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 Prince
Edward Island, 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.
Likely the most unique, and significant, feature of the Act is
that a disclosure document can be delivered piecemeal. Although the
pre-conditions for such delivery may be more cumbersome than the
"one document at one time" delivery requirement expressly
prescribed by Ontario, New Brunswick and Prince Edward Island, the
ability for multiple deliveries may be useful for many reasons
including, for example, if the franchisor's financial
statements are not available at the time that a franchisor wishes
to initiate disclosure to a prospective franchisee.
The following conditions are prescribed by the regulations for
multiple-part delivery of a disclosure document:
The statutorily-prescribed risk warnings under Section 3 of the
regulations must be provided with the first delivery of disclosure
materials provided to a prospective franchisee;
All information prescribed in Part 1 of Schedule A of the
regulations, being background information about the franchisor, its
directors, officers and partners, and litigation and bankruptcy
history must be provided together at one time;
The following statement must appear prominently at the top or
front of each document that forms part of the disclosure
THE FOLLOWING INFORMATION FORMS PART OF THE DISCLOSURE DOCUMENT
REQUIRED TO BE PROVIDED UNDER THE FRANCHISES ACT; and
The prescribed certificate of disclosure must be included with
the last part of the disclosure provided by the franchisor.
As such, although disclosure may be provided over time and in
any number of documents, the disclosure obligation under the Act is
not met until the last document forming the disclosure document is
provided. It is on this date that the 14-day disclosure review
period begins, during which neither the franchise agreement nor any
other agreement relating to the franchise can be signed by the
prospective franchisee or consideration paid by the prospective
The regulations also require in a number of instances a form of
"negative disclosure," a statement that no information is
being provided with respect to a specific disclosure item. If, for
example, the franchisor does not provide earnings projections or an
estimate of annual operating costs, the disclosure document must
provide a statement to that effect. A statement must also be made
in the disclosure document if training, manuals or other assistance
is not offered to the franchisee. The Certificate of Franchisor,
the form of which is prescribed by the regulations, requires a
supplementary statement if the franchisor is relying upon an
exemption from providing financial statements.
Finally, the Regulations expressly permit delivery of a
disclosure document by fax, courier or electronic means, which will
make providing the disclosure document to a prospect much easier
Although substantially similar to the disclosure requirements in
the other provinces, there are many unique elements in the Manitoba
Regulations that will require franchisors to modify their current
disclosure documents to comply with the new Manitoba
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.
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