Siskinds franchise lawyer Peter Dillon was featured in AdvocateDaily.com for his article in the Franchise Law Journal.
See the full article below.
‘Canada: it’s like watching a car crash in slow motion:’ Dillon
By AdvocateDaily.com Staff
While franchising provides an effective way to distribute goods and services, foreign businesses may be dissuaded from expanding here because of Canadian franchise legislation and the judicial interpretation of it, London, Ont. franchise lawyer Peter Dillon writes in the fall 2017 edition of Franchise Law Journal.
“Canadian franchise legislation and its judicial interpretation has led to a substantial increase in compliance costs to franchisors and a substantial risk of devastating damage awards, including personal liability to the principals of franchisors,” writes Dillon, a partner with Siskinds LLP.
“These risks are often based on minor or technical failures in the franchisor’s disclosure document or disclosure processes.”
He says “significant legislative or regulatory changes should be a priority” in order to prevent the loss of such foreign business.
“In the meantime, practitioners preparing disclosure documents for use in Canada should proceed with extreme caution, a sound knowledge of both the legislative and judicial requirements for compliant disclosure, and adequate errors and omissions insurance.”
In his article, Dillon examines “the current mixed and maturing state of the developing franchise jurisprudence in Canada and posits that there are other queer happenings in the land of the midnight sun.”
He says there have been some judicial decisions that have led him to question “whether franchising would — or could — survive as a business model in Canada.”
Dillon says those preparing disclosure documents for use in this country would be wise to brush up on the case law, given the amount paid by the “captive bar insurance company on behalf of Ontario practitioners to settle claims.”
He says LawPro paid more than $2 million annually from 2011 to 2013 to settle an average of 15 franchise negligence cases per year.
“Because this early case law was created by a Court of Appeal,” writes Dillon, “it is of particular concern because it may require legislative amendment to overturn its impact.
“From time to time, a minor rebalancing of the judicial interpretation of franchise laws provides what the author sees as a more balanced approach in determining the relative rights of franchisors and franchisees.”
In the article, Dillon goes on to provide an overview of the current essentials of franchise disclosure in Canada.