Law Times

Law times • OctOber 20, 2008 FOCUS Session to help lawyers sleep better BY DARYL-LYNN CARLSON For Law Times F proper guidance to the occasional client involved in a franchise, there may some peace coming soon. Franchise practitioners Allan or business lawyers who are restless at night worrying about whether they've given at the moment to find ready and complete answers." The lawyers have identified Dick of Sotos LLP and Geof- frey Shaw of Cassels Brock & Blackwell LLP are teaming up to present a session entitled Ma- jor Issues That Keep Franchise Counsel Up At Night at the Ontario Bar Association's day- long 8th Annual Franchise Law Conference: Putting Principles Into Practice, on Nov. 25. The session is billed as cov- ering practices that may lessen the ability of the franchisor to enforce contracts, the growing trend towards class action liti- gation, the pricing of goods in the context of the act, the limits on the exercise of franchisor dis- cretion, and how a franchisor's business might be competing with that of its own franchisees. "We know there are a lot of lawyers out there who practice a little bit in the area" but not often enough to become im- mersed in the details of the Ar- thur Wishart Act that came into force in 2000, says Dick. "So we've identified a number of issues we say will keep counsel up at night because they're not necessarily issues that have been re- solved in the law and they're issues that appear repeatedly," he says. Many of the issues the lawyers will discuss are based on matters that have arisen during current liti- gation they are involved with before the courts. In some of the cases, they represent clients on opposing sides so they'll be able to provide a well-rounded perspective. "For people like Geoff and I who work a fair bit in the area, we know that they're difficult issues and they do come up commonly," Dick explains. "There's no place you're going to be able to look to 10 areas that are most problem- atic and will help shed some light for colleagues on how to best ap- proach the issues for clients. The act is complex in its word- ing and interpretation, while re- cent developments such as the listeria outbreak have raised yet more questions in law. "That raised a question of one's there was a material change by the franchisor between the time the disclosure document was au- thored and the time it's used by the franchisor to sell franchises to franchisees," says Shaw. "It's a big question because duty of good faith," says Shaw, noting the fear that swept through the quick service restaurant indus- try following the listeria outbreak. "We were all concerned just as any other human but then as a lawyer, you're thinking, 'Oh my gosh how does [this] affect my client?'" There is the question of wheth- Franchise practitioners Allan Dick and Geoffrey Shaw are teaming up to present a session at an OBA conference on major issues that keep counsel up at night. er lawyers should be advising fran- chise clients to include arbitration clauses in their agreements. "It depends what situations they may face and whether arbi- tration is a good recourse," says Dick. He says he was involved in a matter recently that went to ar- bitration and was resolved in nine days although it might not be the best recourse for all disputes. "We'll cover what lawyers should be asking or telling their clients when deciding whether to include arbitration so they can make an informed deci- sion," he says. There are also ramifications under the Competition Act when setting up distribution systems and Shaw says in some cases, a lawyer might not even know his client is involved in a franchise. "A classic example is a client says to their lawyer, 'I have some distribution contracts I want you to review,'" he explains, "but it may in fact be a franchise that needs disclosure. It's an area where sometimes you don't even know that you're in there." The lawyers will discuss class actions based on cases they are involved in before the courts, and provide insight into how to settle issues in a class action context before or after certification. They will also address remedies under the act that enable franchi- sees to rescind an agreement if there hasn't been adequate disclo- sure of a "material change." "What keeps lawyers up at night could be whether or not Federal & Ontario Corporate & Consulting Editor: Stephen N. Adams, Q.C. Key statutes and regulations include: Business Corporations Act, R.S.O. 1990, c. B.16, and regulations Business Names Act , R.S.O. 1990, c. B.17, and regulations Business Records Protection Act , R.S.O. 1990, c. B.19 Business Regulation Reform Act , , 1994, S.O. 1994, c. 32, and regulation Canada Business Corporations Act, R.S.C. 1985, c. C-44, and regulations Corporations Information Act R.S.O. 1990, c. C.39, and regulation Extra-Provincial Corporations Act , R.S.O. 1990, c. E.27, and regulation Limited Partnerships Act , R.S.O. 1990, c. L.16, and regulation Partnerships Act , R.S.O. 1990, c. P.5 Securities Transfer Act, 2006, S.O. 2006, c. 8 [there is] no real clarity on what a material change is," he says. "If the client is renewing a franchise, there's obligation to disclose if there's been material change in the franchise," he continues. "But what's a material change, who knows? If you change the colour of your sign? Lawyers would say it's something that would make a difference of whether to buy or not but that's very subjective." There are also emerging issues surrounding multi-brand fran- chises that involve companies that own multiple franchises, some which may compete against each other, says Shaw. LT Reduce your research time with these useful features: Business Legislation 2008-2009 Also includes: Part III and related sections of the Ontario Corporations Act, R.S.O. 1990, c. C.38 Part II and related sections of the Corporations Act, R.S.C. 1970, c. C-32 Part VI, "Interpretation", of the 2006, S.O. 2006, c. 21, Sch. F Fees under the Ontario Canada Legislation Act, Business Corporations Act Summaries and Web sites for Policy Statements and Information Kits under the Canada Business Corporations Act and Information Sheets under the Ontario Business Corporations Act Order your copy today! www.canadalawbook.ca Federal & Ontario Corporate & Business Legislation (LT 1-4x3).indd 1 LT1020 PAGE 13 10/15/08 11:33:58 AM WHAT CAN YOUR ONLINE RESEARCH SERVICE DO FOR YOU? CAN YOU ACCESS CANADIAN JUDICIAL INTERPRETATIONS OF MORE THAN 30,000 TERMS? www.westlawecarswell.com/youcan Request a demo for a chance to win $2,500 in AMEX gift certificates Untitled-4 1 www.lawtimesnews.com YOU CAN. Words&Phrases, exclusive to WestlaweCARSWELL, quickly shows you how key terms have been interpreted by the courts. With WestlaweCARSWELL, AUTHORITATIVE. INNOVATIVE. TRUSTED. 9/30/08 9:50:56 AM

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