UTGB Vol 5.pdf - Robson Hall Faculty of Law

122 Underneath the Golden Boy
document.[ ...] People should not be forced to locate a franchise lawyer and litigate
this, but should have the benefit of a regulatory body. 134
Such a tribunal would save franchisees millions of dollars in legal fees, 135
allowing them to pursue their rights even after being abused by unscrupulous
franchisors. A regulator should not only go after rogue franchisors, requiring
them to post a bond to compensate potential victims and ensuring access to
justice, but it should also protect compliant franchisors from rogue
franchisees. 136 Such a body would not be unique to Canada, as the United
States has already implemented it through the Federal Trade Commission.
The United States Federal Trade Commission (FTC)s a federal agency with
power to regulate interstate commerce, investigate business activities and issue
enforcement orders, regulates federal franchise law in the United States. 137 The
FTC may commence an enforcement action against a franchisor if an
investigation determines that the franchisor has not complied with an FTC
Rule. The enforcement action sought or commenced by the FTC can either be
administrative, wherein the FTC may negotiate an order or a consent decree in
which the franchisor will be enjoined from certain actions, or the enforcement
action may be judicial, wherein the FTC commences a lawsuit against the
franchisor for their breach or non compliance in a court of law. Penalties for
non compliance are serious and may include the impounding of company assets,
cease and desist orders, injunctions, and mandated rescission or restitution for
injured franchisees. 138
Complementing the FTC, all states have incorporated, in one form or another,
consumer fraud or deceptive trade practice acts, commonly referred to as "Little
FTC Acts., These little FTC Acts independently create a private cause of
action, wherein a violation of the FTC Act will give rise to m independent
cause of action in state law. 139 If Manitoba chooses to instate a regulatory body,
the FTC model would certainly be one to follow. Since franchisors are not
required to register with the FTC and the FTC does not review or approve of
the initial disclosure documents, 140 the regulatory body would not play an
invasive or cumbersome role in the purchase process. Furthermore, franchisors
coming to Manitoba from the United States, already accustomed to such a
system, would not see it as a deterrent from establishing franchises in the
province.
134
Ibid.
135
Ibid.
136
Ibid.
137
So, supra note 71 at 86.
138
Ibid. at 94.
139
Ibid.
140
Manitoba Law Reform Commission, .supra note 14 at 55.