Mr Gilles Bisson (Timmins-James Bay / -Timmins-Baie James
ND)
Mrs Claudette Boyer (Ottawa-Vanier L)
Mr Brian Coburn (Carleton-Gloucester PC)
Mr Garfield Dunlop (Simcoe North / -Nord PC)
Mr Raminder Gill (Bramalea-Gore-Malton-Springdale PC)
Mr Pat Hoy (Chatham-Kent Essex L)
Ms Frances Lankin (Beaches-East York ND)
Mr Bill Murdoch (Bruce-Grey PC)
Substitutions / Membres remplaçants
Mr Mike Colle (Eglinton-Lawrence L)
Mr Steve Gilchrist (Scarborough East / -Est PC)
Mr Tony Martin (Sault Ste Marie ND)
Mr John O'Toole (Durham PC)
Clerk / Greffière
Ms Anne Stokes
Staff / Personnel
Mr Michael Wood, legislative counsel
The committee met at 1011 in committee room
1.
FRANCHISE DISCLOSURE ACT, 1999 / LOI DE 1999 SUR LA
DIVULGATION RELATIVE AUX FRANCHISES
Consideration of Bill 33, An
Act to require fair dealing between parties to franchise
agreements, to ensure that franchisees have the right to
associate and to impose disclosure obligations on
franchisors / Projet de loi 33, Loi obligeant les parties
aux contrats de franchisage à agir équitablement,
garantissant le droit d'association aux franchisés et
imposant des obligations en matière de divulgation aux
franchiseurs.
The Chair (Ms Frances
Lankin): I call the meeting to order, please. We are
here to deal with Bill 33, An Act to require fair dealing between
parties to franchise agreements, to ensure that franchisees have
the right to associate and to impose disclosure obligations on
franchisors. Today we are gathered for clause-by-clause
consideration.
Mr Tony Martin (Sault
Ste Marie): I move a 10-minute recess.
The Chair:
There has been a motion for a 10-minute recess. All those in
favour, please indicate. Opposed? Agreed. Thank you. We will
recess for 10 minutes.
The committee recessed
from 1012 to 1023.
The Chair: I
call the meeting to order. Again, we are convened to deal with
clause-by-clause consideration of Bill 33.
Mr John O'Toole
(Durham): Chair, if I may, I would like to move that we
go in camera for about three or four minutes so Mr Martin can
explain how we got to this point in the consideration of
clause-by-clause for the edification of all the members of the
committee, so we know we are starting from, and we can go through
it I think a little more expeditiously. I would default to Mr
Martin if he has a comment on that.
The Chair:
There is a motion by Mr O'Toole to take the committee in camera.
Is there any debate of that motion? Seeing none, all those in
favour, please indicate. Thank you. Passed unanimously.
We will now go in camera.
The committee continued
in closed session from 1024 to 1035.
The Chair:
The committee is back in session. If I may, I'm seeking agreement
from the committee members that we commence with a process of up
to 10 minutes from each caucus for statements.
Mr O'Toole:
Madam Chair, if I may, just for the members of the committee, I'd
like to introduce the members of staff who are with us to help
answer any difficult technical questions. On my immediate left
are Joseph Hoffman, who is the director of policy, I believe, and
Bonni Harden. Backing up the whole team is Terry Irwin. They're
here as a resource. With that, thank you.
The Chair:
Did we get everybody on record?
Mr O'Toole:
Pardon me: and Allan Williams. I apologize, Allan. I looked
before and I thought you'd left.
The Chair: I
didn't want you to feel left out, that's all.
Mr O'Toole:
Allan was hiding at the end.
The Chair:
Welcome, and our thanks again to the ministry staff.
There is agreement from
members of the committee that we will commence today's session
with statements of up to 10 minutes in length from each of the
three caucuses. Mr Martin, would you like to begin?
Mr Martin:
Yes. In the spirit of the co-operative nature of this venture, I
want to thank everybody for their efforts to date, particularly
Allan Williams for being so helpful.
Having said that, I have to
put on the record today my disappointment that we haven't been
able to achieve more than will be obvious as this session
unfolds.
We travelled the province for
the four days, and I want to recognize that was by the
co-operative support by all three caucuses in this place,
particularly the government. They could have chosen not to do
that. They could have chosen to have a day of hearing in Toronto
and then get on with business. They could have chosen not to
travel, but they chose to travel, and I recognize that. It's
because of some moves of that sort that I am willing today, as
will become obvious, to agree to some changes to Bill 33. That
gives me some relief in terms of my concern and in terms of
trying to respond to some of the things we heard as we travelled
the province.
I think it was important that
we got out to the various places that we did-Sault Ste Marie,
Ottawa, London-so that we might hear from folks. I've said before
that it took some degree of courage on the part of some of the
people to come forward and share their stories and tell us some
of the things they did, because it put them in some jeopardy. We
will never understand how much jeopardy it put them in. We will never understand what the
feedback has been to them because of the action they took in
order to participate in the democratic process, in helping us as
government to try to put together a regulatory regime that will
govern that sector of industry that is becoming ever more
important as the amount of business done in this way
increases.
It was really important that
we do that and, in doing so, that we educate people around the
issue of franchising and some of the difficulties and challenges
that are there. Franchising often presents as an easy turnkey.
You just come in, follow the formula, make your investment, do
the work and make money, when in fact it's not as simple as that.
It's as sophisticated as any business operation out there, as
difficult and challenging as any business set-up. In some
instances, if you are to believe some of the research that has
been done, and there's no reason in my mind why we wouldn't,
franchising can present as even more difficult in some instances
than getting into a traditional regular or small business
start-up and operation.
1040
It was really important that
we get out there and share with the province the concerns that
were raised. Brought to the committee during those hearings were
not only the stories of the people who came forward, but a raft
of research that was done by the Canadian Alliance of Franchise
Operators and one Les Stewart to compile two huge volumes of
information that he gleaned from the media, stories that have
been written over a period of five to 10 years about franchisees
who got into some difficulty with their franchisors, sometimes
relating how it turned out and sometimes simply relating the
circumstances surrounding those stories. It reflected the very
difficult stories of a significant number of families in this
province who have been very negatively affected by getting into
franchising arrangements to protect their future and investment
or to do something with a severance package they may have
received.
This brings me to the next
point I want to make. Not only is franchising evolving and
growing in the province, but as life changes more and more in
Ontario, à la the way we do business, more and more people,
particularly middle-aged to older workers, are finding themselves
out of work as restructuring happens. I use as an example the
closing down of the brewing plant in Barrie. Some folks there,
because they negotiated it and actually had a work stoppage at
one point, will be given a fairly good severance package, and
they will be looking around to invest in something. I think we as
legislators want to make sure that whatever they invest in-if
they do the work and are willing to follow through on the
commitment they make by way of the agreement they sign-they have
every chance of being successful and being able to contribute to
the economy of this province as it unfolds.
In my view, we are at an
important juncture today. Finally we have a bill before us that
is going to be passed. Legislation was recommended 30 years ago
in the Grange report under the able leadership of Arthur Wishart,
who was my predecessor as MPP for Sault Ste Marie. Subsequent
governments have looked at this. The government I was part of
from 1990 to 1995 established a working team, the report of that
working team was ultimately delivered to the present government,
and here we are today considering the result of all that
work.
Bill 33 was identified by a
number of presenters during the hearings as not going far enough,
as not having teeth to it. As a matter of fact, it was referred
to by some people, including myself, as perhaps worse than not
having legislation at all if it was simply left as it stood. So I
am happy to report today that some amendments have been proposed
by the government that I think will put some baby teeth into the
act, which hopefully will grow in time. As we around this place
consider the evolution of things once this bill is put in place
and people begin to work with it, hopefully we will nurture and
nourish the growth of those teeth so that people will be
protected and encouraged and have every chance of being
successful in the franchising they decide to do.
Having said that, it really
doesn't go nearly far enough as far as I'm concerned. The
government was obviously not willing to move from simply a
disclosure and right-to-associate piece of legislation. That
became obvious to me through the hearings and in the discussions
I had with government over the last couple of weeks as we moved
toward trying to come to some co-operative, all-party agreement
on what we would move into the House with in terms of amendments
and ultimately a package we would present for approval or
non-approval.
I pointed to three areas, out
of myriad areas we could have looked at, that I needed some
reference to in the bill if I was going to be agreeable to moving
expeditiously on this so that we might get it through the House
before the end of June. They were in the area of a vehicle
government would set up or facilitate, perhaps using the
securities commission to accept disclosure statements so they
could be vetted and prospective franchisees could feel confident
that somebody other than themselves was looking at these things
and making sure that everything in them and the people who are
delivering them and who stand behind them and who ultimately will
be in partnership with them are bona fide and above-board and, if
they're not, that those things are pointed out to them, not
unlike what happens now in terms of offerings on the stock
market.
If you remember, for a long
time that was a sort of freewheeling, casino type of operation
where you went in with your money and could win or lose depending
on a lot of things you had no control over. Franchising in this
province, without any regulation or legislation, is a lot like
that right now. As a matter of fact, franchising in Ontario is
referred to by a lot of our US neighbours as the Wild West.
There were a number of things
I thought were important, if we weren't going to move to
regulating the relationship, that in some way needed to be in,
and that was one of them.
The other two were some significant movement in the area of the
need for dispute resolution, so that people don't have to go
further into debt or into bankruptcy to prove their case in
court, and also some movement in the area of the issue of
sourcing goods and services, to give franchisees the right to
source where it's not a trademark issue and, in doing that, to
assist local economies and local producers to get their goods
into the market.
The agreement we've come up
with is that at least two of those three things will be
referenced in regulation under the disclosure part of the
legislation. As I said, even though they don't go far enough, I
hope they will be helpful in the end. Only time will tell whether
that is the case. So the sourcing of both goods and services will
be included under regulation, under the piece of legislation
dealing with disclosure, as also will be a piece on the issue of
dispute resolution and some mechanism that should be or could be
in place when we get to that.
The Chair:
Could you wrap up, please.
Mr Martin:
Could I ask for unanimous consent for a couple of minutes more?
This is really important to me, and I don't have much more to
say. I just need to say what I have to say.
The Chair:
Is there unanimous consent to add a couple of minutes?
Agreed.
Mr Martin: I
appreciate that.
The government has agreed to
include me in the discussion on the development of regulations
and the ultimate imposition of regulations, which gives me some
comfort that I won't wake up one day to find out that regulations
are passed and some of the things we have agreed to around this
table are not included. I have both the commitment of the
minister, because I met with him on this, and the minister's
staff, Mr Williams, and I have the commitment of the civil
servants, Mr Hoffman and Ms Harden, that every effort is going to
be made to include the pieces we agreed to in discussion and that
we may attempt to make it even better-go further and do something
that might be even more helpful in the end.
1050
The changes that we've agreed
on, just to put them on the record, are: a statement informing
the prospective franchisee that the cost of goods and services
acquired under the franchise contract may not correspond to the
lowest cost of goods or services available in the marketplace.
There will also then be another statement regarding volume
rebates in regulation under information on the franchise offer
which will call on the franchisor to state whether or not the
franchisor or its associate receives any rebates, commissions,
payments or other benefits from vendors as a result of purchases
of goods or services by franchisees, including specific
information on franchisees' buying, inventory obligations,
restrictions and terms. There's a commitment as well on that
piece to perhaps go even further in defining exactly what kinds
of rebates or commissions or payments would be realized by the
franchisor in relationship with the franchisee in that
instance.
I'm happy that we're going to
be looking at that and hopefully taking that further, and by both
of those, hopefully running up a red light for potential
franchisees that they really need to look at this very closely
and scrutinize it, recognizing that this piece will not do what I
had hoped we would be able to do in this round of legislation,
which is to move to including in this bill something similar to
section 5 of my bill, Bill 35, which would have given
franchisees, even the ones existing now, who are actually the
ones under the most stress at the moment regarding this issue,
the right to source product wherever they could get it, as long
as it wasn't a trademark-related issue.
We're not going there, we're
not doing that, and because of that, there are going to be a
whole lot of small business folks out there today, tomorrow and
over the next while who will be quite disappointed, because they
came forward and took a great chance in coming forward,
particularly a number of them in the grocery industry, if you
remember, to share with us the limited opportunity they have to
enhance their potential to make sure that their operation is
profitable and to actually participate actively in the local
economy, supporting local producers, so that they and everybody,
in turn, might do better. The reference in this legislation to
that issue in regulation will not do anything for them, will not
relieve them in any significant way re that whole problem and
that whole issue.
However, having said that,
and recognizing that some of this is activity that is actually
governed by the federal government under the Competitions Act,
the Competition Bureau, the government has agreed, through the
influence and input and encouragement of both opposition parties,
to send a letter to Mr Manley, the minister responsible for the
Competition Act at the federal government, requesting that he
meet with us so that we might share with him in this exercise
they're going through now to make amendments to the Competition
Act that might cover this area, and perhaps in that way give some
of these folks the relief they're asking for and so desperately
need if they're going to be successful themselves and if they're
going to be allowed to participate in the way they want in the
local economies surrounding or in the communities where they
live.
So I am again thankful that
the government has agreed with us to bring that forward to the
federal government so that we might have it addressed. It's
something we were able to do at this table, I think, because we
were dealing with this bill at first reading as opposed to second
reading, which gave us a bit more latitude as to some things we
might suggest and want to, together, promote or have happen. I
think that's something we can hang our hat on a little bit in
terms of something we have done that was different and new and
perhaps for the first time, which will set a bit of a precedent
for this Legislature and hopefully will in the end be helpful to
a whole lot of small business people in this province who are
looking to us for some much-needed relief at the moment.
The other thing that I had
some very serious concern about of course was the issue of the
dispute resolution mechanism. There are two pieces committed to by
the minister and the government that they're willing to put in
the regulation which I think will be helpful, at least in running
up again a bit of a warning sign to potential franchisees to
further look into this and make sure that when they sign the
agreement there is something there that speaks to resolution of
disputes, because I think it's central and so very important. The
government has committed to "a statement describing mediation or
other alternative dispute resolution processes as a voluntary
attempt to resolve disputes with the assistance of a mutually
agreed upon independent third party." That's a new piece in the
regulatory regime that the government was considering doing, had
we not had the discussions that we had.
They have also added a new
piece to a second section there, which says, "A statement
describing any internal or external mediation or other dispute
resolution processes utilized by the franchisor and a brief
description of the circumstances under which the process is
utilized." Then it goes on, and this is the new addition: "A
statement indicating that either party may propose mediation to
the other party," in order to facilitate or to encourage that to
actually happen.
So at least it's referenced
and at least there's some indication to the franchisee that
there's a need for this to be in place as they sit down at the
table, hopefully with their lawyers, to sign these documents.
There's also in this some encouragement to both parties to
actually move to that kind of resolution of difficulty before
considering the very costly and difficult process of going
through the courts. So that's another piece that I think is
really important.
The Chair:
Mr Martin, if I could just indicate we're approaching the end of
the second 10-minute period now.
Mr Martin:
OK, thank you. There are a couple of other things in here that I
think are important that were issues raised by the presenters as
we went around the province. I think we can be satisfied and
happy that at least they're in there. One is under information on
the franchise offer, a need for a definition of conditions of
termination, renewal and transfer of franchise. There were a
number of franchisees, particularly those who have already been
terminated and who are out there now trying to do other things,
who in looking back on their experience would have liked to have
had some reference in their agreement to conditions of
termination, renewal and transfer of franchise before they
actually got into it, as opposed to 10 years down the road when
that actual event came up.
There's some reference as
well to the need for training and other assistance programs
presented by the franchisor, and also a need to define further
things like the advertising fund; for example, the portion of
funds spent on administrative costs, national campaigns and local
advertising and how that balances out and what contribution that
will make to the actual success of the franchisee.
The other piece and the last
piece I will speak to this afternoon is a commitment by the
government to include under the fair dealing section of the act a
reference to "commercial reasonableness" in defining fair
dealing, something a number of people that I have faith in
indicated was necessary if they were going to have some chance of
success in proving somebody has been wronged in court. In their
view simply putting "fair dealing" was too big, too wide, too
prone to interpretation of various sorts. "Commercially
reasonable" or "commercial reasonableness," according to them,
will tighten that up and make it more useful and helpful in the
long run.
Having said all that, I want
to thank everybody for their patience and understanding. I'll be
looking forward to taking what we have agreed on here today into
the House so that myself and Mme Boyer and Mr Colle and others
might have some fuller opportunity in second reading debate to
put on the record some further thoughts and comments re this
piece of legislation and particularly how we are still
disappointed that it hasn't gone further and that the government
hasn't seen it within their purview, at this point in time, to
move to actually regulating the relationship, which I still think
is absolutely necessary if we're going to respond in any way that
respects and honours the stories we heard those four days as we
went through public hearings across this province.
1100
Mrs Claudette Boyer
(Ottawa-Vanier): I'll try not to take my 10 minutes.
Tony has taken 10 minutes, and I will not repeat what he has
said, which I agree with. First of all, I thank the government
for having met with Tony, who gave his concerns. My party goes
along with the concerns he brought.
Of course, during all the
presentations and testimonies and the tour that we did we were
all made aware of the difficulties encountered by many who have
been involved with franchises. The number of presentations, like
Tony said, did bring up that there is a serious problem, and I
think this bill is needed.
We were always saying the
current bill is lacking teeth. Maybe with these amendments the
government is ready to put forward the teeth may be sharper. But
I think we still had a few amendments that we would have liked to
bring in, because the Liberal amendments to this bill were an
attempt to fix the bill so it would have sharper teeth and
address the concerns of all the people we met while we were on
the tour.
Of course, we would have
liked the complaints commissioner to be set up. The franchise
registry was also very important to us. I'm grateful that the
dispute resolution mechanism has been looked into a little
further, just like the fair dealing.
I repeat that this bill is
not what we were really looking at, but if this is a needed bill
and if people outside are waiting to have something to debate-and
like Tony was saying, there are a lot of court cases which can't
move on because there's no legislation that will back this-I'm
happy to say that the Liberal Party is glad to be co-operative to
have this bill pass second reading as soon as possible. But we
will still bring in what we would have liked during the second reading. We
will have a chance to bring in what we really thought would have
been sharper, and we will have the amendments that we should have
brought in.
I thank the government again
for their goodwill and the recognition that something has to be
brought in as soon as possible. Maybe this bill is better than
nothing. It is a start. I will take this opportunity to say that
the Liberals are ready to withdraw their amendments so that we
can go clause-by-clause and go along with the government
amendments.
Mr O'Toole:
I'll be brief as well-I appreciate that-and also give other
members a chance to make comments if they wish. I have prepared
remarks that I will read. I want to start by saying how pleased I
am at this point in what has been a very successful and very
useful process. We've taken the time, I believe, to do the right
thing.
I think you have to look back
at the original intention of the ministry, which was to deal with
an upgrade or update of the franchise legislation in three
specific areas. We are all familiar with them, but for the
record: disclosure, fair dealing and the right to associate.
The committee has heard a
number of very important and insightful observations during our
deliberations and tours. I'd like to thank all the participants
for that. We're at a point where there seems to be a meeting of
minds, and hopefully we'll have unanimous consent. That has
always been the goal of the government and I think most members
of the committee. We also realize that every piece of legislation
there is may not go far enough, but I think we've achieved
something very positive for the franchise sector, and this bill
and the amendments will move us a great deal forward. It is a
balanced package that will benefit franchisees, franchisors and
small business, a very important part of the economy of
Ontario.
I'd like to recognize the
co-operation, goodwill and efforts on everyone's part to this
point, with special mention of course of MPP Tony Martin and his
assistant, Les Stewart. I thought he was a paid staff member at
some point but I later found out he wasn't, but I'm still not
convinced.
I'd like to thank everyone
for their efforts and diligence. This has been a very interesting
and informative process for me. It's a very complex area of
partnerships and relationships, and it's in everyone's interest,
especially the franchisees, to get through clause-by-clause and
get the bill back into the House and passed so that we can turn
our attention to the regulations. Mr Martin has assured us there
is a schedule here, which would be submitted in some form, I
believe.
In everything I've seen and
heard, it never exempts either party from due diligence in the
process. You can't legislate against stupidity. That's really
what it comes down to. No one forces anyone to do that, to put
their money out. I don't want to get into the debate. I think
with goodwill here we can also deal with these amendments rather
expeditiously. There are a lot of words on this on the record,
and we've taken the time to do that.
I would like to take a
special chance to thank Minister Runciman for allowing this
process and the House itself for looking at a first-reading bill
that could expeditiously be moved through, hopefully by the end
of this particular session.
I would also like to thank
the committee clerk and staff for their understanding. I know the
clerk has had to make some unusual arrangements from time to time
to accommodate each one of us, and me specifically perhaps.
Ministry staff has been hard-working and focused in this
exercise; Mr Hoffman, Ms Harden and Terry Irwin have been
available and I think responsive.
I'd also like to thank the
working team members, for the record. They have really
participated actively in this process to achieve everyone's
desire to move forward with updated franchise sector legislation.
With that, those are my comments.
Mr Raminder Gill
(Bramalea-Gore-Malton-Springdale): Echoing my
colleague's comments, I also want to thank everyone for allowing
the opportunity for all of us as a committee to travel across the
province, because I think, as Mr Martin mentioned, we could have
taken a high road or a shortcut or not have had as many hearings.
I think the fact that we went to some of the places like Sault
Ste Marie, Mr Tony Martin's own riding, did bring out some of
these special and unique issues and regional difficulties which
stem from wanting local sourcing. I think that's a big issue.
I did say previously in the
committee as well that some of these franchise systems, though,
are based on a total package of down payment, leasehold
improvements and sourcing. So franchisors do take into account
that all this sourcing is going to be done through a central
system, whether that's the most economical way or not. They have,
I'm sure, built that into their profit margins. It would have
been very difficult for us to legislate that, but I do
understand, as the parliamentary assistant has said, that in any
of these agreements that the franchisee and franchisor will make,
they could always put in some local sourcing provisions. I think
that's important. Just because we highlighted it, they should be
able to put those provisions in.
I also want to thank Minister
Runciman, because it does show the openness of the process, where
he is allowing especially Mr Martin to be part of the development
of the regulations. I think that's very important. Usually it's
lip service; usually governments have been known to go ahead with
whatever. But this is very important, and I'm very happy that Mr
Martin is going to be included.
1110
As in any business, there are
success stories and there are failures. I sometimes feel that the
franchisees go into these agreements with unreasonable
expectations. Just because most franchisees are successful, that
does not mean 100% will be. That also should be part of the due
diligence. Circumstances change. E-commerce changes the way
things are being done. If something is good today, five years
down the road it might not be as profitable in that sense.
I think some of the issues have been brought
forward, and I'm happy that every party came to a compromise and
we're going to have a speedy approval of this so that the people
out there who are going to get into these agreements will benefit
from it. There's always more to be done, let's face that, but I
think the efforts we made to come to some agreement are good and
commendable.
Mr Garfield Dunlop
(Simcoe North): I'd like to thank the committee, the
staff and the clerk's office for their participation in this. I'm
very pleased to be able to take part in these public meetings on
Bill 33. We listened very carefully to a number of individuals
throughout the province and we heard some very disillusioned
people and some very brave individuals come forward, some very
successful stories and some very unsuccessful stories.
Mr Martin, I know you've got
a lot of concerns with the legislation and I applaud you for the
efforts you've put into the work of this committee. However, I
believe that the proposed amendments we've seen here or will see
here shortly, added to the existing Bill 33 will create good,
balanced legislation for the time being. Maybe it is a good first
start. I'm hoping that's the case. It responds to the concerns of
both the franchisors and the franchisees. Again, I hope this bill
will continue to encourage the investment and the type of job
creation we've seen in Ontario and that we can carry on and get
it passed before the end of this session.
The Chair:
Is there any further comment? Mrs Boyer, you indicated that you
wanted to-
Mrs Boyer: I
think Mr Colle would have a couple of words to say, if
possible.
The Chair:
There were about four minutes left on the clock for your time so,
Mr Colle, if you would contain your comments to that.
Mr Mike Colle
(Eglinton-Lawrence): Certainly we, the opposition, have
worked co-operatively with Mr Martin and the committee and Mr
O'Toole, trying to do the best we could. There are some very
immediate, pressing problems that franchisees face, and we were
trying to do our best. We applaud, certainly, the efforts on
everybody's part to try to meet these needs. It hasn't been easy.
It seems that the minister has a sincere interest in doing the
right thing.
Our frustration, as you know,
is the fact that we are concerned that one of the fallouts of
this bill would be that it might give people a false sense of
security, as much as it does help and is a good first step,
because this is a very dangerous business area. There is no doubt
the franchisors are carrying most of the clout, and this isn't
going to take away some of the clout despite its attempts to do
that.
I agree with Mr Dunlop, whose
sentiments reflect mine. A lot of these franchisees are brave
people. They risk their life savings, they try to set up a
business that they think is legitimate, that they think will get
them through their years and enable them to provide for their
families.
I don't agree with the other
comments that you can't legislate stupidity and that they have
unreasonable expectations. It's the role of government to make
the playing field level for both big and small, and in the
franchise business it is not level. This bill is not going to
make it level in any way, shape or form. We have to be very frank
with people. It is an extremely dangerous business area to get
into, and people should be warned that the fancy brand names
don't protect you as an individual. You risk a great deal, in
some cases more than if you were to go to into the field yourself
as an individual entrepreneur. That message has to be out there
loud and clear.
I'll give you one recent
example of a Ford dealer in my area who was not too far down the
street from a Mercury dealer. As you know, Ford now has a new
policy where Mercury dealers are now Ford dealers. So basically
in the same neighbourhood you have two competing franchises
because of the change in name from Mercury to Ford. They're
selling the same cars at the Mercury dealer's as they're selling
at the Ford dealer's. There's a group of Ford dealers now taking
Ford to court, and these are car dealers who you think are
reasonably well off. They're not going to have much chance.
They're going to spend a lot of money trying to protect their
rights to do business because of this change that Ford has
made.
It is a good first step. It
probably has to go through at this point, but it's still very
imperfect. We should not try to give people the impression that
this solves the problem. There is a serious problem with this
type of business undertaking, and people had better be aware,
caveat emptor. This business is fraught with a lot of land mines.
Be very, very careful; that's the message we should give to
anybody contemplating owning or buying a franchise.
The Chair:
We're ready to begin clause-by-clause consideration of Bill 33.
Ms Boyer has indicated that the Liberal caucus is withdrawing the
amendments that have been submitted. Mr Martin, I understand that
you wish to place a similar statement on the record?
Mr Martin: I
think I did.
The Chair: I
think you said that you were going to. Just for the record, will
you?
Mr Martin:
Yes.
The Chair:
That's an indication that the New Democratic Party caucus has
withdrawn the amendments they have tabled. Mr Martin, you had a
request for unanimous consent?
Mr Martin:
Yes. There are two amendments that we want to place that will get
us to the consideration of the regulations that I read into the
record earlier. There is an amendment to subsection 5(3).
The Chair:
We don't need to read it yet.
Mr Martin:
OK. And another amendment to our clause 13(1)(d.1).
The Chair:
Is there unanimous consent to accept these amendments for
consideration?
Mr Martin: I'm sorry. There's also
a third amendment, if you don't mind. It's to change the short
name of the bill to the Arthur Wishart Act (Franchise
Disclosure), 2000.
Mr
O'Toole: Yes, we agree.
Mr Steve Gilchrist
(Scarborough East): So in effect you're not withdrawing
amendment 58.
Mr Martin:
No. Actually we're amending amendment 58. Where it says "fairness
in Franchising," because this bill really isn't about fairness in
franchising, it's about disclosure and the right to associate,
we're putting in brackets there "Franchise Disclosure."
The Chair:
Is there unanimous consent to accept these three amendments for
consideration? Agreed.
The clerk, I believe, will
distribute copies of these amendments, or has. I have two of them
in front of me. I don't have the third one yet. The third one
will be photocopied and distributed to committee members.
May I ask unanimous consent
from the committee, following that decision made by the
committee, to reorder the amendments before us for consideration?
Agreed.
I believe we can begin
then. We'll deal first of all with section 1. Are there any
comments, questions or amendments?
1120
Mr
O'Toole: On subsection 1(1):
I move that the definition
of "franchise" in subsection 1(1) of the bill be amended by
striking out the portion before clause (a) and substituting the
following:
"`franchise' means a right
to engage in a business where the franchisee is required by
contract or otherwise to make a payment or continuing payments,
whether direct or indirect, or a commitment to make such payment
or payments, to the franchisor, or the franchisor's associate, in
the course of operating the business or as a condition of
acquiring the franchise or commencing operations, and,"
The Chair:
Do you have any comments to this, Mr O'Toole?
Mr
O'Toole: No comments.
The Chair:
Is there any debate on this amendment? Seeing none, is the
committee ready to vote? All those in favour, please indicate.
That's carried unanimously.
Are there any further
amendments to section 1?
Mr
O'Toole: I move that subclause (b)(i) of the definition
of "franchisor's associate" in subsection 1(1) of the bill be
struck out and the following submitted:
"(i) is directly involved
in the grant of the franchise,
"(A) by being involved in
reviewing or approving the grant of the franchise, or
"(B) by making
representations to the prospective franchisee on behalf of the
franchisor for the purpose of granting the franchise, marketing
the franchise or otherwise offering to grant the franchise,
or"
The Chair:
Do you have any comments to make, Mr O'Toole?
Mr
O'Toole: No comments.
The Chair:
Any debate on this amendment? Seeing none, all those in favour,
please indicate. Carried unanimously.
Are there further
amendments to section 1?
Mr
O'Toole: Amendment number 3.
I move that the definition
of "prospective franchisee"-
Interjection.
Mr
O'Toole: No, it's "franchisee." That's a small typo
there, if you could amend that.
-"in subsection 1(1) of the
bill be struck out and the following substituted:
"`prospective franchisee'
means a person who has indicated, directly or indirectly, to a
franchisor or a franchisor's associate, agent or broker an
interest in entering into a franchise agreement, and a person
whom a franchisor or a franchisor's associate, agent or broker,
directly or indirectly, invites to enter into a franchise
agreement; (`franchisé éventuel')"
The Chair:
Any comments on this section, Mr O'Toole?
Mr
O'Toole: No comments.
The Chair:
Any debate on the section, committee members? Seeing none, all
those in favour, please indicate. It's carried unanimously.
Are there any further
amendments to section 1? Are there any comments or questions on
the section as a whole? Are there are comments or debate on
section 1? Shall section 1, as amended, carry? Section 1 is
carried.
We move to section 2. Are
there are any amendments to section?
Mr
O'Toole: I'm looking at amendment number 5, a government
motion.
I move that subsection 2(1)
of the bill be amended by striking out "with respect to a renewal
or extension of such a franchise agreement" in the third, fourth
and fifth lines and substituting "with respect to a renewal or
extension of a franchise agreement entered into before or after
the coming into force of this section."
The Chair:
Any comments? Any debate?
All those in favour?
Carried. That was unanimous again.
Are there any further
amendments to section 2? Is there any comment or debate on
section 2? Seeing none, shall section 2, as amended, carry? No
dissent. Section 2 is carried.
Moving to section 3, are
there any amendments on section 3?
Mr
O'Toole: Section 3 is government motion 17 here.
I move that section 3 of
the bill be amended by adding the following sections-
Mr
Gilchrist: Subsections.
Mr
O'Toole: Subsections, pardon me. I appreciate that, Mr
Gilchrist.
Mr
Gilchrist: You're more than welcome.
Mr
O'Toole: I may alternate the readers of these
amendments.
"Right of action
"(2) A party to a franchise agreement has a right
of action for damages against another party to the franchise
agreement who breaches the duty of fair dealing in the
performance or enforcement of the franchise agreement.
"Interpretation
"(3) For the purpose of
this section, the duty of fair dealing includes the duty to act
in good faith and in accordance with reasonable commercial
standards."
The Chair:
Any comments, Mr O'Toole?
Mr
O'Toole: No. This was something brought up repeatedly
during public hearings, the reasonable commercial standards
interpretation, and I think it's an improvement.
The Chair:
Is there any debate on this amendment? Seeing none, all those in
favour, please indicate. It's unanimous. Carried.
Any further amendments to
section 3? Any debate or comments on section 3 as a whole? Seeing
none, shall section 3, as amended, carry? Hearing no dissent,
section 3 is carried.
We move to section 4. Are
there any amendments to section 4? Is there any comment or debate
on section 4 as a whole? Hearing none, shall section 4 carry?
Hearing no dissent, section 4 is carried.
Are there any amendments to
section 5?
Mr
O'Toole: Yes, government motion 23, subsections 5(1.1)
and 5(2).
I move that subsection 5(2)
of the bill be struck out and the following substituted:
"Methods of delivery
"(1.1) A disclosure
document may be delivered personally, by registered mail or by
any other prescribed method.
"Same
"(2) A disclosure document
must be one document, delivered as required under subsections (1)
and (1.1) as one document at one time."
The Chair:
Any comments? Mr O'Toole.
Mr
O'Toole: No comments.
The Chair:
Any debate on this amendment? Seeing none, all those in favour,
please indicate. It's unanimously carried.
Are there any further
amendments to this section?
Mr Martin:
Yes. I move that subsection 5(3) of the bill be amended by
striking out "and" at the end of clause (c) and by adding the
following clause:
"(c.1) statements as
prescribed for the purposes of assisting the prospective
franchisee in making informed investment decisions; and"
1130
The Chair:
Any comments, Mr Martin?
Mr Martin:
No.
The Chair:
Any debate on this amendment? Seeing none, all those in favour,
please indicate. Those opposed? Carried.
Are there any further
amendments to section 5?
Mr
O'Toole: I move that clause 5(6)(c) of the bill be
struck out and the following substituted:
"(c) the grant of an
additional franchise to an existing franchisee if that additional
franchise is substantially the same as the existing franchise
that the franchisee is operating and if there has been no
material change since the existing franchise agreement or latest
renewal or extension of the existing franchise agreement was
entered into;"
The Chair:
Any comments, Mr O'Toole?
Mr
O'Toole: No comments.
The Chair:
Any debate on this amendment? Seeing none, all those in favour,
please indicate. Those opposed? Mr O'Toole, you almost got in
under the opposed there.
Mr
O'Toole: Pardon?
The Chair:
You almost got counted under the opposed there. OK, that is
carried.
Any further amendments to
section 5? Any comments or debate on section 5? Shall section 5,
as amended, carry? Hearing no dissent, section 5, as amended, is
carried.
Section 6. Are there any
amendments?
Mr
O'Toole: I move that subsection 6(3) of the bill be
amended by striking out "personally, by registered mail or by
fax" in the second and third lines and substituting "personally,
by registered mail, by fax or by any other prescribed
method."
The Chair:
Any comments, Mr O'Toole?
Mr
O'Toole: No comments.
The Chair:
Any debate on the amendment? Seeing none, all those in favour,
please indicate. Those opposed? Carried.
Further amendments to
section 6?
Mr
O'Toole: I move that subsection 6(4) of the bill be
amended by adding the following clause:
"(e) on the day determined
in accordance with the regulations, if sent by a prescribed
method of delivery."
The Chair:
Any comment or debate on this amendment? All those in favour,
please indicate. Those opposed? Carried.
Any further amendments to
section 6? Any comment or debate on section 6? Shall section 6,
as amended, carry? Hearing no dissent, section 6, as amended, is
carried.
Section 7: Are there any
amendments?
Mr
O'Toole: I move that subsection 7(1) of the bill be
amended by adding the following clauses:
"(a.1) the franchisor's
agent;
"(a.2) the franchisor's
broker, being a person other than the franchisor, franchisor's
associate, franchisor's agent or franchisee, who grants, markets
or otherwise offers to grant a franchise, or who arranges for the
grant of a franchise;"
The Chair:
Any comments or debate on the amendment? All those in favour,
please indicate. Opposed? Carried.
Further amendments to
section 7?
Mr
O'Toole: I move that subsection 7(6) of the bill be
struck out.
The Chair: Any comment or debate
on the amendment? All those in favour, please indicate. Opposed?
Carried.
Further amendments, Mr
O'Toole?
Mr
O'Toole: Yes. I move that the bill be amended by adding
the following section:
"Joint and several
liability
"7.1(1) All or any one or
more of the parties to a franchise agreement who are found to be
liable in an action under subsection 3(2) or who accept liability
with respect to an action brought under that subsection are
jointly and severally liable.
"Same
"(2) All or any one or more
of a franchisor or franchisor's associates who are found to be
liable in an action under subsection 4(5) or who accept liability
with respect to an action brought under that subsection are
jointly and severally liable.
"Same
"(3) All or any one or more
of the persons specified in subsection 7(1) who are found to be
liable in an action under that subsection or who accept liability
with respect to an action brought under that subsection are
jointly and severally liable."
The Chair:
Are there any comments or debate on the amendment? All those in
favour, please indicate. Opposed? Carried.
Are there any further
amendments to section 7? Any comments or debate on section 7?
Mr O'Toole, the last
amendment that you read actually becomes its own section, 7.1. My
apologies on that. If, with the committee's agreement, we can
just back up, section 7 was amended by government amendments on
pages 36 and 37, which were passed. I hear no further debate or
comments on section 7 as a whole.
Shall section 7, as
amended, carry? Hearing no dissent, that is carried.
The government amendment on
page 38, which was carried by the committee, creates a new
section, 7.1. Is there any comment or debate on section 7.1?
Shall section 7.1 carry? Carried.
Section 8: Are there any
amendments to section 8? Any comment or debate on section 8? Is
there any warning about what I'm doing about section 8 from the
back corner there?
Mr
O'Toole: No, it's fine. Go ahead.
The Chair:
Shall section 8 carry? Carried.
Sections 9, 10, 11 and 12:
Are there any amendments that are coming forward in those
sections? Is there any comment or debate on those sections? Shall
sections 9, 10, 11 and 12 carry? Carried.
Section 13: Are there any
amendments to section 13?
Mr Martin:
I move that subsection 13(1) of the bill be amended by adding the
following clause:
"(d.1) prescribing
statements for the purpose of clause 5(3)(c.1);"
The Chair:
Do you have any comments, Mr Martin?
Mr Martin:
No.
The Chair:
Any comment or debate on this amendment? Seeing none, all those
in favour, please indicate. Opposed? Carried.
Any further amendments to
this section?
1140
Mr
O'Toole: Yes, government motion 54.
I move that subsection
13(1) of the bill be amended by adding the following clause:
"(h.1) prescribing methods
of delivery for the purposes of subsections 5(1.1) and 6(3), and
prescribing rules surrounding the use of such methods, including
the day on which a notice of rescission delivered by such methods
is effective for the purpose of clause 6(4)(e)."
The Chair:
Any comment or debate on this amendment? Seeing none, all those
in favour, please indicate. Opposed? Carried.
Section 13: any comment or
further amendments? Seeing none, shall section 13, as amended,
carry? Carried.
Section 14: any comments,
debate or amendments? Shall section 14 carry? Carried.
Section 15: Are there any
amendments to section 15?
Mr Martin:
I move that section 15 of the bill be struck out and the
following substituted:
"Short title
"15. The short title of
this act is the Arthur Wishart Act (Franchise Disclosure),
2000."
Mr
O'Toole: I'd like to add the word "act" at the end of
that: "(Franchise Disclosure Act)." Isn't that the way it's
supposed to be?
Mr Gill: I
think you said that.
Mr Martin:
It was just "(Franchise Disclosure)."
The Chair:
Just a bit of advice from legislative counsel in terms of
appropriate wording. The short title of the act is the "Arthur
Wishart Act" with "(Franchise Disclosure)" as the description. It
would be inappropriate to add the word "Act" there again.
Any comment or debate on
this section?
Mr
Gilchrist: I certainly would like to support Mr Martin's
motion on this. Mr Wishart was certainly an exceptional
individual and I appreciate that, given the history of the
franchise legislation we're dealing with here today could
probably be traced back to Mr Wishart's own activities, and the
connection he has with the riding Mr Martin represents today,
it's quite appropriate.
I would like to put on the
record, though, Mr Martin, that it is a very exceptional honour
we are conferring on Mr Wishart. I wouldn't want it to become an
habitual practice in this Legislature that we name bills after
ourselves. I hope you agree with me that self-aggrandizement is
not the thing we want as a hallmark of our legislation, but in
fact representing the greater good. I would be loath to see other
cabinet ministers, even from our side of the House, recognized in
this way.
This is a unique honour,
but I think it bears stating that this really should be an
exception. I'm very pleased to support your motion and think it
is an honour due to Mr Wishart, but in addition it would cheapen
his memory if this became just one of.
Not to belabour the point, I think this is
something we want to deal with as an exception to common practice
in this Legislature. I appreciate your bringing this forward and
honouring a past legislator in this House.
Mr Martin:
I guess I don't share the same sentiment as the member about how
we name acts and whether we should name them after people. Your
government has shown itself to be capable of some very creative
naming of acts, often breaking with tradition in this place in
some interesting ways that we have pointed to in the Legislature,
sometimes adding some colour to what we do around here.
I think it's important,
from time to time, to remember those who went before us,
particularly if they have done important work that connects with
something we are doing later and that might add a sense of
history to it and lend some opportunity for those who will look
at this to actually perhaps reflect back. If they look at this
act and see this, they may want to explore why we would have put
that name on it, and then go back to the Grange report to see
where all this started. It adds in a number of different ways to
the importance of this and the opportunity it affords people who
are interested in this to find out why and how and where.
Mr Wishart, not a New
Democrat but a very staunch and well-placed Conservative in the
community of Sault Ste Marie, served well and garnered nothing
but respect from anybody who had any involvement with him in
trying to get issues resolved or to bring things forward to the
Legislature, and also a person who contributes in our community
in that he has a wonderful family who continue to live in Sault
Ste Marie. In fact, at one point, when I was trying to shed some
light on the need for legislation in this area, some of his
family members showed up at a function we were having, because I
had indicated that it flowed from him and some work he had done.
Some interest is still percolating out there in taking a look at
what he did and that it now actually has the possibility of
seeing the light of day, which it will, even if only to some
small degree, compared to what some of us would like to have
seen.
Those are just my
comments.
Mr
Gilchrist: I really want to stress to Mr Martin that
there is not the slightest reservation in supporting Mr Wishart's
name being included on this. I really want to impress on you that
we think this is typical of how you have co-operated throughout
this process. I know we disagree on an awful lot of things in the
Legislature, but I think what we have seen here today is far more
what a lot of us expected would be the case when we first got
elected, that members from all sides would try to work together
to fashion bills that arrived at the best consensus.
I appreciate that you have
made some concessions. You asked at the outset of your comments
whether we would give you the assurances that we cared as much
that the regulatory framework would support this bill in the way
we would all like to see it supported. You certainly have my
assurance, and I'm sure I speak for my colleagues. I think the
fact that you are recognizing a past member of a different party
is very much in the same spirit.
I just wanted to put on the
record that I wouldn't want any of our colleagues or anyone else
sitting there thinking it is now open season to add their names
to bills, because I really do think that would cheapen the work
Mr Wishart did. I really do want to put on the record: Thank you
for this honour you have accorded him.
The Chair:
Any further debate on this amendment?
All those in favour of the
amendment, please indicate. Carried unanimously.
Are there any further
amendments to section 15? Seeing none, is there any debate or
comment on section 15?
Shall section 15, as
amended, carry? Hearing no dissent, that is carried.
Are there any amendments to
the long title of the bill? Seeing none, shall the long title of
the bill carry? Hearing no dissent, that is carried.
Is there any further debate
on Bill 33, as amended? Seeing none, shall Bill 33, as amended,
carry? Hearing no dissent, that is carried.
Shall I report the bill, as
amended, to the House? Agreed.
Thank you very much to all
committee members.
Mr
O'Toole: Chair, may I just make one comment, now that we
have formally completed the work? I would just like to say, in a
sort of flippant way, that I'm just as glad Mr Martin didn't call
it the Les Stewart bill. I do appreciate all his reports to the
committee; I have a whole box full. Thanks very much to Les.
The Chair:
The committee's appreciation to all the staff of the clerk's
office and the legislative offices and, of course, ministry staff
and the minister's office for their support in our work. I echo
the committee's thanks to the minister and to the government
House leader for this interesting experience of dealing with a
bill after first reading.
Thank you to all the
committee members, and we will see you in the House.
