On Tuesday, May 23, 2017, the Ontario Government's Special Advisors released their
Final Report (Report) in the Changing Workplaces Review, in which they outline 173 recommendations to amend the Employment Standards Act (ESA) and Labour Relations Act (LRA).
The Report unfairly singles-out, negatively characterizes, and targets franchising.
While the Report does not recommend automatic or deemed joint employer status between a franchisor and franchisee(s), the recommendations are nevertheless designed to make it easier to unionize franchisors and franchisees.
The Report recommends the Ontario Labour Relations Board (Board) have authority to order separately owned franchisees of the same franchisor (and franchisor owned outlets), in the same geographic area, be unionized and subject to a single collective agreement applicable to all. The Report also recommends the Board have authority to order franchisees subsequently unionized be bound by the terms of the existing collective agreement (negotiated by others), with or without modification.
With regard to the ESA compliance, the Report recommends "top down" enforcement, through which the custodian of the brand (the franchisor) is expected to become more actively involved with and exert pressure on franchisees to improve employment standards compliance. The notion being that non-compliance by a franchisee can result in serious legal consequences for the franchisee which can negatively impact the entire brand.
All of this (and more within the Report) represents a dramatic infringement on the rights of franchisees to independently operate and/or control their own business, and a failure on the part of the Special Advisors to understand and support the franchise industry. There is no basis to treat franchise businesses differently than their non-franchise business competitors. An even playing field, that encourages business growth and job opportunities, should be protected by our government, not undermined.
Practical consequences of the recommendations include:
- Franchisees will be unfairly targeted and discriminated against simply because they've chosen to go into business for themselves by investing in a franchise.
- The concept of franchisee as an independent business owner will be undermined. New franchisees - who have invested in a franchise to own and operate an independent business - may no longer be viewed as such by the law.
- Every franchisee within a defined geographic area will be at the mercy of other franchisees. If one franchisee is a poor employer or weak negotiator, all franchisees within a designated geographic area could end up in a badly negotiated labour contract.
- The franchise business model will be less appealing to prospective franchisees.
- A chilling effect on investing in Ontario as franchise systems from outside the province choose not to expand into Ontario because of significantly enhanced labour and employment risks.
CFA is working to fight these inequities so they do not find their way into legislation. The Association will send letters to and request meetings with Ministers, MPPs, and government officials to reiterate the industry's concerns. CFA will also continue to work with the Keep Ontario Working Coalition to address a range of other serious issues raised in the Final Report, including that government policy be made based on meaningful evidence (not speculation), and that a comprehensive economic impact analysis of the recommendations be undertaken.
MEMBER ACTION:
Now, more than ever, franchisors and franchisees must voice their concerns to their MPPs!
To assist you, CFA is updating its "E-mail Your MPP" online letter, and will distribute a separate Advocacy Alert with instructions on how franchisors and franchisees can take action.
The franchise industry must be heard! The time to act is now.
For more information about the Report, please contact Ryan Eickmeier, CFA Vice President, Government Relations & Public Policy at
reickmeier@cfa.ca or 416-695-2896 ext. 297.
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