Franchisee organizations need legal standing in civil litigation

November 25, 2011

It’s only fair to both sides and will stop the continuing carnage.

Independent franchisee associations, IndFA and their consultants should be treated as if they were individuals within a franchise agreement.

  • Franchisors’ corporations get to accumulate over decades information, expertise and capital.
  • Franchisees should have the same advantages by building their own IndFA and contracting with a consulting firm that specializes in leadership development,  conflict resolution and system reform.

Dr. Gillian Hadfield: Amend the Bill to include mechanisms for low cost enforcement of the rights and obligations. Mechanism could include permitting franchise association/class standing in civil litigation; dispute resolution mechanisms including mediation that would operate outside the civil litigation system.  SUMMARY OF RECOMMENDATIONS, BILL 33 – Franchise Disclosure Act, 1999, Legislative Assembly of Ontario, Canada, March 31, 2000

Justice, Plaster model created by Walter Allward between 1925 and 1930 and used by stonemasons in the construction of the Vimy Memorial in France. The figure of Justice leans her forehead against a sword hilt.

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Opposition to Australian state lawmaking exorcizes industry puppets

November 18, 2010

The sky will fall if you legislate, cry those that profit from no change.

“And we’ll boycott any jurisdiction that tries,” is the implied threat.

For a more thoughtful approach, see Classic federal-state battle reaching ultimate showdown by Chalpat Sonti who asks:

Why wouldn’t good franchisors want to set up in states where prospects are confident enough to invest their money and feel protected?

— Thanks for the fuzzy monsters, From Outer Space


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

October 31, 2010

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.


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

September 29, 2010

EPSON scanner Image

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

The case for repealing disclosure laws

September 25, 2010

Any law exists because those most able to compete for it goes to the political process and wins.

This is how the Ontario franchsie law went in 2000. I was there.

Everyone’s interests were served very well, except the powerless: mom-and-pop franchise investors.

Sure a few attorneys were made multi-millionaires (continue to blackball, block and betray sincere advocates), the franchise bar has reached record numbers (God love those disclosure document revisions!) while the 2nd-worst-chumps, the false protagonists (the franchisors) got  a short-term sales bump but their reputation continues to nose dive.

On any legitimate public policy level, the Arthur Wishart Act is a complete and total failure.

But as a way to launder mom-and-pop life savings via dim-witted franchisors?

Priceless to the true champions of tyranny (the franchise bar legal elite).


Does the Wishart Act belong only to the franchise bar?

March 28, 2010

I went to a terrific franchise law meeting in Toronto.

Met some really smart and charming young lawyers.

Sure there are some dinosaurs around but they just reveal themselves for what they are.

No need to shout or leap about.

Room enough for everybody.


Is your paper boy a franchisee?

January 6, 2010

Maybe yes, Maybe no.

Maybe not the urchin on the street but maybe those that deliver his papers to him.

My understanding is that there are 3 types of legal business relationships in Ontario:

  1. employee:employer,
  2. independent contractor and
  3. franchisee:franchisor.

It seems everyone is happy to consider them as independent contractors but I’m not so sure.

The Ontario Wishart Act defines a “franchise” (at a minimum, based on the U.S. FTC Rule) as having 3 elements:

  1. franchisees make direct or indirect payments to a franchisor (very, very broadly defined),
  2. the distributed good or service is “substantially associated” to the franchisor’s trade- or service-mark and
  3. the franchisor exercises “significant control” or assistance over the offered business opportunity.

Humm…seems like someone could claim that this commercial relationship is in reality and in practice, a franchise and not an independent contracting arrangement.

No one that I’m aware has asked an Ontario court or labour tribunal to determine what actually is and is not a franchise since Wishart was passed in 2000. I’d hate to think that the owners of Canada’s major newspapers are failing to write honestly about franchising because they may have become “accidental franchisors“.

This is an excellent article by Thomas M. Pitgegoff on the topic of these “hidden” franchises.

A clever card trick:

“professional” journalists stop writing about franchise abuses (after the jurisdiction’s 1st toothless law is passed) because they don’t want to draw attention to the fact that their own distributors are now unintentionally franchisees — a secret which would be an expensive hit to an already dying industry.

They talk about an “iron curtain” between the editorial and business sides of newspapers. This is, again, much more of a theory than a practice especially when high levels of corporate concentration, plummeting ad revenue and vertical integration are considered. Franchising is almost never written about now in anything other than an advertorial manner in Canada’s elite daily newspapers (eg. Toronto Star, Globe and Mail and Natinal Post) since Wishart was passed in 2000.

The underlying abuse has not been solved:

Accurate reporting is almost extinct except by non-professional journalists in the new media.

I continue to send out news ideas, run WikidFranchise and continue only to be interviewed by American journalists.

No wonder only fools as I read these papers anymore.

Too bad.


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