FRANCHISE DISCLOSURE ACT, 1999 / LOI DE 1999 SUR LA DIVULGATION RELATIVE AUX FRANCHISES

CONTENTS

Wednesday 10 May 2000

Franchise Disclosure Act, 1999, Bill 33, Mr Runciman / Loi de 1999 sur la divulgation relative aux franchises, projet de loi 33, M. Runciman

STANDING COMMITTEE ON REGULATIONS AND PRIVATE BILLS

Chair / Présidente
Ms Frances Lankin (Beaches-East York ND)

Vice-Chair / Vice-Président

Mr Garfield Dunlop (Simcoe North / -Nord PC)

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.

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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.

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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.

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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.

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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?

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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"

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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?

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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.

The committee adjourned at 1150.