What is the Canadian Franchise Association doing to protect the 1,100 CDN franchisees and 96,000 employees at Tim Hortons?

February 1, 2015

The Canadian Franchise Association says it …advocates on behalf of franchisors and franchisees in Canada

CFA

Tim Hortons is a member of the CFA. The CFA’s Code of Ethics says that their members’ should treat each other with fairness.

Tony Martin former ON MPP and MP made certain recommendations from his experiences during the public hearings which led to Ontario’s 1st franchise law.

News Release
April 4, 2000

Investigate Franchise Association Abuses: Martin

Tony Martin, MPP

Tony Martin, MPP, Sault Ste. Marie
New Democratic Party
News Release
Legislative Assembly of Ontario, Canada

INVESTIGATE FRANCHISE ASSOCIATION ABUSES: MARTIN

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.

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Also: Martin’s questions directed to the CFA during their Mar 2000 expert witness testimony.

Source

CFA National Sponsors


How long will CDN organized labour & the NDP fiddle while 96,000 Tim Hortons franchisees’ staff and management burn?

January 31, 2015

Makes a citizen democrat want to burn up his orange card.

ndp card

How about the nearly 1,100,000 other Canadian employees/families that work in franchised outlets?

Don’t the union and NDP brainiacs understand that 3G Capital will be forcing the franchisees to do their dirty work by laying off tens of thousands of their hourly and managers, many of them personal friends? Hello: jacking up franchisees cost of goods to +32%, driving their “equity” into the red, makes layoffs inevitable.

Franchisees dislike unions true. But the fear and loathing for the vulture capitalists is profound, notwithstanding the company-man, shill franchisees.

Smart, silent current franchisees know the sewer they’re being sent into: Country Style, Second Cup, Coffee Time, Bakers’ Dozen, etc.

Franchise Industry Statistics, 1998

  • Number of Employees: Ontario 400,000 to 600,000 (Canada 760,000 – 1,140,000)
  • Annual Retail Sales: Ontario $45 to 50 billion (Canada $90 billion)
  • Number of Franchisees: Ontario 40,000 (Canada 76,000)
  • Total Investments: Ontario $2 to 8 billion (Canada $3.8 – 15.2 billion)
  • Number of Franchisors: Ontario 500 (Canada 1,300)
  • Franchised Retail Sales (% of Total Retail): 40
  • Number of new lawsuits per year in the Ontario Franchise Industry: 5,000 Ontario Government

I’d like to know:

  1. How many NDP executive positions in joint provincial/federal ridings (Simcoe Grey and Barrie-Springwater-Oro-Medonte) do I have to volunteer/toy with to get an audience from the ON NDP? Monthly payer?
  2. Maybe Ms. Nash MP should ask Charlie Angus ($15 per hour minimum wage?) about the work that Tony Martin former MPP and MP and I did,
  3. Or maybe Mr. Singh and Ms. Horwath need to check their egos and start bragging about what the entire Hampton caucus did to get Ontario’s 1st franchise law and the de facto Canada-wide statute after 30 years of all-party broken promises?
  4. Maybe check with the Fightfor15.org people to find out why they are very, very interested in knowing more about franchising?
  5. btw: McDonald’s (franchisor and franchisees) has just been fined by the U.S. National Labor Relations Board because they judge McDonald’s as a “joint employer” (see here, here).

Full Disclosure: I was a franchisee (twice), studied poli sci, a member of the Teamsters’ union, and continue to be viewed as a “union organizer” by franchisors and their toadies.

Based on the theory that your enemy’s enemy, is your friend, you’d think it’d be Palm Sunday for Mr. Stewart and the Canadian Alliance of Franchise Operators rather than a type of amateur hour.

Kathleen Wynne Les Stewart

With friends like this, it almost makes a guy see red.

Dale Carnegie moment: Of course, saying you care about the lost jobs is a lot easier than having to co-operate with people that have, like, technical knowledge of the most sophisticated form of international commerce: business format franchising.


The Canadian Alliance of Franchise Operators, CAFO

November 26, 2014

We created CAFO in 1998 to give voice to “mom-and-pop” franchise operators.

cafo_smvlogo

We were the 1st association in Canada to improve the commercial interests of 76,000 franchise families because:

  • there was no Ontario law,
  • there was no one for journalists to talk to,
  • there was no one for politicians to learn from,
  • there was no FranchiseFool.com and WikiFranchise.org, or and
  • there was nothing to protect the “little guys”.

And more importantly, there was no where for franchisees to talk confidentially with someone they could trust.

In 2014, heading into the 15th anniversary of the Arthur Wishart Act (Franchise Disclosure), there are a lot of alternatives if franchisees wish to use them. (call: 705-737-4635)

This is one of the first articles (Sept 1998) in the Toronto Star called, Franchisees need fair-deal law:

LesStewartFRANCHISEE FIGHTER: Former franchisee Les Stewart has taken up the cause of franchisees.

WHAT PROTECTS A SMALL FRANCHISEE IN ONTARIO AGAINST UNFAIR DEALING BY THE FRANCHISOR CONTROLLING THE SYSTEM?

We asked Les Stewart, a landscaping supplies retailer in Barrie and a former franchisee and founder of the fledgling Canadian Association of Franchise Operators. (second of two parts)

Franchising is a $100 billion sector and a powerful concept of business organization. Many of Canada’s 76,000 franchise operators make a good buck.

But others, like Stewart, an MBA from the University of Western Ontario in London, have sad stories about being put into failing situations by deceptive franchisors, stripped of their savings and crushed by the costs of litigation in Ontario’s totally unregulated franchising regime.

Everyone warns prospective franchisees to investigate before investing, but exactly how are they supposed to check out the records of the 1,350 franchisors who want to sell them a business? Which are exemplary, which have reasonable standards of conduct, and which are practicing legalized fraud?

The best approach is to talk to franchisees in the system to find out whether head office delivers the business training and support it promises, and respects the commercial territories it purports to sell.

Unfortunately, there is no efficient way to identify and then locate those who have the most interesting tale to tell – the franchisees who failed. How many of these unfortunates have been spat out by each franchise system, who are they and why did they sell or go under?

Most U.S. states addressed this question with law decades ago, and Alberta adopted a similar standard in the 1990s. They require public disclosure of contract terms and verifiable disclosure of franchisee experience.

The laws cover all franchisors from mighty McDonald’s and across a business gamut that includes, among many others, such familiar names as Coffee Time, Mr. Sub, Mr. Lube, Giant Tiger, Mail Boxes Etc., First Choice Haircutters, Medichair, M&M Meat, Kiddie Kobbler, One Hour Motophoto, Ramada, Rent-a-Wreck, Ryan’s Quality Pet Foods, Shred-It, Servicemaster Lawn Care and about 1,340 others.

Ontario should have the disclosure Alberta has – and more, Stewart says. The law should allow franchisees to associate without fear of reprisal, and fact-finding to resolve disputes or affordable compulsory arbitration.

Any franchisee can go to court, says Stewart, but it’s no fun playing David to a franchisor’s Goliath in long and costly civil proceedings.

In Ontario, the Harris government’s draft legislation does not provide for a central registry of franchisor disclosures, and requires only that disclosure be made to a franchisee prospect before a contract is signed.

That’s essentially worthless, says Stewart. He says Queen’s Park should recognize franchising as an important function like banking or securities trading.

mike bear-webA little older with a unique background to bring to the table.

Still willing to talk to franchisees and their families.

Les Stewart Consulting: les.j.stewart@gmail.com


$50,000 franchisee award: mental distress caused by the franchisor’s bad faith dealings

November 19, 2010

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:

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]


Fear mongering begins in Ontario Wishart Act proposed change

November 11, 2010

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 WikiFranchise.org, Risk #12 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


The Grange franchise investigation stands the test of time

November 2, 2010

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


Reverse the onus on good faith

October 8, 2010

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?


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