Franchise workers in Ontario: Employee rights

What is a franchise employee?

A franchise employee in Ontario is someone who works for a business that operates under a franchise model. This model allows a business owner (franchisee) to use the branding and business system of a larger company (franchisor) to sell products or services.

Key points about being a franchise employee include:

• Employed by the franchisee: These employees are directly hired and paid by the franchisee, not the franchisor.
• Adherence to Brand Standards: They must follow specific operational procedures and service standards set by the franchisor.
• Operating under a Licensing Agreement: The franchisee operates the business based on a licensing agreement with the franchisor, which includes using the brand’s name and methods.

Who is a franchise worker employed by?

A franchise worker is employed by the franchisee, the individual or entity that owns and operates the specific franchise location.

While the franchisee is the direct employer responsible for hiring, managing, and paying the worker, the business operates under the branding and operational system of the franchisor. This relationship means the worker must adhere to the standards and procedures established by the franchisor, even though they are not directly employed by them.

What are my rights if the franchise is sold to a new owner?

If a franchise where you work is sold to a new owner in Ontario, your employment typically continues without interruption under the same terms of your existing contract, and your seniority and benefits should carry over to the new owner.

If the new owner decides not to keep you on board, you are deemed to have been terminated without cause. In this case, the responsibility for providing severance pay lies with the seller, not the purchaser.

• Read our blog on employee rights during a sale of business in Ontario to learn more about a change in ownership can affect your job.

Am I entitled to the same pay and bonuses as employees at other locations of the same franchise?

No. Each franchise location is independently owned and may offer different compensation packages based on the franchisee’s discretion, the local market conditions, and provincial employment laws.

For additional information, refer to your employment contract and discuss the matter directly with your employer.

LEARN MORE
• Do I automatically get pay raises in Ontario?

Who is responsible for handling workplace disputes?

Addressing workplace issues is primarily the responsibility of the franchisee, who is the direct employer. The franchisee manages day-to-day operations, including human resources issues, at their specific location.

However, depending on the nature of the grievance and the policies of the franchise brand, the franchisor may become involved in certain situations.

Can the franchisor influence my hiring, firing, or promotion?

The direct responsibility for these decisions lies with the franchisee, who operates the individual location and manages its employees.

The franchisor may have some influence on hiring, firing, or promotion practices within a franchise location, particularly if these practices are outlined in the franchise agreement or if they relate to maintaining brand standards.

What happens to my job if the franchisor revokes the franchisee’s license?

If the franchisor revokes the franchisee’s license to operate, the future of your job could be significantly impacted. Here are the possible scenarios and their implications for your employment:

1. Franchisor operates the location directly: Your employment might continue under the franchisor’s management.
2. Sale to another franchisee: Your job could continue with the new franchisee, subject to their discretion.
3. Permanent closure: You would likely lose your job and be entitled to a full severance package.

Reporting discrimination or harassment

For issues regarding employment discrimination or harassment within a franchise system in Ontario, you should first approach your direct supervisor or the human resources department. This should be done at your specific franchise location, as the franchisee is your direct employer and responsible for addressing workplace concerns.

If the issue is not resolved satisfactorily, or if it involves upper management at your location, you might consider escalating the matter to the franchisor, especially if the issue violates the franchisor’s policies or brand standards.

Severance pay for franchise employees in Ontario

Non-unionized employees working in Ontario for a franchise are owed full severance pay – as much as 24 months’ pay – when they lose their job. This includes individuals working full-time, part-time, and hourly.

The franchisee is responsible for providing an employee with a severance package.

Severance is the compensation a non-unionized worker in Canada receives from their employer when they are fired without cause.

Even if you are fired for cause, it’s very likely that you are still entitled to full severance because employees often don’t meet the conditions necessary for this type of dismissal.

LEARN MORE
• Severance pay for provincially regulated employees
• Rights to severance for food service industry workers
• Severance packages during mass layoffs

Regardless of a company’s grasp on employment law, they are legally required to provide proper compensation following a termination.

This concept applies during challenging economic conditions, downsizing, the closure of a business, or major public health events such as the COVID-19 pandemic.

WATCH: Employment lawyer Lior Samfiru explains everything you need to know about severance pay on an episode of the Employment Law Show.

The employment lawyers at Samfiru Tumarkin LLP have represented tens of thousands of employees over the years in severance package negotiations.

• LEARN MORE: Severance pay by company

We have successfully secured much larger amounts for individuals employed across a variety of positions, from entry level jobs to executives.

How to properly calculate severance pay

Employers often incorrectly calculate severance pay. There is a belief that severance pay is only one week’s pay, two weeks’ pay, or a week for every year of service an employee has with the company.

For non-unionized franchise employees, the main factors of termination or severance pay include:

• Age
• Length of service
• Position
• Bonuses
• Benefits
• The ability to find new work

To figure out how much compensation you may be entitled to, use our firm’s Pocket Employment Lawyer.

Don’t sign on the dotted line!

Do not accept any severance offer, termination papers, or exit agreement that the company may provide you with.

Once you sign back these documents, you eliminate your ability to negotiate a fair and proper severance package.

ADDITIONAL RESOURCES
• Severance Pay in Ontario
• Alberta severance packages
• Understanding severance in B.C.
• Layoffs in Canada

Generally speaking, most employers offer far less severance than what the law says you’re entitled to. This is referred to as a wrongful dismissal in Ontario.

An employment lawyer at Samfiru Tumarkin LLP can review your situation and explain how much compensation you are legally entitled to.

Talk to an employment lawyer

The knowledgeable employment law team at Samfiru Tumarkin LLP has helped tens of thousands of non-unionized individuals across the country.

In addition to severance package negotiations, our lawyers have experience securing solutions for the following employment matters:

Our lawyers in Ontario, Alberta, and B.C. stand ready to help you solve your workplace issues.

If you are a non-unionized employee who needs help with an employment issue, contact us or call 1-855-821-5900 to get the advice you need, and the compensation you deserve.

Disclaimer: The materials above are provided as general information about the rights of non-unionized employees in Canada. It is not specific to any one company and should not be read as suggesting any improper conduct on the part of any specific employer.