The British Columbia (Canada) government has introduced a bill
that will make it the sixth province in Canada to regulate
franchising along with the provinces of Alberta, Ontario, Manitoba,
New Brunswick and Prince Edward Island.
According to Bill 38–2015, Franchises Act (Franchises Act)
for the Province of British Columbia ("BC"), the
legislation "is designed to strike a balance between
protecting vulnerable franchisees and upholding franchisors'
rights to freely contract to allow for the success of the franchise
chain. It will provide franchisees with the same legal protections
as those in the five other Canadian provinces with franchise
The Franchises Act is modeled on the uniform legislation that is
enforced in the five other Canadian provinces that have franchise
legislation "in order to provide business certainty for
franchising in British Columbia." Provisions of the Franchises
Act provide for the following:
Wrap-around disclosure documents
allowing franchisors to use their existing disclosure documents if
they are supplemented with additional information required to
comply with British Columbia legislation and regulations.
A substantial compliance standard to
be applied to disclosure documents.
Major investor exemption allowing
franchisors to forego the expensive process of disclosure should a
potential franchisee invest a prescribed amount.
Franchisors can accept a fully
refundable deposit from a prospective franchisee prior to providing
disclosure so long as the deposit does not exceed a prescribed
Prohibition against a waiver or
release of rights does not apply to a post-dispute settlement
Mediation will not be mandatory.
Electronic delivery methods allowing
franchisors to make electronic disclosure, reflecting current
Bill 38-2015 was ordered for second reading at the next sitting
of the House of Commons. After the second reading, the BC
government will continue to work with interested parties to make
any amendments to the Franchises Act before it receives a third
reading where the legislative assembly votes on whether to pass
Bill 38-2015. If approved this fall, the Franchises Act is expected
to be in force by late 2016 or early 2017.
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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