by Temple Scott Associates

Yesterday, the Bank of Canada raised its benchmark interest rate by another 25 basis points, bringing it to levels not seen since 2001. The Bank’s key interest rate now stands at 5.0% with back-to-back increases in June and July, following a status quo period for the first six months of 2023.

While this will lead to increased costs for many small businesses, it is an increase that lobbying can’t control, but only try to predict and plan. There have been many indicators in the last month that this was the likely path, while the June increase caught many off guard. Now the speculation with start for the next Bank of Canada announcement on September 6, 2023. Early speculation is mixed among the major banks, so if the economy doesn’t react and inflation come down, we could see another increase.

All this to say, we have to be prepared for announcements that we can’t control, but that still leaves a lot of room to speak out and educate our legislators on the pros and cons of certain announcements.

In a recent study released on the Competition Guidelines conducted by the Competition Bureau of Canada, the CFA was able to advocate for a hand’s off approach to the franchise sector. And the Bureau has indicated further reviews may be required where we can once again advocate for even more measures to protect the franchise business model.

Thanks to the CFA legal team, in the current format, the Bureau has strengthened the language acknowledging the importance and legitimacy of labour-related restraints in many business arrangements and has added franchise agreements to the list of business agreements – a specific request from CFA.

On an individual basis, one CFA member managed to lobby the same Competition Bureau with respect to the enhancing competition in Canada’s grocery sector after the industry came under fire for collusion and price-fixing. A specific recommendation in the report is to limit the use of property controls that make it difficult for new grocery stores to open. While this is also not the final report, this reference resulted from direct input from a franchisor and may lead to a significant change to rights granted to all tenants in mall settings. Again this could provide more opportunities for all retail franchises.

Advocacy works but it is not an exact science, nor is it a timely one. Due diligence and timely approaches are required and patience is an absolute must. Focus on the issues you are likely to be able to impact and monitor and prepare for those you can’t.

Source: Temple Scott Associates