Threat to the Franchise Model Re-Emerges in British Columbia

On July 26^th, the Canadian Franchise Association (CFA) filed for intervenor status in a BC Labour Relations Board hearing where Sobeys and several of its franchisees are seeking reconsideration of a decision that deemed them to be common employers for the purpose of collective bargaining with the United Food and Commercial Workers (UCFW). If intervenor status is accepted, the CFA will argue to preserve and protect the franchise business model in Canada.

A common employer designation has the potential to alter the franchisor/franchisee relationship in this case, making it easier to unionize entire franchise systems, and could change the way Courts and Tribunals view the franchise relationship.

Why should CFA members be concerned?

The decision strikes at the heart of the franchised business model. If left unchecked, not only could this decision be used by labour relations boards across the country as a dangerous precedent for union-related issues, the decision could be applied by Courts and Labour Boards on other employment-related issues, potentially exposing franchisors to claims by franchisee employees for unpaid wages, overtime, vacation pay, benefits, termination notice (or pay in lieu of notice), severance pay, wrongful and constructive dismissal, human rights violations, and payroll taxes. Simply put, there is now an increased risk an employee at one franchised business location can be deemed to be employed by their franchisor if the analysis by the BC Labour Relations Board is followed by other Tribunals or Courts.

In the United States, the expansion of joint employer led to increased costs, less equity, and less support for franchisees.

The franchise business model gives independent entrepreneurs an opportunity to start and sustain successful businesses with brand and system support from a franchisor. Under this model, the rights and responsibilities of the franchisor and franchisee are clearly delineated.

Support the CFA as it continues the fight against Common Employer

It takes a significant amount of time and resources to defend the franchise model against potential attacks, but we cannot do it alone!

We need your support to continue that fight against the common employer threat. Click here to support the CFA in its defense of franchises in Canada.

Background

On July 6, 2023, the BC LRB released a decision finding that Sobeys and several of its BC FreshCo franchisees were a common employer, based on the BC Labour Relations Code. Sobeys is seeking a “reconsideration” of that decision. The July 6 decision is a reconsideration of the decision made by the BC LRB on September 9, 2020, which found that Sobeys and certain franchisees were a common employer.

This 2020 decision was sent back for “reconsideration,” with a full hearing. The BC LRB held hearings in 2021 and 2022, but came to the same conclusion as in 2020, declaring that Sobeys and those franchisees were a common employer under the BC Labour Relations Code. Sobeys then applied for a reconsideration of the 2023 decision. The CFA is applying for intervenor status so we can make submissions to the BC LRB concerning the reconsideration.

What happens next?

The CFA will be working with a subcommittee made up of members of the Legal and Legislative Affairs committee to protect the franchised business model.

If intervenor status is accepted, the CFA and its lawyers will not be making submissions on behalf of either party in the hearing, but rather educating the BC LRB on common elements of the franchise model that we feel were wrongly used in determining common employer status. Those elements include the requirement to use approved suppliers, standardized uniforms, standardized signage, and standardized training for employees.

For more information about the CFA’s advocacy work and strategy, contact Derek Robertson, Senior Manager, Government Relations, at drobertson@cfa.ca.