Over the past several months the CFA has continued to push governments across Canada to adopt new programs and make changes to existing programs to help franchised businesses get through this very difficult time.

Canada Emergency Wage Subsidy (CEWS) extended to December

On July 17, Finance Minister Bill Morneau announced changes to the federal government’s wage subsidy program that would extend the program until the end of the year and open the program to more businesses.

This is good news for franchised businesses across Canada.

The changes, which were approved by parliament in late July will extend the wage subsidy until mid-December and will ensure that businesses will still qualify as they reopen.

Under the previous version of the CEWS, a business had to have seen revenue drops of 30 per cent or more to qualify. That has been changed so that even companies that have seen a 10-15 per cent drop in revenue can now qualify.

Those companies who have seen a decline of more than 50 per cent will also see a top-up in their CEWS with a subsidy of up to 85 per cent of eligible remuneration.

Unfortunately, the program is now more complex which is why the CFA has been hosting a number of webinars on the topic. Please check the CFA’s COVID-19 resources page for our recent webinars on the CEWS extension.

Ontario: Arthur Wishart Act regulations announced

The Ontario government recently announced that it was moving forward to implement the un-proclaimed legislative amendments in the Arthur Wishart Act which will come into force on September 1, 2020.

The CFA worked closely with the Ministry of Government and Consumer Services, the Business Law Modernization and Burden Reduction Council, and the Premier’s Office on these changes over the past year.

We started by pushing the government to move forward with the enabling regulations that had not been implemented since the passage of Bill 154 in 2017. This advocacy led to public consultation in the fall of 2019 and many follow up meetings, phone calls, and briefings in the winter and spring of 2020.

Thanks to all the hard work of the LLAC sub-committee that drafted the CFA’s response to the public consultation and participated in numerous meetings, phone calls, and brief sessions.

These changes are expected to reduce the burden on the franchise sector. The key changes to Ontario’s Act are:

• Confidentiality agreements: Franchisors will be able to protect their confidential information by requiring prospective franchisees to sign basic confidentiality agreements in advance of the franchisor delivering a franchise disclosure document.
• Refundable deposits: Franchisors will be able to collect refundable deposits that do not exceed the prescribed amount.
• Updated amounts for the “minimum investment exemption” and “large investment exemption”: Franchisors are more likely to rely on these two exemptions now that the threshold amounts have been changed and the method of calculating the franchisee’s initial investment have been revised to include both actual and estimated amounts that the franchisee will invest to establish or acquire the franchise.

One issue that we are still working through is the treatment of U.S. Financial Statements. Ontario intends to allow U.S.-based franchisors to use the same audited financial statements used in their U.S. franchise disclosure document in Ontario, without needing a report from a Canadian accounting firm outlining the differences between U.S. GAAP and Canadian GAAP. The CFA will continue to work with the Ontario government to ensure that those U.S. statements are allowed under the regulation.

CFA members who are operating in Ontario or who plan to operate in Ontario should speak with their lawyers to ensure their Franchise Disclosure Documents are up to date.

Canada Emergency Commercial Rent Assistance (CECRA) changes are still needed

Over the past few months, the CFA and others have been actively lobbying for the following changes to the CECRA:

1. per cent
2. Inclusion of “dark sites” in the program
3. Allow tenants to apply for the CECRA without their landlord
4. Extend the CECRA program beyond July
5. Temporarily suspend property tax rebate for vacant properties (provincial/municipal issue)
6. Expand access to the Canadian Emergency Business Account (CEBA) so that landlords can use the loan on a site by site basis

We successfully convinced several provincial governments across Canada to institute a temporary moratorium on commercial rent default evictions.

Less than 5 per cent of commercial landlords have applied for CECRA

As of July 3, Canada Mortgage and Housing Corporation (CMHC), has approved applications for only 29,000 small businesses and total requested funding of over $221 million.

According to the Government of Canada’s “Key Small Business Statistics – November 2019” there were roughly 1.2 million businesses with less than 99 employees.

We are actively lobbying for the program to be extended beyond the end of July 2020.

A look at the “economic and fiscal snapshot”

On July 8, federal Finance Minister Bill Morneau tabled a federal “economic and fiscal snapshot” which outlined the status of the federal government’s books following all the pandemic related spending.

The government’s COVID-19 Economic Response Plan includes more than $230 billion in measures to support Canadians and businesses. The snapshot is formatted to give the government flexibility to scale those programs up or down in the coming months.

By the numbers

• Deficit for 2020-21 rises to $343.2 billion from $34.4 billion projected before the pandemic
• Net federal debt will hit $1.2 trillion
• Federal debt-to-GDP ratio is expected to rise to 49 per cent in 2020-21 from 31 per cent
• Direct federal support for Canadians and businesses: $212 billion
• COVID-19 slowdown has cost the federal treasury an additional $81.3 billion
• GDP will shrink by projected 6.8 per cent this year — worst since the Great Depression
• Economy is expected to bounce back by 5.5 per cent next year.

Although no Parliamentary vote is required to pass the “snapshot”, NDP Leader Jagmeet Singh stated that his support for the Government could be contingent on its contents, and the other Opposition leaders were also vocal in setting criteria for the fiscal update.

The NDP gave the snapshot a “C+”, primarily criticizing the lack of support for persons living with disabilities and absence of action to increase taxes on the wealthy and eliminate tax havens.

The Conservatives argued that the Government lacks a plan to stimulate growth, attract business investment, and get Canadians back to work and they also sounded alarm over the size of the Federal debt. The Bloc Quebecois also called for more measures to get Canadians back to work.