hearings on draft franchise legislation
Charlottetown, PEI, Canada
Al White

Standing Committee on Community Affairs & Economic Development
Session 2/61


BETH MacKENZIE (PC) CHAIR: The final presentation for today is for Islanders for Fair Franchise Law.

AL WHITE: I do not promise I’ll be brief, but I do promise I will attempt not to be boring.

BETH MacKENZIE (PC) CHAIR: Well, it’s been an interesting day thus far so you can only add to it, I’m sure. You’ve been allocated a half-hour for your presentation and hopefully, you’ll entertain questions at that time.

AL WHITE: Thank you very much. My name is Al White. I’m neither a lawyer; I’m not a business owner, nor a franchisor, not a franchisee. I have been cursed or perhaps blessed with an ability to listen and I believe, a fair degree of common sense. I hope I can bring some of both to the table today. I will borrow one thing from Ontario and I promise this will be the only thing I’ll borrow from there today. It’s a quote from Samuel Grange, 1971, when Ontario was looking into whether or not there should be some legislation or some degree of control concerning franchisors and franchisees, among other things.

“We doubt very much if any legislation will be necessary, or indeed, if any consideration to the legal problems of the relationship would have ever been given if the parties had been able to bargain from positions of equal or relatively equal strength. The thrust is that franchisors grant the franchises on contracts drawn for and in the interest of the franchisor and as a result, the inequities described below take place. This does not mean, of course, just as in feudal days, there were many happy serfs, and there were many happy tenants prior to the enactment of Part IV of the Landlord and Tenant Act,” – Samuel Grange, 1971, Ontario, before he became a Justice.

Position bargaining and equality – one year ago, actually over a year ago, when I began doing my research into the matter and we’re dealing with today, I would have embraced the knowledge that was brought to this table by Tim Hortons. I would have embraced the knowledge that Mr. Danny Murphy has. I will tell you this, that Mr. Murphy’s business was among 110 others that I approached and spoke to on Prince Edward Island. And out of those 110 businesses that were solicited to see if there was a need for franchise legislation here on Prince Edward Island, 51 joined a coalition that we call Islanders for Fair Franchise Law. Thirty-three of those people have given me their permission to make their names known and their support known publicly. Eighteen of those wish to remain anonymous. Mr. Murphy was given that opportunity. This is not a group of individuals that were put together by Alan MacPhee. It’s not a group of employees. These are a group of individual businesses, Islanders that were solicited and spoke to by myself, and I listened with my ears. I don’t listen with my mouth.

In the past year, there have been five victims, five gasoline retailers, Irving operators each one of them, some of them perhaps and I don’t know this for a fact, because they spoke to me. Some of them are among the 18 that wish to remain anonymous. Some of them are among the 33 who made their support known publicly; and some of them couldn’t even bring themselves past their fear to discuss this need with me. In their parking lots, some of them, while I was buying gas from them.

I know what fear is in people, I’m not a businessman. My background is in law enforcement. For 20 years, I served this country, mostly as a drug investigator in Toronto, and I know what fear is in people’s eyes and I thought when I retired in 1995, that I would not have to deal with people coming up to me and saying, I have some information for you, but you can’t tell anyone, because I fear. No, perhaps they’re not fearing for their life, but they’re fearing for their livelihood. And is that real? Yes. And can I judge that? Yes. And do I put my experience and my name behind that? Yes, I do. And that’s what I bring to the table.

I bring that ability to see the fear in these people and to listen to their story and say, “Gosh, what can we do about this?” And you know, unfortunately, there are five Irving dealers out there right now that it’s too late for. If they were able to bargain from positions of equal strength, and were they? No. Some people feel there’s no need for legislation. We’ve heard from good, good solid franchisors here. We’ve heard from franchisees that belong to good, solid franchisors. And is there a need for legislation for those people? No. But as it was pointed out here earlier by one of the members of the committee, we don’t make laws for the good guys. We don’t have to worry about controlling the good guys. It’s the bad guys that we have to deal with, and I know that and I’ve seen that, and I’ve seen the effects of it.

Having your supply line choked off is not something that is very pretty, but that is a true threat to some of the franchisees on this Island today. If you want to know the state of unlegislated and uncontrolled franchise dealers is, you need not look any further an the face of Debbie Tanton. Was there anything to protect her? Yes, there certainly were lots of things to protect her, contract law, let the buyer beware. How do you get your protection under contract law? You seek it in the courts. Debbie sought that protection knowing full well that her chances were not good. There was a Judge sat on her case here on Prince Edward Island, and that jurist must have been reaching and stretching within himself for something that could bring justice to the situation that she was in. There as nothing he could do. The only thing he could rely upon was contract law and the case law and the precedents that have been set and the decisions in the court, relative to contract law. There was no legislation anywhere to protect Debbie Tanton, other than contract law. As soon as she put her name to that document, her protection was gone.

The Province of Alberta in 1985, saw a need for legislation. I believe it was 1995, that it was changed again by some very aggressive lobbying from some of the groups that we’ve heard from here today. Mostly, I put it to you, franchise law organizations. There’s no need for government intervention in this. Of course, there isn’t. We have to keep the legal profession well paid and well heeled. There’s nothing there for the common man.

Mr. Alan MacPhee brought up a point this morning when he had a problem with his franchisor, he couldn’t find anyone here on Prince Edward Island to represent him from the major firms. And it was brought up today as well that in civil matters, and I want people to have a layman’s observation of this, not from the legal profession. The last avenue fro appeal on a civil matter is the Supreme Court of Canada. If you’ve got enough money to get there and you are right, you won. If you don’t have enough money to get there, and you are right, you have lost perhaps. And how do you take on a 21 or 22 billion dollar corporation, when your bottom line is measured in tens of thousands. It does not matter how right you are, does it, Debbie Tanton? We were not there to protect her, had they been able to bargain on equal strengths.

In the franchising business, you are on the lower end of the chain. You, in fact, are a consumer of sorts and you are the last line of protection in that system to the consumers. We have consumer protection legislation. We have it in this province. We have it in a lot of other provinces. But here’s an interesting note on this. If you are presently sitting in this province with a head office, you’re a franchisor with a head office in the Province of Ontario, you are bound by the laws of Ontario, because any court proceedings according to most franchise agreements will take place in the jurisdiction of the head office. Those court proceedings will be under the rule of the Ontario legislation. Is it fair that Ontario would dictate to Prince Edward Island what the speed is on Highway 2? They have their Ontario Highway Traffic Act; we have ours. They have their legislation; we have ours, in health care and many, many other things.

I brought a pocket criminal code with me. There perhaps, there’s a good possibility that I’m the only one in this crowd today that even recognizes this document. And the reason I brought this pocket criminal code with me is because it’s the only copy of the Constitution Act in the Canadian Charter of rights and Freedoms that I have. And I’m not going to read them all to you but I’m going to read one.

Section 2 – Fundamental Freedoms, everyone, everyone you can’t slide away from this. You can’t say people who are only 5’2 and you can’t say people who aren’t franchisees, you can not say that only people from Ontario or only people from Prince Edward Island, no, no, this is the premier law of this land. Everyone has a following fundamental freedoms – freedom of conscience and religion, freedoms of thought, belief, opinion, expression, including the freedom of press and other means of communication, freedom of peaceful assembly and freedom of association.

Is there anyone in this room that has ever seen a franchise agreement that said you do not have the right to associate? I have. How am I to assert my basic, fundamental rights as guaranteed by the charter if my franchise agreement says that I do not have the right to associate? In today’s current world, the only way I can assert that is my civil litigation. And a jurist is going to look at that and say, would it ever get to that point, I can’t imagine it would. It’s unconstitutional, to contract that someone’s basic fundamental rights are taken away from them. However, the Ontario legislation has it there the right to associate. Why would that be put in there? Why would there be a need to? Why do we legislate fair dealings between businesses and consumers? And why is this group, Islanders for Fair Franchise Law looking for something that is there? That’s all we want.

Is the document that was put before you perfect? No, it isn’t. We became aware today that the Canadian Franchise Association knew of our existence and knew that we had actually put a draft in the hands of the Attorney General’s department here on Prince Edward Island in October of last year. Did they offer their expertise to us? No. Did they contact us in any way? No. I would have embraced any information that I could have gotten. I’m not a legislator or writer. I do not write legislation, but you know what? I wrote that. I don’t have any law degrees. I’ve got a degree in common sense and I hope some university will recognize that someday so I can put some letters after my name.

We heard some submissions from the Canadian Franchise Association here and I’m not, I’m sure they’re a wonderful organization. We heard that they feel there should be rules. They have a code of ethics, a code of conduct for their members. Well not everyone belongs to CFA. But anyone that wants to do business here on Prince Edward Island, there are certain rules that you have to follow. I’m taking credit for writing this but you know I borrowed an awful lot of intelligence from a lot of people when I wrote this.

We looked at the Ontario legislation. We looked at the Alberta legislation. We looked at submissions that had been made in Ontario. We sat down and we scratched our head a lot, and we looked to this government in June of 2000 that passed the Farm Machinery Dealers and Vendors Act. I urge you to find the similarities in there because there are a lot. I felt like Paddy, the Irishman, I started off with nothing and I was able to hold my own, and came out. Just the guy from Souris put that together. It got us here. Is it perfect? No. Do the people’s representatives of Prince Edward Island have the ability to make something that’s perfect? Sure they do.

We’ve heard things like how can you possibly define standards of conduct? But what’s fair and what’s reasonable? We’ve got Judges on this dear Island that do that everyday. They have to decide what the degree of an assault is? Did it actually take place? Did it not? This is not something that’s new, but it removes an awful lot of time and an awful lot of argument and an awful lot of time spent in court, very expensive time that most franchisees can not afford. And fortunately, some need never worry about, and I think about people like Tim Hortons. A Tim Hortons’ franchisee is never in competition with his supplier. He’s never in competition with the person that has the ability to choke off his supply line. I wish the same could be said for our gasoline retailers. I wish the same could be said for some of our fast food outlets. I wish the same could be said for some of our independent grocers, but it can’t.

There are very many small towns in Ontario and I had the opportunity to work in quite a number of them, some of them I just maybe blew through in the middle of the night, chasing some criminal down. There’s places like Wawa, which some of us have heard of. There are places like Cobourg and Port Hope and maybe, Lindsay or Fenlon Falls or names like that. I would wonder, wonder out loud if some of the people from Ontario have ever heard tell of Fort Augustus, a small little community. Well I know everyone here has heard of Fort Augustus. All the Islanders have. A beautiful little town, little village, a collection of families, a collection of people. Beautiful sandstone church there and there’s also a small convenience store with a gas bar with the name of Wakelin’s run by Susan Clark and her father.

Now some time ago, the Wakelin’s were advised that their supplier was no longer going to deliver gasoline to them, because they weren’t selling enough and they did not fit the profile and so on. Well, let’s think of what happens. Let’s think of what makes us Islanders. Let’s think of what happens if the likes of Wakelin’s store disappears. Well if they lose their gasoline sales, could they stay open perhaps? But the reason that people stop in there, the people that live in Fort Augustus, it saves them driving to Mount Stewart or driving to Stratford to buy gasoline, and while they’re there, well they can buy a pack of smokes or I can buy a loaf of bread, and you know, that’s convenience.

If you take that out of there, are there still places that people gather ain Fort Augustus? Yes, there are. There’s still the church, most people go once a week. There’s still a community centre there that people might go to once a month. But we’re Islanders. There’s another aspect to have a central place in a community and we’re just a bunch of communities. We’re a great booming metropolis here in Charlottetown, made up of a whole bunch of communities. That’s all it is. Each one has got its local points.

There’s a little girl in Fort Augustus lost her cat. Her tabby was gone. She hand wrote a little ad and put it up in Wakelin’s store. That’s what makes us Islanders. Yeah, she could have put it up in the church if Wakelin’s wasn’t there. Once a week, people might see it. She could have put it in the community centre. We’re small, we wear our hearts on our sleeves. We don’t hide behind anything, and all we want to do, and all I heard from the people that I talked to, all they want to do is work hard, make a living. They don’t want what they don’t deserve. They want to reap the benefits from their businesses. We don’t hide our fights behind a bevy of corporate lawyers because we know we’re small. We like to do what we do best, out there selling gas or selling groceries or selling food or selling coffee, because that’s what we do best.

This is not our forum here. Our forum is out there, making this Island click, supplying services and goods to people at reasonable prices, and making a living while we’re doing it, and not seeing all those dollars leave this island. But also establishing for our children, the possibility of free enterprise here. I did not want to have to justify the existence of the Islanders for Fair Franchise Law. But I was put in that position today by people who didn’t care to speak to me or didn’t care to contact Islanders for Fair Franchise Law, to find out what our position was and we are real, and we are growing.

I did not want to take the time to read every section of this proposed legislation to you, that was misread today in some cases, that was misinterpreted, I’m sure in some other cases, and I will certainly make myself available to anyone that would like to debate any of the contents in here because I have faith, personal knowledge of this. I know what it says and in some cases, I know what I tried to say in there. Was I totally successful? Perhaps not, in every regard.

There are a few things that I want to touch on though and I don’t want to keep anyone here, including myself, any longer than I have to. I think the best way to do that is to go through this act. My time is drawing short but there are a few major things that we should look at. There are lots of other copies available if you would like, see Lori.

Section 1 of the act deals with definitions. Some people like some of the definitions we have in there, on open.

Section 2 of this act deals with the purpose for this act. I think we got, unfortunately, I think we have to take a look at that. It’s common sense dictates that we do that.

“To require franchisors to disclose information about he franchise, the franchisor and its associates and the intended franchise relationship so that prospective franchisees can make informed investment decisions.” Disclosure? Yes.

“To establish minimum standards of fair dealing between franchisor and their associates and franchisees…”, between, not one way, between.

“To provide a remedy so that disputes between franchisors or their associates and franchisees can be dealt with efficiently and effectively.” Is there anything that’s not fair there?

Section 3 of this Act applies to an offer for sale, etc., etc. There’s retroactivity in this Act. You know why? I’ve got an awful feeling, I carry guilt around that some of the Irving franchisees and some other people that have been dealt with harshly in the past year may have been dealt with because of the establishment of this Coalition that we have, because we were looking into franchise agreements. I don’t know that for a fact, but I carry that guilt with me.

And if you want to put the courts into a quagmire then you say, well, from this date on if there is a renewal it’s going to be this and so on. No, we don’t have a law on this Island for those that were quick enough to get something in place before a proclamation. Because I would guarantee you, not all franchisors, because a lot of them are fine upstanding businesses, but some of them would be attempting to have their franchisees enter into new agreement before this was proclaimed into law. So it’s only fair if it applies to everyone.

A Delivery of an Agreement – let me read what this says. A franchisor shall give a prospective franchisee a copy of the franchise agreement and all material facts at the earlier of; the first personal business meeting that is held for the purpose of discussing the offer or sale of a franchise. We’ve heard that already. But do you know what we didn’t hear – the “or” that follows that. And the “or” says a day that is at least 14 days before the prospective franchisee enters into an agreement relating to the franchise or pays any consideration relating to the franchise. Changed the whole thing a lot, didn’t it? One simple word “or”. That’s what I was trying to say and I think I said it. But let’s not stop reading the words that are on those sections.

Good Faith: Reasonable Performance Standards – neither the franchisor nor its associate nor the franchisee may impose unreasonable performance standards on the other. It doesn’t say the franchisor has to be fair and the franchisee doesn’t have to.

Encroachment is prohibited. I like the way that Tim Hortons does it. I believe that I certainly hear if I’m wrong on this but I think that Mr. Murphy has the rights to Prince Edward Island as far as Tim Hortons is concerned. That’s great.

BETH MacKENZIE (PC) CHAIR: Somebody is shaking their head behind you, no.

AL WHITE: He’s got first right of refusal then on Prince Edward Island. That’s just as good. As a matter of fact from a competition standpoint that’s even better.

BETH MacKENZIE (PC) CHAIR: Still shaking their heads, no.

AL WHITE: Well perhaps I should contact Tim Hortons about opening one up in Souris.

Sources of Supply and Services – hard to believe but yes. Should we not be allowed to buy a box of Tide from wherever we can get it for the best price and sell it to our customers to their advantage? I believe we should. Should we be able to buy a Benchmark drill bit anywhere else other than Home Hardware? No, it’s a brand, it’s a trademark, that’s the system we’re in. Tide’s not our trademark.

Payments into Trust – what I tried to say; and I guess I didn’t hit the mark too well on this; was that payments that are made into trust or things like that should be paid out to a third party. And I missed on that. I’m sorry. For advertising, for outside of the system marketing, etc. why couldn’t those monies be paid into trust? I’d trade that off for the rest of it. But I still think it’s important.

Renewals – you want to get rid of your franchisee, don’t renew him. And why would you ever want to do that? A lot of franchisors are involved in a thing called vertical integration and that is where they’re not only selling as a wholesaler but they’re also selling as a retailer. They’ve got corporate stores. I don’t know of a corporate Tim Hortons store, certainly not here in Prince Edward Island and I hope no one is shaking his or her head behind me on that one. But you know what we’ve got a lot of, corporate Irvings, corporate Essos, corporate Ultramars, corporate Petrocans. So not only is my franchisor my supplier; he is also my competitor across the street. And is that right? Is that fair? So if my franchisor wants to get rid of me, just don’t renew. I’m gone, I’m gone.

Section 9 clearly states a termination will not be unilaterally imposed unless there is good cause. What is unfair about good cause? What is the fear of having to have good cause to terminate someone? Do we want to live in an environment where people can walk in and say you’ve got five minutes to get your property off our property and we’re finished?

The one that seemed to take an incredible amount of time, Section 18 Damages for Contravention – if a franchisee suffers a loss because of a contravention of Section 7, 8, 9, 10 or 12 by the franchisor or its associate, the franchisee has a right of action. Basic, basic civil protection, that’s all. Nothing terrible here, nothing hidden. Right to associate – we put that in there.

Section 29, which seemed to get an incredible amount of opposition, the Minister or designate may make an interim order at any time where in the opinion of the Minister or his designate an apparent contravention of this Act is of such a degree that the apparent contravention substantially affects the viability of the franchise or the franchise system. That is an ability to invoke an interim court order at the ministerial level. Can it be appealed? Absolutely, immediately. Is a Minister of the Crown going to will nilly hand these out? I very much doubt it.

Section 36. Offences and Penalties – government should not be involved in what colour the plates are that the hot dogs are served on. Government should not be involved in what colour uniform that the attendants wear. We agree with that. We’re not interested in that stuff. If there are contraventions of Section 4, 5, 7, 8, 9, 10, 12, 15 or under the regulations or interference of an investigation under Section 24, failing to comply under Section 32 then the government may take action. They may investigate and they may prosecute. Much the same as Farm Machinery Dealers and Vendors Act. And again, I thank this government for supplying that to me to use. It was most helpful.

Section 38. Plain Language – My God, does that ever escape us a lot. This is plain language; as plain as I could make it. I think we all understand this. I think we all understand where it’s coming from.

Sections 39 to 44 merely relate to the ability of the government to establish regulations in the administration of the proposed legislation. I must mention that….oh my God, we can get a search warrant. We’re advocating that the government may get a search warrant under this Act. Well I put it to you that the government may get a search warrant under any Act that it enforces. But I also put it to you that under this Act there is an avenue of appeal for that particular matter and if there is any compromising information, any strictly confidential damaging information, there are procedures whereby that information can be sealed to protect the person that it relates to.

Madam Chair, Committee Members, I sincerely thank you for the opportunity to bring to your attention the document that the Islands for Fair Franchise Law feels will shape the landscape of business in this great province for years to come.

BETH MacKENZIE (PC) CHAIR: Thank you very much for your presentation. Questions?

WES MacALEER (PC): Mr. White, is there a priority in terms of what you would consider to be the important issues that you want dealt with? In other words, what would you consider to be more important here; government’s involvement in the enforcement side, that’s after the agreement is signed or the involvement of government in terms of ensuring that the parties have adequate information which is a disclosure issue?

AL WHITE: Sir, truthfully the enforcement side. And the reason I say that is that’s what balances this. That’s what negates the deep pockets approach to justice because although there may be a problem with what is disclosed and in disclosure legislation the only avenue that is left to combat that or to deal with it is through civil litigation and civil litigation, quite honestly, does not work. It does not work for the aggrieved party and it really truly does not work that well for the aggrievor. It works great for lawyers and that is why we have so much contract law. But I truly believe that if it is an offence to do something, an offence under the laws of Prince Edward Island, we don’t have to….we’re not going to see a whole bevy of companies, franchisors being hauled into court here. They’re not interested in it. They’re interested in doing the best they can, getting the best amount of money out of their business that they possibly can squeeze. Good business. Not interested in breaking the laws of this province. Interested in taking on Al White? No problem. Interested in taking on the province of Prince Edward Island? Absolutely not.

WES MacALEER (PC): In a case of a dispute between a franchisee and a franchisor, whose position do you think that the government should defend?

AL WHITE: I think the government should defend the position of right and fairness. I would never ever, I wouldn’t advocate for one minute that the govdrnment would take the side of a franchisee or franchisor. I think the government has to establish what’s fair. That’s the side they’d take, what’s fair.

BETH MacKENZIE (PC) CHAIR: Thank you very much.

AL WHITE: Thank you.

BETH MacKENZIE (PC) CHAIR: That concludes today’s hearings. Thank everybody for attending. Stimulating discussion. Thank you.

This document is a spelling-corrected copy of the Verbatim Transcript of House Committee Proceedings, Province of Prince Edward Island, Canada.

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Risks: Fear, Prince Edward Island Public Hearings, Canada, 2001, Fearmongering, Imbalance of information and power, S. G. M. Grange, Q.C., Grange Report, Happy serfs, Short- or forced-shipping, Caveat emptor - let the buyer beware, Frenzied lobbying, Canadian Franchise Association, CFA, Justice only for the rich, Veil of secrecy, Right to associate, Code of ethics, almost never enforced, Good faith and fair dealing, Encroachment (too many outlets in area), Right of first refusal, Refusal to renew contract, Franchisor takes store and converts to corporate, Canada, 20011025 Islanders

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