Hansard does not record standing ovations.

For what it’s worth…

The Acting Speaker (Mr. Jim Wilson): Pursuant to standing order 98, the honourable member has 12 minutes for her presentation.

HELENA JACZEK, MPP

Ms. Helena Jaczek: At the outset I would like to make sure that everyone knows that this bill, Bill 102, An Act to amend the Arthur Wishart Act (Franchise Disclosure), 2000, is co-sponsored by my colleague from Parkdale–High Park and my colleague from Parry Sound–Muskoka. I think that this type of collaboration is something our constituents expect of us. We know that in our ridings many people did not actually vote for us or our party and it is our duty to represent them in this House wherever we can. It has been certainly an interesting and very satisfying experience to work with my two colleagues on this particular bill.

I’d also like to recognize in the west members’ gallery some supporters of the bill: Les Stewart, the founder of the Canadian Alliance of Franchise Operators, and Detective Fred Kerr, the corporate fraud manager for York Regional Police’s major fraud unit.

…

The Legislative Assembly of Ontario
Toronto, Canada
September 23, 2010

• http://www.wikidfranchise.org/20100923-second-jaczek1
• http://www.ontla.on.ca/web/house-proceedings/house_detail.do?Date=2010-09-23&Parl=39&Sess=2&locale=en#P953_222324

Ontario franchisees: 9 months to our most important provincial election ever

Best chance ever to protect franchise families.

If you won’t act to support pro-franchisee MPP candidates in 2011,  Why the hell should they give you what you want in the face of the demands to the contrary by Big Auto, Grocery and Oil, their fat cat lawyers and the Canadian Franchise Association?

You, your spouse and your family want:

• Bill 102 passed (now).

To Do:

1. Call your current MPPs constituency office (see here, postal code lookup) and ask for a 10 minute interview. Insist, take your spouse and follow-up in writing.
2. Offer to and then donate as a sign of goodwill to (a) your home riding and (b) the Bill 102′s co-sponsors: Jaczek, DiNovo & Miller (time preferably but $ only if lazy).
3. Handwrite a note to each party leader’s riding office: McGuinty, Hudak & Horwath.

Stand up because the backroom weasels have been all over Queen’s Park saying that your family doesn’t deserve what little protection that the Wishart Act gives you now.

Need a vehicle, a Tims or a Big Mac this year?

• Ask your local franchisee if he’s going to continue to sit on his hands this time out or will he stand up on his 2 legs with you?

People sacrificed for these democratic rights.

For selfish reasons alone, use them or lose them.

$50,000 award for franchisor’s breach of good faith duty

A recent Ontario appeal court decision is very important for every Canadian franchisee.

On September 16, 2010 the Ontario Appeal Court confirmed a $50,000 award for mental distress.

First time ever. Read it here:

• Appeal Court decision: Salah v. Timothy’s Coffees of the World Inc., 2010
• Trial Court decision: Salah v. Timothy’s Coffees of the World Inc., 2009

Suddenly the economics of pleading good faith has tipped significantly in franchisees’ favour, not just in Ontario but beyond Canada as well..

Some systems have 50, 100 or 1,000 franchisees.

You do the math of the aggregate value of a group or class action lawsuit.

You still need protection against choosing the wrong attorney but great news this fall.

Kudos: First franchisee call-out on internet:

Jeff Lefler, National Bread Network, October 21, 2010

[full chronology on Blue MauMau]

After 10 years, the Ontario Wishart Act is getting a little tweaking

Bill 102 is important.

But what’s revolutionary is the way the Ontario courts are back-filling the Wishart Act with real umph.

This judge-made or case law is designed to modify franchisor behavior.

A $50,000 appeal award upheld for mental distress in a low-rent coffee joint?

I understand this is the 1st time a breach of good faith and fair dealing provision has triggered $ on its own. And it was accomplished by a non-”franchise bar” attorney in Ottawa, too.

I wonder…

– Queen’s Park, Toronto Ontario Canada: Home of the Legislative Assembly of Ontario

Fear mongering begins in Ontario Wishart Act proposed change

Some professionals hold fast to their word.

They continue to practice with integrity, dignity, grace and humour, often under extreme conditions.

If faced with insurmountable economic hardships, they choose to leave a field rather than sell-out their principles.

Bev Cline writing for the Globe and Mail attributes the following excerpt to a Sotos LLP partner:

Another concern is that franchisors will essentially be asked “to crystal ball gaze” into the future in creating the educational document, says Allan Dick, a franchise lawyer at Sotos LLP in Toronto. “Currently a franchisor has to disclose, through the disclosure document [as mandated by the Arthur Wishart Act], everything that is material to the opportunity,” says Dick. The disclosure document, he points out, “is not a ‘general’ document; it’s a very specific document for a specific opportunity for a specific franchise.”

So, in terms of the proposed educational document, Dick asks: “If the franchisee is relying on a franchisor who is being forced [in the educational document] to crystal-ball-gaze into the future, to provide information that the franchisor could not know, will this benefit the prospective franchisee?”

The point is that prospective franchisees’ immediate interest and goal is to “look for the best opportunity they can find to be successful in business,” says Dick.

The implied threat to politicians, always sensitive to job loss or creation, is in the last sentence.

In addition, if franchisors are held liable for predicting business prospects in an unrealistic way, says Dick, they may be reluctant to enter into certain markets in the first place.

In WikidFranchise, Risk #17 is 95 per cent of legal fees are paid by franchisors. The full article: before and after I had “Wiki-ed” it (eg. told a story through a case study risk analysis).

Who are you going to trust?

– Thanks to This Isn’t Happiness

To Canadian franchisees: Thank you for your patience

A joint communique will be delivered shortly.

40,000 ON and 76,000 CDN families

– No renewing franchisees were harmed in this post (ie. redacted conference badge).

The Grange franchise investigation stands the test of time

Samuel Grange, Q.C. and his 1971 “Report of the Minister’s committee on Franchises”: the Grange Report.

In 1970, the Honourable Arthur Wishart, W.C., M.P.P. (Sault Ste. Marie),  Minister of Financial and Consumer Affairs commissioned a public inquiry into referral sales, multi-level or pyramid sales, and franchises. He appointed Grange to head a public inquiry. The current Ontario law was named in 2000, specifically to point backwards in time to Grange’s independent recommendations.

Even after almost 40 years, Justice Grange cuts through the nonsense.

SUMMARY OF RECOMMENDATIONS

Franchises
1. Legislation is to apply to all industries and to all franchises within each industry
2. Prohibition against dealing in franchises except as provided
3. Franchisor to file prospectus setting forth detailed information on scheme
4. Franchisee to have compulsory 48-hour cooling-off period before execution of agreement
5. Franchisee to have right to apply to Tribunal or Court to determine,
(a) whether contract is fair; and
(b) whether conduct of franchisor is fair in circumstances
6. Tribunal or Court to discourage following:
(a) arbitrary termination
(b) arbitrary refusal of assignments or renewals
(c) arbitrary forfeiture of deposits
(d) forced purchases and secret profits
(e) competitive and discriminating practices by franchisors

General
1. The formation of a separate branch of division with its own Registrar to administer multi-level and franchise matters.
2. Control of advertising
3. Regular renewal of permission to operate to be required
4. Suspension and cancellation of permission to operate
5. Regular inspection of records
6. Provision for escrow of investments or fees to protect investors and franchisees
7. Application of legislation to leases as well as sales

– Full Report

It is my impression that the current Ontario judiciary is on same frequency as was retired Appeal Court Justice Grange.

York University’s Osgoode Hall Law School Alumni Association Honours Three Outstanding Members of the Legal Profession

Is a weak/any franchise law better than no franchise law?

In my opinion, no.

Why I believe this goes back a little ways.

No Law: In 1998, Mr. Ken Fong, McDonald’s Canada, VP and Corporate Counsel formed an industry  committee together to discuss ways and means to have industry disputes heard in other than the Courts. I attended as the founder and president of the Canadian Alliance of Franchise Operators, CAFO the 1st and only national franchisee advocacy group.

In Feb 1999, I was vigorously questioned by a couple of the 2nd Tier attorneys on the committee about my unwillingness to accept a “disclosure-only” law solution. The industry wanted a law to give an impression of order and oversight in what was seen as the “wild west of the business world”. They wanted what I subsequently defined as a McLaw: toothless legislation designed to protect the dominant parties.

It became apparent at that meeting that CAFO either:

1. agreed with their desire for a McLaw or
2. CAFO/Les was not welcomed at the meeting.

I quickly showed the work we had done on the corporate Identification of a proposed industry dispute resolution process, thanked Mr. Fong and shook his hand, and left the meeting.

McLaw passed: In June 2000, I sat with some other franchisees in the opposition guest gallery at the Ontario legislative assembly and watched the Canadian Franchise Association get the law they wanted: Arthur Wishart Act (Franchise Law), 2000.

However, the Ontario judiciary are not easily intimidated, black-balled  or threatened.

Judge-made law: Provincial court justices are smart, independent-minded (no elections) and not easily fooled. Since 2000, they have tended to assume that the Wishart Act was passed as a sincere piece of legislation and that its intent was to protect franchisees.

I listened to Chief Justice Winkler last year at the Ontario Bar Association’ Franchise Law Conference in Toronto and he was just great! He told the +100 attorneys that every justice knows the “deal” about franchising because they have all had franchisee clients before being called to the bench. One of the two attorneys at side seemed a little ill-at-ease.

I can hardly wait for Thursday to see what Ms. Debi M. Sutin (Gowling Lafleur Henderson LLP) and Ian N. Roher (Teplitsky, Colson LLP) as co-chairs will be presenting.

Record attendance again in 2010, I bet.

Free riding on the authority of the state

The notion that people need to believe in and trust in their institutions is not a naive, child-like or stupid idea. It’s an evolutionary imperative because humans are social beings.

Our survival depends on a reasonable expectation of the basic trustworthiness of the officers and offices in our instituations.

A modern complex post-industrial knowledge economy requires a high-trust environment. Fairness of opportunity is the business governments are in: not passing laws that enable the the creation and cover-up of consumer swindles.

A country, a provincial parliament or a police force are not a brand.

Franchising as a bully arena is most readily seen when they start to push around people we elect to represent us.

See this coat of arms?

Canada stood for something at one time. People sacrificed a lot (continue to die for, in fact) a principle, not to enable federally regulated financial institutions to drive the lending getaway car.

See this one?

The Legislative Assembly of Ontario: hear the other side. It’s designed to remind us of something. We as citizens are diminished when its taken 40 years to prove that powerful commercial interests can deny the need for, then flip-flop in 2000 when they need a sales boost and then flop-flip(?) saying that any more pre-sale disclosure would “give a false sense of security” for investigating future franchisees.

Oh, please.

And this one…

When fraud coppers have to continue to turn away franchise victims (wives of some of their own “brothers”, even), it reduces the trust we have in the value of all police enforcement activities.

When the legitimate authority of the state is debased, we are all diminished.

Reverse the onus on good faith

The problem with the “good faith, fair dealings” issue is that the little guy (franchisees) have to prove that their franchisor played unfair.

• How about making the franchisor show they acted acted fairly instead?

I think this is a very clever idea and would prevent much bad behavior.

This was a suggestion brought forward by Gerald Nori of Wishart Law Firm LLP in 2000.

I think it’s interesting that in that circumstance the Grange report does a reverse of onus. It says there has to be fair dealing, and if there isn’t fair dealing, then it’s up to the franchisor to show, and I quote, “that the contract between the parties was fair.” In other words, the onus shifts, not from the franchisee to prove they were treated unfairly but to the franchisor to prove that franchisor dealt with this individual fairly. I think that’s an extremely important concept. It goes on to say that the franchisor’s conduct was “equitable in the circumstance.” So you have this onus on the franchisor, at that point, to prove they dealt with this person fairly.

And in response to a question By John O’Toole that this may increase litigation, Mr. Nori was firm in the opposite direction:

I would see it as just the opposite. I would see it as the big guy now having to come into court with all the resources and proving that the treatment was fair under the circumstances. That’s a tremendous onus for the little guy to prove. The other thing is that the documentation is never there. The documentation is always in head office, and you never know whether you’re getting the whole story. So I think that’s an extremely important concept.When I spotted that in the Grange report, I thought, “Boy, there’s something that really would have some meaning in this legislation to equalize the playing field,” because it is tremendously unequal.

Mr. Nori’s reference to the Grange Report under (see under Legislative Approach, (iii.) Contractual v. equitable approach  section) is from 1970:

3. In these dealings also, placing the burden upon the franchisor to prove,
(a) that the contract is fair; and
(b) that the franchisor’s exercise of his rights under the contract is justified in the circumstances.

“Justified” is the absence of opportunism. The test for opportunism is: Would the franchisor have likely made this decision if it were their own assets at risk?