16 | LEXPERT • June 2016 | www.lexpert.ca/usguide-corporate/
Canada has the second-largest franchise industry in the world, behind the US. ere
are an estimated 1,300 franchise brands with more than 78,000 franchise units across the country.
ey employ more than one million Canadians, representing upwards of 7 per cent of the working
force. US franchises dominate the landscape. Franchising is particularly significant in Ontario,
which boasts 56 per cent of the country's franchise headquarters and 65 per cent of its outlets.
For all this activity, only six provinces have franchise legislation. Alberta was first in 1971 and
enacted a major update in 1995. Six years later, Ontario borrowed heavily from Alberta in passing
the Arthur Wishart Act (AWA). Manitoba, New Brunswick and Prince Edward Island followed
with legislation that was substantially similar to that in Ontario.
British Columbia's new Franchises Act received Royal Assent late last year and the government
is busily draing regulations. At press time, it wasn't clear when the Act would be proclaimed.
"My best guess is that the legislation will be in force in the latter part of 2016," says Blair Rebane
of Borden Ladner Gervais LLP in Vancouver.
But the legislation hasn't really evolved. Alberta's law has not changed since the 1995 update
and Ontario hasn't revised the AWA – which doesn't even allow for electronic delivery of disclo-
sure documents – since its inception 15 years ago. Most of the provinces don't have any statutory
provisions to cover distant sales, such as those made online.
But even the BC legislation is substantially similar to the outdated franchise laws in the other
jurisdictions. For example, the provisions regarding two of the most significant elements of
franchise legislation, namely the disclosure provisions and the duty of good faith and fair dealing,
closely mirror their counterparts elsewhere in the country.
As it turns out, disclosure is the major bugbear. Ontario, for example, is one of the only juris-
dictions in the world that has an open-ended and subjective standard of disclosure that includes
"all other material facts." To make matters worse, there's no guidance in the legislation as to what
Franchisors face a complex
and challenging legal
environment across Canada
BY JULIUS MELNITZER
THE FRANCHISE
LAW MINEFIELD
FRANCHISING
PHOTO:
SHUTTERSTOCK
