Franchise chains have been the object of many lawsuits over the years, and the Ontario Legislature had hoped to curb the number of nasty disputes by passing  disclosure and fair-dealing legislation — the Arthur Wishart Act (Franchise Disclosure) 2000. The Act and accompanying regulations came into effect Jan. 31, 2001. The law requires franchisors to supply a package of contracts and related information before a prospective franchisee signs or pays anything.

Franchisors must allow someone at least 14 days to, among other things, review audited financial statements, read about the background of the franchisor and  outstanding suits, and contact franchisees listed in the documents for their comments. So onerous is the penalty for failing to provide this information — a full refund of money plus compensation for the prospective franchisee's related losses — all franchisors were expected to fall into line.

 But many would-be franchisees are unaware of their rights. No government or industry body was assigned to review the disclosure documents or license salespersons the way the Alberta Securities Commission did before June, 1995. Nor are there fines or jail terms prescribed. The only way for a dissatisfied franchisee or prospective franchisee to seek compensation is to go to court at great expense and satisfy a judge that proper disclosure was not provided.

The first time a judge applied the Wishart Act was in late February [2003], ordering Solhi, 3 for 1 and two companies directed by Bagherzadeh to pay $115,000 to  Karamjit Gill, Mamta Patel and their company, MAA Diners Inc.  The award covered the price of the franchise, plus $12,500 for the women's losses from setting up and operating for a few weeks a Mississauga store the judge
 agreed was in a deplorable state when they took possession. Solhi and the companies claimed they met requirements for disclosure. But Justice Gertrude Speigel of the Ontario Superior Court of Justice rejected their explanation that no copies of the disclosure materials were made because of "sloppy paperwork."  "In my opinion, this submission must fail," the judge wrote. The judge said it was also not enough that a lengthy agreement signed by the women included an acknowledgement that they had been afforded the opportunity to receive the disclosure documents in time.