The stated purpose of franchise legislation in Canada is to ensure the disclosure of pertinent information by franchisors to prospective franchisees and, to some extent, to alleviate the power imbalance existing between franchisors and franchisees.

Manitoba recently introduced legislation to govern the sale and operation of franchises. New Brunswick did so earlier.

Manitoba Franchise Legislation

Bill 15 The Franchises Act of Manitoba received its third reading and Royal Assent on June 17th, 2010, but regulations are still being drafted.

Bill 15 is modelled on The Uniform Franchises Act of the Uniform Law Conference of Canada and has been used by some of the other provinces. As a result, The Franchises Act is similar to many of the existing franchising statutes of other provinces. This will make it easier for franchisors who operate in multiple regulated provinces to comply with the requirements under the Act.

Bill 15 imposes duties and obligations on both parties to a franchise agreement, including:

  • A duty of fair dealing by each party.
  • An absolute right of a franchisee to associate with other franchisees.
  • Disclosure of specified information by a franchisor delivering a disclosure document to a franchisee at least 14 days before the franchisee signs a franchise agreement. The required disclosure includes a copy of the franchise agreement and related agreements, financial statements of the franchisor and, generally, all material facts about the franchisor and the franchise system. If all required information is not disclosed by the franchisor, the franchisee may cancel the agreement within a certain period of time.
  • A franchisee may sue a franchisor for any loss suffered because of a misrepresentation or omission in the information disclosed.
  • A franchisee cannot waive its rights under The Franchises Act.

A copy of The Franchises Act is available for viewing at http://web2.gov.mb.ca/bills/39-4/b015e.php#top. Regulations are in the drafting process.

New Brunswick Legislation

Regulations to Bill 6 The Franchises Act were issued on June 10th, 2010. The Regulations provide disclosure requirements which are similar to those currently in force in Ontario. However, the New Brunswick Regulations state that they will not come into force until February 1, 2011 and therefore could be amended by the legislature in the meantime.

A copy of the New Brunswick Franchises Act is available at:

Copies of the New Brunswick Regulations are available at:

Summary

Five of the ten provinces of Canada now have franchise legislation, however only Alberta, Ontario and Prince Edward Island legislation is in force at this time. As outlined above, New Brunswick and Manitoba have draft franchise legislation, but their Regulations must be finalized before the legislation will be declared in force. Franchise legislation in New Brunswick and Manitoba will come into force on dates fixed by proclamation of their governments.

We will advise you as each proclamation is made.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.