UTGB Vol 5.pdf - Robson Hall Faculty of Law

franchisee's decision to purchase will result in unlimited liability for the
franchisor. 43
The franchisor must thus exercise utmost diligence when preparing disclosure
documents under the Ontario Act or, if adopted, the UFA. A franchisor must
determine what about the franchise and franchisor is material and disclose it. 44
However, taking into consideration that Bill 33, the Arthur Wishart Act
(Franchise Disclosure), 2000, was called "An Act to require fair dealing between
parties to franchise agreements, to ensure that franchisees have the right to
associate and impose disclosure obligations on franchisors," the onerous
character of the Ontario Act suddenly makes sense. If the purpose of the Act is
to provide franchisees with full disclosure so as to allow them to make a proper
decision, requiring such stringent disclosure is justified. As Edward N. Levitt
said:
For those looking for a franchise investment specifically, the disclosure requirements of
the Ontario Act will allow them to more easily shop for the right one. 45
If Manitoba chooses to adopt the ULCC standard, franchisors will be faced with
a new and more stringent standard than Ontario's. This is because not only
must "all material facts" be disclosed, but also because franchisors will be faced
with a more extensive list of requirements under the Regulations. Thus, if the
goal for introducing franchise legislation in Manitoba is to aid franchisees and
ensure that sufficient information is disclosed, allowing them to make informed
decisions when purchasing a franchise, the ULCC standard should be adopted.
However, if the province is concerned about placing a heavy burden on the
franchisor, the Ontario standard should be adopted.
There is yet another alternative to the level of disclosure that may be required
from franchisors. Both the Alberta and P.E.I. Regulations 46 provide that a
disclosure document complies with the Act if it is "substantially complete." The
Alberta Court of Queen's Bench interpreted the meaning of "substantially
complete" in Emerald Developments Ltd. v. 768158 Alberta Ltd. 47 The court held
that technical compliance with the regulations is not necessary so long as the
franchisee was given sufficient and timely disclosure of facts relevant to the
decision to purchase.
Including such a provision in Manitoba would give the franchisor more freedom
to err, while still granting the franchisee the required disclosure necessary to
make an informed decision. In other words, the disclosure standard established
43
Ibid.
44 Levitt, supra note 19.
45
Ibid.
46
Alberta Franchises Act: Franchise Regulations, A.R. 240/95, s. 2(4); Prince Edward Island,
Franchises Act: Regulations, P.E.I. Reg. EC232!06, s. 3.
47
[2001] A.B.Q.B. 143.