The long-discussed Franchises Act of British Columbia
(the "Franchises Act") is making quick
strides to becoming a reality. On October 5, 2015, Bill 38 was
introduced in the B.C. Legislature. A short 15 days later, it had
progressed through Committee and second and third readings, all
The legislation will come into force on a date to be set by the
Lieutenant Governor in Council, which will likely be sometime in
2016. When it does, B.C. will become the sixth province to enact
laws specifically aimed at franchising. It is not yet known,
however, when the related disclosure regulations will come into
The Franchises Act was based in large part on the form developed
by the Uniform Law Conference of Canada
("ULCC"), which encourages uniformity of
laws throughout the Canadian provinces. The disclosure regulations
are also expected to be based largely on the ULCC template
franchise regulations, as well as recommendations made by the
British Columbia Law Institute. The Government of B.C. has opened a
public consultation on the proposed disclosure regulations.
The Franchises Act is substantially similar to franchise
legislation already enacted in Alberta, Manitoba, Ontario, PEI and
New Brunswick. Among other things, it:
requires franchisors and franchisees to deal fairly with one
requires franchisors to provide disclosure of financial and
other information to prospective franchisees 14 days before a
franchise agreement is signed or any consideration is paid to the
provides franchisees with a statutory right to associate with
each other, free from interference by the franchisor;
permits franchisees to rescind their franchise agreement in
certain circumstances where the franchisor failed to provide
provides franchisees with a statutory cause of action to sue
franchisors for misrepresentation; and
voids any purported waiver or release given by a franchisee of
the rights conferred by the legislation.
There are, however, some provisions in the Franchises Act which
are not common to existing franchise legislation in the other
provinces. These provisions, which are largely a response to issues
that have been litigated in those other provinces, include the
disclosure documents may be delivered electronically;
the validity of a disclosure document will not be affected by
defects in its form, technical irregularities or errors, provided
that they do not affect the substance of the disclosure document
and that it otherwise substantially complies with the
notwithstanding the general provision making waivers and
releases void, releases given by franchisees in connection with the
settlement of a specific action, claim, or dispute are not rendered
certain types of confidentiality and site selection agreements
may be signed prior to the franchisor's delivery of a
disclosure document; and
franchisors may accept deposits from prospective franchise at
any time, provided the deposit:
(i) is under a certain amount;
(ii) is returnable if the prospective
franchisee does not enter into a franchise agreement; and
(iii) does not oblige the prospective
franchise to enter into a franchise agreement.
Franchisors operating in B.C. but not elsewhere in Canada will
need to adjust their current practices in order to meet the
requirements of the Franchises Act when it comes into force.
Franchisors already operating in other provinces with franchise
legislation, however, will find that only minor adjustments are
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
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