On Monday, October 5, the Liberal government in B.C. introduced
Bill 38 (the Bill), enacting a Franchises Act (the Act),
for first reading in its legislature. The possibility of franchise
legislation in the province comes as no surprise given the
government's recent investigation into regulating franchising,
and the recommendation of the British Columbia Law Institute's
(BCLI) Report on a Franchise Act for British Columbia
here for more information). The private member's bill
proposing franchise legislation that was introduced last spring,
which we reported on
here, did not progress past first reading.
As expected, the proposed legislation closely follows the
format of the Uniform Law Conference of Canada's Franchises
Act and is substantially similar to the other legislation that
is already in force in Alberta, Ontario, New Brunswick, Prince
Edward Island and Manitoba.
Among other things, the intentions of the Bill are to: (i)
enact a duty of fair dealing among the parties to a franchise
agreement and remedies for breach of that duty; (ii) confirm
franchisees' right of association and provide remedies for
infringement; (iii) require disclosure by franchisors to
prospective franchisees of financial and other information about
the franchise prior to entering into a franchise agreement; (iv)
provide conditions for rescission of a franchise agreement; (v)
provide circumstances in which there may be liability for damages;
and (vi) prevent the waiver of application of the Act in the event
of a claim or dispute under a franchise agreement that is subject
to the Act.
The Bill also includes some noteworthy concepts that are not
found in all (or in some cases, any) of the other regulated
The Bill provides for the explicit ability to deliver
disclosure documents by email.
The Bill has a much-needed "substantial compliance"
provision, which states that the existence of a defect in form, a
technical irregularity or an error in a disclosure document (or
statement of material change) will not affect its validity provided
that such blemishes do not affect its substance and, further, that
the disclosure document (or statement of material) is
"substantially in compliance" with the Act. Currently,
Ontario is the only regulated province that does not include such a
Some forms of confidentiality agreements and site selection
agreements will not be considered "franchise agreements"
and may be signed in advance of disclosure.
Similarly, monetary deposits paid by a prospective franchisee
that are refundable without obligation will not trigger a
A franchisee need not elect between a rescission remedy and a
statutory right of action for damages but that franchisee may not
receive double recovery if successful in both instances.
The Bill expressly provides that a release obtained with
respect to the settlement of a specific action, claim or dispute
will not be rendered void by the general provision that disallows
waiver or release of the application of the Act.
If the Bill becomes law, British Columbia will be the sixth
Canadian province to adopt franchise legislation. However, even if
all progresses smoothly, it is unlikely that the Bill will become
law until sometime in 2016, with the possibility of a further delay
before the disclosure regulation (of which a draft has yet to be
publicly circulated) comes into effect.
In Ontario Securities Commission v. Tiffin, the Ontario Court of Justice clarified the limits of the definition of "securities" under s.1(1) of the Securities Act, as it relates to promissory notes. The defendant in the case was charged with trading in securities without being registered and while prohibited, and without filing a prospectus.
The OSC has issued a press release advising stakeholders that Ontario securities law may apply to any use of distributed ledger technologies, such as blockchain, as part of financial products or service offerings.
The use of electronic signatures is becoming increasingly commonplace in commercial transactions, as individuals and businesses capitalize on the administrative efficiency afforded by today’s digital world.
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