The recent case of 1448244 Alberta Inc. v Asian Concepts Franchising
Corporation ("Asian Concepts"), a decision
of the Court of Queen's Bench of Alberta, serves as a reminder
of the importance of technical compliance with the disclosure
requirements in Canada, particularly those relating to certificates
of full disclosure, and of the consequences of failing to properly
comply with those obligations.
In this case, the plaintiff franchisee alleged that the
defendant franchisor, Asian Concepts Franchising Corporation, had
provided a significantly deficient disclosure document, and the
franchisee sought to obtain partial summary judgment in the form of
a declaration that the disclosure document provided was not
"substantially complete" within the meaning of the
Alberta Franchises Act ("the Act") and its
Regulations, as it sought to rescind its franchise agreement.
The franchisee alleged that the disclosure document was
deficient in a number of respects, but that the lack of two
signatures on the certificate alone was sufficient to render the
disclosure not "substantially complete". The Court
agreed, noting in its reasons that because the disclosure document
contained only one signature, this deprived the franchisee of
having two parties motivated by potential liability to make full
disclosure, and also of a potential cause of action against a
second signatory in the event that the franchisee suffered a loss
resulting from a misrepresentation contained in the document.
The Court relied on the Alberta Court of Appeal's decision
in Hi Hotel Ltd. Partnership v Holiday Hospitality Franchising
Inc., reiterating the statement by the Court of Appeal in that
case that a signed certificate is extremely important, and in fact,
"... is the linchpin of the substance of the
The Court in Asian Concepts held that the incomplete
certificate prevented the disclosure document from being
substantially complete as required by the Act, and granted partial
summary judgment in the form of a declaration that the disclosure
document was not substantially complete.
This decision is a reminder to franchisors in Canada of the
importance of complying with the form and content requirements of
applicable provincial franchise statutes, in particular, those
requirements relating to certificates. The decision is an example
of how non-compliance with such requirements can result in a
finding that a disclosure document is not substantially complete,
or so deficient as to amount to no disclosure at all, and provide
franchisees with an easy way out of a franchise
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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