The grant of franchises in the Province of Manitoba will be subject to regulation as of October 1, 2012, joining Ontario, Alberta, New Brunswick and Prince Edward Island with pre-sale disclosure legislation in Canada.
As a result, franchisors offering franchises in Manitoba will be required to amend their current disclosure document to comply with Manitoba's requirements. Like Alberta, New Brunswick and PEI, the Manitoba Franchises Act allows for a "wrap-around" to a pre-existing disclosure document in order to include the Manitoba-specific requirements.
While Manitoba's disclosure Regulation mirrors, in many respects, the disclosure requirements in Ontario, Alberta, New Brunswick and PEI, there are some noteworthy differences.
Unlike Ontario's requirement that a disclosure document be delivered as "one document at one time", the Manitoba legislation permits delivery of a disclosure document in parts, subject to certain prescribed requirements for delivery of certain information at certain times and together with certain other prescribed information. As a result, the 14-day disclosure review period before a prospective franchisee signs any agreement or pays any consideration in respect of the franchise does not begin until the last of the disclosure document is provided.
The Regulations also require in many cases a form of "negative disclosure". For example, if the franchisor does not provide earnings projections, a statement to that effect must be included in the disclosure document. A similar statement is required if training, manuals or other assistance is not offered to the franchisee and, if the franchisor is exempt from providing financial statements, then the required signed Certificate of full disclosure must include a prescribed statement that the franchisor is relying on the exemption Regulation.
Finally, the Regulations expressly permit delivery of a disclosure document by fax, courier or electronically which will make providing the disclosure document to a prospect much easier for franchisors.
Although substantially similar to the disclosure requirements in the other provinces, there are many unique elements in the Manitoba Regulations which will require franchisors to modify their current disclosure documents to comply with the new Manitoba requirements.
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.
