42 LEXPERT MAGAZINE
|
MARCH/APRIL 2018
FEATURE
EVEN AS FRANCHISORS
were basking in the Ontario Court of Ap-
peal's decision in Raibex Canada v. ASWR Franchising, Ontario's new minimum
wage legislation, which came into force less than a month earlier, threatened a new
wave of issues capable of striking at the core of franchise relationships.
e original ruling in Raibex raised the prospect that franchisors could not
provide adequate disclosure to prospective franchisees prior to identifying and
signing a lease. As such, it was consistent with a recent jurisprudential trend that
lowered the threshold of what constituted a "material deficiency" in a disclosure
document and so made rescission of a franchise agreement easier for franchisees to
achieve. e appellate decision, however, clearly raised that threshold.
"Raibex ... restores confidence in the common industry practice of franchisors
providing a disclosure document and entering into a franchise agreement prior to
site selection", says Jennifer Dolman at Osler, Hoskin & Harcourt LLP. "Provided
a franchisee is given the opportunity to make a properly informed investment de-
cision, the fact that a franchisor's disclosure isn't perfect doesn't mean there was
'no disclosure' giving rise to the two-year rescission remedy."
As refreshing as it was, however, Raibex had no impact on franchisees' reaction
to the minimum wage hikes, with some making it absolutely clear that they had
no intention of bearing the burden of the increased labour costs on their own.
And while Ron Joyce Jr. and Jeri-Lyn Horton-Joyce, arguably, took their frus-
tration out on the employees at their two Cobourg locations by moving forward
with the elimination of paid break times and reduction of health benefits, it was
evident that neither their franchisor nor the provincial government were at all im-
mune from their dissatisfaction.
PHOTO:
SHUTTERSTOCK
in the Coffee Shops
Talking Politics
As certain provinces raise the minimum wage,
franchisees cancel paid breaks for their employees
and turn to franchisors for some kind
of contribution or adjustment
BY JULIUS MELNITZER
