Is it fair to force franchisees to prove that their franchisor has acted in “bad faith”?

No. Since 1971, there have been recommendations in Ontario that franchisors should have the burden of proof when challenged about acting unfairly.

Reverse the onus

The first one was by a retired Superior Court Justice and the next one a former partner to the actual Arthur Wishart, a lawyer from Sault Ste. Marie.

1. The Grange Report

MGCS

Legislative approach

(iii.) Contractual v. equitable approach

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.

Report of The Minister’s Committee on Franchising, The Honourable Arthur Wishart, W.C., M.P.P., Minister of Financial and Consumer Affairs by S. G. M. Grange, Q.C., June 1, 1971.

2. Public Hearing testimony

Wishart

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.

Mr. Gerald Nori, Wishart and Partners, March 7, 2000.

One of the greatest barriers is franchisee access to information.

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