Canada: How Will Canada's New Anti-Spam Law Affect Your Franchise?

Last Updated: June 16 2014
Article by Chad Finkelstein

If it feels like you've been hearing about the federal government's drafting, re-drafting and re-re-drafting of Canada's anti-spam legislation (CASL) for years, it's because you have.  And though the law was finalized months ago in advance of a July 1, 2014 implementation date, the hits have just kept on coming to further clarify or confuse Canadian businesses' understanding of what's involved.  Whether it has been by way of the government's ongoing publication of bulletins, guidelines and FAQs about CASL, or the legal community advising more and more clients regarding compliance and better understanding the scope of CASL, it feels like much has changed since I last wrote in this space in late-March regarding what franchised businesses needed to know.

By now, we have all read about what is generally captured under terms like "commercial electronic message", "express consent" and "implied consent" (spoiler alert – a lot), and the heft of the fines the government may charge for non-compliance (A LOT).  But I want to focus this blog specifically on the impact of CASL on franchise systems doing business in Canada.

First, it is important to keep in mind that e-mails sent across franchise systems from franchisor to franchisee or between franchisees is not considered to be a prohibited type of message under CASL (phew, said no one since as that makes logical sense).  That's pretty much CASL's only recognition of the uniqueness of the franchise business model.  Commercial electronic messages are prohibited from being sent unless the sender has the recipient's express or implied consent to send them.  The bucket of "existing business relationship" is likely to be the instance of implied consent that will be relied upon by most businesses as it means that messages can be sent to people provided that that person has purchased a product or service from the sender within the last two years.

If that makes a franchisor's head office nervous, it should.  Because in most cases, the transaction between customer and merchant takes place at the franchisee level, not between customer and franchisor.  When I drop my business card in a bowl at a local sandwich shop for a chance at a free lunch, I just gave my implied consent to the franchisee that they can contact me – not the franchisor.

The franchisee can attempt to get consent on behalf of the franchisor, but, unfortunately, if the primary sender of a message is collecting that consent on behalf of a third party (in this case the franchisor), that third party requires the express consent of the recipient.  Accordingly, whenever a customer is providing some form of consent (express or otherwise) to a franchisee, reference should be made somewhere that the customer is also agreeing to receive email communications from the franchisor. 

However, the recipient must be provided with the opportunity to withdraw from all email communications sent on behalf of these third parties.  To that end, the subscription management tool should offer the option to unsubscribe from either the communications sent by the franchisor and the franchisee.  If third party subscriptions are unsubscribed from, then any third party who has relied on the consent obtained on their behalf needs to be notified by so that they know to cease sending communications to that individual.

In an effort to combat unsolicited emails, CASL has inadvertently created way more of those messages in the run-up to July 1 as businesses scramble to obtain as much express consent from their distribution list as possible.  If your inbox is anything like mine, you have received a plethora of emails seeking your opt-in consent and there's more coming.  Oddly, most of the emails I have received in this respect have been from law firms (go figure), but in light of the third party consent rules, franchisors should take a close look at CASL with their legal advisors and determine whether similar express consent emails sent before July 1 might be the safest way to go. 

Some franchise systems may be able to creatively squeeze within a handful of other exemptions from the consent requirement, but I'm expecting my inbox to get swamped with these requests from my friends within the franchise industry over the coming weeks.

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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Chad Finkelstein
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