On October 5, 2015, the British Columbia government introduced a
draft Franchises Act (BC Act). The BC Act would apply to
franchise agreements relating to franchises that are operated
wholly or partly in British Columbia.
Following the lead of jurisdictions such as Ontario, Alberta,
Manitoba, New Brunswick and Prince Edward Island, each of which has
a statute governing franchises, the BC Act will impose a duty of
fair dealing on parties to a franchise agreement, confirm a
franchisee's right of association and require franchisors to
disclose certain information to franchisees prior to the franchisee
entering into the franchise agreement. As in the other Canadian
jurisdictions with franchise legislation, under the BC Act
franchisees will have rights of rescission for a franchisor's
failure to provide a franchise disclosure document and a right of
action for damages for a misrepresentation by the franchisor.
The BC Act contains a very broad definition of
"franchise" and reflects a trend in Canada toward
increased regulation of franchises. As a result of this trend, over
the last several years we have seen increased litigation in the
franchise law context. Much of this litigation has been complex and
expensive due to uncertainty over how franchise legislation –
and the parties' duties of good faith and fair dealing –
will apply to specific types of commercial relationships.
Although the British Columbia government has publicly stated
that the BC Act reflects the legislative framework applicable to
franchise relationships in other provinces, there are several key
differences between the BC Act and, for example, Ontario's
Arthur Wishart Act(Franchise Disclosure)
(Ontario Act). These include the following differences:
The BC Act, unlike the Ontario Act, makes explicitly clear that
the duty of fair dealing applies not only to the performance and
enforcement of the franchise agreement, but also to the exercise of
a right under the franchise agreement.
The BC Act contains additional "due diligence"
defences in respect of an action for damages for misrepresentation
against a non-franchisor.
The BC Act expressly provides that certain technical
irregularities will not nullify the legal effect of a franchise
Under the BC Act, the payment of a refundable deposit would
not, in and of itself, trigger the requirement to deliver a
franchise disclosure document to a franchisee.
Unfortunately, the BC Act has not resolved some of the issues
found in the franchise legislation of the other provinces. For
example, if enacted in its current form, the BC Act would have
broad and likely uncertain application to a wide range of
commercial relationships. This could create difficulties in
drafting franchise agreements and lead to litigation (as we have
seen under the Ontario Act). However, it remains to be seen whether
the courts will, in practice, view the provisions of the BC Act any
differently from those of the Ontario Act.
We note that both the Ontario Bar Association and a panel of
distinguished legal experts appointed by the Ontario government,
including law professors and lawyers in private practice and
in-house, have recently advocated an overhaul to the Ontario Act.
Despite this movement toward franchise law reform in Ontario, it
seems more likely than not that the BC Act will become law. Draft
regulations, which would affect the scope of a franchisor's
duties to disclose to a prospective franchisee, have not yet been
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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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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