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

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Affordable, early and non-court dispute resolution: The identity already exists

November 1, 2010

In 1998, I was asked to create a corporate identity (see letter).

The purpose was to move from a temporary working group, chaired by the Ontario government (Franchise Sector Working Team, 1996-2000?)…

…to a permanent mediation function (non-court dispute resolution process)…

..that would be housed within a national, franchisee/franchisor/banking sector run self-regulatory agency:

  • National Franchise Council of Canada.

And here.

This never got off the ground for several reasons. But it was not for the lack of franchisee effort. The Canadian Alliance of Franchise Operators stopped in 2005 (lack of revenue).

After 11 years, the need has never been greater.

There is, until now, no economic market to  support it..


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.


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