CFA Presentation to Ontario Minister of Finance
Corona Virus Update
CFA Presents to the Ontario Minister of Finance Pre-Budget Consultation in Mississauga
On Tuesday February 4, the CFA’s Director of Government Relations and Public Policy made a presentation to Ontario Finance Minister Rod Phillips at the governments pre-budget consultation in Mississauga.
Thank you for this opportunity. My name is David Black. I’m the Director of Government Relations and Public Policy at the Canadian Franchise Association.
Franchising is the most ubiquitous form of business in Canada.
Every single day Ontarians from every single corner of this province are interacting with franchised businesses. From getting their morning coffee, to dropping their kids off at day care or at a learning centre, to buying gas, to getting their houses cleaned, to having lunch, to picking up their dry cleaning, to buying food for dinner, to going to a restaurant with friends, to stay¬ing at a hotel while on vacation or during a business trip, the franchise model is an important part of their day-to-day lives.
Franchising is not a business itself, but a way of doing business.
It’s a business relationship that is at is heart a contractual relationship between the franchisor and the franchise.
Franchising is a lot like a political party.
You have a franchisor, the central party providing support, branding, advertising, IT, etc. and you have the riding associations, the franchisees, using the tools but also working so they succeed in their part of the province. They work together to achieve something greater.
The Canadian Franchise Association (CFA) is a national, not-for-profit association representing the 12th largest sector of the Canadian economy.
Franchising contributes over $100 billion per year to the Canadian economy and create jobs for over 1.9 million Canadians.
Franchising employs 772,000 Ontarians in 37,000 establishments adding $50.6 billion to Ontario’s GDP.
We speak for a business sector that represents every industry and touches the lives of every Canadian, in every community across the country. Our purpose is to help everyday Canadians realize the dream of building their own business through the power and opportunity of franchising.
Protect the Independent Nature of the Franchisor-Franchisee Relationship
The franchisor/franchisee relationship is, at its heart, a contractual relationship. Franchisors and franchisees sign a legal contract (a Franchise Agreement) which lays out, in great detail, the roles and responsibilities of the franchisor and the franchisees along with the term of the agreement.
Unfortunately, there is a catch-22 between employment law and the franchisor protecting the intellectual property and enforcing standards so that the product or service meets the customers’ expectations everywhere.
Employment law can penalize franchisors for establishing control mechanisms to protect their marks because some enterprising litigators are trying to argue that by clarifying licensing trademarks and controlling or exercising control over those trademarks the franchisor has created an employment relationship with the franchisee and the franchisees employees. This is simply not the case.
We need government address this catch-22 by adopt a four-factor test that will determine if a joint employer relationship exists or not. Does the franchisor…
1. hire or fire the employee;
2. supervise and control the employee’s work schedules or conditions of employment;
3. determine the employee’s rate and method of payment; and
4. maintain the employee’s employment records.
Increase the Small Business Deduction Threshold
We do appreciate that Ontario has reduced the tax rates on small businesses in an effort to keep them competitive. My members applaud the government for this step.
We are concerned however that even with these rate reductions the tax expenses for small businesses is increasing at a fast rate than inflation which means there is less money for salaries and capital investments.
One of the big challenges facing small business is bracket creep. The current small business threshold has been kept at $500,000 for a decade.
We believe that threshold is too low and needs to be raised to $600,000 to be in line with CPI over the same period. The bracket creep has been addressed for personal tax rates however corporate tax payers are still being penalized.
We urge the government of Ontario to increase the small business threshold to $600,000 and index the threshold to the CPI.
Reform the property tax system to protect businesses from unsustainable property tax hikes
Many businesses across Canada are facing an existential threat in the form of unsustainably high property tax bills. This problem is directly caused by the rapid appreciation of property in a large number of Canada’s major cities due to Assessment Authorities (BC Assessment, MCAP, etc) valuing property based on its “highest and best use”, not strictly on the current use.
As a result, businesses, whether property owners themselves or through their leases, are being taxed on the future development potential of their sites with little regard for the current use of the property or the cash-flow or profitability of the current business. These high property tax bills can threaten the survival of many small and medium-sized businesses, and risk hollowing out local economies as businesses are forced to either relocate or close altogether due simply to the skyrocketing cost of their property tax bills.
We urge Ontario to have MPAC develop policies that would address this challenge to ensure property tax rates for small businesses remain affordable.
Reduce red tape – Governments should accept internationally recognized accounting standards in franchise disclosure
The Arthur Wishart Act requires a franchisor to disclose to a prospective franchisee information about the business, the royalties, past performance, future expected performance etc. Basically, everything that a prospective buyer would need to make an informed decision about how to invest their hard-earned money.
Unfortunately, there is some unnecessary red tape that wastes time and money. Almost every franchisor coming to Ontario uses financial statements prepared according to Canadian standards instead of allowing international standards which are just as rigorous.
The CFA recommends that Ontario update the Arthur Wishart Act and accompanying regulations to deem the following accounting standards as acceptable under franchise disclosure legislation.
• International Financial Reporting Standards – Generally Accepted Accounting Principles (IFRS-GAAP)
• United States – Generally Accepted Accounting (US-GAAP)
Thank you for this opportunity to present to you today.
BC report shows support for developing accessibility legislation
Last week the BC government released the accessibility consultation summary report which showed strong support for government to develop legislation to make B.C. more inclusive and accessible. The report was done following a public consultation that ran from Sept. 16 to Nov. 29, 2019. The Province heard that people support developing accessibility legislation as outlined in the Framework for Accessibility Legislation.
The BC government will continue to engage with persons with disabilities, local governments, Indigenous peoples and key stakeholder groups and organizations in developing future standards and regulations. The CFA will follow the issue and get involved where appropriate.
The federal government, Nova Scotia, Quebec, Ontario and Manitoba have accessibility legislation in place. To read the Summary Consultation Report
2019 novel coronavirus: Outbreak update
For the most up to date information on the Coronavirus please see the Public Health Canada website.
The Public Health Agency of Canada (PHAC) has assessed the public health risk associated with 2019-nCoV as low for Canada. Public health risk is continually reassessed as new information becomes available. As of February 8, 2020, 7 cases of 2019 novel coronavirus (2019-nCoV) have been confirmed in Canada.