Business can’t escape change
RON CHAPPLE / DREAMSTIME.COM
Franchisors
Continued From Page 14
the very public Pizza Pizza case,
887574 Ontario Inc. v. Pizza Pizza
Ltd., [1995] O.J. No. 936 (Ont.
Gen. Div.), a committee was established to look into the need for
franchising legislation—it was the
most thorough examination of the
issues to date in Ontario.
It is important to note in reading the committee’s report and in
future debates about franchise
legislation for Ontario that, for the
first time, the semblance of a franchisee lobby had taken shape as
well as the need for codification of
adequate disclosure from franchisors and a covenant of fair dealing in
franchise agreements. And so, after
much legislative machinations, in
2001 —30 years after the Grange
report—Ontario had its first law
governing the practices of franchising in the province.
We are fortunate in Canada
that the five provincial franchise
statutes—Alberta (which was the
very first), Manitoba, Ontario,
Prince Edward Island and New
Brunswick—are very similar. In
fact, compared with the fractured
franchise regulation in the U.S.,
Canada stands out as remarkably
homogeneous.
What keeps franchisors up at
night is the possibility that such
harmony is not forever and that
the remaining provinces will
buck this trend or that prov-
inces will change their legisla-
tion for something completely
different. The winds of change
are blowing through all legisla-
tive bodies everywhere in the
North America and beyond.
Unfortunately, whether dealing
with matters of finance regula-
tion, corporate accountability,
the environment or food safety,
changes in political philoso-
phies and governments can
bring challenges for franchisors
and their franchisees.
Demographics
What will be the consequences
of the baby boomer generation
reaching retirement at unprecedented numbers? How will the
shrinking birth rate in Canada
and changing ethnic mix affect
franchising?
For one thing, franchisors
might expect to see a lot of their
franchisees retiring shortly and
either passing their businesses
on to their children or selling to
new franchisees. At the other
end of the spectrum, there are
more young people unable to
find employment in their
chosen fields or deciding not to
invest in higher education and
instead choosing franchising as
a career path. Are franchisors
ready of this new breed of franchisees, with their different values and aspirations?
It doesn’t end there. The
changing ethnic mix of modern
Canada will challenge franchisors, including as to what products and services will have the
greatest appeal to the largest
number of people and how to
market to ethnic communities.
Legal
Unquestionably, with the
increase of franchise disclosure
legislation in Canada, has come
an increase in the numbers and
severity of lawsuits from unhappy
franchisees. With the willingness
of the courts to apply these statutes strictly and as remedial
legislation, they seem to be having the intended effect.
Hardly a month goes by without another class action lawsuit
being commenced against a significant franchisor. It still
remains to be seen if these lawsuits will be as scary as first
thought. To date, not a single trial
has been concluded in a class
action, only the hearing for certification as a class action. Up
until now, some franchisors,
either concerned about the veracity of the claims and/or the
negative publicity of these lawsuits, with their astronomical
monetary claims have chosen to
settle instead of fight.
Conclusion
There is a lot to keep franchisors up at night, but solutions will
be found to every problem and
challenge and the calming satisfaction that comes with success
will soothe their troubled minds.
The critical factors for success in
franchising are still the same:
skill, tenacity and character. n
Edward (Ned) Levitt is a senior
partner of Aird & Berlis LLP,
Toronto and chair of its franchise
law group.
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