Discrimination in Franchising?

NUMBER 1-1 - OCTOBER 12TH, 2007 

QUESTION CORNER

Question from a franchise: I am an African immigrant that recently purchased a franchise. During the training program, the supervisor advised me that I could no longer continue the training under the pretext that I was fasting. He said that because of that, I had bad breath which was harmful to clients and the personnel. After being told that, I no longer had the heart to continue with this franchisor and I would appreciate your advice to recover the amounts I paid to the franchisor.

Answer: Your situation raises questions that fall under Franchise and Constitutional Law.

The province in which the franchise was purchased is important. We will presume you acquired a franchise in Ontario. Except for franchisors in the provinces of Alberta and Prince Edward Island, which already have franchise legislation, franchisors from the other provinces may start reading the answer in section 2 below.

Given the information provided, I suggest you take the following steps:

1 - In Ontario, the Arthur Wishart Act provides that a disclosure document must be provided to a potential franchise at least 15 days before the signing of any documents or the payment of any amount to the franchisor. Did you obtain a copy of the Disclosure Document and were the delays respected? If these franchisor requirements were not respected, you may have recourses against the franchisor for the amounts paid to the franchisor as well as for the expenses engaged by you through the acquisition process.

2 - I suggest you study the franchise documentation you received and/or signed to determine if you have the right to a partial or full reimbursement of the amounts paid to the franchisor. Usually, the franchise documentation provides that all amounts paid to a franchise are not recoverable and are stipulated fully earned by the franchisor. If you are uncertain about your rights after studying the documents, consult an attorney specialized in franchising. Another provision you could look for in the franchise documentation is an arbitration clause or another type of dispute resolution mechanism that may be used to address this situation.

3 - In the event you do not have the right to recover the amounts paid to the franchisor under the terms of the franchise documentation and that there is no dispute resolution mechanism in these documents, I suggest you meet a representative of the franchisor to discuss the situation with him and the possibility of recovering the amounts paid to the franchisor.

4 - In the event you cannot come to an agreement with the franchisor with respect to this matter, not being an attorney specialized in constitutional law, I advise you to make an appointment with the Center for Human Rights in your province to have them look at your file. The service is free.

Cordially,

Claude J. Pellan, Attorney and Consultant
Franchise and Business Law
www.claudepellan.com