Currently in Canada, British Columbia, Alberta, Manitoba, New Brunswick, Ontario and Prince Edward Island have legislation regulating the relationship between franchisors and prospective franchisees/ franchisees. Within Canada, the provincial franchise legislation has the following common elements:
- Disclosure - obliging franchisors to disclose specified information/documents to prospective franchisees prior to prospective franchisees contractually committing to and/or investing money in the franchise;
- Duty of Good Faith - imposing a duty of good faith and fair dealing on the franchisee and the franchisor in the performance and enforcement of the franchise agreement;
- Right to Associate - providing franchisees with the right to associate and organize with other franchisees;
- Right of Action - establishing consequences should a franchisor or franchisee fail to comply with or breach the requirements contained in the franchise legislation, including the right to seek damages and rescission of the franchise agreement; and
- Can't Opt Out - codifying that prospective franchisees/franchisees cannot contract out of, waive or release, the rights they receive, from, or the requirements imposed upon franchisors pursuant to, the franchise legislation.
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.