The future of franchising in Canada – Lexpert

Jennifer Dolman

Jun 30, 2016

In a lengthy article in the April 2016 issue of Lexpert Magazine, reporter Julius Melnitzer takes an in-depth look at the Canadian franchise industry and offers an analysis of the complex legal issues it faces. Because of the lack of certainty surrounding both legislation and case law, he asserts franchisors are finding it increasingly difficult and costly to comply with the shifting standards and regulations. In his search for clarity, Julius covers a broad range of topics, from the state of provincial legislation across the country, including British Columbia’s new Franchises Act, to the high-profile litigation that is shaping Canadian franchise law, including recent cases involving Pet Valu, Dunkin’ Donuts and GM. One of the issues he examines in detail is disclosure and what he calls the “interpretive uncertainty” that surrounds it. Jennifer Dolman, litigation partner at Osler’s Franchise Group, that this uncertainty is affecting the viability of the franchise model in general.

“There are discussions about whether the franchise model is still worth pursuing because of the increasing burden of regulation and the growing complexity of disclosure,” Jennifer explains. “There’s a lot of rethinking going on.”

Further on in the article, Jennifer offers insight into the concept of joint employment status and its potential impact on the Canadian franchising landscape.

“Because franchisors are allowing franchisees to share their marks and their brands, they are also sharing their reputation, and therefore they need to make sure they have certain controls in their agreements,” she says. However, she continues, “[i]f franchisors start exercising too much control over the nitty-gritty of employment practices, particularly hiring and firing, they could be creating a risk that they’ll be characterized as joint employers.”

To learn more, read Julius Melnitzer’s full article The future of franchising in Canada in Lexpert Magazine.