Changes May Be Coming for Ontario Franchises


Jul 14, 2017


Recently, the special advisors from Ontario's Ministry of Labour released their much-awaited report on their review of employment and labor laws in the province. The purpose of this review was to identify potential law changes that would help increase worker protection while allowing businesses to continue thriving. While this report is just a proposal for now, some of the changes brought up will impact franchises in Ontario if implemented.


Joint employer test is staying the same for now

The good news is that the definition of a "related" or "joint" employer will remain unchanged. This was a concern of franchisors initially because one of the issues the advisors were weighing was whether to alter existing laws to make it more likely that a franchisor would become a joint or related employer of a franchisee. Such as move would then make franchisors more liable for employment law violations made by franchisees.


The franchise bargaining model may change

Today, the Ontario Labour Relations Board views franchisees as independent employees, so unions have to separately organize each franchise, with each location having a collective agreement with the employees in that franchise. However, the just-released report identified this arrangement as a problem, taking the position that it doesn't allow franchisee employees the chance to bargain collectively.

Under the advisors' recommendation, the Board will be able to require that the bargaining units across different franchisees under the same franchisor bargain together. In line with this recommendation, the Board would also be able to direct the terms of a collective agreement between a union and a franchisee and could consolidate locations owned by the same franchisee into one bargaining unit. Therefore, any ratification vote or strike would involve all of the bargaining units together and not just an individual unit.

The concern with this bargaining recommendation is that it does give support to the idea that a franchisor is an actual or true employer of franchisee employees, despite the fact that franchisees are in business for their own profit and success and have varying levels of control over operations and employees.

While the provincial government has not yet commented on the recommendations proposed in the report, these amendments are worth considering if you're planning on franchising in Ontario. If these proposed changes are applied to the current Ontario laws, it will definitely impact the state of franchising in the province.