November 21, 2023
As you may already know, advocacy is one of the four key pillars of the work that the Canadian Franchise Association (CFA) conducts on behalf of franchising in Canada. By continually advocating on behalf of Canadian franchising, the CFA can ensure that the franchise business model is strong now and into the future.
The CFA works extensively with our members and key industry stakeholders to help protect the franchise business model and ensure its continued success in Canada.
Through the hard work of the CFA, we were instrumental in the creation of the programs that many small businesses relied on to make it through the COVID-19 pandemic; programs like the Canada Emergency Business Account (CEBA), the Canada Emergency Commercial Rent Assistance (CECRA), and the Canada Emergency Wage Subsidy (CEWS).
As we finally emerge from the last effects of the pandemic, we are faced with a challenge that poses a great threat to the franchise business model in Canada. Over the past few years, we have seen a trend in many U.S. States where franchisors are designated as common/ joint employers with their franchisees. Most recently, we have seen the U.S. National Labor Relations Board issue a ruling that will make it easier for a franchisor to be deemed a joint employer when it has control, even if it is indirect, over essential terms and conditions of employment such as pay, scheduling, hiring and firing, and supervision. While the franchising community in the U.S. is actively fighting back against attempts to weaken the franchise business model, we must be proactive in defending it across Canada.
Too often government officials lack an understanding of the real strength of the franchise business model. When someone buys a local franchise, they go into “business for themselves, but not by themselves.”
By buying a franchise, the local franchisee gains access to a proven business concept, brand, and processes while running their own small business. In addition, the franchisor provides the franchisee with ongoing support and assistance to ensure their success. The strength of the franchise model lies in this foundational franchisorfranchisee relationship.
By amplifying the message of the CFA, we can work together to educate elected officials across Canada on the strength of the franchise business model, as well as propose ways to safeguard it against these potential threats.
The CFA continues to advocate for clarity in employment law so that franchisors can protect the integrity of their brand and protect the franchisee’s role as an independent small business owner. That is why the CFA has adopted a four-factor test to assist governments in determining whether a common employer relationship exists between a franchisor and its franchisee. The four-factor test is:
1. Who hires or fires the employee?
2. Who supervises and controls the employee’s work schedules or conditions of employment?
3. Who determines the employee’s rate and method of payment?
4. Who maintains the employee’s employment records?
A franchisor that does not engage in these activities should not be considered a joint employer of the franchisee’s employees. So far, this test has been successfully adopted in 19 U.S. states since 2015 to protect against unfair common employer designations. The CFA continues to advocate for provincial governments across Canada to adopt the four-factor test to provide more clarity in the franchisor-franchisee relationship.
Now more than ever it is essential to support the CFA’s advocacy efforts in protecting the franchise business model in Canada. An investment of your time or resources in supporting the CFA in its advocacy efforts is the best investment in ensuring that the franchise business model in Canada remains strong for years to come.
For more information about the CFA’s advocacy work and strategy, please contact Derek Robertson, Senior Manager, Government Relations, at drobertson@cfa.ca.
