Franchisors: Prepare For Saskatchewan's The Franchise Disclosure Act

Saskatchewan has joined the growing list of Canadian provinces which have implemented franchise disclosure legislation in Canada. The Franchise Disclosure Act (the "SK Act"), enacted on May 8, 2024and its accompanying regulations (the "Regulations"), released on April 25, 2025, are expected to come into force in late 2025 or early 2026.

What is the purpose of Saskatchewan's The Franchise Disclosure Act?

The SK Act establishes a framework similar to that in Ontario, British Columbia, Alberta, Manitoba, P.E.I, and New Brunswick. It is designed to ensure franchisees receive accurate and timely disclosure of the franchise opportunity, imposes a duty of good faith, and provides franchisees with rights of association and remedies for non-compliance including rescission and damages. It applies to franchises operated wholly or partly in Saskatchewan and franchise agreements entered into, renewed, or extended on or after the in-force date.

What must existing franchisors update in their disclosure documents?

If you use a national Franchise Disclosure Document (FDD) across multiple provinces, you will need to make Saskatchewan-specific updates, including:

• Saskatchewan Risk Warning Statements: Due to slight variations in phrasing compared to other provinces (e.g., Ontario or B.C.), you must add a Saskatchewan-specific risk warning.
• Certificate of Franchisor: The FDD (and any statement of material change) must include a certificate prescribing the specific wording set out in the Regulations signed by two of the franchisor's directors and officers (unless it only has one director or officer) certifying completeness and accuracy of the FDD.
• Agent for Service: An agent for service in the Province of Saskatchewan must be appointed and named in the FDD if the Franchisor has no place of business in Saskatchewan.
• Proximity Policies and Practices: The SK Act requires franchisors to disclose policies and practices relating to proximity between existing franchises and new franchises of the same type offered by the franchisor or the franchisor's associate. The concept of the franchisor's associate is broader than the equivalent Ontario regulation and may require franchisors to consider whether they and their affiliated franchisor entities have engaged in informal practices which should be disclosed.
• Lists of Franchisees: The SK Act requires disclosure of all franchisees of the franchisor or of its affiliates that operate in Canada and if fewer than 20, then the details of the franchisees in the closest foreign jurisdiction until the lesser of all or 20 franchisees are listed.
• Financial Statements Compliance: Financial statements included in the FDD must be audited or reviewed in accordance with generally accepted standards (i) of the jurisdiction in which the franchise is based; and (ii) applicable to audits or review engagements as set out in the CPA Canada Handbooks, or by the International Auditing and Assurance Standards Board.

These updates should be implemented before granting or renewing any franchises in Saskatchewan post-in-force date. New grants, renewals and extensions may trigger disclosure obligations.

What franchisors need to know before expanding to Saskatchewan

If you are a franchisor planning to franchise in Saskatchewan, you must comply with the SK Act's disclosure requirements once it comes into force. The core obligation is to provide a prospective franchisee with an FDD at least 14 days before they sign any agreement or make any payment related to the franchise. The FDD must include all material facts, financial statements, and other prescribed information as outlined in Section 4 of the Regulations.

How does Saskatchewan's definition of "franchise" differ from other provinces?

While the SK Act is modeled on existing provincial legislation, it includes some key differences:

• Narrower Definition of "Franchise": Under the SK Act, a "franchise" exists only where the franchisor (or its associate) actually exercises significant control over or provides significant assistance in the franchisee's method of operation. This contrasts with Ontario, where it is sufficient for the franchisor to have the right to exercise such control or assistance (even if not actually exercised). This narrower definition may exclude some arrangements (including certain licensing and distribution arrangements) that would otherwise qualify as franchises in other provinces.

What exemptions and thresholds apply under the new legislation?

• Cooperatives Exemption: The Regulations provide a broader exemption for certain cooperative organizations, including co-ops operated by and for independent retailers that purchase wholesale goods for resale (e.g. buying groups).
• Higher Requirement for the Sophisticated Franchisee (Large Investment) Exemption: The SK Act exempts franchisors from providing an FDD for "sophisticated" franchisees making an initial investment of at least $5 million in the acquisition of the franchise. In comparison, Ontario's threshold is $3 million for the total initial investment.

What key disclosure and compliance obligations apply?

• Content of the FDD: The document must contain detailed information on the franchisor's business background, litigation history, costs of establishing the franchise, earnings claims (if any, with substantiation), supplier restrictions, territory rights, intellectual property, and details regarding closures. It must also include copies of all proposed agreements, financial statements, and a certificate of officers or directors certifying the accuracy of the disclosure in the prescribed form.
• Financial Statements: The franchisor must include its audited or reviewed financial statements as described above. However, a franchisor that has operated for less than one fiscal year, or if 180 days have not passed since the end of its first fiscal year, may include in its FDD an opening balance sheet provided it is audited or reviewed to the prescribed standards.
• Statements of Material Change: If any material change occurs after delivery of the FDD but before signing, the franchisor must provide a statement disclosing the change.
• Delivery Method: The FDD can be delivered personally, by registered mail, electronically (with consent), or other prescribed methods.
• Cooling-Off Period: Franchisees have a 14-day cooling-off period after receiving the FDD to review it without obligation. The franchisor cannot have the franchisee sign any agreement (except for a deposit, site selection, or confidentiality agreement) or pay them any fees (excepting deposits subject to certain restrictions) until the expiration of this 14-day period.
• Earnings Claims: If provided, these claims must be based on reasonable assumptions and bases underlying the projection, presentation and preparation. If based on actual results, the locations, areas, territories or markets of the franchises must be set out.
• Rescission Rights: Franchisees can rescind (i.e. terminate) the franchise agreement within 60 days if the FDD is deficient or within 2 years if never provided. Rescission entitles the franchisee to a refund of moneys received by the franchisor, obligates the franchisor to purchase the franchisee's inventory, supplies and equipment at cost, and requires the franchisor to reimburse any losses incurred in setting up the franchise.

Next steps for franchisors

Franchisors should review their national templates, franchise systems, and disclosure policies to ensure Saskatchewan compliance before the SK Act takes effect. Early preparation will mitigate the risk of disputes and align disclosure practices across Canada.

For guidance on updating your disclosure documents or assessing how the SK Act may affect your operations, contact Miller Thomson's Franchising & Distribution Team or subscribe to our newsletters.

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.