• The British Columbia Law Institute Recommends Franchise Legislation in that Province
  • April 16, 2014 | Authors: Frank Robinson; Derek Ronde; Geoffrey B. Shaw; Rebecca Valo; Larry M. Weinberg
  • Law Firm: Cassels Brock & Blackwell LLP - Toronto Office
  • After months of consultation with industry stakeholders, the British Columbia Law Institute (“BCLI”) has issued its Report on a Franchise Act for British Columbia (the “Report”), which makes a recommendation to the Government of the Province of British Columbia to enact franchise legislation in that province. In the Report, the BCLI has recommended that British Columbia should enact franchise legislation similar to the legislation already in force in five other Canadian provinces: Alberta, Ontario, New Brunswick, Prince Edward Island and Manitoba. The possibility of British Columbia legislation is a significant development for franchisors with existing franchisees in the province, or franchisors who intend to develop franchises there.

    The Report’s main recommendations are as follows:

    • British Columbia should enact franchise legislation based generally on the franchise legislation already in force in other Canadian provinces;

    • Disclosure documents should be valid if they are in substantial compliance with the legislation and regulations, and minor defects should not lead to a rescission right by franchisees;

    • Fully refundable deposits prior to disclosure should be permissible, limited to an amount prescribed by regulation;

    • Delivery of a disclosure document by electronic means such as e-mail, or delivery of a disclosure document in machine-readable form (such as a DVD disk), should be expressly permitted;

    • A franchisee’s statutory right to sue for misrepresentation should extend to misleading statements made in a financial projection supplied by the franchisor before a franchise agreement is signed, unless the projection contains cautionary language similar to that required by securities legislation in forward-looking statements;

    • “Wrap-Around” disclosure documents should be permissible;

    • The legislation should contain statutory language that forces all litigation concerning the franchise (including arbitrations), whether statutory or otherwise, to take place in British Columbia in order to prevent the potential splitting of cases; and

    • The statutory bar to waiving or releasing a right under the legislation should not prevent a waiver or release that is part of a post-dispute settlement.

    Other more detailed recommendations as to the contents of a compliant disclosure document are also included in the Report.