Bob Delaney, MPP, Second Hearing Debates

…when I look back on it, I consider the decision not to have invested in the franchise one of the best decisions I ever made.

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The Legislative Assembly of Ontario
September 23, 2010

Second Reading, House Debates
Private Members’ Public Business
Mr. Bob Delaney, MPP

The Committee of the Whole
Second Session, 39th Parliament
Toronto, Ontario, Canada

ARTHUR WISHART AMENDMENT ACT (FRANCHISE DISCLOSURE), 2010
LOI DE 2010 MODIFIANT LA LOI ARTHUR WISHART SUR LA DIVULGATION RELATIVE AUX FRANCHISES

MR. BOB DELANEY, MPP

The Acting Speaker (Mr. Jim Wilson): Further debate?

Mr. Bob Delaney: Let me pick up where my colleague from Parkdale–High Park left off. What is this bill, if you’re watching? I would call it, to be colloquial, “the caveat emptor alleviation bill.” I call it caveat emptor, which is Latin for “buyer beware,” because this bill represents a means of setting out conditions that represent a set of criteria to do due diligence for any prospective business owner or someone considering buying a franchise.

Who are we talking to in this bill? When we write a bill, we have someone in mind. We’re talking to new Canadians and immigrant investors. We’re talking to young people who dream of owning their own business. We’re talking to 45-plus businesspeople, long-time employees, who have worked for someone else most of their professional lives and are looking to establish some independence in their middle age and to have an asset that represents a nest egg for their retirement.

This bill is appropriate because a franchise is a turnkey business. For the franchisor it is, in effect, a means of raising money and, when the franchisee chooses to dispose of his asset, a means of returning money to the franchisee. In effect, the franchisor is something of a deposit-taking institution. You could imagine that if the franchisor was a financial institution, it would operate within a very tight framework of regulations.

It’s reasonable to impose such a set of regulations on an organization that would approach would-be purchasers who would be making an investment that would be as large as or larger than what they’ve put into their home and which represents, for nearly all of them, everything that they’re going to have of value in the world. If the potential for a franchisor is to reduce the risk to an investor, to a business owner, to optimize returns, to share costs and R&D and to share marketing expenses—if the upside is large, then so too is the downside. The potential to do harm is equally large.

A number of years ago, nearly 20 years ago, I evaluated a franchise. I visited a number of franchisees. I asked a lot of these questions, but I had to look them up. I had to dig back into my old MBA books. I had to depend on my own experience in the business world, and when I look back on it, I consider the decision not to have invested in the franchise one of the best decisions I ever made. In fact, I think to myself, “Imagine if this bill were law and the owner of the Phoenix Coyotes had had the opportunity to get these questions answered.” Well, that team might be in Kitchener-Waterloo today.

The Canadian Franchise Association disagrees with the bill. I’m going to cut them a little bit of slack on the scope and the depth of the disclosure. But that’s why we have committee hearings. That’s where we iron out those problems.

As to the intent of the bill, the intent of the bill is solid. I think if this bill is passed, and I hope that it gets to committee and gets through third reading and is passed, the reforms that it will foster will make it a good piece of legislation.

The table at the moment is too heavily tilted toward the franchisor. In doing that, if a bad franchisee-franchisor relationship leads to civil litigation, civil litigation is not about what’s right or wrong; civil litigation is about what is or is not in the contract. The contract is always written by the franchisor, and the contract always protects the franchisor. What this bill does and proposes is that some of the disclosure requirements within it give the franchisee an opportunity to fairly evaluate the business on a level playing field and to make an informed judgement.

1520

On that note, thank you very much for the time. I’m sure my colleagues will pick up from here.

This document is a verbatim copy of the Official Report of Debates (Hansard):
http://www.ontla.on.ca/web/house-proceedings/house_detail.do?Date=2010-09-23&Parl=39&Sess=2&locale=en#P953_222324

Copyright (c) 2010
Office of the Legislative Assembly of Ontario
Toronto, Ontario, Canada


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Risks: Appropriate franchise law, Arthur Wishart Act (Franchise Disclosure), 2000, Canada, Arthur Wishart Amendment Act (Franchise Disclosure), 2010, Canada, Attempts to rehabilitate image, Awareness, Call for franchise law, Caveat emptor canard, Deceptive business practices, Predatory actions, Private Members’ Bill, Canada, 20100923 Second Delaney

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