UTGB Vol 5.pdf - Robson Hall Faculty of Law

Disclosure)2000, P.E.I!sFranchises Act, and s. 2(4) of New Brunswick's Bill32
states:
This Act does not apply to [...] a relationship or arrangement arising out of an oral
agreement where there is no writing that evidences any material term or aspect of the
relationship or arrangement.
This will in turn deter franchisees from entering into oral arrangements with
franchisors and require that all promises be made in writing. Furthermore, since
Manitoba has repealed its Statute of Frauds 178 dictating that a written
agreement will override any alleged oral contract, 179 it is necessary to state this
through franchise legislation.
In conclusion, Manitoba ought to include Ontario's exclusion on oral
representations made during the sale process to encourage potential franchisees
to require franchisors to reduce all agreements to writing.
2. Cooling--Off Period
All Canadian franchise legislation allows for a 14 day period between the
issuance of disclosure documents and the signing by the prospective franchisee
of any agreement relating to the franchise or the payment of any consideration
relating to the franchise. In addition to adopting such a provision, Manitoba
should consider incorporating a cooling off period.
Although the two-week period grants franchisees ample time to acquaint
themselves with all disclosure documents, a cooling off period would allow
them a final interlude during which to assess the purchase. Considering that, for
the most part, franchise agreements last as long as 10 years and may be difficult
to transfer, a potential franchisee will be investing a significant amount of time
and money. Thus, once the agreement is signed, a seven day period would allow
them to analyze the purchase with a "cooler head" and cancel it if so desired. In
doing so, neither party would suffer a loss.
To incorporate such a provision, Manitoba could emulate s 13 of Australia's
Trade Practices Act 1974. The section states that a franchisee may terminate an
agreement (being either a franchise agreement or an agreement to enter into a
franchise agreement) within seven days after the earlier of entering into the
agreement or making any payment under the agreement. A cooling-off period
will not be granted to a franchisee renewing, extending, or transferring an
existing franchise agreement. In addition, if the franchisee decides to terminate
the agreement during the cooling.-off period, the franchisor must, within 14
days, return all payments made by the franchisee to the franchisor under the
agreement. However, the franchisor may deduct from this amount paid the
178
179
An Act to Repeal The Statute of Frauds, C.C.S.M. c. Fl58, enacted as: R.S.M. 1987, c. F158.
Frank Zaid, 'Franchising and The Law," online: Online Publications .