Arthur Wishart Amendment Act (Franchise Disclosure), 2001 Martin, Tony — Bill 138 (37th Parliament, 3rd Session)

Bill 138, 37-3

Ontario — Bills

role="main" class="main-container container js-quickedit-main-content" id="main-content">

Bill 138, Arthur Wishart Amendment Act (Franchise Disclosure), 2001

Martin, Tony

Please select

View bill

Status

Debates

Original

[37] Bill 138 Original (PDF)

Bill 138 2001

An Act to amend the

Arthur Wishart Act

(Franchise Disclosure), 2000

Her Majesty, by and with the advice and consent of the Legislative

Assembly of the Province of Ontario, enacts as follows:

Section 2 of the Arthur Wishart Act (Franchise

Disclosure), 2000 is amended by adding the following

subsection:

Same

(2.1) Sections 3.1 to 3.4, 7.1 and 7.2 apply with respect to a

franchise agreement entered into before January 1, 2002, and with respect to

a business operated under such an agreement, if the business operated by the

franchisee under the franchise agreement is operated or is to be operated

partly or wholly in Ontario.

2. Subsection 3 (3) of the Act is repealed and the

following substituted:

Interpretation

(3) For the purpose of this section, the duty of fair dealing

includes the duty to act,

(

a) in good faith;

(

b) in accordance with reasonable commercial standards; and

(

c) in the manner in which one would wish the other party to act if the

roles were reversed.

3. The Act is amended by adding the following

sections:

Non-renewal of franchise agreement

3.1

(1) A franchisor or its

associate shall not refuse to renew a franchise agreement unless the

franchisee has received six months' notice of the refusal and,

(

a) the franchisee will be entitled to continue to conduct substantially

the same type of business in the same area after the expiration of the

franchise agreement; or

(

b) the franchisee will be compensated either by repurchase or by other

means for the fair market value of the franchised business, as if the

franchise agreement had been renewed for the same period as in the original

franchise agreement.

Fair market value

(2) The fair market value of a franchised business shall

be,

(

a) determined by an impartial appraiser whose appointment is acceptable

to the franchisor or its associate and the franchisee; and

(

b) based on a method of valuation that is recognized as being appropriate

for that industry.

Use of trademarks, etc.

(3) Unless the franchisor or its associate agrees, clause (1)

(

a) does not give the right to the franchisee to use any trademark or other

proprietary information of the franchisor or its associate.

Terms of renewal

(4) If the parties cannot agree on the terms of the renewal,

the terms of the renewal shall be at least substantially the same as the

terms being offered to prospective franchisees, provided that the terms do

not materially change the rights and duties of the parties.

Termination of franchise agreement

3.2

(1) A franchisor or its

associate shall not unilaterally terminate a franchise agreement before its

expiration unless,

(

a) there is good cause; and

(

b) the franchisor has notified the franchisee in accordance with

section

3.4.

Meaning of "good cause"

(2) For the purposes of this section,

"good cause" includes,

(

a) the failure of the franchisee,

(

i) to comply with a lawful material provision of the franchise agreement

after receiving a notice and a 10-day period to cure the default, or

(ii) if the default cannot be cured within the 10-day period, to initiate

within the 10-day period substantial continuing action to cure the

default,

(

b) any case where the franchisee,

(

i) is bankrupt or is declared legally insolvent,

(ii) makes an assignment for the benefit of creditors or a similar

disposition of the assets of the franchised business,

(iii) voluntarily abandons the franchised business,

(iv) is convicted of an offence under a law in force in Ontario that

substantially impairs the goodwill associated with the franchisor's or its

associate's trademark, trade name or trade secret, or an advertising or

commercial symbol of or designating the franchisor or its associate, or with

a patent owned by or licensed to the franchisor or its associate,

(

v) fails, on two or more occasions, to comply with a lawful material

provision of the franchise agreement, if the enforcement of the provision is

similar to that imposed on all other franchisees, or

(vi) operates the franchised business in a manner that endangers public

health or safety.

Transfer of franchise

3.3

(1) A franchisor or its

associate shall not refuse to approve a transfer of a franchise or an

interest in a franchise unless,

(

a) there is good cause; and

(

b) the franchisor has notified the franchisee in accordance with

section

3.4.

Meaning of "good cause"

(2) For the purposes of this section,

"good cause" includes any case where,

(

a) the prospective franchisee fails to meet the franchisor's written

reasonable standards then in effect for a new franchisee,

(

b) the prospective franchisee or its associate is a competitor of the

franchisor or its associate,

(

c) the prospective franchisee is unable or unwilling to be bound by a

lawful obligation imposed by the existing franchise agreement,

(

d) the franchisee or prospective franchisee fails to cure a default under

a franchise agreement with the franchisor or its associate existing at the

time of the proposed transfer.

Approval of transfer

(3) If approval of a transfer is required by the franchise

agreement, the franchisor or its associate shall not unreasonably withhold

that approval.

Deemed approval

(4) A franchisor or its associate shall be deemed to have

approved a transfer unless the franchisee receives written notice of the

reasons for disapproval within 30 days of the franchisor's or its associate's

receipt of the written notice of the proposed transfer.

Notices

3.4

(1) A notice under

section 3.1,

3.2 or 3.3 shall,

(

a) be in writing; and

(

b) contain a statement of the intention not to renew or to terminate the

franchise agreement or to refuse to approve the transfer of the franchise, as

the case may be, together with,

(

i) the reasons for the non-renewal, termination or refusal, and

(ii) the effective date of the non-renewal or termination.

Request to transfer

(2) A notice of a request for approval to transfer a franchise

by a franchisee shall be in writing.

Notice void for non-compliance

(3) A notice that does not comply with this

section is

void.

4. Subsection 7 (1) of the Act is amended by striking

out "right of action for damages" in the portion before clause (

a) and

substituting "right of action for damages, rescission or other appropriate

relief".

5. The Act is amended by adding the following

sections:

Mediation

7.1

(1) If a dispute relating to a

franchise arises between the franchisee and the franchisor or its associate

and has not been resolved by agreement between the parties, either party may

refer the matter in dispute to a mediator.

Starting the process

(2) The party seeking mediation shall file an application for

the appointment of a mediator with the Executive Director of the Ontario

Securities Commission.

Mediator's appointment

(3) The Executive Director shall ensure that a mediator is

appointed promptly in accordance with the regulations.

Mediation

(4) The mediator shall inquire into the issues in dispute and

attempt to effect a settlement of as many of the issues as possible within

the prescribed time.

Extension of time

(5) The parties may by agreement extend the time for the

completion of the mediation process, even if the time for completion has

expired.

Notice of failure

(6) If, at any time before a settlement is effected, the

mediator is of the opinion that mediation will fail, he or she shall promptly

notify the parties.

Same

(7) Mediation has failed when the mediator has given notice to

the parties that in his or her opinion mediation will fail, or when the

prescribed or agreed time for mediation has expired and no settlement has

been reached.

Mediator's report

(8) If mediation fails, the mediator, in addition to any notice

required to be given, shall prepare and give to the parties a report setting

out the mediator's description of the issues that remain in dispute.

Group or organization

(9) Under this section, two or more franchisees may act

together or an organization of franchisees may act on behalf of its members,

and in that case

section 7.2 applies with necessary modifications.

Litigation

7.2

(1) If mediation fails, either

party may start proceedings in the Superior Court of Justice.

Limitation

(2) No person may bring proceedings in court unless mediation

has first been sought and has failed.

6. Subsection 14 (1) of the Act, as amended by the

Statutes of Ontario, 2001,

chapter 9,

Schedule D,

section 1, is further

amended by adding the following clause:

(j.1) respecting the qualifications and appointment of mediators and

prescribing rules of procedure and setting time limits in respect of

mediation proceedings under

section 7.1;

7. The title of the Act is repealed and the following

substituted:

Arthur Wishart Act (Franchises), 2000

Commencement

8. This Act comes into force on January 1,

Short title

9. The

short title of this Act is the Arthur

Wishart Amendment Act (Franchise Disclosure), 2001 .

EXPLANATORY NOTE

The Bill expands the scope of the Arthur Wishart Act (Franchise

Disclosure), 2000 by adding the following:

Protection of franchisee against non-renewal and unilateral termination of

franchise agreement and refusal to approve transfer of franchise (sections

3.1 to 3.4 of the Act).

Mediation provisions (sections 7.1 and 7.2 of the Act).

Subsection 3 (1) of the Act requires parties to franchise agreements to

deal fairly with each other, and subsection 3 (3) provides that the duty of

fair dealing includes duties of good faith and compliance with reasonable

commercial standards. The Bill expands subsection 3 (3) to include, as well,

a duty to act in the manner in which one would wish the other party to act if

the roles were reversed.

The right of action for damages in case of misrepresentation in the

disclosure document is expanded to include rescission and other appropriate

relief (subsection 7 (1) of the Act).

Because the Act is no longer limited to disclosure-related matters, the

title is changed to Arthur Wishart Act (Franchises), 2000 .

Date Bill stage Activity Committee

December 5, 2001

Ordered carried over from previous session

December 5, 2001

Carried over to next session

November 21, 2001

First Reading

Carried

Debates and Progress

First Reading

November 21, 2001

Second Reading

Committee

Third Reading

Royal Assent :

Coming into force :

This Act comes into force on January 1, 2002.

Was this page helpful? Yes , I found this page helpful. An optional survey will open in a new tab. No , I didn’t find this page helpful. An optional survey will open in a new tab.

Back to top

Document details

Collection	Ontario — Bills
Citation	Bill 138, 37-3
Type	bill
Volume / chapter	p37 s3 bill 138 html
Language	en
Format	html
Source	PROVINCIAL
Identifier	875f24a07cd05a4de5fe30c02013ab83cdd3f204

Source file is stored in the law ingest library (html).