Tony Martin asks a few questions of the Canadian Franchise Association, CFA

Mr. Richard Cunningham spoke very professionally and accurately for the franchisor- and supplier-only association.

Mr. Tony Martin, MPP was a key player in asking the right questions which helped clarify how much contempt each stakeholder had for the democratic process. There were five expert witness spots in the 4 days of travelling public hearings that resulted in the Arthur Wishart Act (Franchise Disclosure), 2000. The subcommittee gave the CFA one of those slots.  The complete record of testimony can be found on WikidFranchise.org.

Questions

[...]
Mr Martin: I’m following up on the question that Richard [Patten, MPP] asked a few minutes ago in terms of who you’ve actually kicked out of the association. I’m led to believe that, in fact, you’ve only revoked the membership of one and that was Pizza Pizza. Is that correct?

Mr Cunningham: I’m not at liberty to say, I believe. That would be privileged information of the association and I don’t think it’s appropriate to make any of that public here.

Mr Martin: You’re not going to give me any numbers even?

Mr Cunningham: No.

Mr Martin: Then just to query as to the membership in your group and who you speak for, I’m led to believe that you have 220 out of about 1,300 franchise systems in the country. Is that correct?

Mr Cunningham: I don’t what the date of that paper is, but our franchise member list is just over 300 right now because some of our member companies, like CARA, for example, would have eight brand names.

Mr Martin: And 80 of your members are lawyers, accountants or consultants?

Mr Cunningham: Correct.

Mr Martin: Also there are some big systems-and we heard from one of them today-that don’t belong to your association. Do you have any auto dealers?

Mr Cunningham: No.

Mr Martin: Do you have any food stores?

Mr Cunningham: Yes.

Mr Martin: How many?

Mr Cunningham: One chain.

Mr Martin: Petroleum stations?

Mr Cunningham: Yes, Petrocan.

Mr Martin: What about hotels and motels?

Mr Cunningham: Yes, a number of them.

Mr Martin: You made a statement earlier about the information I shared with the committee that the perception out there is that there’s lower risk by going into a franchise than the independent small business route. I have a study that suggests that’s not the case that the incidence of failure in franchising is greater than in going the independent route.

Mr Cunningham: I don’t know your study so I can’t comment on it.

Mr Martin: It’s a study called Survival Patterns among Franchisee and Nonfranchise Firms Started in 1986 and 1987. I can give you a copy of the report. It was reviewed by Ms Susan Swift from our legislative research branch, and it’s actually quite interesting. It has a number of findings that I think maybe your association might find worth looking at because it challenges very seriously the contention-and I suggest it’s something that needs to be perhaps looked into further. If we’re offering franchising in the country as a more secure way to get into business, particularly in an environment where there are a lot of people who are being restructured and walking around with severance packages looking for someplace to invest them and they are thinking that franchising is a bit more risk-free than actually setting up an independent business, then we may be sending them down a road that will result in stories such as the ones we’ve heard over the last two or three days here.

Mr Cunningham: Can I respond to that?

The Vice-Chair: Go ahead, sir. We’re just about out of time here now.

Mr Cunningham: Even if these statistics are out there, and as people are being told that franchises are more successful than non-franchises, the disclosure is going to give them the information and the ability to contact people in the system. If they call up XYZ system and talk to 10 of the franchisees and they say, “I’m not allowed to associate,” “I’m not making any money,” “I’ve been in this business five years and I’ve lost money,” or “I’m not in the system any more because I lost my life savings,” I think that in itself is going to tell those people, regardless of what any statistics are, not to buy.

Mr Martin: The problem is, though, that a lot of the people that they should actually talk to have signed confidentiality agreements and they can’t talk.

Mr Cunningham: They wouldn’t be able to do that, though, with this disclosure legislation.

The Vice-Chair: Richard, thank you so much for your time today and for the presentation you left with us.

There was one glorious time when the truth about Big Franchising was revealed and recorded

Four days in 2000.

March 6, 7, 8 and 9.

Public hearings into the franchise relationship. Four days of traveling public hearings: Toronto, Sault Ste. Marie, Ottawa and London. Ontario, Canada. Traveling public hearing: extremely rare, if not unheard of, under the Mike Harris government.

Approved by the former Ontario  Minister Robert Runciman over a beer with Tony Martin at the Queen’s Park members’ bar. Two men who share a love of democracy as expressed in the Legislative Assembly of Ontario.

• 35 life stories told in 20 minute chunks to the Standing Committee on Regulations and Private Bill.
• 4 expert witnesses given 45 minutes (John Sotos lawyer, Susan Kezios franchisee expert, Dr. Gillian K. Hadfield scholar and Richard Cunningham franchisor advocate).
• and me, Les Stewart franchisee advocate.

I had the tremendous honour of traveling throughout Ontario as before these life stories were twisted into the Arthur Wishart Act (Franchise Disclosure), 2000. I seemed to have made an impression on the politicians.

Of the current MPPs (107), I know 29 of them. One Minister since I was 17 years old. 45 minutes from my house to their House.

It happened once.

It can happen again.

– The Legislative Assembly of Ontario, looking north to the main doors, University Avenue, Toronto Ontario

Would it be better to have no legislation? That’s a no-brainer.

The public hearings that led to the Ontario Wishart Act (Franchise Disclosure), 2000 started on March 6, 2000.

1. The first expert witness was Ms. Susan Kezios from the American Franchisee Association (her testimony, above to right).
2. Mr. John Sotos was the next of the five expert witness (40 in total :: 4 days :: 4 cities) was a Toronto attorney called (his full testimony, left).

Mr. Tony Martin, a politician from Sault Ste. Marie  asked Mr. Sotos a question:

Mr Martin: Would it be better to have no legislation than to put a piece of legislation in that gives people a false sense of security, given some of the statistics?

Mr Sotos: That obviously is a no-brainer. The purpose of legislation is remedial, it’s to correct a problem. If the legislation doesn’t achieve that, then I think it’s misplaced.

“That obviously is a no-brainer.”

• summum ius summa iniuria -  The more law, the less justice

Tony Martin and the Ontario Wishart Act

Tony Martin isn’t much to look at.

He’s is the kind of person you pass in the street without noticing: a real no body.

Except for the franchise industry.

He is, in my opinion,  the most feared man in franchising.

Here he is listening to Susan Kezios in Toronto, Canada at the public hearings on March 6, 2000. Ms. Kezios was an expert witness brought in from the American Franchisee Association in Chicago, USA. Her testimony is here.

Martin got the Ontario government to pay to bring Susan in.

And here is Martin with Gillian Hadfield (expert witness testimony). Again, he got the government to bring her in from USC. How he got Bob Runciman to schedule 4 days of public hearings in the first place…well, that’s a great story!

Kezios, Hadfield, Martin: all three are the most successful and the 3 most feared people in franchising.

The winner is one who knows when to drop out in order to get in touch.

An administrator in a bureaucratic world is a man who can feel big by merging his non-entity in an abstraction. A real person in touch with real things inspires terror in him.

– Marshall McLuhan 1911 – 1980

Trust in franchising? What a concept

Two people I trust in franchising.

I need to check in with the second next month although everyone has their role to play.

• First expert witness, March 6, 2000, Toronto, Canada.

Resulted in the Arthur Wishart Act (Franchise Disclosure), 2000. Thanks to Bob Runciman who has gone onto his just reward.

BTW: This may be cryptic, but it is not unnecessarily so.

Some information requires care in transmitting and must be done in person. Words can hurt but iIf you don’t understand, that’s okay.

Trusting yourself enough to choose who to trust is 99% of the solution.

Sotos LLP: The McDonalds of CDN franchisee lawyers?

I have learned directly, personally, in-their-armpits relationships from the best in franchising.

Ted Gorski, McDonald’s, CollegePro Painters, Nutri-Lawn, Tony Martin, Canadian Imperial Bank of Commerce, Sam Grange, John Lorinc, Paul Herminston, Katherine Swinton, Canadian Franchise Association, Country Style, Gillian Hadfield, Michael Webster, Jay Harris, etc. They’re all brilliant in their areas of expertise.

When I got into a corner and thought I needed legal help I hired the best I couldn’t afford. John Sotos was my on-and-off-again lawyer from 1998 t0 2000 and I learned a great many things from John and his partner David Sterns. Both John and Michael told me to look at and talk to the banks. Oddly enough, the first lawyer I talked to about franchising in 1982 is now a Ontario Superior Court justice in Barrie. I like lawyers but they’ve got to cover their rent too, you know!

Many franchisees want to fight.

That’s good…and bad at the same time.

Many franchisees think in terms of black and white; now or never; us/them.

That’s good…and bad at the same time.

Many franchisees would rather choose a “white knight” professional instead of a group of franchisees plotting their own course.

That’s not good…and really, really horribly bad.

The McDonald’s U.S.A. president described his corporation as a real estate company with an interest in hamburgers. Let me repeat: McDonald’s is a landlord (to franchisees) with an interest in fast food.

I learned that the economics of modern litigation is very similar.

1. The franchise industry legal cash flows = 95% by franchisors,
2. Once the retainer is paid any consultants are shown the door (only one expert, please),
3. Franchisees are one-shot clients (v. repeat business for franchisors),
4. Disclosure laws are a God-send for billable hours, and
5. The industry has a very, very long memory for those that oppose it’s interests.

All lawyers are businesspeople that operate in a near-monopoly on certain words and concepts.

Learning these terms is not hard if you have (1) a learning tool and (2) a willingness to face some difficult facts.

Most let their emotions rule their decision making (ie. denial and fear) but in their defense, aren’t really conscious of doing so. They’ve been conditioned to be on their knees and look to Daddy for acceptance.

Education is the only way out.

WikidFranchise.org

Reza Solhi and 3 for 1 Pizza & Wings

Sean over at FranchisePick asked me if I knew of Mr. Solhi’s work.

• I do and
• I keep an eye on AnthonyFranchiseInformation.com, too

Please note the first 6 articles that the Information Sharing Project would return if it were alive on the internet (searched for tradename). Download the entire article if you like.

1. Frustrated franchisees call for legislation, The Globe and Mail, December 3, 1998 Excerpt from article: Jesu Dasan figures he lost $180,000 in the 20 months he operated a fast-food franchise in Scarborough, He alleges the franchisor changed the terms of the contract, which drastically reduced the number of homes his business was allowed to service. [download pdf]
2. Ontario introduces bill to protect franchisees, The Toronto Star, December 4, 1998 Excerpt from article: “Everything goes to (the chain) … These people cheat us and we’ve lost everything.”…Vahdati said she and her husband spent $100,000 on legal costs in a fruitless court fight against the pizza-chain owner. [download pdf]
3. New franchising  law called sales job: Ignores ongoing illicit practices, operator rep say, The Toronto Star, December 5, 1998 Excerpt from article: “This is the wooliest thing I’ve ever seen,”…Commercial Relations Minister Dave Tsubouchi “is just like one of the franchise hustlers,” said Stewart. “He’s selling an idea and there’s nothing in it.” [download pdf]
4. Franchise laws welcome, The Toronto Sun, December 8, 1998 Excerpt from article: “What a disappointment.”…“This law is worse than what exists now, which is nothing,” snapped Les Stewart, founder of the Canadian Alliance of Franchise Operators. “It will only lull potential entrepreneurs into a false sense of security.” [download pdf]
5. A declaration of war: breaking into the business, The desperation tactic of gaining entry to a locked business, known as ‘self-help’, is seen as an occasionally useful skill when relations hit a sour note., The Globe and Mail, January 13, 1999 Excerpt from article: Gaining entry to a locked business under cover of darkness isn’t taught in franchise manuals, but it’s a skill that both franchisees and franchisors occasionally find useful. [download pdf]
6. The great franchise trap, The Indo-Canadian Voice, January 15-27, 1999 Excerpt from article: The family lost $150,000 and sadly, the man who put his life’s savings on this scheme, is today on welfare…“These people need to be protected. It is mostly the new immigrants who fall victims to such schemes. And in Ontario, there is very little by way of laws that can protect them in times of dispute.” [download pdf]

Anyone know what happened to these franchisees who were mentioned in the articles?

• Wasim Ansari,
• Tarek Fatah,
• Rayappu Jesudasan [Jesu Dasan],
• Ali Mahmoudzadeh,
• Nhan Van Nguyen,
• Fereshteh Vahdati, or
• Ali Mehmood Zadeh

Or the other  people?

Richard Cunningham, John Deverell, Peter Macrae Dillon, Howard Hampton, Mike Harris, Murray Katzman, Linda Leatherdale, Ned Levitt, Tony Martin, Reza Solhi, John Southerst, David Sterns, David Tsubouchi, Dawn Walton

And these organizations?

Ministry of Consumer and Commercial Relations, Canadian Alliance of Franchise Operators, Canadian Franchise Association, 3 For 1 Pizza and Wings, McDonald’s, Tim Hortons, Golden Griddle,  Siskinds, Cromarty, Ivey & Dowler, Canadian Tire, 3 for 3 Pizza Ltd., Canada Post, Ontario New Democratic Party

The sympathetic Toronto lawyers are there to manage your anger. That’s their job for the industry: a soft landing, breeding passivity.

A franchisee white knight (the appearance of franchisee advocacy while acting to weaken franchisees’ rights; a traitor) lawyer:

• to ensure that learned helplessness infects the immigrant leaders by raising then dashing your hopes for justice.

No Canadian lawyer can survive financially by representing only franchisees. It is impossible. They HAVE to have to behave in an acceptable manner (don’t rock the boat) or the industry elite will not allow them to exist.

1. The appearance of an opposing position provides the pretense of industry balance to outsiders.
2. You are NOT protected by a lawyer’s theoretical fiduciary duty to a client when you talk to them initially. That protection is ONLY when you are in a solicitor:client relationship (a contract: agreement, money exchanged, etc.). Do NOT rely on his advice at this stage: He maybe protecting the industry’s interests (not yours).
3. Because law services are a credence good, you never know exactly how or when your interests were sold down the river.

The antidote to compromised legal representation is a knowledgeable second opinion (ie. a consultant who does not make his living from the industry). They’re rare but if you know where to look for them, they’re out there.

But I’m the most special of all:

I seldom charge anything for my advice to franchisees.

It’s my way of giving back to an industry that has given so much to me and my family over the last 10 years. Call today 1-705-737-4635 and let’s discuss if the lawyers or I was more accurate in predicting Ontario’s franchise industry’s degeneration from 1998 to 2008.

The Value of Knowing which questions to Ask

Frank Zaid is a Canadian lawyer with Osler, Hoskin & Harcourt LLP.

1. From his wikipedia page:

He has been listed as one of the leading franchise law practitioners in every published edition of the Canadian Legal Lexpert Directory, the Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada.

In the 2005 and 2006 editions of Who’s Who Legal Frank was ranked as one of the most highly regarded franchise lawyers in the world, and as the most highly nominated practitioner outside of the United States.

In the 2006 edition of the Lexpert Legal Directory he was ranked as the most frequently recommended franchise lawyer in Canada and Osler was ranked as one of the most consistently recommended major full service law firms in franchising.

Further under Professional Affiliations:

• American Bar Association (Forum on Franchising)
• Canadian Franchise Association (Past General Counsel and past member of the Executive Committee and Board of Directors)

2. Mr. Zaid gave testimony before the Standing Committee on Regulation and Private Members Bills of the Legislative Assembly of Ontario on March 6, 2000 in consideration of Bill 33, Franchise Disclosure Act on behalf of the business law section of the Canadian Bar Association. This bill resulted in Ontario’s first franchise law, Arthur Wishart Act (Franchise Disclosure), 2000.

The Acting Chair (Hon. George Smitherman) exercised his discretion in allowing additional time for questions. I know this because I was in the Committee room listening very carefully to Mr. Zaid. I had just come back from lunch with Susan Kezios and John Sotos.

This is an excerpt from the transcript.

The Acting Chair: We’ve got a few minutes left for questions. We’ll start with Tony Martin.

Questions

Mr Martin: Certainly, your presentation flies in the face of some of the information presented to us, particularly this morning by Susan Kezios from the American Franchisee Association, who suggests other than that franchisor systems flee states where there’s good legislation. I suggest that maybe bad franchisors flee, and who would argue against that?

Were you the counsel for the Pizza Pizza franchisor?

Mr Zaid: I was one of the counsels.

Mr Martin: Were you the counsel in the Bulk Barn case for the franchisor?

Mr Zaid: I’m involved in that.

Mr Martin: You’re not the person who sent out the letters of threat to anybody who would intervene in any way in terms of that action?

Mr Zaid: I’m not going to answer that question.

Mr Martin: OK, thanks.

The Acting Chair: Further questions? Seeing none, thank you very much for your presentation.

Full pdf download

The motto on the Legislature’s Coat of Arms, AUDI ALTERAM PARTEM, challenges the legislators to “Hear the Other Side.” Also note that the Mace (top and crossed on the Shield of Arms) is the traditional symbol of the authority of the Speaker of the Assembly.

Mr. Martin served as the Deputy Speaker of the House at that time. I had the great privilege of acting as a volunteer industry researcher to him.

NFC to AUS MPs: Contempt from the McContemptible?

The Franchise Council of Australia, FCA and it’s Chairman John O’Brien (CEO of PoolWerx Corporation, BTW), is right: Dead right.

• The NFC seems to be acting AS IF it were the nation’s pique franchising body.

When I observe the recent interplay between AUS federal politicians and the NFC (see Franchise Council hits back at critics), I get a little teary-eyed.

It just seems like old times.

I am reminded of how the Canadian Franchise Association, CFA, dealt with a provincial politician called Tony Martin, who has since moved onto federal politics.

They treated Mr. Martin with contempt.

Tony and I worked together from 1998 top 2001, trying to get the 1st franchise law for investors in the province of Ontario in Canada. We failed to get a decent one and everything has been frozen since. (see Arthur Wishart Act (Franchise Disclosure), 2000, especially S3 and it’s pathetic, and still undefined and unargued, good faith provisions).

What we did succeed at (and in spades I might add) is leave a very interesting paper trail. The Information Sharing Project has collected all of these tasty little documents. Think of it as a www, digital record of very some very stupid comments.

• Tony become the main irritant to the CFA. As an experienced parliamentarian and the Assistant Speaker of The Legislative Assembly of Ontario, Tony knew the ropes and we used every one of them.

As a example, please note Tony’s April 2000 press release below calling the Government of Ontario to investigate or “probe” the CFA.

Investigate Franchise Association Abuses: Martin
Tony Martin, MPP

April 4, 2000

TORONTO – The Consumer and Commercial Relations Ministry should investigate the Canadian Franchise Association over its failure to help Ontario franchise holders, NDP MPP Tony Martin said today.

The CFA is advising the Conservative government on proposed changes to provincial laws governing franchise agreements. But the association is under fire from hundreds of its own members for its indifference to their complaints, the NDP Critic for Consumer and Commercial Relations said in the Legislature today.

“The CFA has been of no help to many hundreds of entrepreneurs who lost their shirts in shoddy franchise deals,” Martin said. “Instead of taking the CFA’s advice this government should be sending in ministry staff to thoroughly investigate this association’s failures.”

Martin raised the case of Brenda Hope, a mother of two from Coldwater who lost $90,000 as a Chemwise Inc., franchisee. For more than a year, the CFA has refused to look into Hope’s complaints, although it endorsed Chemwise as a member.

Similarly, the CFA has refused to accept a registered letter from Bulk Barn franchisees who have a series of complaints against the franchisor. Martin was also refused when he tried to deliver the letter. The Sault Ste. Marie MPP called on Consumer and Commercial Affairs minister Bob Runciman to act now to protect small businesspeople.

“Perhaps the minister can convince the CFA to live up to its responsibilities to mediate franchise disputes. If he can’t, we need a full-scale probe of this group. It’s the least we can do for hard-working families who lose everything in dubious franchise deals,” Martin said.

The MPP has proposed his own legislation, Bill 35, that is far tougher than the government’s Bill 33. The Martin Franchise Bill would require full-disclosure of franchise contracts, a dispute resolution mechanism, the right to associate and the freedom to source products outside of the chain when not trademark related.

-30-

Information: Gil Hardy at (416) 325-7118 or Robin Cantin at (416) 325-7324
http://www.ontariondp.on.ca

Outlaw gag orders. Outlaw gag orders.

In the spring of 2000, a committee of the Ontario, Canada government held public hearings to see if there was a need for our first franchise law.

This was the stated reason. The real reason was the franchise industry wanted a weak law [McLaw] to bolster their shady reputation. Big Franchising gets what it wants from governments.

I gave expert witness testimony [.pdf] to the Standing Committee on Regulations and Private Bills. We had 4 full days of traveling hearings with about 40 witnesses in total.

I tagged along with the 13 provincial politicians as an unpaid industry resource ot a member, Mr. Tony Martin from Sault Ste Marie.

In the next little while, I will be bringing forward some of the testimonies that I found compelling.

I would encourage everyone in Australia to contribute to the national inquiry.

• When I was asked if I had one wish, what would I wish for. This is the answer I gave: Outlaw gag orders. Outlaw gag orders.

“Agreements” and Tactical Litigation

1. Confidentiality agreements are almost always coerced. In many cases, the value of any dispute settlement is largely in silencing the individual to avoid piling on [many other similar claims coming forward].
2. Franchisee dissenters are increasingly becoming the target for lawsuits designed simply to stop them from communicating [especially on the internet] by driving them into economic poverty.

I am not alone in thinking that silencing people is an evil independent of any other act. The greatest lies are told by those unable to speak.

Well has it been said that there is no grief like the grief which does not speak. Henry Wadsworth Longfellow

Servants should not only show a servile disposition, but it is quite as imperative that they should show a trained conformity to the canons of conspicuous subservience. Thorstein Veblen

All the powers in the universe are already ours. It is we who have put our hands before our eyes & cry that it is dark. Swami Vivekananda

If all mankind minus one were of one opinion, mankind would be no more justified in silencing that one person than he, if he had the power, would be justified in silencing mankind. John Stuart Mill

It is the nature of slavery to render its victims so abject that at last, fearing to be free, they multiply their own chains. You can liberate a freeman, but you cannot liberate a slave. Jawaharlal Nehru