UTGB Vol 5.pdf - Robson Hall Faculty of Law

92 Underneath the Golden Boy
legislation, the possibility of litigation between the parties arising out of a
misunderstanding should decrease. In other words, since a franchisor will be
obliged to educate franchisees with regard to the proposed investment by
providing a disclosure document, franchisees will be more aware of what to
expect from the franchisor, lessening the chances of a misunderstanding.
Franchise legislation does not always favor franchisees. Introducing an act
would reduce transaction costs for franchisors who will have developed, in
connection with their obligation to comply with the act, a standard disclosure
document for Manitoba. Having said that, it is important to remember that
even if franchisees are in great need of protection, a franchise act should not be
so onerous as to deter franchisors from entering the Province.
Overall, the introduction of franchise legislation in Manitoba is long overdue.
The Province is in the fortunate position of being able to consider the
experience of other provinces, such as Ontario, and of other entities, such as
the ULCC and the CFA, in order to draft the most comprehensive and effective
franchise legislation in the country. Although franchisees stand to gain the most
from such legislation, many franchisors would not even notice a change, either
because they are members of the CFA or because they have franchises in one of
the three regulated provinces and are already in compliance with other
franchise legislation. The need for franchise legislation in Manitoba is clear, and
the time to introduce it is now.
III. IF LEGISLATION IS DESIRABLE, WHAT ELEMENTS SHOULD BE
INCLUDED
A. Disclosure Elements
1. Scope of Disclosure of Material Facts
The question posed by the Manitoba Law Reform Commission under this
heading is whether the province of Manitoba should adopt the ULCC approach
to disclosure of "material facts" (setting out an extensive list of matters that
must be disclosed whether or not the information is material in a situation) or
the approach under current provincial regulations, which provides less detail. 37
The Uniform Franchises Act 38 enforces an obligation upon the franchisor to
disclose, inter alia, financial statements as prescribed, copies of all proposed
franchise agreements and other agreements relating to the franchise to be
signed by the prospective franchisee as well as "all material facts."
Consequently, aspers. 6(1), a franchisee may rescind the franchise agreement
37
38
Manitoba Law Reform Commission, supra note 14 at 49.
Uniform Law Conference of Canada, supra note 27.