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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