Which is the most powerful and misunderstood provision of the most-feared franchise law in the world?

January 13, 2015

Section 4, Right to Associate, Ontario, Canada’s Arthur Wishart Act (Franchise Disclosure) 2000.

Charter of Rights

As sure as water flows downhill, this will lead to franchisee-led, not lawyer-thwarted:

  1. trademark-specific WordPress weblog (then a Wikidot.com wiki),
  2. small groups of franchisees commissioning research (sharing cost information),
  3. non-lawyer franchise expert coach consulting,
  4. an independent franchisee association (no franchise bar involvement),
  5. shared services, supply co-operative(s),
  6. non-franchise bar case preparation, and
  7. equity and gross margin protection.

The Right to Associate provision (the de facto CDN standard and what all franchisees in the world aspire to for justice) is one last conceptual obstacle preventing franchisees from taking their appropriate seat at the adult’s table.

Proof?: after 14-15 years, the CDN franchise bar has filtered each attempt to plead Right to Associate (trial and appeal), thereby, defeating the ON justices from activating its potential.

The ON Superior Court of Justice will make the link to Section 2 of the Canadian Charter of Rights and Freedoms.

ON Surperior Court of Justice

 


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


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

September 22, 2012

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 WikiFranchise.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.


For Canadian franchisees, there’s gold in the hills of unfair industry practices.

August 4, 2012

The Ontario courts have put real teeth into the Arthur Wishart Act (Franchise Disclosure), 2000.

Common industry practices are more and more being considered unfair or offensive to right to associate. The Justices are willing to award real cash to improve the vulnerable partys’ practical plan for improvement (proportionality), access to justice, and behaviour.

One example is timothy’s Coffees of the World Inc.: $50,000 award for franchisor’s breach of good faith duty. How many franchisees are in your system?

However, these claims must be mined, extracted and refined most usually within a functioning, patient independent franchisee association, IndFA.

Franchisees need outside, non-legal help to learn about these matters. IndFA leadership needs to be nurtured and supported in the next-to-unknown franchise power area. There is a role for the elite franchisee bar that’s developing in  Canada but the cannot develop franchisees from the ground-up. For sustainable gains, franchisees have to do it themselves (but with some help).

This is what IndFA  business consulting is all about.

To nurture efficient and effective franchisee-led collective gold mining through patient negotiation and litigation, if necessary.


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

July 25, 2012

QueensParkFour 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.

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


Hansard does not record standing ovations.

November 6, 2011

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


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

November 14, 2010

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


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