The CEO for Friesens Corporation is working with a group to advocate the federal government for a better structure to employee-ownership in Canada.
The Altona-based book, yearbook and packaging manufacturer has been employee-owned in some form since the 1950s.
“Today there are very few employee-owned companies in Canada and there are thousands in the United States and over 1,000 in Britain. Those two countries have been very active in promoting and creating a system whereby a company can transition into employee-ownership from individual or family ownership, and that doesn't exist in Canada today,” explained Chad Friesen.
As a result, companies like Friesens have developed their own structures and gone it on their own to create employee ownership, he added.
"And so, when I talk about us being owned by an employee trust, that trust model is not meant for employee-ownership. We kind of make it work, but it doesn't work well."
Together with the Canadian Employee Ownership Coalition, Friesens has been advocating for four things.
The first is for a better trust structure so companies can easily transition to an employee-ownership trust.
The second item is for simpler, easy to understand rules around employee-ownership.
"Today, our lives are a little bit too complicated in how we navigate through some of the financial and tax aspects of running an employee-owned company," said Friesen. "And so, we've been advocating for simpler rules so that owners can see a path through and it's not complex."
Third, added Friesen, is that the Coalition believes employee-ownership should come at no cost to the employee.
"We advocate for a model where employee-ownership can be the great equalizer of people. It doesn't matter, you know, whether you came from a wealthy family or whether you're a newcomer to the country that is just getting by. We believe that you should have the same access to ownership."
Finally, the coalition is asking the federal government to implement tax incentives that will encourage owners to sell to their employees.
"Because what we're asking owners to do is probably not sell at their top market price," said Friesen. "It takes a little bit more effort to sell your business to employees, and often the owner has to finance part of the sale for a longer period. We think that there's a lot of owners out there that really want to sell to their employees but when they look down the path and say, 'boy, that's going to take longer, it's going to cost me more and I'm going to have to finance it long term', there's just not as much incentive to pursue it."
"We've looked at a number of surveys through groups like CFIB (Canadian Federation of Independent Business). They show the majority of business owners want to sell to their employees and the vast majority of employees want to work for employee-owned companies, and so to us it feels like we just need to make the conditions right to put those two things together and have an incredible outcome for our country," said Friesen.
The Coalition's efforts haven't gone unnoticed.
According to Friesen, the federal government announced in Budget 2023 that it is going to establish an employee ownership trust. However, he noted it has applied some rules that the Coalition feels are a bit of an obstacle. The Coalition is now trying to help smooth out some of those obstacles.
Most of the group's time, however, is being spent trying to convince the federal government to implement the tax incentives.
"Because that's really what made the difference in the United States and in Britain," said Friesen. "Each of those countries put an employee-ownership model in place but it wasn't until they applied some tax incentives to it that it really took off in those countries."
You can listen to the first episode of Industry Leaders in the Pembina Valley, below, with CFAM Radio 950 Morning Show Co-Host Chris Sumner talking with Friesens C.E.O. Chad Friesen about employee ownership.