The Ontario Human Rights Tribunal (OHRT) recently refused to dismiss an employee’s human rights complaint against McDonald’s Restaurants of Canada Limited (MRCL) of discrimination based on family status and marital status. MRCL is the franchisor of the McDonald’s restaurant system in Canada.
In Lindsey v. McDonald’s Restaurants of Canada Limited, 2014 HRTO 372 (CanLII), the complainant alleged that her former employer, the franchisor, and MRCL, breached the Human Rights Code of Ontario when her family status and marital status were not accommodated and when her employment was terminated. In particular, she alleged that the franchisee’s policy requiring part-time employees to be available for midnight shifts had an adverse effect on her due to her childcare obligations.
MRCL moved to have the complaint against it dismissed on the basis that the complainant was an employee of its franchisee and that, as franchisor, MRCL provided only operational support to the franchisee, maintaining that it did not participate in or control the day to day operations of its franchisees.
The tribunal dismissed MRCL’s request to be removed as a respondent in the application, ruling that it could not be determined “at this early stage whether [the franchisor was] legally responsible for the policies that the applicant alleged were discriminatory.” Moreover, the tribunal ruled that it could not be determined at this stage “whether the franchise agreement or [the franchisee’s] exercise of its obligations under that agreement were a factor in any discrimination experienced by the applicant.” Finally, the tribunal held that it could not be determined “at this early stage whether any discrimination in this case is connected to the ‘operational support’ [MRCL] provides to [the franchisee].”
The refusal of the OHRT to dismiss applications against franchisors prior to a full hearing is nothing new. There are numerous reported decisions of its refusal to do so. This fact makes the behaviour of the tribunal all the more frustrating.
Administrative hearings are expensive. A franchisor needs to prepare an entire case in defence of its own position, and participate in the entire proceeding as it relates to its franchisee. The typical cost is measured in tens of thousands of dollars. Of course, virtually every franchise agreement provides for an indemnity from the franchisee to the franchisor of the franchisor’s legal costs, so the end result is a staggering legal bill to a small business owner. Given that the applicant in these proceedings bears no costs liability, the refusal of the tribunal to make preliminary decisions in these matters is nothing short of punitive.
This is all the more true given that, to my knowledge, the tribunal has never, in the end result, found a franchisor liable for the acts of its franchisee. Given the familiarity of the tribunal with the workings of a typical franchise arrangement (and in particular, that of McDonald’s—see also Wozenilek v. McDonald’s Restaurants of Canada RTO 1120 (CanLII)), it does not seem too much to ask that the tribunal direct some of its resources to this issue, and dismiss the franchisor from the proceedings, as early in the proceeding as possible.
A willingness on the part of tribunals and other courts to make decisions sooner would go a long way toward reducing court backlogs, reducing costs, and sending a message to plaintiff’s counsel that naming franchisors—who are distinct legal entities from their franchisees—is not a practice that should be engaged in, absent some evidence to support the claim.
This article was orginally posted on AdvocateDaily.com