Communities dodge franchises

"Why can't the citizens decide the shape and vision of their own community? Why does the rights of a business trump the rights of citizens?"
March 23, 2010

Communities dodge franchises
Dustin Walker

Coun. Stephen Ashton isn't worried that Tofino's soon-to-be drafted bylaw aimed at banning major franchises like McDonald's and Starbucks will be ripe for legal challenge. Although, he admits the exact wording might sound a little "hippy-dippy."

But if a major chain is brazen enough to take the west coast community to court over the issue, said Ashton, there will be a major public backlash against that company.

"People take a real ownership of Tofino and will say 'don't you dare go there'," said the councillor, who introduced the anti-franchise motion earlier this month to preserve the character of the community.

Tofino isn't the first Vancouver Island town to use bylaws to guide what businesses take root.

Qualicum Beach tweaked their legislation to ensure all restaurants provide table service, no packaged food is served and signs must meet strict guidelines.

The bylaws do not target big fast-food chains specifically, but do target many of the features that are essential to the way they do business.

A number of U.S. cities and towns have taken steps to limit franchises or "formula retail" in their communities, including San Francisco which prohibits such operations in its neighbourhood business districts.

But other shopping-heavy communities like Nanaimo has so far shown no appetite to use legislation to block big chains from coming in.

The city has about 90 food-service businesses that operate as a franchise, according to business licence records.

Franchise-backers say such bylaws can hamper economic development in communities while critics say that big chains have already taken a firm hold in our society and some places should be off-limits to such "cookie-cutter" operations.

Large franchises can reduce the uniqueness of a community and in some cases can drive out independent businesses, say critics.

But exactly how a community defines a franchise or decides how to manage them varies widely.

Ashton wants Tofino to take a broad approach, drafting a bylaw that will use "organic" language to preserve the spirit and uniqueness of the community. He worries that if major players like Burger King or Pizza Hut move in it will force the little guys out.

"The only one who can compete with a big box or big franchise is another big box or a big franchise," he said, adding that a 2002 vision document for the town states it will discourage franchises.

"Why can't the citizens decide the shape and vision of their own community? Why does the rights of a business trump the rights of citizens?"

The Town of Qualicum Beach has taken a more subtle approach.

About six years ago, council passed a series of bylaws that regulated restaurants ensuring they followed certain standards for signage, mandatory table service, a ban on serving packaged food and drive-throughs.

The rules apply regardless if the business is sporting a major corporate logo or not.

"We don't pick on anybody, we say if you want to operate a food outlet here, these are the rules," said Mayor Teunis Westbroek, who said two fast-food chains have approached council since the changes came into effect.

A survey conducted before the changes showed public support for creating an environment that fast-food restaurants wouldn't want to operate in, he added.

A number of U.S. communities have taken different approaches to curb the development of franchises. In 2004, San Francisco became the first large city to implement restrictions on "formula" businesses by banning them in the city's neighbourhood business districts after concerns about the increasing number of major franchises popping up in the community. Some cities regulate formula businesses in their downtowns while others like Port Townsend, Washington prohibit major chains everywhere except a single highway commercial zone on the outskirts of town.

Stacy Mitchell, a Maine-based researcher, author and critic of big retailers, said major chains have already saturated the malls and are now creeping into downtowns and other areas.

"This is happening in Manhattan, this is happening in small-town downtown, this is happening everywhere. So to some degree, this conversation is going on it a lot of different places," said Mitchell, with the Institute for Local Self-Reliance, a non-profit research organization.

It's up to the community to define what a major franchise is and where they want them to operate. Exactly how Tofino's bylaw would work is still being hammered out; existing franchises and some services, such as banks, would likely be spared, Ashton added.

Most cities that have passed such laws state that if a chain had more than a certain number of businesses that are substantially similar they can't open another up in the community. Other towns cap the number of franchises in an area or require special permits.

"You're not saying no but you're recognizing that there needs to be a mix," said Mitchell.

She stressed that tougher rules for franchises doesn't mean a blow to the local economy. Many small communities or neighbourhoods have boosted their bottom line by marketing themselves as unique, franchise-free shopping areas.

The president of the Canadian Franchise Association, however, says legislating against franchises can stifle the growth of small businesses in a community.

"It's a little confusing to me that a small business owner is possibly being denied success because their store has a big brand name," said Lorraine McLachlan.

Since franchises provide entrepreneurs with the knowledge needed to run their business and even helps them determine if there's a market for the product, McLachlan believes this model provides new business owners with an opportunity for success they wouldn't otherwise have.

She also said that franchises have a strong reputation of supporting local events and other initiatives in the community, and the desire for a franchise usually rises from within the town itself.

"It's unfortunate they are considering banning businesses that are popular," she said.

Matt Hussmann, managing director for the Downtown Nanaimo Partnership, said he understands the desire not to have a "homogenized" core but doesn't think restrictions on franchises is the answer,

He said that some franchises fit into a downtown better than others, and if a popular retailer were to open in the core it could became an "anchor" that would generate traffic benefiting other downtown businesses.

"It can be done, but the model has to be designed to fit into a downtown," said Hussmann. "The last thing I want to see is three historic buildings knocked down, a parking lot put and a McDonald's put on a corner some place."

Dr. Lynne Siemens, a business professor at the University of Victoria, said that if Tofino can successfully keep major chains out of the community it could entice other towns to look at similar restrictions.

"It will be interesting to see whether these laws actually survive a (legal) challenge," she said.

Tofino expects to have a draft of its franchise-banning bylaw complete in about a month.


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