Arthur Wishart Amendment Act (Franchise Disclosure), 2010 Jaczek, Helena DiNovo, Cheri Miller, Norman — Bill 102 (39th Parliament, 2nd Session)

Bill 102, 39-2

Ontario — Bills

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

Bill 102, Arthur Wishart Amendment Act (Franchise Disclosure), 2010

Jaczek, Helena

DiNovo, Cheri

Miller, Norman

Please select

View bill

Status

Debates

Acts affected

Original

[39] Bill 102 Original (PDF)

Bill 102 2010

An Act to amend the Arthur Wishart Act (Franchise

Disclosure), 2000

Note:

This Act amends the Arthur

Wishart Act (Franchise Disclosure), 2000 . For the legislative

history of the Act, see the Table of Consolidated Public Statutes – Detailed Legislative

History at www.e-Laws.gov.on.ca.

Her

Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

1. The Arthur Wishart Act (Franchise Disclosure), 2000 is amended by adding the following

section:

Educational document

5.1

(1) Before

or at the same time that a franchisor provides a prospective franchisee with a

disclosure document under subsection 5 (1), the franchisor shall provide the

prospective franchisee with an educational document setting out the following

in respect of the decision to enter into the franchise agreement:

1. Self-evaluation

criteria for the prospective franchisee to consider, including,

i. whether

the prospective franchisee has the capital required for investment,

ii. whether

the prospective franchisee has the necessary management skills, education and

work experience,

iii. whether

the prospective franchisee is fully aware of the work involved in operating the

business associated with the franchise and whether the prospective franchisee

can work within the limits of a franchise system,

iv. what

would be the best franchise for the prospective franchisee, based on

consideration of,

A. lines of business that are successful and that are

expected to continue to succeed, and

B. lines of business in respect of which the

prospective franchisee is interested, and

v. whether

entering into the franchise agreement is the only means by which the

prospective franchisee may succeed in engaging in the line of business in which

the prospective franchisee is interested.

2. Issues

for the prospective franchisee to consider in respect of the franchisor and the

businesses associated with the franchise, including,

i. the

franchisor's background and how long the franchisor has been offering

franchises,

ii. the

financial stability of the businesses associated with the franchise,

iii. the

extent to which the franchisor is selective when choosing prospective

franchisees, including whether the franchisor requested the qualifications and

financial standing of the prospective franchisee,

iv. the

directors, general partners and the officers of the franchisor and their levels

of experience,

v. how

many businesses associated with the franchise are operating currently, whether

new locations are being opened on a regular basis and whether any locations

have failed,

vi. if

the franchise is new, the record of accomplishment of the businesses associated

with the franchise,

vii. whether

the franchisor has introduced any new innovations,

viii. whether

the prospective franchisee has been advised by the franchisor to meet with

existing franchisees, and

ix. whether

the franchisor provides local ongoing training for franchisees.

3. Issues

for the prospective franchisee to consider with respect to the goods or

services to be sold, offered for sale or distributed, including,

i. what

makes the goods or services unique,

ii. whether

there is a reasonable demand for the goods or services, including whether there

has been an increase or decrease in sales and whether demand is seasonal,

iii. whether

the prospective franchisee may carry other lines of goods or offer other

services,

iv. whether

the goods or services are priced competitively with similar goods or services,

and

v. if

goods will be sold, offered for sale or distributed,

A. whether the franchisor can guarantee continual

supply at a fair price,

B. whether there are warranties or guarantees and who

is responsible for them,

C. whether the goods are protected by a patent,

trademark or copyright, and

D. whether the prospective franchisee would be

permitted to purchase goods from other suppliers when inventory levels become

low or if the supply from the franchisor is interrupted and while waiting for

the franchisor's goods to arrive.

4. Issues

for the prospective franchisee to consider with respect to location and sales

territory, including,

i. whether

the territory is clearly defined and exclusive, and what guarantees are

provided,

ii. the

sales potential for the territory and whether the franchisor has provided the

prospective franchisee with market information and statistics in support of the

sales potential,

iii. the

future growth potential of the territory,

iv. whether

the prospective franchisee may select the location and whether there are

flexible standards for location and premises,

v. whether

the prospective franchisee will own or lease the location and the related

terms, and

vi. competition

in the territory.

5. A

statement that the prospective franchisee may ask the franchisor for a list of

other franchisees operating in the area.

6. Issues

that the prospective franchisee may wish to raise with other franchisees,

including,

i. the

total investment required by the franchisor,

ii. any

hidden or unexpected costs,

iii. the

franchisee's level of satisfaction with the quality of the goods provided by

the franchisor,

iv. the

frequency and reliability of deliveries from the franchisor,

v. the

length of time before the franchisee's operating expenses were covered by

revenue, and the length of time before the franchisee drew a reasonable salary,

vi. whether

the projected sales and profit figures provided by the franchisor were accurate

and whether profits have met the franchisee's expectations,

vii. the

quality, location and funding of management and staff training,

viii. any

serious disagreement with the franchisor, the nature of the disagreement and

the resolution,

ix. the

franchisor's promptness and helpfulness in responding to questions from the

franchisee,

x. the

franchisee's level of satisfaction with marketing, promotional and advertising

assistance from the franchisor,

xi. whether

the franchisee would prefer to change any terms of the agreement,

xii. whether

the franchisee would recommend entering into a franchise agreement with the

franchisor, and

xiii. what

steps the franchisee has taken to be successful.

7. A

statement that it is advisable to have a lawyer and an accountant review the

entire franchise agreement, particularly with respect to bankruptcy,

termination, renewal, transfer and sale of the franchise.

8. Issues

for the prospective franchisee to consider with respect to the franchise

agreement, including,

i. whether

the agreement protects the prospective franchisee as well as the franchisor,

ii. whether

the rights and obligations of both parties are clearly stated,

iii. whether

the agreement is specific as to the type and size of the operation that will be

managed,

iv. whether

the nature, duration, cost and extent of the prospective franchisee's training

are outlined in the agreement,

v. whether

the payments to the franchisor are clearly specified, including the franchise

fee, any other fixed yearly payments to the franchisor, royalty payments,

advertising payments and fees for continuing services provided by the

franchisor,

vi. whether

the prospective franchisee is required to purchase essential supplies from the

franchisor or from designated suppliers and whether a minimum amount of

merchandise must be purchased from the franchisor in each year,

vii. whether

the prospective franchisee has a right to the franchisor's latest innovations,

viii. whether

there is an annual sales quota and whether it is attainable,

ix. what

types of reports are required to be provided to the franchisor,

x. whether

the agreement covers in detail any verbal promises made by the franchisor,

xi. whether

the franchisor will maintain any necessary federal and provincial

registrations,

xii. whether

the agreement can be renewed and the applicable terms,

xiii. whether

royalty payments may be deferred to a later, more profitable month in the case

of a monthly loss,

xiv. whether

the prospective franchisee is required to follow franchisor controls and

policies exactly, or whether some creativity regarding the goods or services

and their delivery may be exercised,

xv. if

the location is to be leased, whether the lease is for the same term as the

agreement and whether the lease can be renewed upon renewal of the agreement,

xvi. whether

the prospective franchisee is responsible for the construction or improvement

of any premises and, if so, whether the franchisor will provide plans and

specifications, and whether the plans and specifications may be altered,

xvii. the

extent to which the prospective franchisee may choose the territory or

location,

xviii. whether

the prospective franchisee may sell the franchise and the applicable

conditions, including whether any profits from the sale may be kept by the

prospective franchisee and how the sale price is determined,

xix. how

the prospective franchisee will be compensated for goodwill built up in the

business associated with the franchise,

xx. whether

the prospective franchisee or the franchisor can terminate the franchise and

any applicable terms, including any penalties,

xxi. how

much time the prospective franchisee will have to rectify a situation if there

is a default on the agreement, and whether there is an arbitration clause

regarding defaults,

xxii. what

happens to the business in the event of prolonged illness or death of the prospective

franchisee and whether succession is addressed clearly,

xxiii. whether

the prospective franchisee is prohibited from engaging in any other business

activity for the duration of the agreement, and

xxiv. whether

the prospective franchisee is prohibited from establishing, owning or working

in a competing business for a certain number of years after termination of the

agreement.

9. Any

other prescribed information.

Acknowledgment of prospective franchisee

(2) Before entering into a franchise agreement on or after

the day this

section comes into force, a prospective franchisee shall provide

the franchisor with a signed, written acknowledgment that, at the time of

entering into the agreement, the franchisee has reviewed the educational

document mentioned in subsection (1).

2. Subsection 14 (1) of the Act is amended by

adding the following clause:

(j.1) prescribing

matters for the purpose of paragraph 9 of subsection 5.1 (1);

Commencement

3. This Act comes into force on a day to be

named by proclamation of the Lieutenant Governor.

Short title

4. The

short title of this Act is the Arthur Wishart Amendment Act

(Franchise Disclosure), 2010 .

EXPLANATORY NOTE

The

Bill amends the Arthur Wishart Act (Franchise Disclosure), 2000 to require a

franchisor to provide a prospective franchisee with an educational document

containing specified information. Before entering into the agreement, the

prospective franchisee is required to provide the franchisor with a signed,

written acknowledgment that the franchisee has examined the educational

document.

Date Bill stage Activity Committee

September 23, 2010

Ordered referred to Standing Committee

Standing Committee on Finance and Economic Affairs

September 23, 2010

Second Reading

Carried

September 23, 2010

Second Reading

Debate

September 15, 2010

First Reading

Carried

Debates and Progress

First Reading

September 15, 2010

Committee

Second Reading

September 23, 2010

Ms. Helena Jaczek, Mr. Norm Miller, Ms. Cheri DiNovo, Mr. Bob Delaney, Mr. Frank Klees, Mr. Bas

Document details

Collection	Ontario — Bills
Citation	Bill 102, 39-2
Type	bill
Volume / chapter	p39 s2 bill 102 html
Language	en
Format	html
Source	PROVINCIAL
Identifier	faec7b5f9e1ebb02a59c084a0272bc3bbce3ccc0

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