Underneath the Golden Boy - Robson Hall Faculty of Law

Underneath the Golden Boy
Volume VI
EDITOR IN CHIEF
Bryan Schwartz, LL.B., LL.M., J.S.D.
Asper Professor of International Business
and Trade Law
Faculty of Law, University of Manitoba
EDITOR
Heather Belle Guest, B.A., LL.B. (2010)
COVER PHOTO
Travel Manitoba

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Underneath the Golden Boy
contents
PREFACE
BRYAN SCHWARTZ ......................................................................................................... i
ARTICLES
Bill 37: Battle Hymn of the Incumbent
BRYAN SCHWARTZ & ANDREW BUCK ............................................................................ 1
A Proposed Hate Communication Restriction and Freedom of Expression
Protection Act: A Possible Compromise to a Continuing Controversy
EDWARD H. LIPSETT ................................................................................................... 21
Effective Foreign Credential Recognition Legislation: Give It Some Teeth
BRYAN SCHWARTZ AND NATASHA DHILLON-PENNER ................................................... 81
Electronic Employee Monitoring: Potential Reform Options
MELANIE R. BUECKERT ............................................................................................... 99
REVIEWS
The Good Samaritan Protection Act: You Can Lead a Horse to Water, but You
Can’t Make It Drink
KATHRINE BASARAB .................................................................. 117

The Consumer Protection Amendment Act (Prepaid Purchase Cards)
CINDY NADLER ........................................................................................................... 133
The Road to Hell: Examining The Organic Agricultural Products Act
MEAGHAN DANIEL ...................................................................................................... 161
Apology Legislation: Should it be Safe to Apologize in Manitoba An
Assessment of Bill 202
LEANDRO ZYLBERMAN ................................................................................................ 175
The Employment Standards Code Amendment Act
JOHN JACOBS ............................................................................................................. 193
The Registered Retirement Savings Protection Act
RYAN JOHNSON .......................................................................................................... 211
2008 FRANCHISE SYMPOSIUM
MATERIALS
2008 Franchise Law Symposium: Introduction
.................................................................................................................................. 229
Franchise Law: Consultation Paper 2007
MANITOBA LAW REFORM COMMISSION ....................................................................... 231
Response to Consutation Paper on Franchise Law
BRYAN SCHWARTZ, JOHN POZIOS, AND LEANDRO ZYLBERMAN ................................. 295
Franchise Legislation and Associations Around the World
BRYAN SCHWARTZ, JOHN POZIOS, AND LEANDRO ZYLBERMAN ................................. 353
Something Old, Something New: A Comparison of Canad’s Newest Franchise
Legislation Against Existing Franchise Laws
DOMINIC MOCHRIE AND FRANK ZAID .......................................................................... 403

Canadian Franchise Disclosure Laws: Exemptions and Exclusions: Analysis and
Recommendations
JOHN SOTOS AND ARTHUR J. TREBILCOCK ............................................................... 427
APPENDIX A: Bills Passed in the 1st Session of the 39th Legislative Assembly
.................................................................................................................................. 447
APPENDIX B: Bills Passed in the 2nd Session of the 39th Legislative Assembly
.................................................................................................................................. 465

Preface
BRYAN SCHWARTZ
C
anadians witnessed a Parliamentary crisis in late 2008. It came shortly after
a federal election that many Canadians viewed with boredom and
indifference. The incumbent Conservative party increased its standing in the
House —it ended up holding more seats in the House than did the Liberals and
NDP combined and was not far from a majority. Yet the Opposition parties
threatened to bring down the government on a vote of confidence. They notified
the Governor General that they were prepared to organize an alternate
government. The Liberals, ruling in coalition with the NDP, and propped up for
at least eighteen months by the Bloc Québécois, would lead it.
Some argued that, if defeated, the Harper government had a right under
constitutional convention to request dissolution of Parliament and to have that
request granted by the Governor General. Others argued that the Governor
General had the discretion—or even the duty—to reject a call for a second
election by a defeated government that came so soon after an election that the
government itself had triggered.
The shock and controversy of a prospective change in government absent
an election, and the potentially crucial role of the Governor General, provoked
widespread public interest. The prime minister sought and obtained a
prorogation of Parliament while he assembled a new budget plan. Suddenly,
arcane debates over Parliamentary procedures and conventions seemed relevant,
interesting, even exciting to Canadians.
My view is that there would have been a profound illegitimacy to the
attempted take-over by the coalition. Parliamentary tradition in Canada strongly
favours the “plurality principle”—that the party with the most seats in the House
of Commons has the right to form government. Having the most seats in the
House—even if not a majority of them—has been recognized as crucial with
respect to the right to form a government and to request dissolution of
Parliament. When the Liberals led by Louis St. Laurent in 1958 and Pierre
Trudeau in 1978 found themselves in second place after elections, both leaders
resigned government and the Governor General invited the plurality party to
rule. When the government plurality party has sought an election—even within
a year of a previous election—the Governor General has granted it.
The plurality principle has much to recommend it:
i

• It gives legitimacy to the party closest to a majority;
• It results in rule by the government of a single party, which can be held
accountable on the basis of what it stood for in an election;
• It provides a clear and objective basis to establish legitimacy between
elections.
Canada could move to a system where governments are formed based on
post-election bargaining; but that is not the basis on which parties ran in the
2008 election. Parties ran, and Canadians voted, based on the long-established
plurality principle. During the election, Stéphane Dion, as Liberal Party leader,
had expressly disavowed any interest in a coalition with the NDP. If, during the
election, Mr. Dion had instead stated his intention to form a coalition with the
NDP backed up by the separatist Bloc Québécois Party, voters might have
viewed his Liberals even less favourably in an election in which they repudiated
the Liberals as government and reduced their share of the popular vote and their
representation in the House.
The post-election deal worked out by the opposition parties would have had
perverse consequences. The dominant player in government would have been a
party whose standing was seriously reduced in the election. The prime minster
would have been Mr. Dion, who was so rejected by voters that he announced his
intention to resign shortly after the election. The next prime minister would
have been someone who had never participated in a campaign as leader of his
party.
In fact, the post-election deal would have meant that the electorally
diminished party and repudiated leader (and electorally untested successor)
would have been handed far more power and security of tenure than Mr. Harper
and his Conservative Party. They would have been guaranteed eighteen months
in office—long enough time to not only legislate, but to wield the vast power of
the executive, including appointing Senators, Supreme Court of Canada judges,
conducting foreign affairs, and negotiating treaties.
If political parties wish to obtain a share in power through post-election
coalitions, it is their responsibility to announce their intentions prior to elections
and be judged by the electorate accordingly.
The Canadian legislative system is not one in which there is adequate
scrutiny of “routine” government spending. Provincial legislatures, in particular,
meet infrequently, and opposition parties lack the forums and resources to
engage in monitoring and oversight. A culture and institutional framework that
is lax in good times is not likely to insist on adequate deliberation in times of
panic.
The larger context for the Parliamentary crisis was a worldwide financial
and economic crisis. The parliamentary critics of Harper, in bringing about the
ii

plan to topple his government, alleged that he was not acting in a swift and
decisive manner to bring in a package to buffer the blow to workers and
industries, and to stimulate the economy through public-spending. The colossal
deficit financed “stimulus” package that Prime Minister Harper rushed to
prepare and introduce to save his government from defeat in the House easily
secured passage in early 2009.
History will likely regard it as ironic that Mr. Harper was almost evicted
from office for not panicking. The Canadian financial system was not in crisis in
the fall of 2008. Objectively, it made good sense to wait and see how other
governments and economies would act before determining any shifts in
Canadian policy, including re-entering the era of massive deficits. Yet, the
parliamentary system proved capable of spurring the executive into rashness,
rather than curbing its excesses.
There will be much to be written about the extraordinary parliamentary
times we are living through right now. I hope some of that reflection will take
place in the next Underneath the Golden Boy. In the meantime, our latest issue
continues to explore, through the efforts of a variety of efforts with many
perspectives, developments in the provincial legislature of Manitoba.
The provincial and local sector routine spends about a third of Manitoba’s
GDP. The Manitoba Legislature is responsible for allocating spending and for
overseeing the administration of a public health care system that increasingly not
only pays for health care services. The province also funds nearly all education
at all levels in Manitoba. Even at the post-secondary level, this has a major
impact on the quality of institutions and the programs they chose to deliver.
Year after year, independent authors writing in this publication have remarked
on the tendency of legislation to be processed through the Manitoba Legislature
without adequate explanation from government, examination by opposition
parties, or analysis by the media.
It we are to have in place a government system that in the most exigent
times can act with not only energy, but also prudence, self-discipline, and
foresight, we will have to keep working to revive and develop the deliberative
capacity of our legislatures in ordinary times. Elected legislatures should be
places that ensure that decisions are made soberly in the first place, rather than
being rectified at the cost of much public sacrifice by future governments.
iii

Bill 37: Battle Hymn of the Incumbent
BRYAN SCHWARTZ AND ANDREW
BUCK
I. INTRODUCTION
W
eighing in at 48 pages and some 6 000 words, Bill 37 1 of the second
session of Manitoba's 39 th Legislature was a massive undertaking. So
massive, in fact, that the five-bills-in-one superbill never made its way off the
ground during the session.
Bill 37 was introduced 30 April, moved to its committee stage three-andone-half
weeks later, and was on its way to becoming law when it was derailed by
(depending on how one looks at it) either an effective opposition attack at
committee meetings or a procedural quagmire created by a minority group of
MLAs that wasn't willing to play ball. Keeping with the baseball metaphor, Bill
37 had all the drama of a bases loaded, 3-2 pitch in the bottom of the ninth
inning, and at least as much substantive clout.
In total, the bill sought to create or amend five different statutes. If passed
as originally proposed, it would have created a provincial lobbyist registry system,
a new public subsidy for political parties, fixed date elections, given a
government-dominated committee the power to screen MLA mailouts, and
aggressive new limits on political spending and communications. Quite the
mouthful: and one that, in the end, Manitoba's legislative process was unable to
swallow in one session alone. After five nights of packed houses at committee
meetings, the government and opposition came to an agreement to delay passage
1
The Lobbyists Registration Act and Amendments to the Elections Act, the Elections Finances
Act, The Legislative Assembly Act and the Legislative Assembly Management Commission
Act, 2 nd Sess., 39 th Leg., Manitoba, 2008 [Bill 37]. Describing the Bill in the House, Progressive
Conservative Opposition Leader Hugh McFadyen said that it "contains some 48 pages and, just
as a rough estimate, close to 6,000 words of legislation. It is not your average piece of legislation
by any stretch of the imagination. It is an important bill not only in terms of its length at 6,000
words, but it's an important bill in terms of its impact on our democratic institutions here in
Manitoba." (Manitoba, Legislative Assembly, Standing Committee on Justice, Vol. LX No. 2
(26 May 2008) at 28) [Committee (26 May 2008)].

2 Underneath the Golden Boy
of the bill until the fall. 2 Even before that happened, however, the opposition
was able to squeeze several key concessions out of the government at the bill's
amendment stage. 3
From a procedural perspective, Bill 37's progression through the legislative
process involved positive and negative developments. It would be difficult to
characterize the bill's substantive aspects as charitably. In the fifth volume of
Underneath the Golden Boy, 4 we suggested a number of democratic reforms with
an eye to the then-current political situation in Manitoba. Bill 37 has touched
on some of these suggestions and left others for another day. With this history in
mind, we return to an analysis of democratic reform in Manitoba, with the
government's proposed Bill 37 as our focal point.
This paper will analyze Bill 37 from both a procedural and substantive
perspective. Within the substantive portion of the analysis, we will look at, in
particular, reform related to:
• Election and political party financing;
• Set election dates;
• Changes to Manitoba's Legislative Assembly Management Committee
("LAMC"); and
• The creation of a lobbyist registry.
We will also analyze the bill's committee stage amendments and touch on its
future. However, before the analysis proceeds further, a few preliminary
comments must be made.
As a starting point, we should work from the assumption that reform to
promote good governance and democracy is desirable, whereas reform that does
the opposite is not. The Supreme Court of Canada agrees. In a series of decisions
concerning electoral reform, the court has reiterated the principle that changes
to Canadian electoral laws that promote fair elections will pass constitutional
scrutiny, even if they otherwise infringe on Charter 5 values.
Commenting on the nature of the rights guaranteed in section 3 of the
Charter, 6 the Supreme Court has said that "...more is intended [in the right to
2
Manitoba, Legislative Assembly, Debates and Proceedings, Vol. LX No. 53B (5 June 2008) at
2736 [Debates (5 June 2008)].
3
See Part IV of this paper: "Amendments".
4
(2008) Vol. 5 Underneath the Golden Boy at 1–47 [Underneath the Golden Boy Vol. 5].
5
The Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11
[Charter].
6
Section 3 of the Charte reads as follows: "Every citizen of Canada has the right to vote in an
election of members of the House of Commons or of a legislative assembly and to be qualified
for membership therein."

Battle Hymn of the Incumbent 3
vote] than the bare right to place a ballot in a box.” 7 The court amplified this
statement by noting that "the free flow of diverse opinions and ideas is of
fundamental importance in a free and democratic society." 8 Similarly, in its
opinion on Canada's then-new third party election spending limits in Harper v.
Canada, the court stated that:
[T]he central component of the egalitarian model is equality in the political discourse …
Equality in the political discourse promotes full political debate and is important in
maintaining both the integrity of the electoral process and the fairness of election
outcomes … The primary mechanism by which the state promotes equality in the
political discourse is through the electoral financing regime. 9
Two significant points emerge from the court's comments. First, and not
controversially, fair elections are good elections. Second, "[F]ull political
discourse" leads to fair elections. It is therefore not a stretch to say that laws that
restrict political discourse (in a manner that cannot be demonstrably justified in
a free and democratic society) strike against democracy and good governance.
This theme is a central thread that runs through our criticism of Bill 37's
substantive aspects, and we will return to it frequently.
Bill 37, and other recent electoral reform from the governing Manitoba
NDP, have restricted political discourse in a number of ways: by capping
spending limits in non-election years (without doing the same for third-party
spending); by restricting the ability of parties to finance themselves; and, even
more alarmingly, by seeking to censor the contents of political expression.
The role of an opposition party is to provide an effective opposition, which,
in turn, produces a better government product. As a result, reform that seeks to
limit opposition parties from performing their raison d'être (opposing the
government) is not part of a healthy democracy. 10 This is the most troubling
aspect of Bill 37.
7
Figueroa v. Canada, 2003 SCC 37 at para.19 [Figueroa], quoting Dixon v. British Columbia
(Attorney General), [1989] 4 W.W.R. 393 at 403.
8
Figueroa, ibid. at para. 28.
9
Harper v. Canada, 2004 SCC 33 at paras. 101 & 102 [Harper].
10
As Manitoba Green Party leader, Andrew Basham noted at committee hearings, the process of
fundraising takes away from what political parties should be focusing their attention on, "we
hold fundraisers all the time and that takes away from the time we could be working on
legislation, on developing real sustainable policies for Manitoba, which is what we want to do.
We don't want to be out asking people for money all the time. We're actually holding a
fundraiser tonight, and I'm going there right after this is done, just to give you an example."
(Manitoba, Legislative Assembly, Standing Committee on Justice, Vol. LX No. 5 (29 May
2008) at 279 [Committee (29 May 2008])

4 Underneath the Golden Boy
II. PROCEDURAL
A total of 69 presenters came forward to speak to Bill 37 during four nights of
committee hearings. Notwithstanding any other complaints that may be made
about the bill's procedural aspects, the sheer number of people who engaged in
the democratic process must be seen as a success.
Many bills (including some important ones) glide through the legislative
process with little or no public comment. Public apathy is one of the worst
enemies of democracy, yet oftentimes the number of committee members vastly
outnumbers those members of the public who do appear to speak about proposed
bills: not so with Bill 37.
It may be argued that many of those presenters were little more than
partisan supporters, called to committee by party workers via telephone and e-
mail. No doubt there is some truth to that comment, but the value of what went
onto the public record during those four May nights greatly outweighs the costs
associated with the extra time those speakers used. To its credit, the NDP could
have invoked closure to speed the bill's progress through the legislative process.
To do so would have circumvented the democratic process, however, and the
NDP instead chose to take its lumps through many days of debate in both the
House and at committee meetings.
In all, it was a strong response to a bill that blew onto the political scene
with great fanfare and little advance notice at the end of April. Allegations of
procedural impropriety began only one day after the bill was introduced to the
House. 11
More substantially, opposition members described the bill as a "Trojan
Horse" 12 because, while it introduced publicly-popular fixed date elections, it also
contained several other less-appealing aspects within its 48 pages. Despite the
volume of the bill and its apparent importance, no broad public consultation was
performed prior to its introduction, nor was it discussed at Election Manitoba’s
advisory committee. Rather, the bill's appearance was somewhat of a surprise to
observers of Manitoba's political scene. As a newspaper editorial noted at the
time,
11
Progressive Conservative ("PC") MLA Gerald Hawranik claimed the NDP deliberately
introduced the bill late the previous day and only after press releases describing certain aspects
of the bills, but not the bills themselves, had been given to the media: Manitoba, Legislative
Assembly, Debates and Proceedings, Vol. LX No. 34B (1 May 2008) at 1489 [Debates (1 May
2008)].
12
Ibid. at 1500 (Kelvin Goertzen).

Battle Hymn of the Incumbent 5
Instead of respectful, non-partisan consultation, Mr. Doer sprung his reforms, fashioned
from full cloth, out of the blue. As mentioned, he deflected attention from the antidemocratic
guts of the act by presenting it as an act to fix the dates of future elections,
which was rich given that Mr. Doer has in the past strongly opposed the measure,
especially before the election last year when he used every trick in the book to gain
advantage, including massive government and third party pre-election advertising
blitzes. 13
Even with a broad public consultation process in place, it may have been
advisable for the government to consider breaking the bill down into several
smaller, more digestible pieces. Speaking at the second night of committee
meetings, one member of the public said he couldn't help but feel rushed by the
bill:
From introduction on April 30, as been mentioned repeatedly, to the committee stage in
just three and a half weeks where the public gets an opportunity to comment on the bill,
leads us to believe that the government is not looking for the public to be properly
informed and educated on the issue before it becomes law. 14
Credit must also go to those 69 members of the public who sat through the
long and disorganized committee process. The nature of committee hearings is
such that members of the public who have signed up to speak know only that
they will, eventually, be speaking at committee. They do not know at what time
they will speak, or even on what day they will speak, and, if they are not present
when their name is called through two rotations of the list, they are dropped off
the speaking list altogether. It is asking a lot of private individuals who have
their own obligations and commitments to attend four nights in a row of
committee meetings so that they may make a 10-minute oral presentation.
The Bill 37 committee meetings included several would-be speakers who
were not in attendance when their names were called to speak. These speakers
represented lost opportunities to generate the kind of public discourse the
Supreme Court has hailed as being central to democracy. As Business Council of
Manitoba President, Jim Carr, noted at the committee hearings:
Let me also say, and I hope you don't think that this is gratuitous, but the operation of
legislative committees can be improved, too. Looking at what happened today and
yesterday is a good case in point.
There are many Manitobans wanting to argue the essence of a set of democratic bills, who
were not given a chance to speak and who were denied dinners with their families two
nights in a row; before it's over, maybe three or four. I think that, probably, in a spirit of
improving the way in which the Legislature does business, this committee and others can
do a better job. 15
13
"Fixed Elections," Editorial, Winnipeg Free Press (24 May 2008).
14
Manitoba, Legislative Assembly, Standing Committee on Justice, Vol. LX No. 3 (27 May 2008)
at 159 (Chuck Davidson) [Committee (27 May 2008)].
15
Ibid. at 141 (Jim Carr).

6 Underneath the Golden Boy
Mr. Carr's comments are on the mark, and future Manitoba governments
would do well to heed them.
III. SUBSTANTIVE
A. Election Finances
Given the Supreme Court's comments about the importance of election
financing in Harper, 16 Bill 37's proposed changes to election financing in
Manitoba may represent its broadest impact. Crucial provisions in the original
version of Bill 37 included:
• Raising the limit parties can spend on advertising expenses outside the
writ period during an election year to $150 000 from $50 000.17
However, the definition of "advertising expenses" would be widely
broadened, such that items that did not fall under the term under
current legislation (for example, posters and leaflets) would now be
included in the amount subject to the $150 000 limit; 18
• Raising the limit parties can spend on advertising expenses in a nonelection
year from $50 000 to $75 000; 19
• Government advertising will be suspended 60 days before polling day
for a fixed date election. 20 Currently, government advertising is
suspended during the campaign period generally; and
• Parties will receive an annual allowance based on the number of votes
they received in the most recent general election. That amount will
start at $1.25 per vote and be indexed to inflation. 21
The proposed financing changes raise several discrete issues, each of which
will be addressed under separate headings below.
1. Annual Allowances - The 'Vote Tax'
Apparently, $1.25 buys not only a cup of coffee but also a storm of public
dissension. Judging from the comments made by members of the public at Bill
37's committee hearings, the bill's provisions for a new annual allowance for
political parties was easily the most unpopular portion of the bill. The allowance
16
Supra note 9.
17
Bill 37, supra note 1, Sch. C at cl. 11(1). The $50 000 cap outside the writ period was indexed
for inflation.
18
Ibid. at cl. 11(3).
19
Ibid. at cl. 11(1).
20
Ibid. at cl. 12.
21
Ibid. at cl. 15.

Battle Hymn of the Incumbent 7
was also widely panned in the House and in the media, where it came to be
known as the "vote tax":
The $1.25 vote tax is … part of Bill 37, which would make sweeping changes to our
election laws, including forcing taxpayers to give each political party $1.25 per vote they
received in the last election. 22
Several MLAs, including Liberal leader Dr. Jon Gerrard, also described the
allowance as a pay-to-vote scheme:
Well, the reality is that Bill 37 charges people to vote. It discourages people to vote
because knowing that government will fund its operations, its political operations through
a tax on voting. 23
Some would argue this criticism is misplaced. As courts and other
commentators have noted, financing is the lifeblood of political parties. Effective
political activity costs money, and as a result political parties cannot operate
without funding. Meanwhile, legislative limits on how parties raise funds have
severely restricted fundraising avenues. Public funding, therefore, is a crucial
corollary of the political financing system that is currently in place:
As countries, states and provinces have placed limits on who can donate to parties and
how much they give, they have filled the inevitable gap in donations with fair formulas to
provide large and small parties the requisite funds needed to wage campaigns. Public
funds create the space for small parties to give voters more choices on the ballot, which is
ultimately better, not worse, for democracy. 24
Use of the term "vote tax" ignores the reality that Canadian taxpayers—
through the charitable donation tax-credit regime and other public subsidies
such as free television advertising time—already heavily subsidize political
parties. Your vote may put $1.25 in a party's coffers, but—as the Official
Opposition noted—consider also that many of your tax dollars have already
been used to (involuntarily) support the tax credit your neighbour received for
donating to his or her party of choice and to provde a 50 percent subsidy for
eligible expenses incurred during elections.
Additionally, several "vote tax" systems are already in place in a number of
provinces, as well as at the federal level. 25 They have generally received the
support of Canadian courts on the basis that they help promote fair elections by
increasing the level of political discourse.
22
Tom Brodbeck, "You can be Heard" Winnipeg Sun (22 May 2008) 5.
23
Manitoba, Legislative Assembly, Debates and Proceedings, Vol. LX No. 45B (May 22 2008) at
2357 (Jon Gerrard) [Debates (22 May 2008)].
24
Curtis Brown, "Shred most of Bill 37" Winnipeg Free Press (31 May 2008).
25
See Figueroa, supra note 7 at paras. 21 & 22.

8 Underneath the Golden Boy
Following this argument to its conclusion, some would argue the problem
with the annual allowance system proposed by Bill 37 does not relate to the fact
it creates a new public funding regime. Instead, the problem relates to how that
funding system operates. When a voter casts a vote for the party of his or her
choice, the funding is then locked in until the next general election. This allows
a governing party to reap the benefits of an election win throughout the life of its
incumbency, regardless of whether it still holds that voter's support. As one
public presenter noted during committee meetings:
What if, in the future, another political party should arise in Manitoba … that political
opportunity is being cut off at the knees by a bill like this because the existing parties will
get their votes, their money. They have the rebate from the previous election. They have
their $1.25 per year from the previous election, and if someone comes up with a new
point of view, this total control of the system will disallow new, dissenting voices. 26
Alternative methods should be explored in the place of pegging support to
general election results. If a public-subsidy route were viewed as preferable,
another option would be a tax return check-off system, such as the Presidential
Election Campaign Fund Checkoff 27 that is used in the United States. This
method of public financing is attractive because, unlike a subsidy that is tied to
votes received, it allows voters to vote for one party while choosing to fund
another. Alternatively, voters may choose not to fund any parties, since the
program is entirely voluntary. As the Federal Election Commission notes:
In establishing the checkoff program, Congress left the single most important decision to
you, the taxpayer. You decide whether you want three dollars of your tax to be used for
the Presidential funding program described in this brochure. The choice is yours to
voluntarily check yes or no. 28
A check-off program thus provides for voter autonomy at a time when
election-by-election strategic voting appears to be gaining traction with the
Canadian public. No similar programs appear to be in place in Canada and the
26
Committee (26 May 2008), supra note 1 at 76 (Christine Waddell).
27
Federal Election Commission, “Public Funding of Federal Elections”, Federal Election
Commission online: . The United States
check-off system has been in place since 1971, when voters were initially given the option of
donating $1 to eligible nominees in the presidential general election on their federal tax
returns. The check-off amount was increased to $3 in 1993, and the question now reads: “Do
you want $3 of your federal tax to go to the Presidential Election Campaign Fund” See also
Federal Election Commission, “The $3 Tax Checkoff”, Federal Election Commission online:
.
28
Federal Election Commission, “The $3 Tax Checkoff”, ibid.

Battle Hymn of the Incumbent 9
idea was not given any consideration during Bill 37’s passage through the
Legislature. 29
While the logistics of the annual allowance as it was presented may be
defended, there was no excuse for the government's decision to index the
allowance to inflation. The optics of this decision were particularly poor given
the government's ongoing battle with the retired teachers over whether the
Teachers' Retirement Allowances Fund (“TRAF”) should be indexed to
inflation.
The indexing provisions, hidden in the 48 pages of Bill 37, did not go
unnoticed by one retired teacher who spoke at committee hearings:
I feel hurt, angry even, that the members of the legislature are calling for a 100% cost of
living adjustment for their election expenses and their contributions. Why am I angry
Because the government refuses to offer me this adjustment. And yet, I have paid for this
cost of living adjustment, the famous COLA, through my contributions. I do not
understand how and where you find the funds for this full adjustment when you tell me,
over and over, that there is no money to pay me this COLA towards which I
contributed. 30
The business community also took notice of the indexing provisions. The
Director of Provincial Affairs for the Canadian Federation of Independent
Business had this to say at the committee hearings:
Concerning the elections finances amendment act, CFIB is astounded that this
government, which continues to deny the benefits of automatic indexation of personal
income tax brackets and exemptions would extend those very benefits to its political arm,
as noted in section 42.1(2). 31
2. Advertising Limits
After protracted negotiations with the Opposition, the final version Bill 37
removed the $50 000 annual advertising expense limit outside election years for
political parties. In election years, meanwhile, the limit would be raised from $50
000 to $250 000 outside the writ period. At first blush, these seem like
progressive changes—a closer look, however, reveals the opposite.
Removing the spending limit in non-election years is a positive move, but
viewed broadly, it merely represents recognition of the fragile legal foundation
upon which these limits were based on in the first place:
29
See, for example, Elections Canada’s comparative analysis of Canadian and American electoral
finance regimes: Elections Canada, “Chronology of the Federal Campaign Finance System of
Third Parties in Canada / Chronology of the US Campaign Finance System”, Elections Canada
online: at 8.
30
Committee (26 May 2008), supra note 1 at 54 (Norma Lacroix-Gagne, translation).
31
Ibid. at 58 (Shannon Martin).

10 Underneath the Golden Boy
• First, the Supreme Court of Canada cautiously endorsed Parliament's
third-party advertising limit regime in Harper. However, that regime
extends to third-parties, not political parties themselves, and it also
does not apply in non-election periods, as this regime purports to. 32
• Second, party spending limits—such as those installed by the federal
government—apply only during elections. Presumably, this is in
recognition of the fact that the infringement on political speech created
by spending limits can only be justified by the overarching goal of
promoting fairness during an election. 33
As a result, it is unclear whether Manitoba's law—which was introduce by
the NDP in 2000 34 to apply to political parties in non-election periods—would
have withstood a constitutional challenge.
The election-year spending limit (which applies outside the writ period),
meanwhile, was in the final result increased to $250 000. That appears to be a
significant change in favour of free speech, until one considers the effect of the
expanded definition of election year advertising contained in the bill: 35
54.1(6) For the purposes of this section, in the year of a fixed date election, "advertising
expenses" also includes money spent or liabilities incurred, and the value of donations in
kind accepted, by a registered political party in producing and distributing
(a) posters, leaflets, letters, cards, signs and banners;
(b) any similar printed material, the purpose of which is to support or oppose, directly or
indirectly, a registered political party;
but does not include
(c) material that is distributed
(i) to individuals who hold memberships in the party, or
(ii) at a conference, convention or meeting held by the party, or a constituency
association or candidate of the party; or
(d) a commentary, letter to the editor or similar expression of opinion of a kind normally
published without charge in a newspaper, magazine or other periodical publication.
Compare this expanded definition with the current conception of
advertising expenses under the Elections Finances Act:
"[A]dvertising expenses" means money spent or liabilities incurred, and the value of
donations in kind accepted, for advertising
(a) in newspapers, magazines or other periodicals, or on the Internet,
(b) on radio or television, and
32
See Harper, supra note 9 at para. 112, where the majority noted one of the third-party spending
limit regime's saving graces was the fact it did not apply in non-election years.
33
Ibid. at para. 63.
34
Elections Finances Amendment Act, S.M. 2000, c. 9 at cl. 22.
35
Bill 37, supra note 1, Sch. C at cl. 11(3).

Battle Hymn of the Incumbent 11
(c) on billboards, buses or other property normally used for commercial advertising,
including direct production expenses; (« dépenses de publicité ») 36
A simple comparison of the two provisions makes it abundantly clear that
last election's $50 000 would get a party just as much (if not more) bang for its
advertising buck than the next election's $250 000. This ostensible upward shift
in the spending limit is in fact no shift at all.
3. The Uneven Playing Field Remains
When we wrote about eliminating partisan advertising by incumbent
governments in the fifth volume of Underneath the Golden Boy, we spoke of the
imbalance created by the political financing model that was then in place in
Manitoba:
[T]he spending limits imposed by provincial and federal legislation work to stifle political
speech. Lower expense limits reduce the amount of political speech parties and
candidates can produce and disseminate. Less political speech inherently favours
incumbents, who can ride voter apathy to another term. 37
We proposed a number of measures we believed could even up the
imbalance in political discourse the Supreme Court has warned against. Bill 37
provided an opportunity for the Manitoba Government to address this imbalance
by attempting to level the playing field between challengers and incumbent
parties. Unfortunately, the government has used Bill 37 to worsen the problem.
The incumbent government has the advantage of having the province's civil
service and communications machine behind it. While the governing party may
be subject to expense limits in its role qua political party, it remains free from
restraint when it dons its "Government of Manitoba" hat and steps onto the
soapbox. A newspaper editorial noted the hypocrisy of a bill that would "Limit to
$75,000 a year political party spending while not restricting [the] government's
spending of at least $11 million a year on flattering "government
communications" campaigns." 38 It may be that "Manitoba Means Business", as a
recent campaign proclaimed, but is it equitable to allow the government to
charge these feel-good campaigns to the general public free from the limits it has
set for other parties
Another troubling aspect of the political financing regime created by Bill 37
is the complete absence of third-party spending limits. While the government
has continued to tighten the vise on political party fundraising and spending,
third parties are free to spend as they please. The NDP government put a third
36
C.C.S.M. c. E32 at s. 1.
37
Underneath the Golden Boy Vol. 5, supra note 4 at 28.
38
"Fixed Elections", Editorial, Winnipeg Free Press (24 May 2008).

12 Underneath the Golden Boy
party spending limit regime on the books in 2000, but, chose never to proclaim
it, 39 and in the course of their amendments to Bill 37, eventually removed those
limits altogether. 40
One could argue that, if one party does not like the fact another party's
traditional support group is out-advertising their traditional support group, the
solution lies outside electoral financing regulation. 41 This argument, however, is
fundamentally inconsistent with the current government's heavy-handed
approach to election financing. If the government chooses to enter the political
financing regulation arena it should do so consistently, not with a piecemeal,
issue-by-issue, contradictory approach.
While no one has yet challenged the constitutionality of Manitoba's political
financing laws, one wonders whether it would meet the standard laid out by the
Supreme Court. As the court noted in Harper:
The state can equalize participation in the electoral process in two ways; see O.M. Fiss,
The Irony of Free Speech (1996), at p. 4. First, the State can provide a voice to those who
might otherwise not be heard. The Act does so by reimbursing candidates and political
parties and by providing broadcast time to political parties. Second, the State can restrict
the voices which dominate the political discourse so that others may be heard as well. 42
In Manitoba, the state is neither providing a voice to those who might
otherwise not be heard, nor is it restricting the voices which dominate the
political discourse. The $1.25 spending allowance may be a shot in the arm for
smaller political parties, but it will have little effect compared with the
substantially larger payout the governing party will receive under the same
system. Meanwhile, the electoral financing laws discussed above will allow the
voices that already dominate the political discourse to continue to drown other
parties out.
The last word on the issue goes to opposition MLA Kelvin Goertzen, who
rose in the House to speak to the unfairness created by the government's
electoral financing laws:
39
The Elections Finances Amendment Act, supra note 34 at s. 45(2). See also comments made
by Mr. McFadyen at committee hearings: "[F]or the record … those sections have never been
proclaimed in Manitoba, even though they were passed; so that's not law presently. There are
no third-party limits." (Committee (27 May 2008), supra note 14 at 138).
40
It is worthy of note that the only significant third-party advertising that took place prior to and
during the 2007 election was paid for by the Manitoba Nurses’ Union.
41
In other words, it was open to the Manitoba business community to respond to the progovernment
advertising campaign staged by the Manitoba Nurses' Union leading up to the
2007 Manitoba general election.
42
Harper, supra note 9 at para. 62.

Battle Hymn of the Incumbent 13
[O]n the one hand, you have the government using taxpayers' dollars, spending millions
of dollars on feel-good quasi-government ads in the province of Manitoba. On the other
side, you have a law that restricts the ability of opposition parties to bring forward their
concerns about what's happening in Manitoba. So it certainly creates an uneven playing
field. It strikes at the heart of democracy. We believe it impinges upon the Charter of
Rights and Freedoms, and it does all of those things to the detriment of each of us. 43
B. Set Election Dates
Many Canadian provinces, as well as the federal government, have introduced
set election date legislation. We have already canvassed the merits of this
legislation in previous editions of Underneath the Golden Boy; in summary,
these advantages include a measure of legislative certainty and—by removing
the government's power to arbitrarily call an election that suits its own
interests—improved overall governance.
The introduction of set election date legislation in Manitoba could be
described as somewhat of a surprise, given the NDP government's previous
ambivalence to the idea. Set election dates did not form a part of the party's
platform in the general election that had been held just one year before Bill 37
was introduced.
Speaking in the House, Premier Gary Doer did not explain his apparent
change of mind on the issue, though he did note the legislation was modeled
after the federal set election date model. 44 A provision that respects the Royal
Prerogative, which is central to constitutionality of the federal model, was
included in Bill 37:
Powers of Lieutenant Governor preserved
49.1(1) Nothing in this section affects the powers of the Lieutenant Governor, including
the power to dissolve the Legislature at the Lieutenant Governor's discretion. 45
43
Debates (22 May 2008), supra note 22 at 2360 (Kelvin Goertzen). A newspaper editorial made
a different point on the bill's constitutionality: "The Supreme Court has already found that
limits on third-party advertising violate the free speech guarantees of the Charter of Rights and
Freedoms except in the writ period. It is difficult to see how it might find that tougher
prohibitions on political parties than on third-parties can be countenanced." ("Stop this mug's
game", Editorial, Winnipeg Free Press (6 June 2008))
44
Debates (1 May 2008), supra note 11 at 1505 (Gary Doer).
45
Bill 37, supra note 1, Sch. B at cl. 6. Public presenter Jae Eadie spoke to this issue at Bill 37's
committee hearings: "If the situation arises where the government of the day loses the
confidence of the House … that usually necessitates a general election, and that usually
necessitates the Lieutenant-Governor making that order. Nobody else can do that except the
Lieutenant-Governor … it is vitally important–if you're going to have a fixed-date election
process, it's vitally important that the other process remain intact, and that is that the power of
the Lieutenant-Government to dissolve at his discretion is retained in the bill." (Manitoba,
Legislative Assembly, Standing Committee on Justice, Vol. LX No. 4 (28 May 2008) at 208–9
[Committee (28 May 2008)].

14 Underneath the Golden Boy
Such a provision—called an "out clause" by some critics—has been viewed
as necessary to ensure set election legislation remains constitutional. This is
because the Queen's representative (either the Lieutenant Governor or
Governor General) must always retain the power to dissolve or prolong
Parliament at any point. 46 Opposition MLAs seized on this "escape clause",
claiming the legislation creates "fixed elections if necessary but not necessarily
fixed elections." 47 In reality, this clause is nothing more than a tip of the hat to
the necessary constitutional provisions the bill had to contain.
On the other hand, Bill 37 did create a potential loophole for the governing
party in terms of when the set election date legislation takes effect. The bill
would amend s. 49.1(2) of the Elections Act to require the government to hold a
general election on 14 June 2011, "unless a general election has been held
between the coming into force of this section and 13 June 2011." 48 The effect of
this clause can be viewed two ways. First, it could be seen as simply indicating
that if an election must be called before the set date, there is no point to have
another election on that set date "just because". Or, the clause could be seen as
delaying the implementation of set election date legislation for one election.
In any event, the issue is not a pressing one because the bill preserves the
power of the Queen's representative to veto any election call. In the end, the
decision rests with the Lieutenant Governor, not the premier, and set election
date legislation should be viewed as merely persuasive advice to the government
of the day in that regard.
Interestingly, the constitutional "out-clause" may not be required for set
election date legislation. Though no court has ruled on this point, we believe
that set election dates do not derogate from the power of the Queen's
representative to dissolve or prolong a sitting of the House. Instead, the
legislation should be viewed as merely reducing the maximum length the House
can sit from its current five-year length to four years. The maximum shelf life of
Parliament has been changed before without the need for a constitutional
amendment, and we suggest the same could apply to this legislation. We made
this argument in a previous edition of Underneath the Golden Boy as follows:
[T]he law could only be unconstitutional if it forces the Queen's representative to call an
election in a manner that offends the Royal Prerogative, as opposed to prohibiting the
Queen's representative from dissolving the House. The only time a Lieutenant Governor
46
Section 41(a) of the Charte requires unanimous consent from the Senate, House of Commons
and each province's Legislative Assembly for any laws that infringe on the office of the Queen's
representative. Set election date legislation that failed to preserve the Queen's representative's
power to prolong or dissolve the House would thus require such an amendment.
47
Debates (22 May 2008), supra note 22 at 2359 (Kelvin Goertzen).
48
Bill 37, supra note 1, Sch. B at cl. 6.

Battle Hymn of the Incumbent 15
or Governor General would be "forced" to call an election is at the date prescribed by
legislation. This date is nothing more than the ceiling for that particular Parliament's
life—the only difference between this law and the unfixed election status quo is that the
ceiling has been lowered from five years to four years. A mandated election at the end of
four years infringes on the office of the Lieutenant Governor or Governor General no
more than the current five-year requirement does. 49
Several presenters at committee hearings recommended the bill should
contain a provision that would allow the Chief Electoral Officer to recommend
alternate polling days in the event the election falls on a day of religious or
cultural significance. 50 This should be added to the bill.
C. Legislative Assembly Management Commission Changes
The Supreme Court of Canada's view on freedom expression was expressed in
the seminal case of R. v. Keegstra as follows:
Freedom of expression is a crucial aspect of the democratic commitment, not merely
because it permits the best policies to be chosen from among a wide array of proffered
options, but additionally because it helps to ensure that participation in the political
process is open to all persons. Such open participation must involve to a substantial
degree the notion that all persons are equally deserving of respect and dignity. The state
therefore cannot act to hinder or condemn a political view without to some extent
harming the openness of Canadian democracy and its associated tenet of equality for all. 51
In Figueroa, the court singled out the importance political parties play in
ensuring the concept of a broad and open "marketplace of ideas" is allowed to
flourish:
[P]olitical parties act as a vehicle for the participation of individual citizens in the
electoral process; they are the primary mechanism by which individual citizens introduce
their own ideas and opinions into the public dialogue that elections spawn. Legislation
that contributes to a disparity in the capacity of the various political parties to participate
in that dialogue ensures that some persons have a more effective vehicle for their ideas
and opinions than others. 52
We have cited these judicial comments to provide the backdrop against
which the Manitoba government attempted to implement bold changes to the
way elected representatives communicate with their constituents. Bill 37, as it
was initially proposed, would have put the power to censor these
communications into the hands of a government-dominated committee. Use of
the word "censor" is not to be done lightly—it smacks of melodrama and partisan
vitriol—yet, in the face of Bill 37, we are left with little choice.
49
Underneath the Golden Boy Vol. 5, supra note 4 at 7.
50
Committee (26 May 2008), supra note 1 at 29 (Graham Starmer).
51
[1990] 3 S.C.R. 697, at 763–64.
52
Figueroa, supra note 7 at para. 53.

16 Underneath the Golden Boy
The bill speaks for itself. Clause 2 of Schedule E of Bill 37 reads as follows:
6.1(1) The commission must, as soon as reasonably practicable after the coming into force
of this section, establish criteria or guidelines in order to ensure that the following are not
partisan:
(a) material printed, mailed or distributed electronically by a member, if the cost is
(i) paid under section 52.22 of The Legislative Assembly Act, or
(ii) paid for with money that is appropriated by the Legislature to enable the member to
communicate with his or her constituents;
(b) material printed, mailed or distributed electronically by the caucus of a recognized
political party or a member who does not belong to the caucus of a recognized political
party, if the cost is paid for with money that is
(i) received under section 52.23 of The Legislative Assembly Act, or
(ii) appropriated by the Legislature for use by the caucus or the member;
(c) advertising in newspapers, magazines or other periodicals, on the Internet, on radio or
television, or on billboards, buses or other property normally used for commercial
advertising, if the cost of the advertising, including the cost of producing it, is paid for
with money appropriated by the Legislature
(i) to enable a member to communicate with his or her constituents, or
(ii) that is available for use by a caucus of a recognized political arty or a ember who does
not belong to the caucus of a recognized political party.
With this one clause, 53 the government attempted to place control of the
content of almost every single meaningful form of political communication in the
hands of the Legislative Assembly Management Commission. The original
proposal in Bill 37 would have given the commission the responsibility to create
"guidelines" as to what is, and what is not, partisan. The final amendments,
introduced after negotiations with the Opposition, created a test of
“appropriateness” for the content of these mailings and provided an arbitration
process in the event that the commission is unable to arrive at criteria by
consensus (see below). The untrammeled discretion that the original version of
Bill 37 proposed to grant to LAMC is concerning, but perhaps not as concerning
as the prospect of a government-dominated group of MLAs deciding what other
MLAs may or may not tell the public. Given the above comments from the
Supreme Court, there is a legitimate question as to whether this section of the
bill would withstand a constitutional challenge. If nothing else, it certainly goes
against the spirit of Charter expression and political representation rights as the
courts have interpreted them.
The timing of the introduction of these provisions is especially poor,
considering the Manitoba Government has failed to follow Ontario's lead in
establishing legislation that would ban partisan government advertising. The
McGuinty government created the Government Advertising Act 54 in 2004 to
53
Bill 37, supra note 1, Sch. D, cl. 2(1) would also attach LAMC-created guidelines to mailing
privileges established by the Legislative Assembly Act.
54
S.O. 2004, c. 20 at s. 6(3).

Battle Hymn of the Incumbent 17
eliminate public funding for advertisements whose primary objective is "to
promote the partisan political interests of the governing party". A government
could hardly be faulted to failing to adopt another province's legislative regime,
but more troubling in this instance is the fact similar legislation was proposed in
Manitoba during the same session that saw the introduction of Bill 37.
Bill 234, The Ending Government Spending on Partisan Advertising Act 55
was introduced by Tory MLA Myrna Driedger a few weeks after Bill 37 was
presented to the House. In an interview with a newspaper reporter, Driedger
described the rationale behind the private member's bill as follows:
“There's a difference between facts and figures and deceiving the public," Driedger said.
"If you're going to talk about stopping smoking, recruiting foster parents, domestic
violence campaigns, West Nile virus, that's fine. But the NDP is attempting to brainwash
Manitoban taxpayers into thinking they're doing a better job than they are. 56
Bill 234 was similar in substance to Ontario's legislation, but it was not
supported by the NDP. One wonders if the governing party took a pass on the
bill because it wanted to retain the power to decide which communications are
"partisan", instead of giving the task to the Auditor General or another
independent individual.
A poignant moment occurred at the bill's committee meetings when a
public presenter, who otherwise supported Bill 37, was asked who should decide
whether political communications are partisan: "I believe a neutral third party
would do a great job of deciding whether or not that's appropriate or
inappropriate." 57 We agree. With the introduction of Bill 37, however, it appears
Manitoba's governing party does not.
The irony of the NDP's position was not lost on the Winnipeg Free Press
editorial board, which noted that:
The new rules would raise the spectre of a small group of select politicians censoring every
letter an MLA or a caucus wishes to send to Manitobans, something none of the
government's own propaganda is never subjected to … Like any party in power, the Doer
administration gets to ride above such rules. Its virtues are extolled with every press
release issued by the "news media services" branch. Indeed, it was the heft of that robust
machinery that Mr. Doer himself used to extol the virtues of Bill 37 as law that will
ensure elections are fair and democracy in Manitoba remains strong. 58
There is not much else that can be said about this aspect of Bill 37 other
than it is, plain and simple, bad law.
55
2 nd Sess., 39 th Leg., Manitoba, 2008.
56
Paul Turenne, "Tories want line drawn" Winnipeg Sun (16 May 2008) at 12.
57
Committee (29 May 2008), supra note 10 at 265 (Mitch Tripple).
58
"Partisan censorship", Editorial, Winnipeg Free Press (14 May 2008).

18 Underneath the Golden Boy
D. Lobbyist Registration
The inclusion of a lobbyist registration regime in Bill 37 would bring Manitoba in
line with the federal government and other provinces that already have such a
registry. These provisions are therefore a welcome addition to Bill 37, save for
some minor tweaking.
First, the language related to the application of the registration to
communications between government officials and unions could be tightened
up. The relevant section of the bill reads as follows:
Act does not apply to certain submissions
3(2) This Act does not apply in respect of an oral or written submission made as follows:
(e) made to a public official by a union relating to
(i) the administration or negotiation of a collective agreement with the government or a
government agency, or
(ii) the representation of a member or former member of a bargaining unit who is or was
employed by the government or a government agency
As opposition MLAs noted, the wording of this provision gives the
government and unions considerable room to manoeuvre away from the
legislation's registration requirement:
Unions can talk to the government at any time about the administration of a union
agreement, and they don't have to follow the same rules as everybody else. The definition
of administration is so open-ended that it could mean anything at any time. 59
The second provision of the proposed lobbyist registration regime that bears
mention is the inclusion of a cabinet-appointed registrar. 60 Given the
accountability theme underlying the concept of lobbyist registration, placing the
registrar under the control of cabinet is a mistake. The problem inherent in this
position was summarized by a committee presenter as follows:
The target of lobbying regulation is to prevent undue influence. Well, who has more
influence than the Cabinet Why would you place the Cabinet in charge of the regulatory
process to stop undue influence That aspect of the bill is flawed. 61
A final comment on this section of Bill 37 was raised by Winnipeg
community activist Nick Ternette, who questioned why the bill wouldn't also
apply to lobbying at the municipal level. This is a valid point that could be
considered in future deliberations. 62
59
Committee (27 May 2008), supra note 14 at 2431 (Myrna Driedger).
60
See Bill 37, supra note 1, Sch. A at s. 11.
61
Committee (29 May 2008), supra note 10 at 243 (Michael Richards).
62
Committee (27 May 2008), supra note 14 at 155 (Nick Ternette).

Battle Hymn of the Incumbent 19
IV. AMENDMENTS
Bill 37 underwent several important amendments during the committee stage.
As one commentator noted, while the opposition was able to delay the bill's
passage until the fall, its biggest victory was likely the concessions it extracted
from the government on the bill:
The Tories have already realized a dividend from the hard work. The NDP dropped
several objectionable elements from the electoral finance bill, including proposed limits
on political advertising and controls on content which is, in some ways, more important
than delaying passage. The bill was clumsy and the Tories got the NDP to blink. 63
Many of these amendments indicate the NDP was responsive to the
feedback it received during the committee stage. In that sense, all of the public,
opposition, and government deserve credit for these improvements (the
opposition and the public for suggesting the changes, the government for
listening to and adopting them).
A. Election Financing
Two important amendments were made in this area. First, spending limits on
political advertisements in non-election years will be removed. 64 Given the
earlier discussion, this is undoubtedly a win for democracy. Second, the political
allowance (itself a positive development) will no longer be indexed to inflation. 65
This is also a positive development.
B. Legislative Assembly Management Commission
In the face of strong public, media, and opposition criticism, the NDP moved to
tone down the most draconian of its proposed changes in this area.
LAMC will no longer be charged with the responsibility of creating "partisan
guidelines" for most forms of MLA communication. Instead, the bill has been
amended to substitute "appropriate" in place of partisan, and it appears MLA
mail-outs will no longer be subject to these guidelines. 66 Additionally, the LAMC
will invite parties who do not have representation on the committee to join
discussion toward the creation of the guidelines. 67 While this will still allow the
63
Dan Lett, "Premier offered easy targets" Winnipeg Free Press (16 June 2008).
64
Bill 37, supra note 1, Sch. C, cl. 11(1) as amended.
65
Ibid. at cl. 15 as amended.
66
Ibid., Sch. E, cl. 2 as amended.
67
Ibid.

20 Underneath the Golden Boy
government to have a majority voice at LAMC, it is a step in the right direction
nevertheless.
C. Lobbyist Registration
Taking the lead of recent changes to the federal lobbyist registry, the provincial
government will put control of Manitoba's registry in the hands of an
independent officer of the Assembly. This is also a positive development that
was responsive to feedback generated during the committee process.
V. BILL 37: GOING FORWARD
Debate on Bill 37 will resume when the Legislature sits in the fall, as per a
sessional order passed 5 June 2008. 68 Report stage will end 30 September, and
the bill will be given third reading and Royal Assent no later than 9 October. 69
There is much work to do between when the House resumes sitting and
these dates. The government has been responsive to some of the criticism the
bill has received to date, but several negative aspects remain. In particular, close
attention should be given to its political financing provisions as described above.
Bill 37 was born as a comprehensive democratic reform package earlier this
year. The legislative process to date has been a success in that it has highlighted
many of the bill's shortcomings, and led to many improvements. It remains to be
seen how many more improvements will be put to paper, but the legislative
process has helped instil a bit of democracy and accountability into a bill that, in
theory, was supposed to be about both but, in reality, had little of either.
68
Debates (5 June 2008), supra note 2 at 2736.
69
Ibid.

A Proposed Hate Communication Restriction
and Freedom of Expression Protection Act:
A Possible Compromise to a Continuing
Controversy
EDWARD H. LIPSETT, B.A., LL.B.
A
s has been widely observed, the “hate speech” provisions in various federal
and provincial laws unduly fetter freedom of expression on matters of public
interest and may well be counter-productive to the legitimate goals which they
pursue. The Criminal Code 1 provisions, as they entail criminal convictions and
possible imprisonment, are obviously the harshest. However, s. 319(2) dealing
with “wilfully promoting hatred” has a strict mens rea (intention) requirement,
and s. 319(3) provides several defences. The “kinder and gentler” human rights
provisions, contained in s. 13 of the Canadian Human Rights Act 2 and various
provincial (and territorial) human rights laws, do not require intention as a
prerequisite to liability, and lack the defences referred to in s. 319(3) of the
Criminal Code. Therefore, their “censorial sweep” is far wider and can cover or
threaten materials far less extreme or dangerous than that covered by the
Criminal Code, and pose an arguably greater threat to freedom of expression.
Yet international law requires Canada to prohibit certain forms of “hate
speech,” and there may be some materials that are so harmful or dangerous that
they need to be restrained. Most of these materials would not involve the
impugned ideas alone: rather, the ideas in conjunction with other factors (such
as incitement to unlawful actions or the methods, circumstances or likely
consequences of their expression). This paper, after conducting a brief overview
and general critique of the current legislative and jurisprudential scheme, offers
some ideas for reform in this area of the law. I am respectfully suggesting the
abolition of all current laws in this area at the federal and provincial levels and
their replacement with a single, comprehensive federal statute. Hopefully, this
new statute would prohibit the most harmful or dangerous “hate” materials,
while respecting freedom of expression to the greatest extent possible.
1
R.S.C. 1985, c. C-46.
2
R.S., 1985, c. H-6

22 Underneath the Golden Boy
PART I
The debate over the extent freedom of expression can legitimately be restricted
in order to protect equality and social harmony continues. In 1990, the Supreme
Court of Canada, by a 4-3 majority, upheld the “wilfull promotion of hatred
against any identifiable group” provision in s. 319(2) of the Criminal Code 3 in R.
v. Keegstra. 4 That provision, through a definition in s. 318(4), then only covered
“colour, race, religion or ethnic origin.” While acknowledging its interference
with freedom of expression under s. 2(b) of the Canadian Charter of Rights and
Freedoms 5 , the Court held that it was a “reasonable limit” under s. 1. In so
holding, it emphasized the importance of protecting the constitutionally and
internationally protected values of equality and multiculturalism and our
obligations to prohibit certain forms of hate messages under Article 20(2) of the
International Covenant on Civil and Political Rights 6 and Article 4 of the
Convention on the Elimination of All Forms of Racial Discrimination. 7 It relied
on the strict mens rea requirement derived from the word “wilfull”, its attempts
to narrow the concept of “hatred”, and the defences in s. 319(3)—particularly
those of “religious opinion” in (b) and “reasonable belief” in (c) 8 —to uphold the
proportionality of the legislation.
On the same day, that Court also upheld, by a 4–3 majority, s. 13 of the
Canadian Human Rights Act 9 (to the extent that it dealt with race or religion,
the other “prohibited grounds of discrimination” were not dealt with in that
decision) in Canadian Human Rights Commission v. Taylor. 10 Section 13(1)
reads:
3
Section 319(2) of the Criminal Code reads: “Everyone who, by communicating statements
other than in private conversation, willfully promotes hatred against any identifiable group is
guilty of (a) an indictable offence and is liable to imprisonment for a term not exceeding two
years; or (b) an offence punishable on summary conviction.”
4
[1990] 3 S.C.R. 697.
5
Charter of Rights and Freedoms, Part I of the Constitution Act, 1982 schedule B [Charter].
6
International Covenant on Civil and Political Rights, 19 December 1966, 999 U.N.T.S.171.
7
International Convention on the Elimination of All Forms of Racial Discrimination, 21
December 1965, 660 U.N.T.S. 195.
8
Section 319(3)(b) then read “if, in good faith, he expressed or attempted to establish by
argument an opinion on a religious subject.”
Section 319(3)(c) reads: “if the statements were relevant to any subject of public interest, the
discussion of which was for the public benefit, and if on reasonable grounds he believed them to
be true;”
9
Canadian Human Rights Act, R.S., 1985, c. H-6.
10
[1990] 3 S.C.R. 892.

Hate Communication Restriction and Freedom of Expression 23
It is a discriminatory practice … to communicate telephonically or to cause to be so
communicated, repeatedly…any matter that is likely to expose a person or persons to
hatred or contempt by reason of the fact that that person or those persons are identifiable
on the basis of a prohibited ground of discrimination.
Unlike s. 319(2) of the Criminal Code, this provision does not contain a
mens rea requirement. Being a human rights provision rather than a criminal
provision, the effect of the material was ruled sufficient to engender liability;
intention was deemed to be irrelevant. Furthermore, no “defences” akin to those
in s. 319(3) of the Criminal Code are found in this provision. However, the
restriction on freedom of expression was held to be proportional largely on the
basis of the limited remedy then available for a violation of the section. At that
time, the only sanction that a tribunal could impose was in effect a cease and
desist order. Payment of compensation, available for other breaches of this Act,
did not apply here. A respondent could not be liable to a fine or imprisonment
unless he disobeyed such order. Disobedience would be deemed contempt of the
Federal Court of Canada.
Other Criminal Code “hate speech” related provisions whose
constitutionality have not been ruled on by the Supreme Court of Canada are s.
318, prohibiting “advocating or promoting genocide”, s. 319(1) prohibiting
inciting hatred in a public place “where such incitement is likely to lead to a
breach of the peace”, s. 320 dealing with the seizure and forfeiture of “hate
propaganda”, and s. 320.1 dealing with the deletion of “hate propaganda” from
computer systems. 11 The Supreme Court, however, ruled the “false news”
provisions of the Criminal Code, s. 181 to be unconstitutional 12 in a case
involving a Holocaust denier. Other relevant provisions whose constitutionality
have not been ruled on by the Supreme Court are provisions of the Customs
Tariff 13 prohibiting importing “hate propaganda” into Canada 14 and the various
regulations concerning radio and television prohibiting “abusive
comment…likely to expose hatred or contempt… .” 15
11
Note also s. 718.2(a)(i) of the Criminal Code which makes “bias, prejudice or hate…” as a
motivation for a crime “aggravating circumstances” concerning sentence. This is a “hate crime”
rather than a “hate speech” provision, and the Supreme Court of Canada has not yet ruled on
its constitutionality. For an American case which upheld a scheme of “sentence enhancement”
for “hate crimes” see Wisconsin v. Mitchell 113 S. Ct 2194 (1993).
12
R. v. Zundel [1992] 2 S.C.R. 731.
13
S.C. 1997, c. 36.
14
Section 136(1) Tariff Item 9899.00.00(b).
15
Radio Regulations 1986, S.O.R./86-982, s. 3(b) and s. 3(i).; Television Broadcasting
Regulations 1987, S.O.R./87-49, s. 5(i)(b) and s. 5(1.1); Pay Television Regulations 1990,
S.O.R./90-105, s. 3(2)(b) and s. 3(3); Specialty Services Regulations 1990, S.O.R. 90-106, s. 3;
Broadcasting Distribution Regulations, S.O.R. 97/555, s. 8(1)(b) and s. 8(2).

24 Underneath the Golden Boy
Even beyond these federal provisions, several provinces have legislation
which expressly, or as interpreted, prohibits “hate” speech or “discriminatory”
speech and similar materials. 16 Many of these are contained in provincial human
rights legislation. Some, like s. 7(1) of the British Columbia Human Rights
Code 17 and s. 3(1) of the Alberta Human Rights, Citizenship and
Multiculturalism Act 18 prohibit “…any statement, publication, notice, sign,
symbol, emblem or representation that (a) indicates discrimination or an
intention to discriminate…or (b) is likely to expose a person or a class of persons
to hatred or contempt because of…” named grounds. Section 14(1) of the
Saskatchewan Human Rights Code 19 prohibits “any representation, including any
notice, sign, symbol, emblem, article, statement or other representation (a)
tending…to deprive, abridge or otherwise restrict the enjoyment by any person
or class of persons of any right…or (b) that exposes…to hatred, ridicules,
belittles, or otherwise affronts the dignity of any person or class of persons
because of…” named grounds. Other provincial legislation, though without an
16
I have criticized such approaches in earlier publications: Edward H. Lipsett “Freedom of
Expression and Human Rights Legislation: A Critical Analysis of s. 2 of the Manitoba Human
Rights Act (1983) 12 Man. L.J. 285; Edward H. Lipsett “Comments on the Proposed Manitoba
Code of Human Rights” (1985) 14 Man. L.J. 475 at pp. 483-491.
For a more current treatment of such legislation and cases, which takes a viewpoint opposite to
mine, see Luke M. McNamara, Negotiating the Contours of Unlawful Hate Speech: Regulation
under Provincial Human Rights Law in Canada (2005), 38 U.B.C. Law Review 1.
For a continuously updated summary and discussion of this area of the law see Tarnopolsky and
Pentney Discrimination and the Law in Canada Including Equality Rights Under the Charter,
revised edition, volume 3, Chapter 10 “Notices, Signs, Symbols, Advertisements and
Messages.”
Additionally, many human rights legislative provisions and cases are available on-line through
websites collected at .
Also, most of these cases are reported in the Canadian Human Rights Reporter, C.H.R.R.
17
R.S.B.C. 1996, c. 210. For a detailed analysis of the interpretation and constitutionality of s.
7(1)(b) see Canadian Jewish Congress v. North Shore Free Press Ltd (No.7), 30 C.H.R.R. D/5
(B.C. Human Rights Tribunal, Nitya Iyer, Nov. 4, 1997); Also see: Abrams v. North Shore
Free Press (No. 3) (1999), 33 C.H.R.R. D/435 (B.C. Human Rights Tribunal, Tom W. Patch,
Feb. 2, 1999).
An important recent decision under this section is Elmasryand Habib v. Roger’s Publishing and
MacQueen (No. 4), 2008 BCHRT 378 (British Columbia Human Rights Tribunal, October 18,
2008).
After reviewing earlier decisions under this section and decisions under related legislation in
other jurisdictions, the Tribunal in this case modified its earlier interpretation of this provision.
18
R.S.A. 2000, c. H-14.
19
S.S. 1979, c. S-24.1.

Hate Communication Restriction and Freedom of Expression 25
ostensible “hate” provision, use the phrase “indicates discrimination or an
intention to discriminate”. The term “indicates discrimination” has been
interpreted as applying beyond communications intended to announce or
facilitate discrimination at a particular location (which are covered by the term
“an intention to discriminate”). The term “indicates discrimination” has been
held to cover communications 1) because of the negative ideas about the group
in question the material was judged to convey and 2) the risks and harms such
material was believed to cause. 20
These provincial human rights provisions are substantially wider in scope
than s. 319(2) of the Criminal Code, and wider as to the methods and media of
communication than s. 13 of the Canadian Human Rights Act and the
regulations concerning radio and television. Furthermore, intention was held not
to be necessary to create liability; being human rights legislation, emphasis was
on the effects of the communication. Additionally, defences such as those found
in s. 319(3) of the Criminal Code are not found in these provisions. 21
Of course, some human rights provisions dealing with notices and signs have
been more narrowly and precisely drafted to avoid wide interference with
freedom of expression. These provisions attempt to only target communication
which directly facilitates or attempts to bring about discriminatory actions
otherwise prohibited by human rights legislation. For example, Manitoba, 22
besides prohibiting discriminatory advertising in s. 14(3) of the Human Rights
Code, 23 prohibits in s. 18 of that Code:
[A]ny sign, symbol, notice or statement that (a) discriminates or indicates intention to
discriminate in respect of an activity or undertaking to which the Code applies, or (b)
incites, advocates or counsels discrimination in respect of an activity or undertaking to
20
For summaries and analyses of cases dealing with these provisions see Lipsett, McNamara, and
Tarnopolsky and Pentney, supra note 10.
21
The effect of the absence of such defences might be somewhat ameliorated by interpretation
and application of these provisions in a manner that is alive to freedom of expression concerns.
For example, the Tribunal in Elmasry (supra note 11) specifically stated, “Although, on its face,
s.7(1)(b) does not include any specific defences, factors such as whether the statement or
publication is true or is part of a larger political debate are also contextual considerations that
are relevant to determining whether, objectively, a publication is more likely to expose a person
or group to hatred or contempt. These issues are most appropriately considered in assessing the
relevant context and circumstances in which a publication is made.” (para. 85)
Some, but not all of these provisions contain a caveat purporting to protect freedom of
expression. However, it is doubtful whether they add any additional protection other than that
provided by constitutional law (either the Charter or division of powers). Indeed, Tarnopolsky
and Pentney, supra note 10 at pp. 10-33, refer to them as “probably superfluous.”
22
Which used to have an “indicating discrimination” and “hatred” provisions in its Human
Rights Act, see discussion in Lipsett, Freedom of Expression, supra note 10.
23
S.M. 1987-88, c. 45, C.C.S.M. c. H175.

26 Underneath the Golden Boy
which the Code applies; unless bona fide and reasonable cause exists for the
discrimination.
Even s. 18(b), as worded, could raise “freedom of expression” problems
unless it is interpreted very narrowly. It should apply only to the intentional
incitement of imminent and clearly unlawful actions by private bodies. 24
Obviously, it must not be used to prohibit advocacy of amendment or even
repeal of human rights legislation or the discussion of public policy, even when
the discussion suggests policies that could prove to be discriminatory. Even in
discussing acts concerning private bodies, not all “incitement”, “advocacy” or
“counselling” can legitimately be prohibited, as in many cases it would not be
clear whether the proposed course of action would even be discriminatory, and if
so whether “bona fide and reasonable cause exists for the discrimination” until
after a final and definitive legal ruling about the specific conduct at issue has
been given. 25 Human rights legislation deals with some of the most controversial
issues in society, and discussion concerning them must not be prohibited by too
wide an interpretation of the concepts of advocacy, counselling, or even
incitement. 26
24
See Brandenburg v. Ohio (1969), 89 S.Ct. 1827, at p. 1829, where the United States Supreme
Court held that only “advocacy of the use of force or law violation…directed to the inciting or
producing imminent lawless action and…likely to produce such action” can be constitutionally
proscribed. In R. v. Sharpe [2001] 1 S.C.R. 45, the Supreme Court of Canada emphasized that
the reference to “advocates” or “counsels” in the legislation concerning child pornography can
only refer to attempting to bring about or “actively inducing or encouraging” the illegal actions
in question; it does not refer to an attempt to bring about a change in the law or a description
or discussion of such activity (pp. 83-84).
25
This issue was raised in several presentations to the legislative committee considering the Code.
For example, “Second Session, Thirty-Third Legislature of the Legislative Assembly of
Manitoba—Standing Committee on Privileges and Elections”, Volume XXXV, No. 2–7:00
p.m., Thursday, 9 July 1987, Mr. Nick Ternette, on behalf of the Urban Resource Centre at p.
32, and Mr. Harry Peters, on behalf of the Manitoba Association for Rights and Liberties, at p.
35.
I regret I did not recognize this issue in my articles (supra note 10) when I endorsed prohibition
of “incitement” (1983) at pp. 330-331 and (1985) at pp. 485-486.
26
The danger of too-wide an interpretation of the concept of “incitement” and related
terminology is illustrated by the case of Pankiw v. Canada (Human Rights Commission),
[2007] 4 F.C.R. (Federal Court of Canada, Lemieux, J.) [Pankiw], which upheld the
“preliminary jurisdictional ruling of the Canadian Human Rights Tribunal in Dreaver v. Pankiw
(2005) 55 C.H.R.R. 165. That case involved a complaint alleging that Dr. Pankiw (then a
Member of Parliament) in October, 2003 “distributed a householder containing discriminatory
comments about Aboriginal peoples contravening sections 5, 12, and 14 of the Canadian
Human Rights Act.” Pankiw at para. 3, p. 2. A “householder” is an “informational brochure”
that an MP is entitled to distribute to his constituents up to four times a year and is “printed
and paid for under the auspices of the House of Commons” para. 2 at p. 2.

Hate Communication Restriction and Freedom of Expression 27
Other explicit statutory provisions found in human rights legislation, or
concepts articulated in interpretation of such legislation, deal with “harassment”
and “hostile environment” in the course of the activities it regulates. These
provisions or concepts sometimes include expressive or communicative abuse.
For example, the definition of prohibited “harassment” in s. 19 of the Manitoba
Human Rights Code 27 includes s. 19(2)(a) “a course of abusive and unwelcome
conduct or comment made on the basis of any characteristic referred to in
subsection 9(2)… .” Janzen v. Platy Enterprises Ltd. 28 held harassment to be a
prohibited form of discrimination even where it is not specifically mentioned in
the legislation. To the extent that such prohibitions are narrowly drafted and
construed to cover only repeated personal abuse of employees or users on the
basis of the prohibited grounds during such activities, they are legitimate and
their effect on freedom of expression is minimal.
However, there are dangers that such provisions and concepts can be
abused or overzealously enforced with the intention or effect that
communicative freedoms are impaired beyond the circumstances referred to
The preliminary jurisdictional ruling of the Tribunal and the Court’s decision upheld the
Tribunal’s jurisdiction over the complaint. They rejected arguments that the Tribunal lacked
jurisdiction on the basis … inter alia of Parliamentary privilege. However, they did not rule on
the merits of the complaint. At this point, therefore, we do not know whether political
commentary concerning Aboriginals in a publication would even be covered by sections 5, 12,
or 14.
Section 5 deals with discrimination “in the provision of goods, services, facilities or
accommodation customarily available to the general public”; section 14 prohibits “harassment”
in the areas regulated by the Act, and s. 12 reads:
“It is a discriminatory practice to publish or display before the public or to cause to be
published or displayed before the public any notice, sign, symbol, emblem or other
representation that (a) expresses or implies discrimination or an intention to discriminate,
or (b) incites or is calculated to incite others to discriminate if the discrimination
expressed or implied, intended to be expressed or implied or incited or calculated to be
incited would otherwise, if engaged in, be a discriminatory practice described in any of
sections 5 to 11, or in section 14.”
The fact that such a claim could even be brought under these sections illustrates the need for
care in interpreting and drafting (or possibly amending) such legislation to avoid overbreadth in
interference with expression.
Note that Lemieux J.’s decision was affirmed by Dreaver v. Pankiw [2007] F.C.J. No. 1633;
2007 FCA 386. Application for leave to appeal was dismissed by the Supreme Court of Canada
26 June 2008 < http://scc.lexum.umontreal.ca/en/news_release/2008/08-06-26.3/08-06-
26.3.html >.
27
Supra note 17.
28
[1989] 1 S.C.R. 1252.

28 Underneath the Golden Boy
above 29 . For example, in Findlay v. Mike’s Smoke and Gifts (#4), 30 an attempt
was made to apply the concept of “hostile environment for women” to have the
display and sale of “adult magazines” in a convenience store held to be
discrimination “with respect to services, goods and facilities.” The complaint was
dismissed on procedural grounds without deciding the merits. I do not deny that
there are circumstances where the use of communicative materials, such as
pornography, can legitimately be deemed a form of harassment, such as when
they are directly thrust on an unwilling recipient. However, the concepts of
“harassment” and “hostile environment” must not be tools which enable
individuals, groups, or official agencies to censor or veto literature, art,
discussions, conversations, or other forms of expression because of their
(perceived) offensiveness, “political incorrectness” or their ideas or viewpoints.
The concept of “hostile environment” was substantially expanded in the
case of Ross v. New Brunswick School Division #15. 31 In that case, the Supreme
Court of Canada upheld a Board of Inquiry’s finding that a school board created
a “poisoned educational environment” for Jewish students by failing to remove a
teacher from his teaching position for his off-duty anti-Semitic expression. It is to
be noted that this decision was based on s. 5 of the New Brunswick Human
Rights Act 32 which prohibited discrimination “with respect to any
accommodation, services, or facilities available to the public” rather than any
legislation dealing with “hate messages”, or which explicitly referred to
“harassment” or “hostile environment”.
The Board of Inquiry ordered the school division to remove Ross from his
teaching position, to offer him alternative employment under certain
circumstances, and to terminate him from his alternative position should he
29
It is of interest that the first Canadian decision holding that sexual harassment constituted sex
discrimination cautioned against applying the concept to interfere with freedom of expression.
In Cherie Bell v. Ernest Ladas (1980) 1 C.H.R.R. D/155, Ontario Board of Inquiry Chairman
O.B. Shime stated at para. 1391 at p. D/156:
“Again, the Code ought not to be seen or perceived as prohibiting free speech. If sex
cannot be discussed between supervisor and employee, neither can other values such as
race, colour or creed which are contained in the Code be discussed. Thus, differences of
opinion by an employee where sexual matters are discussed may not involve a violation of
the Code, it is only when the language or words may reasonably be construed as forming a
condition of employment that the Code provides a remedy. Thus the frequent and
persistent taunting of an employee by a supervisor because of his or her colour is
discriminatory activity under the Code, and similarly the frequent and persistent taunting
of an employee because of his or her sex is discriminatory activity under the code.”
30
21 C.H.R.R. D/19 (Ont. Board of Inquiry, Interim Decision, October 22, 1993).
31
[1996] 1 S.C.R. 825.
32
New Brunswick Human Rights Act, 1985, c.30, s.1.

Hate Communication Restriction and Freedom of Expression 29
continue his impugned expression. The Supreme Court upheld the order
concerning his removal from teaching and the offer of alternative employment,
holding that any limits on his rights under s. 2(a) or s. 2(b) of the Charter were
justified under s. 1. However, it held that the Board’s further order to remove
Ross from his non-teaching position in the event of such continuation “does not
minimally impair” these freedoms and is not justified under s.1.
Although I certainly appreciate the concerns leading to this decision, I
respectfully find it somewhat disturbing for at least two reasons. First, this
decision used human rights legislation to impose an obligation or duty on an
employer to assume or exercise jurisdiction over an employee’s off-duty
expression. This could set a very dangerous and far-reaching precedent, given
that groups protected, and grounds covered, by human rights legislation are
central to some of the most contentious issues and profound debates in society.
Second, this decision imposes (or at least recognizes) a duty on a teacher to be a
“medium” for the transmission of the school system’s “values, beliefs and
knowledge” off-duty as well as in class. 33 This obligation can severely limit a
teacher’s expressive freedom under circumstances, and for reasons, well beyond
those of concern to this case. 34
33
Ibid at p. 857.
34
The court itself seems to realize this danger when it states at p. 858: “I do not wish to be
understood as advocating an approach that subjects the entire lives of teachers to inordinate
scrutiny on the basis of more onerous moral standards of behaviour. This would lead to a
substantial invasion of privacy rights and fundamental freedoms of teachers.” With the greatest
of respect to the Court, this “substantial invasion” may be impossible to avoid as long as the
duty of transmission of values is incumbent upon teachers. Perhaps the time has come to alter
educational law and policy so as to relieve teachers of the duty to transmit the school’s “values,
beliefs and knowledge” while off-duty and to limit school boards’ jurisdiction over the private
lives of teachers. Indeed, any actual or perceived mandate given the school system to “transmit
values” may well be archaic and in need of abrogation. It is clear that society is profoundly
divided as to which values it should embrace, how to interpret and apply these values, and how
to reconcile competing values. Given the recognized need for “impartiality” and neutrality of
the school system, it might be appropriate to “take care that information included in the
curriculum is conveyed in an objective, critical and pluralistic manner” rather than maintain
attempts at “indoctrination” or values transmission.
The last quotation is taken from the European Court of Human Rights. The passage is from a
judgment given in an entirely different context from the case dealt with here. The case was
Eur. Court H.R. Case of Kjeldsen, Busk Madsen and Pedersen, judgment of 17 December 1976,
Series A, No.23. That case decided that the Danish system of sex education in the public
elementary schools did not violate Article 2 of Protocol No.1 of the European Convention on
Human Rights (or more properly the Convention for the Protection of Human Rights and
Fundamental Freedoms). That Article reads: “No person shall be denied the right to
education. In the exercise of any functions which it assumes in relation to education and
teaching, the State shall respect the right of parents to ensure such education and teaching in
conformity with their own religious and philosophical convictions.”

30 Underneath the Golden Boy
Whether or not Ross could legitimately have been removed from his
teaching position for “just cause” under education legislation, 35 or the extent to
which a teacher (or any employee) can legitimately be disciplined for off-duty
conduct is beyond the scope of this article. But it must be noted that this
precedent has been followed in decisions upholding a thirty day suspension
imposed on a teacher and guidance counsellor (Kempling) by the British
Columbia College of Teachers 36 and a letter of reprimand imposed on him by his
school district 37 for his off-duty public comments critical of homosexuality which
were held to be “discriminatory” against homosexuals.
Unlike in Ross, there was no individual student or parent complaining of a
“hostile environment” in the Kempling case. One can appreciate arguments on
his behalf that it is inappropriate to penalize him for expressing his bona fide
views on a deeply contentious moral and social issue. However, Kempling’s
comments emphasized his professional status as a teacher and guidance
counsellor. Indeed, he went so far as to declare in a newspaper statement
“Sexual orientation can be changed, and the success rate for those who seek help
is high. My hope is that students who are confused over their sexual orientation
will come to see me. It could save their life.” 38 Only on that narrow basis can I
agree with the propriety of the disciplinary actions against Kempling and the
correctness of the result of the judgments upholding them.
However, dangers to freedom of expression are inherent in this line of cases.
Penalizing teachers’ expression because it could lead to adverse emotional effects
on students, or to the lack of public “confidence” in the school system, subjects
The entire passage reads:
“The second sentence of Article 2 implies on the other hand that the State, in fulfilling
the functions assumed by it in regard to education and teaching, must take care that
information or knowledge included in the curriculum is conveyed in an objective, critical,
and pluralistic manner. The state is forbidden to pursue an aim of indoctrination that
might be considered as not respecting parents’ religious and philosophical convictions.
That is the limit that must not be exceeded.” (at p. 26)
35
I am certainly not questioning the right or duty of school boards to take appropriate actions
against a teacher who uses the classroom as a forum to spread hatred or otherwise abuses the
position while on duty. See for example Keegstra v. Board of Education of Lacombe No.14
(1983), 25 Alta L.R. (2d) 370 (Board of Reference, McFadyen J.) which upheld Keegstra’s
dismissal under the School Act on ordinary educational and employment grounds without
reference to the Criminal Code or human rights legislation.
36
Kempling v. The British Columbia College of Teachers, 2004 B.C.S.C. 133; [2004] 7 W.W.R.
749; aff’d 2005 B.C.C.A. 327; 255 D.L.R. (4 th ) 169, [2005] 10 W.W.R. 275; leave to appeal
dismissed Kempling v. British Columbia College of Teachers, [2005] S.C.C.A. No. 381.
37
Kempling v. Quesnel School District No. 28 and Curr, [2005] B.C.H.R.T.D. No. 514 (B.C.
Human Rights Tribunal, November 14, 2005) from .
38
Kempling v. British Columbia College of Teachers, 2005 B.C.C.A. 327, para. 44 at p. 11.

Hate Communication Restriction and Freedom of Expression 31
the teachers’ rights to a degree of subjectivity or deference to public opinion or
pressure. The greatest danger to freedom of expression, however, is in expanding
the concept of discrimination to include negative viewpoints rather than
restricting that concept to negative actions or decisions. This is true whether it is
done in educational (or other) disciplinary decisions, in human rights cases
expanding the definitions of “discrimination” or “harassment” in interpreting
legislation, or in legislation which expressly targets expression on the basis of
ideas.
A particular irony involved in this case is that until fairly recently, a teacher
or counsellor would almost certainly have faced severe sanctions for public
speech in favour of homosexuality, or because he was gay. We now have come to
realize that such a situation would be wrong, and our legal system now quite
properly protects against such injustice. However, is it any more just for a person
to be penalized for taking an opposite position, even absent direct discrimination
against or harassment of a student by such person It must be recalled that much
of the communication that is now criticized (and sometimes penalized) as
“extremist”, “bigoted”, “discriminatory”, or “politically incorrect” was
(throughout most of history and in most societies) considered “mainstream”.
Indeed, the proponents of concepts such as “equality” or “human rights” that are
now officially endorsed were often themselves dissidents and were sometimes
considered “extremists” and subject to severe penalties or even persecution.
Often such progressives relied on constitutional or other protections of freedom
of expression and related concepts for much of the protection they had or
progress they made.
This is certainly not to suggest that we reverse our human rights progress or
revert to the behaviour or norms of less enlightened times. However, neither
should we attempt to “freeze” our current norms, principles, and values in time.
We must not assume that our current generation, culture, society, or authorities
(or indeed any generation, culture, society, or authorities) can be absolutely
certain of the correctness of accepted ideas, 39 —or even of the “direction” a
society would like to move. Therefore it seems unsafe and inappropriate to
penalize those who would challenge these ideas or would move us in a different
direction (even if some would call that direction “backward”). Humanity
develops and evolves gradually, over the course of the generations and centuries.
Freedom of expression helps to ensure that the ideas and institutions that
39
At any rate, as can be seen, there is not (and probably cannot be) unanimity as to what ideas
should be ‘accepted’—either in our Canadian society or in the world at large. History has amply
demonstrated the danger, folly, and tragedy involved in any attempt to coerce or artificially
create such unanimity.

32 Underneath the Golden Boy
develop and evolve are subject to constant scrutiny, analysis, debate, and
evaluation - and indeed facilitates human development itself.
The fact that some human rights principles and values have attained
constitutionally and internationally protected status ought not to insulate or
immunize them from challenge or criticism. Even if their importance and
vulnerability entitles them to some additional measure of protection, attempting
to insulate them from challenge or criticism contravenes “the essence” of a “free
and democratic society.” It must be remembered that all principles, values,
philosophies, concepts, and ideas are subject to question, criticism, and
challenge. This is necessary not only as an attribute of a “free and democratic
society” but in order to ensure human development and progress.
Neither the Charter nor any part of our Constitution contains anything like
Article 17 of the European Convention on Human Rights or Article 5(1) of the
International Covenant on Civil and Political Rights. Article 17 of the European
Convention reads,
Nothing in this Convention may be interpreted as implying for any State, group or person
any right to engage in any activity or perform any act aimed at the destruction of any of
the rights and freedoms set forth herein or at their limitation to a greater extent than is
provided for in the Convention. 40
Article 5(1) of the International Covenant reads:
Nothing in the present Covenant may be interpreted as implying for any State, group or
person any right to engage in any activity or perform any act aimed at the destruction of
any of the rights and freedoms recognized herein or at their limitation to a greater extent
than is provided for in the present Covenant.
To the extent that such provisions prevent the relevant Convention or
Covenant from protecting violent interference with the protected rights, or the
incitement to such violence, they are to be welcomed. However, to the extent to
which they deny protection to peaceful attempts to challenge or repeal these
rights (including speech or political movements deemed to be extremist) they
seem, with respect, somewhat problematic.
It is true that the Charter and other parts of the Constitution limit the
extent to which ordinary legislation can interfere with certain rights and
40
There is European jurisprudence which ruled that Article 17 prevents Article 10 (“freedom of
expression”) from protecting hate communication. See for example Ivanov v. Russia,
Application no. 35222/04 (European Court of Human Rights, First Section, Admissibility
Decision, February 20, 2007) from
.

Hate Communication Restriction and Freedom of Expression 33
freedoms. 41 These constitutional provisions are “entrenched” to the extent that
federal and provincial legislative action is needed to amend them. Furthermore,
as has been seen, our courts have used s.1 of the Charter to limit certain of our
“fundamental freedoms” to protect “equality rights.” Yet nothing in the
Constitution is immune from amendment or repeal. It could be argued that our
entire constitutional system presumes that any change to, or within it, is at least
theoretically possible and within the realm of legitimate contemplation and
debate. Indeed, according to the Supreme Court (as articulated in the Secession
Reference) 42 and to Parliament (as acknowledged in the Clarity Act) 43 the
continued existence of Canada in its current composition (or its “territorial
integrity” to use international legal terminology) is subject to legitimate
challenge and debate (provided that proper procedures are followed).
Important as the egalitarian values are in our social, moral, legal, and
constitutional “scheme of things” (and to international law and politics), they
must not be allowed to “trump” the legitimate rights of their peaceful challengers
or evade the ongoing dynamics of human and social development.
In Quebec, in cases such as Quebec (Commission des droits de la personne
et droits de la jeunesse) c. Filion, 44 racist, verbal abuse was held to violate s. 4
and s. 10 of the Quebec Charter of Human Rights and Freedoms 45 —even in
disputes between neighbours or other circumstances where the defendant was
not an employer or person responsible for the provision of “regulated” services or
facilities. Regrettable though such incidents may be, it is doubtful whether
isolated or sporadic incidents of such personal abuse warrant legal intervention. 46
41
However, s. 33 of the Charter—the ‘notwithstanding clause’—allows Parliament and provincial
legislatures to avoid some of the restrictions on their power.
42
Reference re Secession of Quebec [1998] 2 S.C.R. 217.
43
S.C. 2000, c. 26.
44
2004 CanLII 468 (QC.T.D.P.) 2004-02-04 (from www.canlii.org)..
45
R.S.Q. c. C-12. Section 4 reads “Every person has a right to the safeguard of his dignity, honour
and reputation.” Section 10 reads:
“Every person has a right to full and equal recognition and exercise of his human rights
and freedoms without distinction, exclusion, or preference based on race, colour, sex,
pregnancy, sexual orientation, civil status, age, except as provide by law, religion, political
conviction, language, ethnic or national origin, social condition, a handicap or the use of
any means to palliate a handicap.
Discrimination exists where such a distinction, exclusion or preference has the effect of
nullifying or impairing such right.”
46
Notwithstanding the eloquent call for rendering such conduct tortious in articles such as
Richard Delgado’s Words that Wound: A Tort Action for Racial Insults, Epithets and Name-
Calling 17 Harv. C.R.-C.L.L. Rev. 133 (1982). Although not believing that isolated or sporadic
conduct of that nature should be recognized as a legally cognizable wrong, as mentioned earlier,

34 Underneath the Golden Boy
The more the law or the state attempt to control or sanction unpleasant
manifestations of human personality, the more authoritarian our society risks
becoming.
There are several other statutory provisions aimed at hate-related
expression. In British Columbia, the Civil Rights Protection Act 47 prohibits at s.
1
[A]ny conduct or communication by a person that has as its purpose interference with
the civil rights of a person or class of persons by promoting (a) hatred or contempt of a
person or class of persons, or (b) the superiority or inferiority of a person or class of
persons in comparison with others on the basis of race, colour, religion, ethnic origin or
place of origin.
At s. 2, such “prohibited act” is rendered a tort. In s. 5 it is rendered an
offence that, if committed by an individual, is punishable under s. 5(1) “by a fine
of not more than $2 000 or to imprisonment for not more than six months or to
both.”
It is yet to be decided whether the expression of the impugned idea alone is
covered by the prohibition or if it must be in conjunction with actual or
attempted action, or incitement to unlawful action. To the extent that the
expression has to be directly connected with some (otherwise) unlawful action
that “interferes with the civil rights”—or has to have as its “purpose” the
bringing about of such action—this provision may be less restrictive of freedom
of expression and easier to justify than some of the other provisions referred to
(such as s. 7(1) of the British Columbia Human Rights Code). Furthermore, the
Civil Rights Protection Act has been ruled 48 to have an intention requirement. 49
Indeed the Court emphasized that “the law must be restrained…” in order to
protect “the exploration of ideas” and “academic freedom.” 50 However, to the
extent that the expression of the ideas alone is covered (or that their mere
expression could be considered the necessary “interference” or could be deemed
I accept the need to include repeated verbal abuse as an aspect of harassment prohibited in
activities regulated by human rights legislation. Furthermore, as I will discuss when dealing with
s. 11 of my proposed legislation, infra, I can acknowledge that persistent and unwelcome
communication of ‘hate speech’ to a particular individual, even outside of situations regulated
by human rights legislation might be rendered unlawful as expressing hatred “under
circumstances which involve the invasion of privacy of any individual.”
47
R.S.B.C. 1996, c. 49.
48
Maughan v. University of British Columbia, 2008 BCSC 14 (CanLii) 2008-01-04 (Supreme
Court of British Columbia, Cullen J.) January 4, 2008 from www.canlii.org.
49
Ibid at paras. 332–347 at pp.121-127.
50
Ibid at paras. 493–494 at p.173.

Hate Communication Restriction and Freedom of Expression 35
to contain the necessary “purpose”), this formulation could be more intrusive of
freedom of expression than some provisions earlier referred to.
Although the reference in s. 1(b) to “the superiority or inferiority of a person
or class of persons in comparison with others” is consistent with Article 4(a) of
the International Convention on the Elimination of all Forms of Racial
Discrimination, 51 this targets a particular ideological perspective, and therefore
violates one of the most important aspects of freedom of expression, “the
neutrality principle”. The “neutrality principle” asserts that no idea is beyond
freedom of expression protection, and includes the concept of “viewpoint
neutrality.” “Viewpoint neutrality” means that, even in circumstances where it is
legitimate to regulate expression, regulation must not be done on the basis of the
viewpoint expressed. 52
I certainly acknowledge the revulsion and fear that concepts of racial
superiority or inferiority engender, and how such ideas have led, or contributed,
to tragic abuses. Yet prohibiting the expression of such ideas creates serious
problems of its own. Discomforting though it may be, race is central to many
controversies within the scientific and academic disciplines, as well as within
society at large. If scientists, academics, authors, publishers, or institutions were
51
Article 4(a) of that Convention requires “State Parties” to “declare an offence punishable by
law all dissemination of ideas based on racial superiority or hatred, incitement to racial
discrimination, as well as all acts of violence or incitement to such acts against any race or
group of person of another colour or ethnic origin …”.
52
These concepts have been developed under American First Amendment jurisprudence and are
summarized by Rodney A. Smolla, Smolla and Nimmer on Freedoms of Speech: A Treatise on
the First Amendment, (Matthew Bender & Co., Inc., 1994) at pp. 3-84 to 3-86 (headings and
footnotes omitted) as follows:
“The ‘neutrality principle’ embraces a cluster of precepts that require government to
avoid favouritism in the marketplace of ideas.
Mere opposition to an idea is never enough, standing alone, to justify the abridgment of
speech. ‘If there is a bedrock principle underlying the First Amendment, it is that the
Government may not prohibit the expression of an idea simply because society finds the
idea itself offensive or disagreeable.’
Government may not ‘pick and choose’ among ideas but must always be ‘viewpoint
neutral’. Modern First Amendment cases establish a per se rule making the punishment of
speech flatly unconstitutional if the penalty is based on the offensiveness or the
undesirability of the viewpoint expressed. All ideas are created equal in the eyes of the
First Amendment—even those ideas that are universally condemned and run counter to
constitutional principles. ‘Under the First Amendment’, the Supreme Court has stated
‘there is no such thing as a false idea. However pernicious an opinion may seem, we
depend for its correction not on the consciences of judges and juries but on the
competition of other ideas. While the First Amendment as a whole is not absolute, the
prohibition against view point discrimination is a pocket of absolutism in which the
Supreme Court has tolerated no abridgements.”

36 Underneath the Golden Boy
put at risk of prosecution or legal action (or threats thereof), scientific or
academic work could be imperilled or chilled. Could a work such as Richard
Herstein’s and Charles Murray’s “The Bell Curve: Intelligence and Class
Structure in American Life” conceivably come within such provisions since it
argues that genetics is a causative factor in statistical differences in intelligence
test- scores between various races Although he was never prosecuted or
subjected to formal proceedings, University of Western Ontario Professor J.
Phillipe Rushton (who has done research and published works concerning racial
differences) has been investigated and subjected to complaints under the
Criminal Code “hate” provision and Ontario human rights legislation. 53 As well,
pressure (which has not proved successful) has been applied to have him
removed from his university position.
I wish to emphasize that (having no expertise in the biological or social
sciences whatsoever) I have no opinion as to the scientific merit or lack thereof
of the works of such authors. Furthermore, I can appreciate some of the
discomfort this line of work arouses. However, we must note that such works are
subject to rigorous (and often severe) scrutiny, challenge, and criticism within
the scientific community as well as by the general public. Such ongoing debate
that occurs when norms of freedom of expression in general and academic
freedom in particular are respected at least reduce the risk that such authors will
have undue influence or that their theories will gain uncritical acceptance.
Additionally, it must be remembered that academic and scientific works are
subject to professional standards and discipline. These standards include
honesty, good faith, competence, and observing proper methodology. However,
the enforcement of such standards are best left to the disciplinary mechanism of
the relevant academic or scientific institutions applying appropriate professional
criteria (and following fair procedures), rather than to the “justice system”
applying far-reaching and sometimes draconian laws. Furthermore, such
discipline should not be based on the controversial nature of the views
expressed, external or internal pressure, or what “side” of an issue the academic
or scientist “comes down on.” Academic and professional integrity rather than
ideological partisanship or “political correctness” should be the guiding factors.
In society, factors such as race, ethnicity and religion (and other grounds
included in human rights legislation) are at the centre of some of the most
profound political, social, and moral issues and debates. Additionally, they at
least appear to be connected to many life situations one personally encounters.
Legislation prohibiting expression promoting “the superiority or inferiority …” as
53
Stefan Braun, Democracy Off Balance: Freedom of Expression and Hate Propaganda Laws in
Canada (University of Toronto Press, 2004) p. 125.

Hate Communication Restriction and Freedom of Expression 37
worded in s. 1(b), as well as the more familiar formulation “hatred or contempt”
found in s. 1(a), or similar terminology in other legislation and cases referred to
could be used in an attempt to stifle or silence many viewpoints or arguments
concerning such debates, issues, or situations.
In many cases, expression or commentary that could lead to liability (or at
least to proceedings or threats thereof) under such provisions reflect the
communicator’s perspective on reality. He observes or hears about members of a
group behaving in a manner perceived as inappropriate and imputes that
behaviour to the entire group. Similarly, a commentator can learn about high
profile terrorist acts committed by members of (and purportedly in the name of)
a group and blame the entire group, while ignoring the fact that the
overwhelming majority of that group’s members were not involved or even
sympathetic with such acts. Statistics sometimes show disproportionately high
rates of imprisonment or crime, or disproportionately low rates of occupational
or academic success among various groups. Some commentators use such
statistics to draw negative inferences on the entire group, while failing to
appreciate historic or current factors largely beyond the control of members of
the group which contribute to such situations. On the other hand, some
commentators find fault with a high rate of achievement and success among
members of a group or its perceived political, social, or economic influence,
sometimes attributing this to a “conspiracy” or alleging the group to be “too
powerful”.
Of course, such “perspectives on reality” are regrettably narrow in scope,
overly simplistic, and divisive. They are often reflective of long standing
individual and social prejudice, and indeed are sometimes bordering on the
“paranoid.” Yet they are usually sincerely believed in by their proponents, and
often constitute their inferences from, interpretations of, or “spin,” on facts that
(at least in some cases) actually do exist. Furthermore, freedom of expression is
not merely a “privilege” reserved for an elite of the most “enlightened” or
broadminded individuals in society. It is a “fundamental freedom” available for
everyone.
Penalizing a segment of society for expressing views that have fallen into
official (and much social) disfavour not only is unfair; it is itself divisive and
probably counterproductive. In many cases, such proceedings exacerbate, rather
than alleviate, inter-group tension and resentment. Such proceedings may even
reinforce, rather than refute, negative stereotypes and ideas in the minds of
many members of the public. If someone viewed a group as so weak or helpless as
to need the state or justice system to bolster its reputation on one hand, or so
vindictive and powerful as to be able to get the state or justice system to wreak
vengeance on and silence its opponents, on the other hand, such proceeding
may well corroborate those opinions in his or her mind.

38 Underneath the Golden Boy
Much of the expression that could be caught or threatened by such
legislation could be in reaction or opposition to, or “grassroots backlash” against
statements, policies, positions, and demands expressed by members of (or
organizations perceived as representative of) various protected groups, or policies
or actions adopted by governments in the perceived interest of or deference to
such groups. Whether wise or unwise, justified or unjustified, such demands,
policies, and actions are themselves often highly controversial, divisive and
indeed polarizing. Although some of the opposition may be well-reasoned or
measured in tone, other reaction or “backlash” may be distasteful, misguided, or
even “extremist.” Yet “backlash,” though often unpleasant, is an unavoidable
aspect of a “free and democratic society” and as long as it is expressed peacefully,
its expression must not be prohibited. We have to remember that if a subject or
issue is important enough to be on the “public agenda,” all perspectives on that
subject must be allowed to be articulated for “open debate” to be free and
meaningful.
Another provincial legislative provision intended to restrain “hate” material
is s. 19 of the Manitoba Defamation Act. 54 Section 19(1) reads:
The publication of a libel against a race, religious creed or sexual orientation likely to
expose persons belonging to the race, professing the religious creed or having the sexual
orientation to hatred, contempt or ridicule, and tending to raise unrest or disorder among
the people, entitles a person belonging to the race, professing the religious creed, or
having the sexual orientation to sue for an injunction to prevent the continuation and
circulation of the libel, and the Court of Queen’s Bench may entertain the action.
When it was originally passed in 1934, it only referred to “race” and
“religious creed.” However, it was expanded by the Charter Compliance Act. 55
That Act, however, was an “omnibus” bill amending 56 statutes, which were
seen as discriminating against homosexuals, or as failing to provide them with
sufficient protection. Many of them dealt with family law and related issues, and
these were the matters that received almost all of the public scrutiny 56 I was the
only person who opposed that amendment to the Defamation Act at committee
stage. 57
My reasons for opposition included the arguments that it could be a seen as
an attempt to silence a particular viewpoint on a contentious social issue, given
its inclusion among family related matters pertaining to sexual orientation.
54
R.S.M. 1987, c. D20, C.C.S.M., c. D20.
55
S.M. 2002, c. 24, s. 17.
56
See Christine McLeod, “The Charter Compliance Act” (2004) 3 Underneath the Golden Boy
at 39.
57
Legislative Assembly of Manitoba, Standing Committee on Law Amendments. Wednesday,
July 24, 2002. < http://www.gov.mb.ca/legislature/hansard/3rd-37th/la_09/la_09.html >.

Hate Communication Restriction and Freedom of Expression 39
Furthermore, I questioned the appropriateness of legislation expanding
restrictions on expression in a bill where such expansion would be “insulated”
from public scrutiny by the high-profile issues dealt with in some of the other
provisions.
This provision has apparently only led to two cases. The first, Tobias v.
Whittaker 58 was not defended on its merits, as the statement of claim was
dismissed on a procedural point. The second, Courchene v. Marlborough Hotel 59
dealt with a memorandum from a clerk advising against renting rooms to
Indians, that was repudiated before it could be acted upon. Tritschler, C.J. Q.B.
in obiter dictum suggested that this provision was ultra vires the provincial
legislature as it dealt with criminal law. 60
In some respects, this provision might be less intrusive on freedom of
expression than most “hate” provisions in Canadian federal and provincial
legislation. The remedy is limited to injunction; damages cannot be awarded,
and there is no fine or imprisonment (unless the injunction is disobeyed, which
would constitute contempt of court). Furthermore, the phrase “tending to raise
unrest or disorder among the people” could be construed as limiting the
provision to circumstances where the libel created imminent danger of violence,
so that the section does not prohibit the impugned ideas alone. This point has
not been decided, however, and such a benign interpretation is by no means
certain. This somewhat archaic terminology is reminiscent of a time when
sedition laws were deemed necessary to prevent “the people” from being led into
unlawful or rebellious conduct. 61
Although “hate” legislation is often seen and justified as prohibiting “group
defamation,” it is questionable whether defamation is really the appropriate
paradigm or concept to deal with group hatred. Defamation litigation is more
suitable for (and usually deals with) specific factual allegations of which the truth
or falsity is (to a greater or lesser degree) readily demonstrable by the evidence,
58
Manitoba Court of King’s Bench, Feb. 13, 1935, unreported cite in McNamara, supra note 10
at p. 2, note 7 at p. 36.
59
20 D.L.R. (3d) 109 (Man., Tristchler C.J.Q.B., 1971); affirmed 22 D.L.R. (3 rd ) 157 (Man. C.A.,
1971)
60
Ibid at p. 115. The Court of Appeal did not decide this issue.
61
Interestingly, in Boucher v. The King [1951] S.C.R. 265, the Supreme Court of Canada held,
inter alia, that the intention “to promote feelings of ill-will and hostility between different
classes of such [His Majesty’s] subjects” without the intention of causing unlawful action did
not constitute “seditious intention” which was necessary for conviction of “publishing a
seditious libel” under the Criminal Code.

40 Underneath the Golden Boy
or “matters patent to the senses.” 62 Sometimes “hate” material does fall into that
category. However, much or most material amenable to charges of being ”hate–
related” can involve “complex social and historical facts” 63 as well as broad
scientific, political, moral, or religious issues.
To the extent evidence can be helpful in resolving such issues; the evidence
is often expert evidence. Expert evidence is often highly controversial, and the
best expert evidence might not even be available to the parties in a particular
case, at least on an equal basis. Furthermore, the developments in the disciplines
which form the basis of the expert evidence (and indeed form the basis of many
of our social and scientific beliefs and policies) occur over the long-term, indeed
over decades, and sometimes generations and centuries. Evidence needed to
present a case (or even in development of a discipline) may not even be
available, known, or in existence under timely circumstances. Documents
needed for historical research or forensic evidence, for example, may be
“classified” for a long period, under the control of uncooperative governments,
or perhaps destroyed. 64 It is especially unfair to subject someone to legal
62
To borrow a phrase from McLachlin, J., (as she then was) speaking for the majority in R. v.
Zundel, [1992] 2 S.C.R. 731 at p. 748.
63
McLachlin, Ibid at 757. She was actually discussing the “false news” provision of the Criminal
Code rather than legislation specifically targeting “hate speech” or “group defamation.”
However the problems are equally applicable to such types of legislation.
64
It is relatively easy to prove the tragic historical reality of the Holocaust and the falsity of its
denial largely because the Third Reich was thoroughly defeated, Germany was occupied, and all
the relevant documentary evidence created by the Nazis themselves was retrieved. Such factors
are among those cited to support the prohibition of Holocaust denial, either as an independent
crime, or as a form of hate propaganda against the Jewish people. For arguments supporting
such prohibition and discussing the issue, see David Matas, Bloody Words: Hate and Free
Speech, (Bain and Cox Publishers, Winnipeg, 2000), Chapter 5, Holocaust Denial, pp. 58-66.
However, I respectfully suggest that such prohibition would be unwise for several reasons. It
could lead sceptics, despite all the evidence, to question the credibility of genuine Holocaust
research and writing on the assumption that their conclusions were coerced or preordained,
opposite viewpoints not being allowed. It might in the future deter even bona fide researchers
from dealing with Holocaust related topics if they believed that they could not freely “follow
the evidence wherever it might lead” or that potential conclusions might get them into trouble
with the law. It could lead to “backlash” and inter-group tensions, both generally and among
groups that have also suffered grievous persecution, but the existence or extent of which might
not be as clearly provable as the Holocaust. Perhaps, most importantly, it can be seen as a
precedent and lead to demands for prohibition of denial of other controverted or disputed
historical facts, expanding the interference with expressive and intellectual freedom.
We can look to French experience as an illustration of the last point. In 1990, the French
legislature enacted “…the so-called ‘Gayssot Act’, which amends the law on the Freedom of
the Press of 1881 by adding an article…[which]…makes it an offence to contest the existence
of the category of crimes against humanity as defined in the London Charter of 8 August 1945,
on the basis of which Nazi leaders were tried and convicted by the International Military

Hate Communication Restriction and Freedom of Expression 41
sanctions over alleged falsehood if the “truth” or “falsity” of the material may not
be determined in a suitable time frame for litigation, in the course of the parties’
lifetime or perhaps ever.
Furthermore (as mentioned earlier), some of the material perceived as
exposing the targeted group to hatred is based on (raw) facts or statistics that
actually do exist. The injustice of “hate” materials based on these facts lies not in
the exposition of the facts per se, but in the attribution of negative acts or
attributes of several members of the group to the whole group, failing to
appreciate the historical or social factors leading to these facts, or the unfounded
interpretation of, inference from, or “spin,” on these facts. If an action under s.
19(1) was brought on the basis of materials containing these facts, and the
exposition of the facts was the gist of the claim, the defendant might prevail on
the defence of “truth.” If the interpretation, inference or “spin” were the gist of
the claim, and if the defendant could prove the bare facts true, he might prevail
on the defence of “fair comment” if the opinions (however far-fetched) could be
honestly held. Either way, the victory would corroborate the impugned views
among those capable of believing them. Even should the defendant lose, the trial
itself would further publicize his views, and the proceedings themselves might
reinforce the views in those capable of believing them. Under either scenario,
the bringing of a suit under this section could prove to be a “no-win situation”
for the offended group and for the pursuit of equality.
Not only has human rights legislation been applied to restrict freedom of
expression in the name of equality, it has been applied to require expression and
even to penalize its refusal in certain circumstances. In Hudler v. London
(City), 65 the mayor and City of London were held to have “discriminated … with
respect to services on the basis of sexual orientation …” in refusing to proclaim
Pride Week at the request of an organization dedicated to supporting
homosexuals. The remedy included an order that the City make the requested
proclamation and a statement in recognition of “the lesbian and gay and bisexual
communities” as well as $10 000 damages against the mayor and city, jointly and
severally.
The Board questioned the applicability of s. 2(b) of the Charter to this
interpretation of “services” in the Human Rights Code but held at any rate it
Tribunal at Nuremberg in 1945-1946.” Faurisson v. France, 18 H.R.L.J. 40 (U.N. Human
Rights Committee, 8 November 1996) at para. 2.3 p. 40.
That led to the demand, and introduction, into the French legislature a bill that would prohibit
the denial of the Turkish genocide against the Armenians during World War I. This has led to
diplomatic protests from Turkey, which has always denied that the deaths of the Armenians
amounted to genocide (http://www.cbc.ca/world/story/2006/10/12/french-bill.html).
65
31 C.H.R.R. D/500 (Ontario Board of Inquiry, Mary Anne McKellar, October 7, 1997).

42 Underneath the Golden Boy
would be protected by s. 1. It relied largely on the governmental nature of the
mayor’s and city’s activities. 66 Though recognizing the prima facie infringement
of s. 2(b) in the remedy of ordering the proclamation, the Board held it justified
by s. 1. 67
Other cases dealing with proclamations include Rainbow Committee of
Terrace v. City of Terrace; 68 Hughson v. Kelowna (City), 69 Hill v. Woodside, 70
and Oliver v. Hamilton (City) No. 2. 71 In all these cases the failure to issue the
requested proclamation was held to be discriminatory, although there were
differences as to the precise issues dealt with, the reasoning in the judgments, or
the remedies awarded.
Although I acknowledge the argument that a mayor acts in an official
(rather than personal) capacity when issuing proclamations, what the mayor says
or does can be perceived as reflecting personal beliefs, and can affect or be
influenced by conscience. Whether or not a city as a corporate entity is even
entitled to Charter rights, being a governmental body, its statements can be seen
as reflecting the views of its councillors, officials, or citizens in general and it
does possess legal personality. Even though the proclamation was ruled a
“service”, the complainants were not denied a public forum in which they could
present their message on their own, or in any way impeded in their ability to
express their own views. The respondents were in reality only refusing to endorse
or approve the complainants’ viewpoint or to express them as their own (or at
least to appear to do so). I can appreciate that the complainants may well have
benefited from the proclamation in question, and could legitimately feel offended
by or fear that harm might result from the refusal.
However, the decisions sometimes recognized the sincerity of the beliefs of
the mayor or councillors in question, either as to the moral disagreements with
the message of the proclamation itself, or that the proclamation would be
counter-productive given the backlash it would produce. With the greatest
respect, I do not believe that, on balance, the cause of equality, or the public
interest, is well served by forcing public officials or public bodies to perform what
(in effect) is an act of hypocrisy.
66
Ibid. at paras. 64–74 at pp. D/509 and D/510.
67
Ibid. at paras. 83–86 at pp. D/511 and D/512.
68
(2002) 43 C.H.R.R. D/413 (BC Human Rights Tribunal, Ana R. Mohanned, July 25, 2002).
69
(2002) 37 C.H.R.R. D/122 (BC Human Rights Tribunal, Carol Roberts, March 21, 2000).
70
33 C.H.R.R. D/349 (NB Board of Inquiry, Brian D. Bruce, Sept. 17, October 8, 1998).
71
24 C.H.R.R. D/298 (Ont. Board of Inquiry, Elizabeth Beckett, March 6, 1995).

Hate Communication Restriction and Freedom of Expression 43
Interestingly (perhaps ironically), a pre-Charter case seemed more sensitive
to expressive freedoms than some of the post-Charter cases referred to. In Gay
Alliance Toward Equality v. Vancouver Sun, 72 a majority of the Supreme Court
of Canada held the refusal of a newspaper to publish an advertisement by a gay
organization because of its content not to be an unlawful denial or
discrimination in the provision of a service. The advertisement solicited
subscriptions to the organization’s newspaper the Gay Tide.
Although sexual orientation wasn’t named as a prohibited ground of
discrimination under the British Columbia Human Rights Code then in force,
denial or discrimination in “any accommodation, service or facility customarily
available to the public” was prohibited “unless reasonable cause exists for such
denial or discrimination.” A Board of Inquiry held that such provision applied to
newspaper advertising and that the newspaper “did not have reasonable cause”
for the refusal.
Relying largely on “editorial control and judgment” over a newspaper’s
content as “one of the essential ingredients of freedom of the press,” 73 Martland,
J. for the majority held, 74
In my opinion the service which is customarily available to the public in the case of a
newspaper which accepts advertising is a service subject to the right of the newspaper to
control the content of such advertising. In the present case, the Sun had adopted a
position on the controversial subject of homosexuality. It did not wish to accept an
advertisement seeking subscriptions to a publication which propagates the views of the
Alliance. Such refusal was not based on any personal characteristic of the person seeking
to place the advertisement, but upon the content of the advertisement itself.
Another case that could be seen as involving compelled expression was
Brillinger v. Brockie. 75 However, it focused on freedom of conscience and
religion under s. 2(a) of the Charter, and freedom of expression under s. 2(b) was
not even raised. A commercial printer was held liable under ss. 1, 9, and 12 of
the Ontario Human Rights Code for refusing to print letterheads, envelopes, and
business cards for a homosexual organization. Brockie, who was president and
“directing mind” of Imaging Excellence Inc:
[H]olds a sincere religious belief based on the Book of Leviticus, Ch.18, v.22 and Ch.20,
v.13 that homosexual conduct is sinful and in furtherance of that belief he must not assist
72
[1979] 2 S.C.R. 435.
73
Ibid. at pp. 453–455.
74
Ibid. at pp. 455–456.
75
Brillinger v. Brockie (No.2), (1999), 37 C.H.R.R. D/12 (Ont. Board of Inquiry, Heather M.
MacNaughton, Sept. 29, 1999); Brillinger v. Brockie (No.3) 37 C.H.R.R. D/15 (Feb. 24, 2000),
varied Ontario Human Rights Commission v. Brockie, 222 D.L.R. (4 th ) 174 (Ont., Div. Ct.,
2002).

44 Underneath the Golden Boy
in the dissemination of information intended to spread the acceptance of a gay or lesbian
(homosexual) lifestyle. Mr. Brockie draws a distinction between acting for customers who
are homosexual and acting in furtherance of a homosexual lifestyle. 76
As a remedy, the Board ordered “Brockie and Imaging Excellence to provide
the printing services that they provide to others, to lesbians and gays and to
organizations in existence for their benefit” and to pay $5 000 damages. 77
On judicial review, the Divisional Court held that the order was correct to
the extent it “was directed to the activity which gives rise to the offensive
conduct, namely the provision of printing services for ordinary materials such as
letterheads, envelopes and business cards.” It went on to acknowledge,
“However, the order would also extend to other materials such as brochures or
posters with editorial content espousing causes or activities clearly repugnant to
the fundamental religious tenets of the printer.” 78 The Court concluded:
In the result, we are of the opinion that the impact of the Board’s order could be so broad
as to extend beyond what is reasonably necessary to assure the rights of Mr. Brillinger and
his organization to freedom from discrimination but may require Mr. Brockie to provide
services which could strike at the core elements of his religious belief and conscience.
In order to balance the conflicting rights, we would add to the Board’s Order ‘Provided
that the order shall not require Mr. Brockie or Imaging Excellence to print material of a
nature which could reasonably be considered to be in direct conflict with the core
elements of his religious belief or creed.’
We affirm the Board’s Order in all other respects. 79
The Court did not decide the Appellants’ challenge to “the constitutional
validity of the Code because it allows no defence based on bona fide reasons” to
the “accommodations, services, and facilities” provisions. It held “the Appellants
have led no evidence to provide a factual matrix necessary to challenge an
otherwise apparently valid statute… .” 80 As the alteration to the Board’s Order
only dealt with the remedy provided rather than the liability under the Code,
this case cannot be seen as addressing the issue as to whether or not there can be
a “constitutional exemption” from a valid legislative provision. As mentioned
earlier, it left completely untouched any possible “freedom of expression” issues.
It is true that a commercial printer generally does not exercise editorial control
of the content of the material as a newspaper or publisher does, and does not
purport to “proclaim” anything in the printer’s name. Therefore, as the
“message” of the work is generally not attributed to the printer, any freedom of
76
222 D.L.R. (4 th ) para 3 at pp. 178-179.
77
37 C.H.R.R. at p. D/20.
78
222 D.L.R. (4 th ) para 48–49 at p. 190.
79
222 D.L.R. (4 th ) at para 57–59 at p. 192.
80
222 D.L.R. (4 th ) p. 187.

Hate Communication Restriction and Freedom of Expression 45
expression issue would be somewhat attenuated as compared with the cases
previously mentioned. However, in some cases a commercial printer could face
civil or criminal liability for his work. Furthermore, even though the “message” is
usually not attributed to the individual or corporate printer, the individual
concerned may have ideological or other qualms about the message outside the
realm of s. 2(a), or even being involved with its dissemination, so that a
“freedom of expression” argument would not necessarily be specious or without
merit.
The tendency of “hate–related” legislative provisions to expand must be
noted. The expanded scope of the legislation included the grounds covered, the
media included, and the remedies provided. For example, the definition of
“identifiable group” in s. 318(4) of the Criminal Code (which also applies to s.
319) was amended to include sexual orientation” 81 Note also the expansion of s.
19(1) of the Manitoba Defamation Act 82 to include sexual orientation. One must
recall that at the time of the Supreme Court decision in Taylor, 83 s. 54(1) of the
Canadian Human Rights Act stated: “When a tribunal finds that a complaint
related to a discriminatory practice described in s. 13 is substantiated, it may
make only an order referred to in paragraph 53(2)(a).” Section 53(2)(a) refers to
a cessation order (and an order for preventive measures). However, s. 54 was
amended by replacing subsection (1) and adding (1.1). 84 These provisions now
read:
54(1) If a member or panel find that a complaint related to a discriminatory practice
described in s.13 is substantiated, the member or panel may make only one or more of the
following orders:
(a) an order containing terms referred to in paragraph 53(2)(a);
(b) an order under subsection 53(3) to compensate a victim
specifically identified in the communication that constituted the
discriminatory practice; 85 and
(c) an order to pay a penalty of not more than ten thousand dollars
81
By S.C. 2004, c.14, s.1.
82
The Defamation Act, C.C.S.M. c.D20.
83
Supra note 4.
84
By S.C. 1998, c.9, s.28.
85
S. 53(3) reads:
“In addition to an order under subsection (2) the member or panel may order the person
to pay such compensation not exceeding twenty thousand dollars to the victim as the
member or panel may determine if the member or panel finds that the person is engaging
in or has engaged in the discriminatory practice willfully or recklessly.”

46 Underneath the Golden Boy
(1.1) in deciding whether to order the person to pay the
penalty, the member or panel shall take into account the
following factors:
(a) the nature, circumstances, extent and gravity of
the discriminatory practice; and
(b) the willfulness or intent of the person who engaged
in the discriminatory practice, any prior discriminatory
practices that the person has engaged in and the
person’s ability to pay the penalty.
Furthermore, s. 13(2) which originally read, “Subsection (1) does not apply
in respect of any matter that is communicated in whole or in part by means of
the facilities of a broadcasting undertaking” was replaced by s.88 of the Anti-
Terrorism Act. 86 Section 13(2) now reads:
For greater certainty, subsection (1) applies in respect of a matter that is communicated
by means of a computer or a group of interconnected or related computers, including the
Internet, or any similar means of communication, but does not apply in respect of a
matter that is communicated in whole or in part by means of the facilities of a
broadcasting undertaking.
In Manitoba, the Human Rights Commission is calling for an amendment to
the Human Rights Code “to add a prohibition on the publication or display of
messages which are likely to expose a person or group to hatred or contempt on
the basis of a protected characteristic” based on “the model used in British
Columbia.” 87 This is despite the fact that Manitoba did have a “hatred” provision
in the previous Human Rights Act 88 which the Manitoba Legislative Assembly
decided not to continue when enacting the current Human Rights Code 89 in
1987.
It is understandable enough that a body given a mandate, and dedicated, to
promoting equality and combating discrimination would seek to restrict
expression it perceives as inimical to its vital goals. However, even the noblest
“ends” do not justify every conceivable “means” to achieve them. Even our most
important public bodies (and the very principles and ideologies on which they
are based) are amenable to peaceful challenge and dissent.
86
S.C. 2001, c. 41.
87
“The Rights Connections” by Janet Baldwin – Chairperson; M.H.R. Connections Published by
the Manitoba Human Rights Commission, volume 6, number 1, January 2006.
.
88
Which I criticize in Lipsett, supra note 10.
89
Supra note 17.

Hate Communication Restriction and Freedom of Expression 47
Furthermore, a provision such as the one referred to above might not be all
that necessary or beneficial towards the goal of promoting equality; 90 it may even
prove to be counterproductive. I would respectfully suggest that the prohibition
in question not be enacted.
I respectfully acknowledge that I am not a supporter of attempts to prohibit
“hate speech” per se. I am largely in agreement with the dissenting judgments of
McLachlan J. (as she then was) in R. v. Keegstra 91 and Canadian Human Rights
Commission v. Taylor 92 and with much of the reasoning in the American cases of
R.A.V. v. St. Paul, Minnesota 93 and Virginia v. Black. 94 I agree that criminal
prosecution is the harshest method of dealing with such expression. However, I
believe that the “human rights” approach as it has been applied in both the
terms and interpretation of various legislative provisions at both the federal and
provincial levels pose a substantially greater threat to freedom of expression than
the Criminal Code provision upheld in Keegstra.
The human rights approach (in terms, and as interpreted) is substantially
wider in scope than s. 319(2) of the Criminal Code. Furthermore, as effects
rather than intention are emphasized, they lack a mens rea requirement.
Additionally, the defences provided by s. 319(3) are not found in such
provisions. These factors render human rights “hate–provisions” capable of
covering substantially more communication than the clearly extremist materials
targeted by the Criminal Code. 95 They can cover or threaten vigorous (albeit
offensively-expressed) dissent from “mainstream” or “officially endorsed”
90
The coercive powers of the human rights legislation and its enforcement agencies should be
restricted to combating discriminatory actions. However, there are persuasive methods
available to human rights commissions (as well as other public bodies, private organizations,
and citizens) which are more suitable to the goals of influencing attitudes and opinions. For
example, s. 4 of the Human Rights Code expressly mandates the Commission to “promote the
principle” of equality and to undertake “educational programs.” Indeed the Manitoba Human
Rights Commission has an ambitious and successful educational and outreach strategy. For the
limited circumstances where prohibiting “hate” related expression might be needed or
appropriate, I am respectfully suggesting new legislation in Part II of this article.
91
Supra note 2 at pp. 796-868.
92
Supra note 4 at pp. 944-976.
93
112 S. Ct. 2538 (1992).
94
123 S. Ct. 1536 (2003).
95
This is not to deny that many (perhaps most) of the cases dealt with under s. 13(1) of the
Canadian Human Rights Act and some of the material targeted under provincial legislation
(e.g. Kane v. Church of Jesus Christ Christian Aryan Nations (No.3), 18 C.H.R.R. D/268
(Alta. Board of Inquiry, February 28, 1992) are indeed “extremist”—however one may wish to
define that term. Some of that material may well be appropriate for prohibition under the new
legislation which I am proposing. That does not detract from the substantially more farreaching
potential scope of the “human rights” approach.

48 Underneath the Golden Boy
principles and values. They can cover or threaten “grass-roots backlash” in
reaction to statements, positions, and policies expressed by members of various
“protected” groups or adopted by governments in the perceived interests of such
groups. They can cover or threaten the perceptions of reality of many members
of the public, even if such perceptions are regrettably narrow or unfair. As
mentioned earlier, the peaceful expression of such dissent, “backlash,” and
perceptions must be allowed to be articulated for discussion on public issues to
be complete, meaningful, and open.
This is not to deny that some of the defences in s. 319(3) of the Criminal
Code 96 can be problematic in their own right. It has been recognized that there is
difficulty in adjudicating the truth or falsity of “complex social and historical
facts” that are not “patent to the senses.” 97 It has also been recognized that it is
difficult to adjudicate the defendant’s belief in the truth or falsity of these facts.
Furthermore, the issue whether or not there are “reasonable grounds” to believe
a statement to be true could largely be a difficult “value judgment’ in itself. If it is
judged on an “objective” or “mainstream” basis, it fails to meet one of the most
important purposes of freedom of expression, to protect dissidents from enforced
conformity by holders of “mainstream” opinions. If it is judged on a “subjective”
basis (or by giving undue weight to the opinion of an “extremist”) the legislation
could be rendered largely ineffective.
The existence of the defences could render the more “sophisticated” or
“professional” hate-mongers largely immune from the law. It is possible for such
racists or other bigots to draft their messages to appear as “legitimate” arguments
on political, social, scientific, religious, or moral matters so that they could come
within the apparent scope of the defences (or at least not to show sufficient
evidence of the mens rea component of s. 319(2)). (It is not inconceivable that
at trial, such a defendant could rely on negative statistics that do exist about a
group to convince a judge or jury that he at least had some “reasonable grounds”
to support an honest belief in his impugned views. An acquittal on such basis
could be of far greater propaganda value than the original communications on
96
Section 319(3) reads:
“No person shall be convicted of an offence under subsection (2) (a) if he establishes that
the statements communicated were true; (b) if, in good faith, the person expressed or
attempted to establish by an argument an opinion on a religious subject or an opinion
based on a belief in a religious text; (c) if the statements were relevant to any subject of
public interest, the discussion of which was for the public benefit, and if on reasonable
grounds he believed them to be true; or (d) if, in good faith, he intended to point out, for
the purpose of removal, matters producing or tending to produce feelings of hatred
toward an identifiable group in Canada.”
97
See McLachlin, J’s comments concerning s. 181 of the Criminal Code in R. v. Zundel, supra
note 59 at pp. 747-759.

Hate Communication Restriction and Freedom of Expression 49
which the charges were based.) It seems that such “sophisticated” hate-mongers
or extremists could pose a greater threat to egalitarian values or social harmony
than one who clearly articulates his repulsive views and motives, or whose
utterances come across to most observers as “ranting and raving”.
Yet to omit such defences (as the human rights provisions referred to have
done), or to give them an unduly narrow interpretation or application could
further exacerbate the interference with freedom of expression to a clearly
intolerable level. However, even with the absence of the defences and with the
unlikelihood of a defendant or respondent prevailing in judgment, these
provisions could still prove counterproductive to the goals they were designed to
promote. A well-publicized trial or hearing could bring the offending messages to
thousands (perhaps millions) of people who otherwise might not have heard
them. As pointed out earlier, many people prone to believing such “hate”
messages could see the proceedings as corroborating or reinforcing, rather than
negating, the messages - irrespective of outcome. Such proceedings could make
the defendants or respondents appear as martyrs, and make the offended groups,
complainants, prosecutors, commissions, courts, or tribunals appear as
persecutors. Furthermore, the divisiveness and polarization created by these
proceedings and by the legislative provisions in question could do more harm to
social harmony than the impugned communications.
As already pointed out, existing “special” legislative provisions attempting to
tackle the issue of “hate speech” contain their own specific problems as well as
the problems generally inherent in such legislation. The reference in the B.C.
Civil Rights Protection Act 98 to “the superiority or inferiority of a person or class
of persons…” targets a particular ideological perspective, so is especially inimical
to the “neutrality principle.” Although s. 19(1) of the Manitoba Defamation
Act’s 99 archaic qualifying factor “and tending to raise unrest or disorder among
the people” might limit this provision to circumstances where there is a
likelihood of imminent violence, this is by no means certain. More importantly,
as I elaborated earlier, I doubt that defamation is even the appropriate paradigm
or concept to deal with group hatred.
Whatever the problems that may be seen with attempts to prohibit or
control “hate speech,” it is unlikely that the Canadian legal system is going to
abandon them in the reasonably foreseeable future. Many of our legislators seem
genuinely convinced of the need for such provisions, and others would find it too
daunting a task politically to try to abolish them completely. Our courts seem to
share this conviction—or at least seem prepared to show considerable deference
98
Supra note 40.
99
Supra note 81.

50 Underneath the Golden Boy
to the legislative decisions in this area. Furthermore, Canada has ratified two
international treaties which require us to have some prohibitions on “hate
speech.” 100
Article 20 of the International Covenant on Civil and Political Rights reads:
1. Any propaganda for war shall be prohibited by law.
2. Any advocacy of national, racial or religious hatred that constitutes incitement
to discrimination, hostility or violence shall be prohibited by law.
Article 4 of the International Convention on the Elimination of All Forms
of Racial Discrimination reads:
State Parties condemn all propaganda and all organizations which are based on ideas or
theories of superiority of one race or group of persons of one colour or ethnic origin, or
which attempt to justify or promote racial hatred and discrimination in any form, and
undertake to adopt immediate and positive measures designed to eradicate all incitement
to, or acts of, such discrimination and, to this end with due regard to the principles
embodied in the Universal Declaration of Human Rights and the rights expressly set forth
in Article 5 of this Convention, inter alia:
shall declare an offence punishable by law all dissemination of ideas based on racial
superiority or hatred, incitement to racial discrimination, as well as all acts of violence or
incitement to such acts against any race or group of persons of another colour or ethnic
origin, and also the provision of any assistance to racist activities, including the financing
thereof;
shall declare illegal organizations, and also organized and all other propaganda activities,
which promote and incite racial discrimination, and shall recognize participation in such
organizations or activities as an offence punishable by law;
shall not permit public authorities or publics institutions, national or local, to promote or
incite racial discrimination.
Therefore, I am respectfully proposing a compromise solution to this issue. I
would suggest the enactment of a new federal statute to replace (and repeal) all
current federal legislation and regulations in this area (in particular sections 318
to 320.1 of the Criminal Code, s.13 of the Canadian Human Rights Act 101 and
the relevant provisions in the various broadcasting regulations. 102 Furthermore, if
this is possible from a “division of powers” perspective, this new legislation would
100
In Canadian constitutional law, ratifying treaties is a prerogative of the Crown. Though a treaty
doesn’t have the direct force of law in Canadian domestic law unless it is incorporated by
legislation, Canadian courts interpret statutes consistently with our treaty obligations where
possible, and treaties are used in interpreting Charter provisions and in evaluating limits on
Charter rights under s. 1. Moreover, a treaty ratified by the Crown binds Canada in
international law to fulfill its terms, whether the treaty is incorporated by legislation or not.
Two recent works on the subject of the role of international human rights law in Canada are:
Mark Freeman and Gibran VanErt International Human Rights Law, Irwin Law Inc., 2004; and
William A. Schabas and Stephane Beaulac, International Human Rights and Canadian Law,
3rd ed., Thompson Carswell, 2007.
101
R.S.C. 1985, c. H-6.
102
Supra note 9.

Hate Communication Restriction and Freedom of Expression 51
expressly and clearly 103 state its intention to “occupy the field” in its entirety, so
as to render all relevant provincial (and territorial) legislation in this area
“inoperative” through the “paramountcy doctrine”. 104
The proposed new federal law could state (possibly in a preamble, the
substantive provisions, or both) that it is the intention of Parliament to deal with
the problem in a single, exhaustive, and exclusive law. It could state that
because of the national and international ramifications of the problem, it should
be dealt with at the national level. It could emphasize the need for clarity and
uniformity in this matter. It could also acknowledge the danger that too wide
legislation or interpretation or a multiplicity of laws in this area could pose an
undue restriction on freedom of expression. It could state its intention and
purpose to prevent this danger and to protect freedom of expression to the
greatest extent possible. 105
Whether through the “occupies the field” doctrine or through the
“frustration of the purpose of the federal law” concept, valid federal legislation
might be able to render related provincial legislation “inoperative” through the
“paramountcy” doctrine. There are several theories on which the proposed
federal legislation could be intra vires Parliament. Some of it would clearly be
within the criminal law power. It also could be within the “peace, order and good
government” power because of the national and international scope of the
problem. Possibly the provisions on intention to “oust” related provincial law
103
See Canadian Western Bank v. Alberta, [2007] 2 S.C.R. 3 [Canadian Western Bank], para. 74,
at p. 53. Also see British Columbia (AG) v. LaFarge Canada Inc., [2007] 2 S.C.R. 86, para. 84,
at pp. 133–134; Law Society of British Columbia v. Mangat [2001] 3 S.C.R. 113; Rothman
Benson & Hedges Inc. v. Sask [2005] 1 S.C.R. 188 and O’Grady v. Sparling [1960] S.C.R. 804.
See discussion at Hogg, Constitutional Law of Canada, 5 th ed., at pp. 16–4 and 16–5.
104
Even if the “occupied the field” doctrine has been definitively repudiated, it still might be
possible for federal legislation to render valid provincial legislation “inoperative” through the
“paramountcy doctrine” if it could be established “…that to apply the provincial law would
frustrate the purpose of the federal law” Canadian Western Bank Ibid at 93 at para. 75, pp. 53–
54, British Columbia (Attorney General) v. La Farge Canada Inc., supra note 93, para. 84,
pp.133–134.
105
Of course, I am not suggesting that it is possible or appropriate that the new federal legislation
oust all provincial legislation or its application where expression related to discrimination is
involved. Narrowly drafted and interpreted provincial provisions concerning discriminatory
advertising, expression directly facilitating discrimination, and harassment in activities
regulated by provincial human rights law must remain operative. Furthermore, it is doubtful
whether federal legislation can or should interfere with the professional disciplinary or
employment status of teachers (or other occupational situations under provincial jurisdiction)
even if, as pointed out, some actions in this area can be problematic from a freedom of
expression perspective. However, provincial legislation (and its interpretation) targeting “hate
speech” or negative ideas per se can legitimately be rendered inoperative by the proposed
federal law.

52 Underneath the Golden Boy
could be deemed “incidental” to the substantive prohibitions in the new law and
also within the previous heads of power.
Additionally, it could be argued that the tendency to be overly restrictive of
freedom of expression, purportedly in the name of equality, could also be seen as
a national or international problem. Therefore, the need for more balance in this
area, and to protect freedom of expression as much as possible, could be seen as
an issue of “national dimension”: being further reason to bring “peace, order and
good government” into play.
Also, it still might be possible to argue that the protection of freedom of
expression, at least to the extent that it involves political speech, is within the
power of Parliament. One recalls the obiter dictum of Duff, C.J. in Reference re
Alberta Legislation 106 when he refers to “the right of the free public discussion of
public affairs” and asserts that “the Parliament of Canada has the authority to
legislate for the protection of this right.”
In the event that it is impossible for Parliament to render the related
provincial provisions inoperative, I still suggest that Parliament enact this new
legislation to replace the current federal “hate speech” laws. I would also suggest
a co-ordinated federal-provincial (and territorial) approach in this area, and that
the provinces and territories with “hate speech” legislation 107 repeal those
provisions, and the provinces and territories without them refrain from enacting
them, so that this new federal law would be the only law in Canada dealing with
the subject. 108
It is intended that the proposed legislation not target the disagreeable ideas,
viewpoints, attitudes, or emotions alone. It is only when their expression is
“coupled with” incitemen to unlawful actions, the method or circumstances of
their expression are particularly harmful or dangerous, or the likely consequences
of their expression are particularly severe, that I envisage the terms or
application of this law. Such approach would respect the “neutrality principle” to
106
[1938] S.C.R. 100 at pp. 133-134.
107
Of course, it is possible that such type of legislation is ultra vires the provinces in whole or in
part. Although this line of argument by Milliken, J., in Saskatchewan Human Rights
Commission v. The Engineering Students’ Society et. al (1986), 7 C.H.R.R. D/3443 (Sask. QB)
at p. D/3447 was rejected by the Saskatchewan Court of Appeal (as was the “paramountcy”
argument) at Human Rights Commission (Sask). v. Engineering Students’ Society, University
of Saskatchewan (1989) 72 Sask. R. 161 (Sask. CA) at pp. 190–198, the issue has not been
decided by the Supreme Court of Canada. Further discussions of the “division of powers” issue
can be found in the literature referred to in note 10 (and in some of the cases included in those
works) but is beyond the scope of this article.
108
The federal government might wish to consider a constitutional reference to the Supreme
Court of this proposed new act, as well as of all the federal and provincial “hate material”
provisions—the constitutionality of which have not been determined by that Court.

Hate Communication Restriction and Freedom of Expression 53
the extent reasonably possible (although of course it would be compromised to
some extent by having the methods, circumstances or likely consequences of the
impugned expression “tied in” with their substantive content). Under this
scheme, the “defences” such as those found in s. 319(3) of the Criminal Code
would be unnecessary, as the truth or falsity, reasonableness or unreasonableness
of the communication, or belief or disbelief of the speaker concerning them
would be irrelevant. Such a scheme would remove from the law the reality or
perception of “thought control” on the one hand and of putting the protected
group “on trial” on the other hand.
Such a scheme would be based on Article 20, paragraph 2 of the
International Covenant on Civil and Political Rights to a large degree. 109 This
scheme would require the presence of the distinct ingredients of “advocacy of
hatred” and incitement to the unlawful actions 110 (or, in some cases, certain
methods, circumstances or likely consequences rather than “incitement”) for the
expression to be prohibited. This scheme would of course omit any reference to
paragraph 1 of Article 20 (“propaganda for war”). Additionally, the new scheme
would deliberately omit any reference to “ideas based on racial superiority or
hatred” as a literal reading of Article 4(a) of the International Convention on
the Elimination of All Forms of Racial Discrimination” would seem to require. 111
109
That paragraph reads: “Any advocacy of national, racial or religious hatred that constitutes
incitement to discrimination, hostility or violence shall be prohibited by law.”
110
I acknowledge that this interpretation of Article 20, paragraph 2 of the Covenant is narrower
than much (perhaps the mainstream) opinion in the international community. It is possible to
regard the “advocacy” of hatred as incitement per se, or to regard “hostility” as the negative
attitude rather than the prohibited actions (see “Report of the United Nations High
Commissioner for Human Rights on the incitement of racial and religious hatred and the
promotion of tolerance” A/HRC/2/6 20 September 2006 Human Rights Council Second
Session Agenda Item 2,
, paras. 36–41 at 11–12 where uncertainty concerning the meaning of the relevant
terminology is discussed.
Furthermore, this interpretation and scheme would give freedom of expression greater
protection and the duty to ban “hate speech” a narrower scope than much international
jurisprudence. Note that in cases where Canadian hate-mongers complained that the sanctions
against them violated Article 19 of the ICCPR (freedom of expression), their complaints were
rejected at least in part on the basis of Article 20 (see Taylor v. Canada (1983) 4 HRLJ
193(UN Human Rights Committee, April 6, 1983) and Ross v. Canada,
CCPR/C/70/D/736/1997 (UN Human Rights Committee, 10 October, 2000)
at para. 11.5.
111
Again I acknowledge that the new scheme, by this omission and by retreating from the ban on
impugned ideas that exist in some of our current legislation, would undoubtedly earn us
additional displeasure from the Committee on the Elimination of Racial Discrimination. (See
for example that Committee’s expression of concern over Canada’s refusal to ban racist
organizations “Concluding Observations of the Committee on the Elimination of Racial

54 Underneath the Golden Boy
The proposed law would only sparingly involve criminal sanctions. There
would be only two circumstances where the proscribed conduct would
automatically be deemed criminal. The “direct and public incitement of
genocide” would be an offence. This would replace s. 318(1) of the Criminal
Code. It would also be an offence to “publicly advocate, promote or express
hatred” against any identifiable group with the intention to cause violence or
with the knowledge that such advocacy, promotion or expression is substantially
likely to cause imminent violence. This would replace s. 319(1) of the Criminal
Code. There would not be an offence of “willfully promoting hatred” so that the
offence now contained in s. 319(2) of the Criminal Code would disappear from
the law.
To replace s. 319(2) of the Criminal Code, s. 13 of the Canadian Human
Rights Act (and ideally all other federal and provincial and territorial “hate
speech” provisions), the new legislation would create a number of “unlawful
acts” which would be based on the “hate” related content of the impugned
material in conjunction with factors such as incitement, the method or
circumstances of the expression, or the likely consequences of the expression.
Unlike with the offences, the only remedy or sanction available in a proceeding
for these unlawful acts would be a declaration of their unlawfulness, and a cease
and desist order against continuing or repeating them. However, continuing or
repeating such acts after the declaration and cease and desist order would be an
offence subject to the normal criminal sanctions.
This scheme was “inspired” by s. 13 of the Canadian Human Rights Act and
its remedial provisions as originally enacted, although of course there are major
differences. 112 The term “discriminatory practice” would not be used for such
Discrimination: Canada A/57/18 paras. 315–343 Concluding Observations and Comments,
2002, from
. It is to be noted that the Committee takes a stringent view of State Parties’
obligations under Article 4. The reports of the various state parties to the UN treaty
monitoring committees and the committees’ concluding observations (as well as the
jurisprudence of the committees that receive individual complaints) are available online
through: www.unhchr.ch or www.ohchr.org or http://tb.ohchr.org/default.aspx or connected
websites.
112
In my “Submission to the Canadian Human Rights Act Review Panel” (unpublished,
November 1999), I suggested that this replacement scheme would be accomplished through
expanding s. 13 of the Canadian Human Rights Act. I suggested the possibility of either
providing some defences analogous to s. 319(3) of the Criminal Code or limiting the
prohibition to where the “hate speech” was coupled with the deleterious method,
circumstances, or likely consequences.
I now repudiate my suggestion that the Canadian Human Rights Act should be involved, and I
have decided that a scheme based on expression plus these additional deleterious factors would

Hate Communication Restriction and Freedom of Expression 55
matters. As pointed out, expanding the concept of discrimination to include
expression of ideas, rather than only actions or decisions is a phenomenon which
is a significant part of the problem. Furthermore, I suggest that the new law
should be enforced by the federal Attorney General (as this is a federal statute
outside the Criminal Code) and the superior courts of the various provinces and
territories, rather than by the Canadian Human Rights Commission and the
Canadian Human Rights Tribunal. There is no doubt that the Commission and
Tribunal are composed of people of the highest integrity, competence, and
dedication who make excellent contributions to the promotion of equality and
the development of human rights jurisprudence in Canada. However, given the
specific mandate of the Canadian Human Rights Act institutions to promote
equality and combat discrimination, there might be a danger (at least a
perception) of “ideological bias” in dealing with communications which are seen
as posing a challenge to that mandate. Perhaps the Attorney General, who is
responsible for all aspects of the legal system (within his jurisdiction) and the
regular superior courts, which are accustomed to balancing all conflicting rights
and obligations, might be (perceived) as more “objective” in balancing the
factors motivating these proceedings and the need to protect freedom of
expression to the extent reasonably possible.
In Part II of this paper, it is my intention to set out (in very rough, tentative,
and sometimes incomplete form) some of the provisions of the proposed law
which I would recommend for consideration. Any discussion or explanation of
these proposed provisions will be contained in the footnotes. I wish to emphasize
that I am certainly not suggesting that the proposed legislation is suitable for
enactment in the form appearing below. For one thing, legislative drafting is not
within my expertise (as may become apparent). More importantly, nothing in
this article should be seen as a firm or final conviction on my part (or necessarily
my final work on this subject). The purpose of this study is to note some of the
perceived problems with the current state of the law in this area, acknowledge
the profound controversy and debate concerning these matters, and to offer for
consideration some ideas which might form the basis for a “compromise” solution
to this problem. Even should these proposals not prove to be appropriate or
feasible, it is to be hoped that they would lead to further study and thought
which might eventually lead to a more suitable alternative to the current
legislative and jurisprudential scheme.
be better than the paradigm based on the ideas alone subject to the defences. Although this
article therefore supersedes my suggestions concerning “hate messages” in that submission, I
relied largely on that submission as a basis or outline on which to develop some of the ideas
expressed in this article, and borrowed some of the terminology from that submission.

56 Underneath the Golden Boy
PART II
An Act to Restrict Certain Forms of Hate Communication while Protecting
Freedom of Expression to the Greatest Extent Possible
Preamble
WHEREAS racism, religious intolerance, and other forms of group-based hatred
and prejudice are problems of international and national concern; and
WHEREAS Canada is a party to two international treaties requiring the
prohibition of certain forms of hate communication; and
WHEREAS certain forms of hate speech are perceived as presenting a danger to
the equality rights and the security of members of the targeted groups; and
WHEREAS several statutory (and regulatory) provisions dealing (expressly or as
interpreted) with hate-related, prejudicial, or similar communications have been
enacted at the federal, provincial and territorial levels; and
WHEREAS some of the provisions or cases decided under them seem to be
unduly restrictive of freedom of expression; and
WHEREAS freedom of expression is an internationally and constitutionally
protected right; and
WHEREAS overzealous or over-broad restrictions of communication in this area
unnecessarily imperil freedom of expression and are possibly ineffective in or
counterproductive to the goals they seek to accomplish; and
WHEREAS limitations on expression should respect the freedom to express
ideas and viewpoints to the extent reasonably possible, and should be clearly
focused to deal with the methods, circumstances, or likely consequences of the
impugned expression rather than the disagreeable ideas per se; and
WHEREAS the international and national scope of the problem and the need to
devise solutions with the least possible impairment of freedom of expression
render it desirable to legislate in this area in clear, comprehensive, and exclusive
legislation at the federal level; and
WHEREAS it is desirable that such federal legislation occupies the field in this
subject matter and renders related provincial and territorial legislative provisions
inoperative.
Short Title
1 This Act may be cited as the Hate Communication Restriction and
Freedom of Expression Protection Act.

Hate Communication Restriction and Freedom of Expression 57
Exclusivity
2 (1) This Act shall be the only law in Canada dealing with the subject of hate
communication.
2 (2) Sections 318, 319, 320 and 320.1 of the Criminal Code and Section 13 of
the Canadian Human Rights Act are hereby repealed. 113
2 (3) Any provincial or territorial legislation dealing with this subject shall be
deemed inoperative.
2 (4) For greater certainty, this section shall not affect:
(a) Any law prohibiting discriminatory actions on certain grounds,
advertisements or other communications directly facilitating such actions,
or harassment of any individual on prohibited grounds; 114 or
(b) Any law not directed at hate communication where the situations
covered by that law correspond with the situations covered in this Act. 115
113
The various regulations dealing with “abusive comment … likely to expose in hatred or
contempt …” in radio and television”, supra note 9, enacted pursuant to the Broadcasting Act,
should also be repealed, whether through legislation or regulation.
114
This clause is inserted out of an abundance of caution to prevent unintentionally ousting or
impairing human rights legislation or its remedies under certain circumstances. For example,
sometimes “hate speech” is used in communicating the discriminatory decision. Similarly,
human rights legislation must remain free to deal with advertisements stating that members of a
particular group need not apply, or signs at a business premises saying that members of a
particular group are prohibited from entering. Additionally, narrowly drafted and applied
prohibitions against harassment of an individual, even when verbal abuse is involved, must
remain operative. However the use of the phrase “of any individual” is deliberate. If this
“exclusivity” section renders an unduly wide interpretation of the concept of “harassment” or
“hostile environment” (such as that sought in Finley v. Mike’s Smoke and Gifts (#4), supra
note 24) impossible, then it would be within its intended purpose.
115
This clause is also inserted out of an abundance of caution. There might be legislation or
common law principles providing a remedy for an individual victim greater than that provided
for in this Act. For example, s. 11 makes it an “unlawful act to advocate, promote, or express
hatred against any identifiable group under circumstances which involve the invasion of
privacy of any individual.” Some of the circumstances envisaged in that section might also give
rise to a civil cause of action such as violation of privacy, nuisance, or trespass. As this Act does
not provide for an award of damages, care must be taken to avoid preventing the individual
victim from seeking that remedy in a civil action. Furthermore, some of the conduct prohibited
in this Act might legitimately give rise to administrative sanctions under educational or other
professional legislation. For example, s. 13 prohibits promoting hatred “with the specific
intention to instil such hatred in children or adolescents.” We wouldn’t want this Act to
prevent the application of provincial legislation to have a teacher behaving in such manner
fired or deprived of his teaching license. These are just some examples where this Act might
overlap with other more “general” law (be it provincial or federal, civil or criminal)—the
operation of which ought not to be precluded by this Act. In criminal matters, of course, the
rules against “double jeopardy” and “multiple punishment” would have to apply.

58 Underneath the Golden Boy
Definitions
3 In this Act
3(1) “Identifiable group” means any section of the public distinguished by race,
nationality, national or ethnic origin, colour, religion, sex, age, mental or
physical disability, or sexual orientation. 116
3(2)(a) “Incites” means intentionally urges another to engage imminently in
clearly unlawful conduct in circumstances under which there is a substantial
likelihood of imminently causing such conduct. 117
(b) For greater certainty, “incites” does not include attempting to bring about
change in the law or discussion concerning public policy. 118
116
Though borrowing the terminology of, and based on, s. 318(4) of the Criminal Code, this
definition expands the included grounds. “Nationality” is being added to the list as an attempt
at greater compliance with Article 20, paragraph (2) of the International Covenant on Civil
and Political Rights which refers to “national, racial or religious hatred” (emphasis added). Of
course “race, national or ethnic origin, colour, religion, sex, age, mental or physical disability”
are expressly mentioned in s. 15 of the Canadian Charter of Rights and Freedoms and sexual
orientation has been ruled an analogous ground by the Supreme Court of Canada. Other
grounds ruled analogous by the Supreme Court, such as marital status and residence off of a
reserve, have not been included; neither have several other prohibited grounds of
discrimination mentioned in the Canadian Human Rights Act or provincial or territorial
human rights legislation. Although persons protected by those other grounds are entitled to
protection from discrimination, they perhaps do not appear to be as readily identifiable on a
group basis so as to be amenable to group-based hatred. A strong argument can perhaps be
made that this Act should only include grounds which we are required to include by the
International Covenant on Civil and Political Rights or the Convention on the Elimination of
All Forms of Racial Discrimination. However, as this legislation is intended to pre-empt all
other “hate” legislation in Canada, such a proposal would probably be a non-starter politically.
Furthermore, the more limited and clearly defined scope of this Act (as compared with many of
the provisions it is intended to replace) would reduce the interference with freedom of
expression to a more acceptable level.
117
Paragraph (a) with the exception of the words “intentionally” and “clearly unlawful” is
borrowed from U.S.C. § 1093 (3) enacted by the Genocide Convention Implementation Act of
1987 (the Proxmire Act), Pub. L 100–606, 102 Stat. 3045 (1988). The term “intentionally” is
added out of an abundance of caution to ensure that the concept of incitement only covers
expression that is used with the specific intention to bring about the proscribed conduct. It is
no the purpose of its use in this Act to cover a “rant” or “rhetorical flourish” without purpose
or thought of consequence, or even recklessness concerning consequences. See R v. Hamilton
[2005] 2 S.C.R. 432, dealing with the mental element of the related concept of counselling. A
majority held that a form of recklessness would be sufficient.
118
If incites in this Act were only to apply to incitement to genocide as is the case with the
Proxmire Act, perhaps the addition of the words “clearly unlawful” in clause (a) and the
proviso in clause (b) would be unnecessary. Indeed, it could be argued that the proviso in (b) is
inappropriate for incitement to genocide, given that genocide is criminal according to
international law (irrespective of the state of national law) and that genocide is often carried
out in pursuit of public policy.

Hate Communication Restriction and Freedom of Expression 59
3 (3)“Violence” means unlawful death or physical injury to any person or
unlawful destruction of, or damage to, any property.
Inciting Genocide
4 (1) Everyone who directly and publicly incites genocide is guilty of an
indictable offence and is liable to imprisonment for a term not exceeding
fourteen years
4 (2) In this section “genocide” means any of the following acts, committed
with the intent to destroy in whole or in part, a national, ethnical, racial, or
religious group, as such
(a) Killing members of the group;
(b) Causing serious bodily harm to members of the group; or
However, s. 7(1) prohibits inciting violence, discrimination, and hostility. Although the
definition of violence is clear and narrow enough, discrimination and hostility (as defined in s.
7(2) and (3)) could be quite far-reaching. Surely it must be legitimate to freely discuss what
forms of discrimination the law should or shouldn’t prohibit, and what policies to pursue—even
if some of them might eventually prove to be discriminatory, illegal under national or
international law, or unconstitutional.
Although the definition of hostility would include some acts deemed criminal by the norms of
international law that have been incorporated into Canadian domestic law (see for example the
Crimes Against Humanity and War Crimes Act, S.C. 2000, c. 24), some of those provisions are
quite far-reaching and occasionally somewhat vague (for example, persecution). To prohibit
merely discussing whether (or to what extent) they should or should not be prohibited seems
somewhat excessive. Thus, I believe that if incitement is to be prohibited in this Act (especially
in matters other than incitement to genocide), this proviso protecting seeking change to the
law and policy discussions is necessary.
Of course, there is judicial authority and academic literature suggesting that incitement (and
even hate speech) constitute the international crime of persecution, at least under extreme
circumstances. However, the extent to which such expression can amount to persecution is
beyond the scope of this paper. For a discussion of this or related issues, see Mugesera v.
Canada [2005] 2 S.C.R. 100; William A Schabas “Hate Speech in Rwanda: The Road to
Genocide” (2001-01) 46 McGill Law Journal 141; and Wibke Kristin Timmermann
“Incitement, Instigation, Hate Speech and War Propaganda in International Law”
and
the cases cited therein.
Also see Nahimana et al. v. The Prosecutor, Case No. ICRT-99-52-A (Appeal Chamber, 28
November 2007 ). In this case, the Appeal Chamber of the
International Criminal Tribunal for Rwanda discusses the concept of “direct and public
incitement to commit genocide” in depth at paras. 677–727, pp. 215–232.
The issues of if and when “hate speech,” that falls short of such incitement, can amount to
“persecution” are dealt with at paras. 972–988 at pp 307–314; Partly Dissenting Opinion of
Judge Fausto Pocar at para. 2, pp 349–350; Partly Dissenting Opinion of Judge Shahabuddeen
at paras. 7–64, pp 352–368; and Partly Dissenting Opinion of Judge Meron at paras. 3–21, pp
375–381.

60 Underneath the Golden Boy
(c) Deliberately inflicting on the group conditions of life intended to bring
about its physical destruction. 119
119
There are some significant differences between this section and s. 318 of the Criminal Code
(which it would replace). This is for several reasons. One is to have the provision correspond
more closely, though not completely with, Article II and III(c) of the Convention on the
Prevention and Punishment of the Crime of Genocide (hereafter the “Genocide Convention”).
Another is to have the provision more narrowly and precisely drafted to prevent unnecessary
interference with freedom of expression.
The substantive provisions of s. 318 of the Criminal Code read:
“(1) Everyone who advocates or promotes genocide is guilty of an indictable offence and
liable to imprisonment for a term not exceeding five years. (2) In this section, "genocide"
means any of the following acts committed with intent to destroy in whole or in part any
identifiable group, namely, (a) killing members of the group; or (b) deliberately inflicting
on the group conditions of life calculated to bring about its physical destruction. (4) In
this section, "identifiable group" means any section of the public distinguished by colour,
race, religion, ethnic origin or sexual orientation.”
Article II of the Genocide Convention reads:
“In the present Convention, genocide means any of the following acts committed with
intent to destroy, in whole or in part, a national, ethnical, racial or religious group, as
such (a) killing members of the group; (b) causing serious bodily or mental harm to
members of the group; (c) deliberately inflicting on the group conditions of life calculated
to bring about its physical destruction in whole or in part; (d) imposing measures intended
to prevent births within the group; (e) forcibly transferring children of the group to
another group.”
Article III of the Genocide Convention reads: “The Following shall be punishable: (a)
genocide; (b) conspiracy to commit genocide; (c) direct and public incitement to commit
genocide; (d) attempting to commit genocide; (e) complicity in genocide.”
The terminology of this proposed section directly and publicly incites genocide is closer to
Article III than advocates or promotes genocide and (at least with the proposed definition of
incites) is narrower and more precise. Similarly, sexual orientation (and several of the other
identifiable groups referred to in proposed s. 3 and covered in the rest of the proposed Act’s
provisions) is omitted from this section, and the description of the groups referred to in this
section is identical to that of Article II of the Genocide Convention.
The definition of genocide in this section adds “causing serious bodily harm to members of the
group.” As this is clear enough, there is no compelling reason to omit it, as 318(2) of the
Criminal Code did. However, this still falls short of Article II(c) of the Genocide Convention
by omitting mental harm. Because of the potential vagueness and far-reaching applications of
the term mental harm, it is not included here.
Proposed clause 2(c) departs from s. 318(2)(b) of the Criminal Code and Article II(c) of the
Genocide Convention in using the word intended rather than calculated. This is to prevent
possible overbreadth and uncertainty as the word calculated is not limited in its potential
meaning to intended. It could also mean, for example, “fitted, suited, apt or likely” (see
definitions in Words and Phrases Judicially Defined in Canadian Courts and Tribunals, volume
2, Thompson Canada Ltd., 1993, at p. 2–5).

Hate Communication Restriction and Freedom of Expression 61
Hate Expressions with Intention or Knowledge Concerning
Violence
5 Everyone who publicly advocates, promotes, or expresses hatred against any
identifiable group,
(a) With the intention to cause violence; or
This section, like s. 318 of the Criminal Code omits reference to acts referred to in Article II
clauses (d) and (e) of the Genocide Convention. This is necessary to avoid criminalizing
discussion in areas that could be potentially far-reaching and uncertain in scope.
It might be argued that this section is unnecessary as s. 4(1.1) of the Crimes Against Humanity
and War Crimes Act, supra note 108, provides “Every person who…counsels in relation to an
offence referred to in subsection (1) is guilty of an indictable offence.” Section 4(1)(a) prohibits
“genocide”—which, incidentally, is defined in s. 4(3) in a wider and less precise manner than in
Article II of the Genocide Convention or in Article 6 of the Rome Statute, which is included in
the Schedule of The Crimes Against Humanity and War Crimes Act. (Article 6 of the Rome
Statute follows the definition in Article II of the Genocide Convention).
However, the Supreme Court in Mugesera v. Canada, supra note 108 at pp. 151–152 held that
counselling in former s. 7 (3.77) of the Criminal Code, only referred to counselling as an act
that was actually carried out. Despite the differences in wording of the two provisions, there is
no great reason to believe that the current provision would be interpreted any differently in
that regard. Therefore, if incitement of genocide is to be made a specific offence in the absence
of it actually being carried out, this proposed section is probably necessary.
It is to be further noted that s. 464 of the Criminal Code provides
“Except where otherwise expressly provided by law, the following provisions apply in
respect of persons who counsel another person to commit offences, namely, (a) everyone
who counsels other persons to commit an indictable offence is, if the offence is not
committed, guilty of an indictable offence and liable to the same punishment to which a
person who attempts to commit that offence is liable.”
Section 463 of the Criminal Code provides that “except where otherwise expressly provided by
law” any attempt to commit an indictable offence that is punishable by imprisonment for life “is
liable to imprisonment for a term not exceeding fourteen years” (s. 4(2) of the Crimes Against
Humanity and War Crimes Act provides for life imprisonment for genocide). Section 22(3) of
the Criminal Code provides “for the purposes of this Act ‘counsel’ includes procure, solicit or
incite.” So again, one can argue that incitement to genocide is already prohibited, through the
operation of these provisions in the Criminal Code and the Crimes Against Humanity and War
Crimes Act and that the proposed new section is strictly speaking, unnecessary. However, it is
desirable that a statute comprehensively dealing with hate-related communications expressly,
clearly, and directly prohibit inciting genocide, the most severe kind of hate communication.
Furthermore, the definition of “genocide” in this proposed new provision is more precise (albeit
narrower) than in the Crimes Against Humanity and War Crimes Act.
The maximum penalty under s. 318 of the Criminal Code is five years imprisonment. This
proposed section increases the maximum penalty to fourteen years. It would be inappropriate
for the most serious kind of incitement (“direct and public”) of the most serious offence
(genocide) to carry a lighter sentence than ordinary forms of “counselling” or “incitement” for
offences that are less serious. Furthermore, the narrow and precise definition of “incites” with
perhaps a stricter mens rea requirement than applicable in s. 318 prevent the increased
sentence from having a disproportionate impact on freedom of expression.

62 Underneath the Golden Boy
(b) (i) In circumstances under which there is a substantial likelihood that
such advocacy, promotion, or expression will cause imminent violence
against the person or property of members of the identifiable group or
communal property of the group; and
(ii) With knowledge of such circumstances and likelihood;
is guilty of an indictable offence and is liable to imprisonment for a term not
exceeding five years. 120
120
It is intended that this provision replace s. 319 of the Criminal Code. This is largely based on s.
319(1), but it is intended to be more precise than that subsection. Section 319(1) reads:
“Every one who, by communicating statements in any public place, incites hatred against any
identifiable group where such incitement is likely to lead to a breach of the peace, is guilty of
(a) an indictable offence and is liable to imprisonment for a term not exceeding two years; or
(b) an offence punishable on summary conviction.”
I respectfully suggest that (besides incitement to genocide referred to earlier) this is as far as the
law should go in making hate communication automatically liable to criminal sanctions. I am
not proposing a provision based on s. 319(2). However, I am suggesting a series of unlawful acts
that are to be criminally punishable only after a Court declares them to be unlawful and issues a
cease and desist order and the defendant continues to repeat such acts after the Court’s
declaration and order.
The term “publicly” is used rather than “in any public place” so that the place where the
expression is made is irrelevant, as long as it is intended to reach the public. Therefore,
methods such as broadcasting, writing articles or books, posting material on the Internet and
other methods of mass communication will be covered.
The term “advocates, promotes or expresses” hatred is used instead of the term “by
communicating statements” and the terms “incites” or “willfully promotes” found in s. 319(1)
and s. 319(2) respectively. The word advocates is used because of its use in Article 20(2) of the
International Covenant on Civil and Political Rights. The terms promotes and expresses are
used rather than the term willfully promotes as the specific intention to promote hatred will not
be regarded as an ingredient of the offence as is the case for s. 319(2). The mens rea
requirement for this section (beyond the intended communication of the impugned material
with knowledge of its meaning) will be the intention to cause violence referred to in (a) or the
knowledge of the circumstances and likely violence referred to in b(ii).
It is interesting to note that the Saskatchewan Court of Appeal recognized the difference
between the mere “expression of hatred” and the “promotion of hatred” in R. v. Ahenakew,
[2008] 2 W.W.R. 68 at para. 45–49 pp. 81–83. As this proposed new offence will include the
intention to cause violence or the knowledge of its likelihood, adding expresses to the
prohibition should not unduly interfere with the freedom of expression.
Throughout the proposed Act, the word incites is only used to refer to intentionally urging
action as explained in the definition in s. 3(2); and the words advocates and promotes will only
refer to the hatred rather than actions, unlike s. 318 of the Criminal Code.
Violence is the intended or likely consequence prohibited by the section rather than the wider
and more vague term breach of the peace.
If a defendant intends to cause violence, I suggest it is legitimate to punish him—regardless of
whom the intended victim of the violence may be. However, the limitation of likely violence to
the identifiable group in (b) is necessary to prevent a “heckler’s veto” over expression (i.e.

Hate Communication Restriction and Freedom of Expression 63
Continuing or Repeating an Unlawful Act
6(1) Everyone who continues or repeats an unlawful act after
(a) The Court has found that he has committed the act in question, and
(b) The Court has declared the act to be an unlawful act and issued a cease
and desist order to him against continuing or repeating the act;
is guilty of an indictable offence and is liable to imprisonment for a term not
exceeding two years.
6.(2) In this section “unlawful act” means an act referred to in sections 7 to
15. 121
Advocacy of Hatred Coupled with Incitement to Unlawful Actions
7.(1) It is an unlawful act to publicly advocate, promote or express hatred
against any identifiable group while inciting violence, discrimination, or hostility
against that group or its members. 122
prevention of expression by disruption or by the threat of unlawful violence or retaliation). For
example, if a defendant receives threats from members of the identifiable group or others to kill
or injure him if he proceeds or continues with the expression, and he chooses to take the risk,
he will not be liable under the section. There may be rare emergency situations where it is
necessary to prevent hate speech likely to cause any violence, even against the speaker, but
that is to be dealt with in the unlawful act in s. 9 dealing with a “hate-related emergency
situation”.
The proposed maximum penalty is being raised from the two years in s. 319(1) to five years
imprisonment. I suggest that this is justified here because of the more blameworthy intention
requirement in (a) or the more clearly dangerous circumstances and knowledge thereof in (b).
The option of proceeding by summary conviction is being removed in order that proceedings
under the Act will be dealt with exclusively in a superior Court. This should not be unduly
harsh since there is no minimum penalty attached and the trial judge will retain the option of
granting an absolute or conditional discharge should the circumstances warrant.
121
As mentioned earlier, while this provision is inspired by s. 13 of the Canadian Human Rights
Act and its related remedial provisions (as originally enacted), it is substantially different. It is
central to the proposed compromise scheme in that it removes from immediate criminalization
all but the most clearly harmful or dangerous expression. It retains a kinder and gentler method
for dealing with other material that is arguably in need of prohibition. The lack of immediate
criminalization and the limited remedy could reduce (if not eliminate) any chilling effect on
material which may or may not come within the prohibition. Furthermore, the knowledge of its
prohibited nature caused by the declaration and cease and desist order could make punishment
justifiable even in cases where the unlawful act has a reduced mens rea requirement (or has
eliminated mens rea as an ingredient completely) See discussion of this issue in Canadian
Human Rights Commission v. Taylor, supra note 4.
122
This section is based on Article 20, para. 2 of the International Covenant on Civil and Political
Rights, but departs from it in certain matters. For ease of reference I repeat that paragraph
which reads:
“any advocacy of national, racial or religious hatred that constitutes incitement to

64 Underneath the Golden Boy
7.(2) In this section “discrimination” means discrimination which is clearly and
unequivocally prohibited throughout Canada, by the Canadian Human Rights
Act, or by corresponding provisions in provincial or territorial legislation in force
in all the provinces and territories. 123
discrimination, hostility or violence shall be prohibited by law.”
The term publicly is added to avoid the reach of this aspect of the law to private
communications.
The term “while inciting” is used rather than “that constitutes incitement” to make it clear that
for the advocacy, promotion, or expression of hatred to come within this provision it must be
coupled with incitement to the unlawful activity, and to avoid the interpretation that
advocating hatred per se constitutes incitement. It is to be recalled that “incites” is defined
fairly narrowly and precisely in proposed s. 3(2).
It is to be noted that I am not recommending a prohibition “on any propaganda for war” as is
required by a literal reading of article 20(1) of that Covenant. It is doubtful whether a
meaningful and workable ban of “propaganda for war” can be drafted that wouldn’t unduly
interfere with or chill discussion of public policy or international affairs. At any rate, such a
prohibition is unlikely to “fly” politically.
I am also not recommending a prohibition based on a literal reading of Article 4(a) of the
International Convention of the Elimination of All Forms of Racial Discrimination. This
provision (as well as others of the proposed Act) might partially fulfill our obligations under
that Article. Hate speech that also constitutes incitement to violence or discrimination, or that
poses an exceptional risk of violence, is covered. However, as discussed earlier, expressly
referring to “ideas based on racial superiority or hatred” could unduly interfere with or chill
discussion of scientific, social, or other matters of public importance, and would be in clear
violation of the “neutrality principle.”
Article 13, paragraph 5 of the American Convention on Human Rights contains a more
narrowly drafted prohibition, but covers somewhat more grounds than Article 20, of the
ICCPR. It reads:
“Any propaganda for war and any advocacy of national, racial or religious hatred that
constitutes incitement to lawless violence or to any other similar actions against any
person, or group of persons on any grounds including those of race, color, religion,
language or national origin shall be considered as offences punishable by law.”
123
“Discrimination” is deliberately defined in this manner for several reasons. The Canadian
Human Rights Act only covers entities or activities under federal jurisdiction, which is a
relatively small portion of regulated activities in Canada in which discrimination is prohibited.
However, it seems inappropriate for federal legislation to ban incitement to discrimination that
is only unlawful in parts of, but not all, of Canada.
It is to be noted that this terminology, in conjunction with s. 2(3), might render inoperative the
incitement and related provisions in some provincial human rights legislation. However, that
might not be such a terrible lacuna in the law. The prohibitions against discrimination itself
and clearly ancillary communications would remain operative. Perhaps a separate ban on
incitement is only appropriate concerning violent actions (or where it is coupled with hate
provisions as in this provision).
The term “clearly and unequivocally prohibited” in the definition of “discrimination” is to avoid
prohibiting or chilling the incitement or discussion of activities which may ultimately be judged
discriminatory, but where the issue is uncertain. This may be redundant in view of the

Hate Communication Restriction and Freedom of Expression 65
7.(3) In this section “hostility” means any hostile conduct which is clearly and
unequivocally unlawful throughout Canada. 124
Calling for Violence
8.(1) It is an unlawful act to publicly advocate, promote, or express hatred
against any identifiable group
(a) While using language or rhetoric which calls for, or strongly appears to
call for, violence against that group or its members, and
(b) Such advocacy, promotion, or expression is substantially likely to cause
such violence. 125
8.(2) For greater certainty, no one shall be deemed to come within clause
(1)(a) solely for
(a) Quoting, citing, referring to or discussing any religious text; 126 or
reference to “clearly unlawful conduct” in the definition of “incites” in s. 3(2)(a), but is added
out of an abundance of caution.
124
There are several reasons for this definition of hostility. It is intended that only the incitement
of hostile actions are prohibited, and to avoid interpreting hostility as the negative attitude.
The term “clearly and unequivocally unlawful throughout Canada” includes criminal activity
other than that covered by violence (which is defined in relatively clear terms in s. 3(3)), as
well as conduct that is clearly recognized as unlawful in civil and regulatory law in all
jurisdictions in Canada. Although there might be some danger of overbreadth and vagueness in
this aspect of the prohibition, this is somewhat ameliorated by the term “clearly and
unequivocally” here as well as the term “clearly unlawful conduct” in the definition of “incites”
in s. 3(2)(a). Furthermore, no penalty would result from such incitement unless it is continued
or repeated after it has been declared unlawful and a cease and desist order issued. This
inclusion of these additional matters is necessary to give meaning to the concept of hostility
beyond that involved in discrimination and violence while restricting it to hostile actions rather
than merely hostile attitudes.
125
The purpose of this section is to cover cases where the material “calls for violence” against the
group (see for example, Richard Warman v. Peter Kouba, 2006 CHRT 50, Canadian Human
Rights Tribunal, Karen A Jensen, November 22, 2006, unreported, at paras. 76–81 at pp. 19–
21, ), or appears to do so.
The material must also pose a substantial danger of causing such violence. This section would
apply even if the communication stops short of incitement, lacks the specific intention to cause
violence or knowledge of its likelihood, and the feared violence may not be perceived to be
imminent. Under these circumstances, though freedom of expression concerns militate against
immediate criminalization of the perpetrator, the declaration of the unlawfulness of the
material and the cease and desist order would justify criminal penalties against the person who
continues or repeats this practice. Besides compensating for the lack of mens rea requirement,
the need for a declaration and cease and desist order as a prerequisite to punishment would
ameliorate any vagueness or uncertainty problems that might exist in the terminology used
here.
126
The caveat in clause 2(a) is motivated largely by Owens v. Saskatchewan (Human Rights
Commission) (2006) 267 D.L.R. (4 th ) 733 (Sask. CA, 2006); reversing 45 C.H.R.R. D/272

66 Underneath the Golden Boy
(Sask. QB); which affirmed (2001) 40 C.H.R.R. D/197 (Board of Inquiry) and the controversy
surrounding that case. Mr. Hugh Owens, for religious reasons, published an advertisement in
the Saskatoon Sun Phoenix in response to an advertisement “announcing an upcoming gay
pride week.” (267 D.L.R. (4 th ) at p. 739.
His “…advertisement consisted of the citation of four Bible passages: Romans 1:26,
Leviticus 18:22, Leviticus 20:13, 1 Corinthians 6:9–10, set out prominently in bold type.
They were accompanied by a reference in smaller print to the New International version
of the Bible. The citations were followed by an equal sign and by two stickmen holding
hands. A circle with a line running diagonally from the two o’clock to the eight o’clock
position (the ‘not permitted’ symbol) was superimposed on the stickmen. The following
words appeared in small print at the bottom of the advertisement: ‘this message can be
purchased in bumper sticker form. Please call [telephone number]’” (267 D.L.R. (4 th ) p.
739.
Romans 1:26, after referring to homosexual behaviour and numerous other sins, ends with the
passage “Although they know God’s righteous decree, that those who do such things deserve
death, they not only continue to do these very things but also approve of those who practice
them.” Leviticus 18:22 reads: “Do not lie with a man as one lies with a woman, that is
detestable.” Leviticus 20:13 reads: “If a man lies with a man as one lies with a woman, both of
them have done what is detestable. They must be put to death; their blood will be on their own
heads.” 1 Corinthians 6:9 lists “homosexual offenders” among other sinners whom it asserts
“will not inherit the kingdom of God.” These Biblical passages from the New International
Version of the Bible were quoted at 267 D.L.R. (4 th ) par [7] at pp. 739-740.
A complaint against Owens under s. 14(1) of the Saskatchewan Human Rights Code was filed
by three gay men. A Board of Inquiry held that Owens breached s. 14(1) of the Code in that
the complainants “were exposed to hatred, ridicule and their dignity was affronted on the basis
of their sexual orientation” and “made an order prohibiting Mr. Owens from further publishing
or displaying the bumper stickers featured in the advertisement and directed him to pay
damages of $1,500 to each of the complainants.” 267 D.L.R. at para. 16–19 at pp. 742-743.
That decision was upheld by the Court of Queen’s Bench. The Saskatchewan Court of Appeal,
however, reversed the judgement of the Court of Queen’s Bench and exonerated Mr. Owens of
violating s. 14(1)(b).
The Court of Appeal, while not ruling out the possibility that religious texts could ever be used
in a manner that “offended the Code” and while cautioning against courts being “drawn into
the business of attempting to authoritatively interpret sacred texts such as the Bible”, analyzed
the context in which the impugned texts were used. In particular, it dealt with the passages in
context of the entire Bible, the varying views of the Biblical passages in “contemporary society”
and the distinction sometimes made between homosexual behaviour and homosexuals
themselves. The Court of Appeal rejected the Board of Inquiry’s and the Queen’s Bench’s
interpretation of these passages as equivalent to a “plain assertion made in contemporary times
to the effect that homosexuality is evil and homosexuals should be killed.” 267 D.L.R. (4 th ) at
para. 77–83 at pp. 758-761.
It is to be noted that this case was a major source of concern among those who opposed Bill C-
250, which amended s. 318(4) of the Criminal Code to include “sexual orientation” in the
definition of “identifiable group” protected by the “hate speech” provisions. See, for example,
the presentation of Mr. Bruce Clemenger, Director, National Affairs, the Evangelical
Fellowship of Canada to a Parliamentary Committee studying that Bill (37 th Parliament, 2 nd
Session Standing Committee on Justice and Human Rights, Meeting No. 45 - Tuesday, 13 May
2003. Found at

Hate Communication Restriction and Freedom of Expression 67
(b) Proposing, suggesting or discussing any legislative measures or measures
of public policy; 127 or
(c) Both of the above. 128
Hate-Related Emergency Situations
9.(1) It is an unlawful act to publicly advocate, promote, or express hatred
against any identifiable group in a hate-related emergency situation.
9.(2) In this section “hate-related emergency situation” means
(a) A situation where rioting, widespread violence or other widespread
criminal activity is occurring and is being substantially caused by such
advocacy, promotion, or expression; or
(b) A situation described in (a) is substantially likely to occur
imminently. 129
).
Bill C-250 was amended to provide some protection for religious texts. The amended Bill
amended s. 319(3)(b) of the Criminal Code, the “religious belief” defence to a charge of wilfully
promoting hatred under s. 319(2). Section 319(3)(b) had previously read: “if, in good faith, he
expressed or attempted to establish by an argument an opinion on a religious subject.”
Section 319(3)(b) now reads: “if, in good faith, the person expressed or attempted to establish
by an argument an opinion on a religious subject or an opinion based on a belief in a religious
text.”
127
Although the caveat in clause 2(b) might seem inappropriate to some observers, I respectfully
suggest that it is at least worth considering. On the one hand, it could legitimately be argued
that legislative measures and public policy that would authorize violent measures against
“identifiable groups” so clearly violate our constitutional norms and international law that even
suggesting them cannot be tolerated, and that it could even amount to “persecution” under
extreme circumstances. On the other hand, it could equally legitimately be argued that in a
constitutional democracy, the protection against regrettable suggestions materializing lies in
counter argument, the democratic process, and (if needed) judicial remedies. Furthermore, it
might be easier to counter extremists with a political agenda if they clearly articulated their true
position than if they “camouflaged” their messages to comply with legislation.
128
The caveat in clause 2(c) refers to cases where both religious texts and suggestions for violent
legislation or policy measures are found in the same material, in particular where the proposed
measures are based on or motivated by religious texts (or interpretations thereof).
It must be noted that the caveats in subsection (2) would not necessarily immunize impugned
materials from clause 1(a) merely because religious texts, legislative or policy suggestions, or
both are found in them. If the materials would otherwise come within that provision, or if the
religious text and/or legislative or policy suggestions in conjunction with other aspects of the
communication would bring the material within clause 1(a), that clause would cover them. The
caveat is included only to prevent these “protected” kinds of expression from being per se
within the prohibition.
129
Because of the level or quantity of the actual or likely criminal activity resulting from the

68 Underneath the Golden Boy
Intimidating Methods
10.(1) It is an unlawful act to advocate, promote, or express hatred against any
identifiable group while using intimidating methods.
10.(2) In this section “intimidating methods” means methods that, because of
their nature or history, or the context of their use, are likely to have an
intimidating effect on members of the identifiable group and include:
(a) Communicating express or implied threats of violence;
(b) Displaying real or simulated weapons or means of execution;
(c) Parading or demonstrating in paramilitary uniforms, Nazi uniforms, or
Ku Klux Klan regalia;
(d) Use of a burning cross; or
(e) Methods of similar intensity and severity. 130
advocacy, promotion or expression, this section does not contain any intention or knowledge
requirement concerning such situations. Neither does it contain any requirement for
incitement, or an actual or apparent call for violence or other criminal activity. Furthermore,
this section would apply irrespective of whether or not the victims or potential victims would be
members of the identifiable group.
It is suggested that the severity of the situation—and the fact that there is no penalty until
declaration, order, and continuation or repetition occurs—renders this limitation on freedom of
expression acceptable even in the absence of the ingredients that would otherwise be required.
130
Undoubtedly, a freedom of expression purist or absolutist would find this section problematic,
as it targets some forms of expressive conduct or symbolic speech that have received
constitutional protection under the First Amendment. For example, in R.A.V. v. St. Paul,
Minnesota, 112 S. Ct. 2538 (1992) and Virginia v. Black, 123 S. Ct. 1536 (2003), the U.S.
Supreme Court has held that a cross-burning to express a political or ideological viewpoint is
protected, although the latter case held that burning a cross with the specific intention to
intimidate can be banned. This section, however, refers to the “intimidating effects” of such
methods on members of the identifiable group and deliberately omits the need for intention to
intimidate.
Collin v. Smith, 578 F.2d. 1197 (1978) (US Court of Appeal 7 th Circuit), certiorari denied, 99
S. Ct. 291 struck down, inter alia a ban on “hate” marches using paramilitary uniforms.
However, the Supreme Court of Canada in Keegstra, supra note 2, refused to be bound by First
Amendment cases such as Collin v. Smith (see pp. 738-744) and upheld the constitutionality
of s. 319(2) of the Criminal Code. If banning “hate speech” per se is constitutionally
permissible, à fortiori banning a particular method of “hate speech” is constitutional, especially
if the idea alone is not the targeted ingredient.
As should be clear by now, the purpose of this paper is not to achieve doctrinal purity or to
satisfy jurisprudential absolutism. Rather, my aim is to work towards a reasonable and
pragmatic compromise to the contentious issue of freedom of expression versus control of hate
speech. Viewpoint neutrality—the concept that even when certain methods or circumstances
can lead to restrictions on expression, this must not be done on the basis of disagreement with
the viewpoint expressed—is an important factor in the debate. Yet, it can and should be
compromised to a certain extent. It can be argued that no viewpoint, idea, or attitude ought to

Hate Communication Restriction and Freedom of Expression 69
Invasion of Privacy
11.(1) It is an unlawful act to advocate, promote, or express hatred against any
identifiable group under circumstances which involve the invasion of privacy of
any individual.
11.(2) Circumstances which involve the invasion of privacy of any individual
include:
be completely banned. Additionally, there may be certain actions or forms of expression that
shouldn’t normally be banned. However, I suggest that under certain circumstances, particular
kinds of messages in conjunction with particular activity or methods of communication can
legitimately be prohibited or restricted. The circumstances envisaged in this section are, in my
opinion, such a situation.
It is suggested that the need for declaration, an order, and disobedience as prerequisites to
punishment adequately compensates for the absence of specific intention to intimidate or any
vagueness or uncertainty that might be found in some of the terminology in this section.
At any rate, clause 2(a) is clear enough. In clause 2(b), “real or simulated weapons” is clear
enough, and “simulated methods of execution” refers to the repulsive practice of erecting actual
or miniature nooses in the presence of members of the Black community (which is sometimes
done by racists) and similar practices.
Clause 2(c) might seem somewhat more problematic. Paramilitary uniforms aren’t always used
for hate-related purposes, and, as pointed out, their use even for that purpose has received First
Amendment protection. However, their use during the expression of hatred can have the
potential to cause especially frightening or traumatic effects on members of an identifiable
group or to raise community tensions to an especially high level. It therefore seems appropriate
to prohibit such a combination.
Clause 2(d) recalls a Canadian case involving the use of a burning cross, inter alia, which took
a different approach from R.A.V. v. St. Paul, Minnesota, and Virginia v. Black. In Kane v.
Church of Jesus Christ Christian Aryan Nations (No. 3), 18 C.H.R.R. D/268 (Alta. Board of
Inquiry, Feb. 28, 1992) the Board held that the display of “KKK White Power” signs, a
Swastika, and a burning cross at an “Aryan Fest” held on private property violated the
provisions of the Individual’s Rights Protection Act, R.S.A. 1980, c. 1-2, s. 2. The section
prohibited the public display of “any notice, sign, symbol, emblem, or other representation
indicating discrimination or an intention to discriminate…” The judgment relied on the history
and the intimidating effects of such materials, among other reasons. Although I have criticized
the breadth of the wording and some of the wide-ranging interpretations of such legislation, I
find it more difficult to criticize the results of this decision. Narrower legislation focusing on the
intimidating methods of expressing hatred such as those involved in this case are appropriate.
Clause 2(e) is intended to cover methods similar to those referred to in the Kane case, such as
the use of Swastikas or similarly recognized hate symbols or regalia similar to those referred to
in clause 2(c) under certain circumstances. One cannot foresee all the potential circumstances
where a section such as this might be needed so the omnibus clause in 2(e) is provided. The
wording is deliberately chosen to restrict its use to the most serious cases, and to avoid
prohibiting methods or substance of communications merely because they are politically
incorrect, offensive, unpopular, or controversial. Again, any problem with potential uncertainty
or vagueness of this clause is ameliorated by the scheme requiring declaration, order, and
disobedience as prerequisite to any penalty being imposed.

70 Underneath the Golden Boy
(a) Publicly naming or displaying the image of any individual except when
necessary for the discussion of any matter of public interest;
(b) Publicly revealing the personal information of any individual;
(c) Harassing any individual by persistently contacting or communicating
with such individual when such contact or communication is unwelcome
and unjustified in the circumstances;
(d) Demonstrating, picketing, displaying any material, shouting, or
otherwise visibly or audibly communicating at or in the immediate vicinity
of a private residence without the invitation or consent of the occupier of
the residence;
11.(3) In this section, “personal information” includes the address, telephone
number, facsimile number, e-mail address, social security number, credit card
information, or other personal and confidential information which facilitates the
contact with or compromising the identity or security of such individual. 131
131
Clause 2(a) and (b) are necessary because hate communications are not always restricted to
generalities about the identifiable group but often target individuals who are members of (or
seen as sympathetic to) that group.
Clause 2(a) is drafted primarily to protect private citizens who play no significant role in public
affairs from being mentioned in hate material. It might be impractical and unduly restrictive of
freedom of expression to prevent the mention or discussion of public figures, even when tied in
with the expression of hatred.
Clause 2(b), as clarified by subsection (3), is not limited to the protection of private citizens,
but includes any individuals whom the hate-mongers may wish to harm by publishing such
information. The wording is deliberately used to avoid restricting information which could be
relevant, however tenuously, to matters of public interest.
Clause 2(c) is designed to cover harassing situations outside of the regulated activities usually
covered by harassment provisions of human rights legislation. It is also designed to avoid
including single or isolated instances of racial or similar slurs or insults, regrettable though they
may be. The qualification “and is unjustified in the circumstances” is added to avoid censoring
unpalatable materials directed to persons who have a duty or need to receive communications
from members of the public, such as public officials.
Clause 2(d) is designed to offer potential targets of hate speech protection from being subject to
it in the privacy of their own home. Unlike the ordnance upheld by the U.S. Supreme Court in
Frisby v. Schultz, 108 S. Ct. 2495 (1988), which prohibited “picketing before or about the
residence or dwelling of any individual”, this provision is not content neutral and is certainly
not viewpoint neutral. However, as with other provisions in this proposed statute, the
departure from a pure or absolute standard of content neutrality and viewpoint neutrality seems
a legitimate compromise. The traumatic effect of hate speech on identifiable groups and their
members have often been recognized. Canadian courts are more prepared than their American
counterparts to protect these groups and their members from this effect. My main criticism of
some of the Canadian jurisprudence and legislation in this area has been with their interference
with the intellectual and political freedom inherent in stifling certain ideas, however repulsive
or dangerous they may be. A restriction such as the one envisaged here still leaves individual
and collective means of thinking, developing, exploring, and communicating ideas relatively

Hate Communication Restriction and Freedom of Expression 71
Undermining The Critical Faculties Of Individuals
12.(1) It is an unlawful act to advocate, promote, or express hatred against any
identifiable group by intentionally or knowingly undermining the critical
faculties of individuals 132 through:
(a) The use of games involving videos, computers or similar devices, 133 or
unhampered.
It is to be noted that some of the behaviour prohibited in this section might overlap with that
referred to in s. 10 and may already be prohibited in other areas of the law. There may be other
forms of behaviour accompanying “hate speech” having as great an impact on privacy as those
mentioned in this section and also ought to be prohibited. On the other hand, perhaps greater
safeguards are needed in this section to protect freedom of expression. I emphasize again that
this does not purport to be a perfectly drafted statute. Further thought about what should or
should not be prohibited, the need to protect against legislative overreaching, and appropriate
mechanisms and terminology are obviously needed.
132
The term “the critical faculties of individuals” is borrowed from the Report of the Special
Committee on Hate Propaganda in Canada, Queen’s Printer, 1966, at p. 8. Of course, that
Report envisaged situations beyond those referred to in this section, and recommended the
legislation on which sections 318 and 319 of the Criminal Code are based. However, the
Report took special note of “the successes of modern advertising”, “radio, television, motion
pictures” along with “the pervasiveness of print” and “the impact of speech as associated with
colour, music and spectacle on the feelings of great multitudes of people” (p. 8) Its authors were
keenly aware of the impact of applying scientific knowledge to mass communication. Any
problems in that regard have been greatly exacerbated by the developments of communication
technology since then.
The idea for this section is largely inspired by three factors:
1) the attempt to zero in on a particular method of communication—as was originally done by
s.13 of the Canadian Human Rights Act;
2) the comments in the Tribunal’s original decision concerning the psychological and social
impact of certain communicative methods in Canadian Human Rights Commission et al v. The
Western Guard Party and Taylor (The Canadian Human Rights Act Human Rights Tribunal,
1979) ; and
3) the jurisprudence and literature suggesting that certain specialized media or methods of
communication can give rise to restrictions or regulation not appropriate to ordinary means of
expression.
133
This is not to suggest that video games are beyond freedom of expression protection. Indeed,
there are several American cases clearly indicating that such means of communication are
protected under the First Amendment (see for example, Entertainment Software Association v.
Blagojevich, 469 F.2d 641 (U.S.C.A., Seventh Circuit, 2006)). Furthermore, I am certainly not
suggesting that all hate messages using computers or the internet should be banned, as
subsection 13(2) of the Canadian Human Rights Act—as amended by the Anti-Terrorism Act,
S.C. 2000, c. 41, s. 88—has done.
I would doubt (speaking as a person without any expertise in psychology or mass
communication whatsoever) that purely text on-line communications (especially lengthy
articles purporting to be historical, political, or ideological) would have any greater impact on
the critical faculties of an individual reader than the same material read from hard copy.

72 Underneath the Golden Boy
(b) The use of audio, visual, or other sensual methods that create or
produce subliminal messages; 134 or
(c) Other deliberate abuse of physical or social scientific technology; 135
12.(2) In this section “subliminal” means taking place below the threshold of
sensory perception or outside the range of conscious awareness. 136
The type of material that would be included within clause 1(a) is the most virulent type of hate
material using the format of such games. Banning such materials would not interfere with the
serious exploration and analysis of ideas, which freedom of expression is largely meant to
protect. Such methods might indeed impair critical analysis and would be inimical to that basic
purpose of freedom of expression.
134
Of course, to avoid an unduly wide interference with communication, the term “subliminal”
has to be precisely and narrowly defined. The use of that term by the communications expert
witness in Canadian Human Rights Commission v. Taylor (1979), Supra note 122, and
referred to in the reasons for decision at pp. 21–24 seems to be somewhat expansive and
certainly beyond the definition which I recommend in subsection (2).
135
At this point, I regret that I cannot be more specific as to where this provision would apply and
I acknowledge that greater care in drafting this clause would be appropriate. Furthermore, great
caution would be necessary in interpreting and applying this provision.
Certain forms of technological communication have been held amenable to special regulation
(for example, F.C.C. v. Pacifica Foundation, 98 S. Ct. 3026 (1978), dealing with broadcasting).
It is possible that this clause could be used against hate communications that utilize the special
effects of media such as radio, television, or cinema to overwhelm or compromise one’s critical
faculties. Perhaps even recordings and music could come under this provision under certain
circumstances. Regrettably, there is a genre of racist and hate-based rock music, although I
concede that I am not aware whether or not its composers, performers, or producers have the
technological expertise or sophistication that is envisaged here.
I wish to emphasize that I am not suggesting that all materials that could be deemed hate
communications should be banned from radio and television and other technological forms of
mass communication. Again, speaking without social scientific expertise, I would doubt that a
simple lecture, speech, or discussion that is broadcast (without special effects) and could be
construed as hate-related would have significantly greater impact on the critical faculties of an
individual listener or viewer than if that same lecture, speech, or discussion were delivered and
observed in an ordinary hall or auditorium and not broadcast.
If this section (and the other sections of the proposed Act) could be used against
communications using radio and television under the circumstances referred to, it seems that
provisions dealing with hate communication in these media in the regulations referred to at
supra note 9, would no longer be needed.
Such provisions, which could lead to a loss of a broadcasting license or a fine (see Broadcasting
Act, S.C. 1991, c. 11, s. 9, s. 24, and s. 32), could present some of the problems concerning
vagueness, overbreadth, and interference with communicating ideas connected with other
“hate” legislation. For example, s. 5(1) of the Television Broadcasting Regulations 1987,
S.O.R./87-49 reads: “a licensee shall not broadcast… (b) any abusive comment or abusive
pictorial representation that, when taken in context, tends to or is likely to expose an
individual or a group or class of individuals to hatred or contempt on the basis of…” named
grounds. As mentioned earlier, it is probably better that the entire area of hate
communications be dealt with comprehensively in a single Act.

Hate Communication Restriction and Freedom of Expression 73
12.(3) In a proceeding under this section, an act shall not be held to contravene
clause 12(1)(b) or (c) unless the nature of the impugned method of
communication and its effect on the critical faculties of individuals is clearly and
unequivocally established by expert evidence. 137
Children or Adolescents
13.(1) It is an unlawful act to advocate, promote, or express hatred against any
identifiable group with the specific intention to instil such hatred in children or
adolescents by: 138
(a) Using materials or methods of communications which are specifically
designed to influence children or adolescents; 139 or
(b) Directly approaching children or adolescents; or
(c) Sponsoring, organizing, or participating in an event, series of events, or
association specifically designed to instil such hatred in children or
adolescents; 140 or
(d) Abusing a position of authority or trust over children or adolescents if
such position is of a public or publicly-regulated nature 141 .
136
This definition is taken from Mosley’s Medical Nursing, and Allied Health Dictionary, 6 th ed.,
at p. 1647. Perhaps a better definition than this one ought to be drafted. However, care is
needed lest too-loose a definition or application of this concept leads to unnecessary restriction
on expression.
137
Although the nature (if not necessarily the effect) of materials included under clause 12(1)(a)
would be self-evident, that would often not be the case with materials referred to in (b) or (c).
To avoid suppression of materials merely on the basis of subjective reactions or understandable
revulsion of viewers or listeners, or on a popular interpretation of technical concepts, expert
evidence should be required before an act could be found unlawful under these provisions.
As expert evidence in the social sciences is sometimes speculative and/or ideologically driven,
some degree of certainty or consensus in this type of evidence should be required before
expression is prohibited in these circumstances.
138
This section is drafted only to cover those hate-mongers who deliberately target children or
adolescents as the recipients of their messages, not material communicated “at large” but which
might incidentally reach people in that category. Even here, caution is necessary to avoid
overreaching, especially where family life and privacy, religion or legitimate youth activities,
and associational interests might be at risk. Greater care and precision might be needed in the
actual drafting of legislation based on this section.
139
Some of the methods, materials, or activities envisaged here might overlap with some of those
envisaged by s. 12.
140
See note 129 above.
141
The scenario that comes most readily to mind is that of a teacher such as Keegstra. The term
“public or publicly regulated nature” is used so that private as well as public schools are
covered, as they are also subject to a degree of public regulation. Positions other than teachers
could be covered, including law enforcement officers, licensed professionals, or regulated

74 Underneath the Golden Boy
13.(2) In this section “children or adolescents” means people under the age of
eighteen years.
13.(3) For greater certainty, nothing in this section shall apply to:
(a) Private communication within a family home or setting or familyarranged
care not available to the public or a section of the public; 142
(b) Bona fide communication made by a member of the clergy, religious
official, or other participant during a bona fide religious activity; 143 or
(c) Bona fide communication of the viewpoint or policy of an association
that was not established for the purpose prohibited by subsection (1) or
clause 1(c). 144
facilities offering a service to the public (such as day care centres). Depending on the extent of
their regulation by government or public authorities, coaches or officials in private athletic
teams or leagues might also be covered—as might professional or volunteer youth leaders in
other circumstances.
Education and some of the other situations envisaged here are under provincial jurisdiction.
The double aspect doctrine might allow this proposed federal legislation to apply to such
situations—if it can come within a federal head of power. This provision, coupled with the
provisions in s. 2(3) rendering provincial hate laws inoperative, would not prevent appropriate
provincial employment or disciplinary sanctions against the abuser as well, as s. 2(4)(b)
specifically protects the application of more “general” laws where situations covered by them
correspond with situations covered by this Act.
142
Although family or home related indoctrination of children into hatred can be among the most
nefarious situations where such communication occurs, the law simply cannot reach that far
without creating an unduly authoritarian or even totalitarian society.
This exception includes not only communications made by family members themselves, or
communications made in a home, but also those made by persons outside the family (such as
when they are visiting with the family at home or in another location).
The “family-arranged care” mentioned here includes situations where care is provided by a
friend, neighbour, or babysitter, but does not include a commercial care-giving company that
makes its services available to the public.
143
Of course it could be argued that some of the most dangerous hate promotion, including that
directed at youth, can be carried out by extremist religious leaders. However, this exception
seems necessary to protect freedom of religion and to prevent undue interference by secular
authorities into religious affairs. Indeed, an argument can be made that the qualifications that
the communication or activity must be “bona fide” gives secular authorities undue power to
evaluate religious expression or activity.
144
This is meant to protect organizations that, though established or operated for legitimate
purposes may express messages that members of an identifiable group could find objectionable.
For example, the Boy Scouts of America teach that homosexual conduct is immoral. It might
be possible for religiously, ethnically, or culturally based organizations to be overzealous in
expounding their perspectives in controversial matters at the apparent expense of other groups.
Though such groups would probably not be caught by this section—given the “specific
intention” requirements in subsection (1) and the “specifically designed” requirement in clause
1(c)—this provision is added out of an abundance of caution. This should help to reduce the

Hate Communication Restriction and Freedom of Expression 75
13.(4) No proceedings under this section shall be brought against a person
under the age of eighteen years.
Severe Outrage on a Massive and Unavoidable Scale
14.(1) It is an unlawful act to display hate materials under circumstances
where
(a) Such display is likely to cause severe psychological trauma, severe
emotional distress, or severe outrage on a massive and unavoidable scale; 145
and
risk of an inappropriate finding of a violation of this section, of an inappropriate initiation or
threat of proceedings, and of an unnecessary “chilling effect” concerning legitimate expression
or association that might prove controversial.
145
See Collin v. Smith, 578 F.3d. 1197 at pp. 1205–1206 and Richard Delgado “Words that
Wound: A Tort Action for Racial Insults, Epithets, and Name-Calling” 17 Harv. C.R.-C.L.L.
Rev. 133 (1982) for a discussion of whether the concepts of trauma, severe emotional distress,
or outrage could be applied to racist or similar expression. Of course, Collin v. Smith declined
to decide whether or not a traumatized Holocaust survivor could successfully sue a Nazi leader
in tort or if such suit would survive First Amendment scrutiny, and ruled the various Skokie
“hate” ordinances in question unconstitutional on First Amendment grounds.
Furthermore, I do not agree with Delgado that verbal racial insults should be made a tort,
although, if persistent, they might be within the “unlawful act” concerning hate expression
involving “invasion of privacy” referred to in s. 11. I acknowledge the legitimacy of having
repeated verbal abuse being considered as a form of harassment prohibited by human rights
legislation.
Although the severe psychological effect of hate speech has been among the reasons the
Supreme Court of Canada upheld certain “hate” provisions (see Keegstra, supra note 2 and
Taylor, supra note 4), I respectfully disagree that those reasons (powerful though they may be)
are sufficient to justify a general ban on “hate speech”. Furthermore, I stand by the arguments I
made in Lipsett (1983) (supra note 10 at 12 Man. L.J. 185 at pp. 294–296 and pp. 306–309)
that insult, offensiveness, or “affront to dignity” per se are not sufficient grounds to prohibit
expression.
Interestingly, in upholding the constitutionality of s. 300 of the Criminal Code (prohibiting
publishing “a defamatory libel that he knows is false”) and the definition of defamatory libel in
s. 298(1) (“…matter published…that is likely to injure the reputation of any person…or that is
designed to insult the person”), the Supreme Court of Canada in R. v. Lucas [1998] 1 S.C.R.
439 distinguished between “mere insults” and “grave insults”. Cory, J., for the majority, stated
that “I agree that the provision would be overly intrusive if it were to be construed so that mere
insults should constitute a criminal offence.” (p. 474) However, considering inter alia the
French version “destinée à outrager”, the Court held, “[w]hen s. 298 is read in the context of
the aim of the section and the French text is taken into account it becomes apparent that the
phrase ‘or that is designed to insult the person’ should be read as requiring proof of a grave
insult. Thus, the inclusion of insults in the definition of defamatory libel is minimally
impairing.” (pp. 475-476)
However, the circumstances which I envisage for this section involve materials and
circumstances far more severe than mere insults, grave insults, simple offensiveness, or an

76 Underneath the Golden Boy
(b) Such display is unnecessary for the expression of any ideas or for any
other legitimate purpose. 146
14.(2) In this section “hate materials” are materials which advocate, promote, or
express hatred against any identifiable group.
Calling for Boycott
15.(1) It is an unlawful act to publicly advocate, promote, or express hatred
against any identifiable group while calling for a boycott against such group or its
members;
15.(2) In this section “calling for” includes:
(a) Urging the initiation or commencement of a boycott irrespective of
whether or not the boycott materializes;
(b) Urging the continuation or participation in a boycott that has
commenced;
(c) Pressuring people to participate in a boycott by methods such as
picketing, threats of retaliation, or recording and revelation of the names of
participants or non-participants.
15.(3) In this section “boycott” includes
(a) Refusing to conduct business with or to maintain a business,
professional, or academic relationship with members of such group;
(b) Refusing to conduct business with or to maintain a business,
professional, or academic relationship with an enterprise or institution
affront to dignity against any individual or group without more. Furthermore, this provision is
substantially narrower in scope than the general prohibition against hate speech or materials
“indicating discrimination” as that term has been interpreted in the cases which I criticized in
the article referred to in Lipsett 1983, supra note 10.
The types of materials that I have in mind for this section includes extraordinarily large and
widely visible billboards, or neon or other electrical signs of that nature that light up the night
and are visible from a great distance. I am not referring to ordinary methods of
communication—such as books, articles, newspapers, pamphlets, letters, signs, buttons, or
placards. Perhaps a provision such as this is unnecessary or unworkable, or in need of major
redrafting. However, I am suggesting considering such a provision out of an abundance of
caution to avoid any lacuna in the law that might be created by the elimination of general
“hate” provisions and of wide-ranging provisions dealing with signs “indicating discrimination.”
146
Clause (1)(b) may actually be redundant as it is hard to see how such materials could be
necessary for expression of ideas. Indeed such methods of communication may be inimical to
rational consideration and analysis of ideas, and could resemble (or even overlap) material or
circumstances referred to in section 10 or 12. The clause is only added as a precaution against
over-broad interpretation or overzealous application of this section.

Hate Communication Restriction and Freedom of Expression 77
because of the connection, involvement, or association of members of such
group with the enterprise or institution;
(c) Refusing to conduct business with or to maintain a business,
professional, or academic relationship with any individual, enterprise, or
institution because of the association of such individual, enterprise, or
institution with members of such group;
(d) Refusing to fulfill one’s business, professional, or employment
obligations:
(i) To members of such group; or
(ii) In relation to any function, business, goods, or services because of
the connection of such function, business, goods, or services to
members of such group.
15.(4) Nothing in this section shall prevent the criticism of, or discussion
concerning, the actions or policies of any country, government, or group; or
calling for, suggesting, or discussing any governmental policy or action. 147
147
At first glance, this suggestion might seem strange in an article largely intended to protect
freedom of expression. At least in certain circumstances, boycotts (including some of the
pressure tactics referred to in clause 15(2)(c)) have been held to be within First Amendment
protection. In NAACP v. Clairborne Hardware, 102 S. Ct. 3409 (1982), the protected boycott
had racial elements—it was a boycott of white merchants intended to bring about civil rights
reforms. However, far from promoting hatred or discrimination, its purpose was “designed to
force governmental and economic changes and to effectuate rights guaranteed by the
Constitution itself.” (p. 3426)
This proposed section does not prohibit all boycotts, or even all political boycotts, but merely
prohibits calling for boycotts in conjunction with advocating, promoting, or expressing hatred
against identifiable groups. As I argued earlier, even though certain ideas taken alone shouldn’t
be banned, and certain methods of communication and/or actions ought ordinarily to be
permissible, the particular message coupled with particular actions or methods of
communication might create a high enough degree or risk of harm as to justify prohibiting or
restricting them when they are carried out together.
Additionally, as sympathetic as one might be to the American Black civil rights movement (or
other civil rights or progressive movements that have utilized methods such as boycotts), there
are aspects of the NAACP v. Clairborne Hardware judgment itself that one can find troubling.
The Court held:
“In addition, names of boycott violators were read aloud at meetings of the First Baptist
Church and published in a local newspaper. Petitioners admittedly sought to persuade
others to join the boycott through social pressure and the ‘threat’ of social ostracism.
Speech does not lose its protected character, simply because it may embarrass others or
coerce them into action…” (pp. 3423-3424).
It further held that “There is nothing unlawful in standing outside a store and recording
names.” (p. 3432) Though citing another case where privacy arguments were rejected (at p.
3424), I respectfully suggest that the Court was unduly dismissive of the privacy interests of a
person (especially a private citizen) in not having personal activity deliberately monitored,

78 Underneath the Golden Boy
CONCLUSION
I have attempted to set out, in a very rough and tentative form, a framework for
the substantive and remedial provisions of a new, comprehensive, and exclusive
law that would replace all existing “hate speech” laws in Canada. I have not
attempted to draft the procedural provisions, although, as I mentioned,
proceedings would be brought by the federal Attorney General 148 and would be
tried in the provincial or territorial superior courts. Of course, a complete appeal
would have to be available from a conviction or a finding that an unlawful act
was committed, and an appeal “on a question of law alone” would have to be
available from an acquittal or finding that an unlawful act was not committed. It
would seem that, in order to prevent interference with freedom of expression in
unclear or uncertain cases, the Crown should have to prove the allegations,
(including all the ingredients) beyond reasonable doubt in proceedings to find
“an unlawful act” as well as in criminal proceedings.
recorded, and publicized. Worthwhile though the purpose of the boycott was, ends do not
always justify the means. Furthermore, I doubt whether coercive speech ought to receive the
same degree of protection as purely persuasive, ideological, or political speech.
There may be cases other than those envisaged either in NAACP v. Clairborne Hardware or
this proposed section where boycotts are so unfairly discriminatory or interfere with freedom of
expression to such a degree that legal restrictions against their organizers or enforcers may be
appropriate. A boycott against academics or other individuals (or even institutions) because of
disagreement with their country’s policies does not seem just. Boycotting a business because of
its owner’s political beliefs or actions, or boycotting a bookstore because it carries the works of a
particular author, seem to be cases where certain forms of private acts can be almost as
detrimental to freedom of expression as certain forms of government action. Such cases are not
covered by this proposed section, and are beyond the scope of this article.
Boycotts have a long history in the persecution of, and discrimination against, minority groups
and their members. It is such scenarios that this section is intended to protect against.
Although it would be an inappropriate interference with individual liberty (as well as largely
unworkable) for the law to dictate to a private consumer whom to deal with or to question
him/her in this matter—organizers, public instigators and enforcers are another matter. I would
ordinarily be reluctant to call for limitations on the right to encourage otherwise lawful actions.
As previously argued, banning hate speech per se seems to be unduly restrictive. However, I
suggest that a prohibition against hate speech in conjunction with a call for identifiable groupbased
boycotts seems like a reasonable aspect of a broader compromise solution.
It must be emphasized that the advocacy, promotion, or expression of hatred against the
identifiable group is the sine qua non for this section to be applicable. Other forms of boycotts,
including politically motivated boycotts, are not intended to be covered by this section. As a
precaution, subsection (4) is included to guard against inappropriate application of this section,
although better drafting of that subsection and indeed of the entire section may be needed for
effective protection of freedom of expression.
148
A provision similar to s. 318(3) of the Criminal Code should be included and state “no
proceedings under this Act shall be instituted without the consent of the Attorney General of
Canada.”

Hate Communication Restriction and Freedom of Expression 79
I have not used the word “publishes” or “broadcasts” in any of these
provisions, nor have I generally dealt with the issue of when (or if) a person
should be prohibited from publishing or broadcasting or otherwise facilitating the
communication of material other than his her own. More thought on this matter
may be desirable. However, care must be taken to avoid penalizing publishers or
broadcasters or other persons who do not share the intention of the original
communicator or knowledge of the content of the material. Furthermore, it is
necessary to avoid penalizing or restricting the publishing, broadcasting, or
reporting of the “hate” materials of others when this is done for legitimate
purposes, such as to expose hate-mongers to the public or to discuss the
problem. 149
Neither have I dealt with the issue of whether any in rem proceedings are
necessary to replace s. 320 of the Criminal Code, or if any materials of the nature
referred to would still have to be excluded from Canada under the Customs
Tariff. However, if still needed, in rem proceedings would have to be quite rare,
as the evil targeted in this proposed Act is (at least in most cases) not the
material per se, but the material in conjunction with the additional
circumstances referred to. Even the most virulent “hate” materials might be
needed for bona fide research, educational, and journalistic purposes, and indeed
have become part of “general knowledge.” 150 Not having any expertise in
computer science or technology whatsoever, I am not even attempting to offer
an opinion as to what, if any, provisions are needed to replace s.320.1 of the
Criminal Code concerning deletion of material from computer systems.
It might be worth considering whether an accused who is acquitted, or a
respondent who has been found not to have committed an “unlawful act”,
should be entitled to recover costs from the Crown. It seems unfair that a person
should suffer an onerous financial burden simply for doing what is found to have
been within a person’s constitutional rights. Furthermore, the prospect of facing
this burden could pose an additional “chilling” factor on those whose
contemplated expression could well prove legitimate. It could even be argued
that an accused or respondent in all cases brought under this Act should be
entitled to have counsel provided at public expense. This would not only avoid
preventing or deterring such a person from presenting a complete and effective
defence, it would help reduce the risk of setting an unduly repressive precedent
and would assist in the clarification of the law and the development of the
jurisprudence in this area. If society believes that it needs legislation that limits a
149
See Jersild v. Demnark (1994) 19 E.H.R.R. 1 (European Court of Human Rights).
150
See Braun, supra note 46 at p. 111 concerning the dilemma of whether or not a bookstore
should carry Mein Kampf.

80 Underneath the Golden Boy
constitutional right such as freedom of expression, it should take all reasonable
steps to ensure that it is not unnecessarily or inappropriately applied.
I must reiterate that I do not believe that freedom of expression is absolute
and that I respect and appreciate the powerful arguments favouring prohibitions
against “hate speech”. However, it seems that the current legislative and
jurisprudential scheme in Canadian federal (and much provincial) law goes
unnecessarily far in attempting to deal with the problem. In some circumstances
it may be counterproductive to its legitimate goals. I have attempted to identify
from Canadian legislation and cases, comparative and international
jurisprudence, literature, and indeed general knowledge, some of the
circumstances which seem to require some sort of legislative response. It is my
wish to develop legislation that would cover these circumstances without having
the far-reaching effect on expression described earlier. I do not know if I have
even come close to achieving an appropriate balance, but I hope that this
attempt at least encourages further thought in this area that might lead to that
goal.

Effective Foreign Credential Recognition
Legislation: Give It Some Teeth
BRYAN SCHWARTZ AND
NATASHA DHILLON-PENNER
I. INTRODUCTION
I
n recent history, when recruiting abroad, Canada’s immigration policies have
focused on highly educated and financially established populations. 1
Applicants assume that because their education almost guarantees them
Canadian entry, the job market needs their skills, and therefore, their
credentials, earned outside Canada, will be recognized. Sadly, there is a
disconnect between the federal government’s recruitment criteria, the labour
needs of the different provinces and territories, and the standards set by the selfregulated
professions. In the last few years the federal government has been
working with provincial governments to successfully target and recruit
immigrants to fill provincial labour gaps. 2 Unfortunately, even though the
various levels of government are working in concert for the common good, the
bodies that set the criterion for entry into professional fields can unilaterally
block governmental initiatives.
The issue of foreign credential recognition has been a hot topic in political
circles for the last few years. In their 2006 election platform, Harper’s
Conservatives promised to ease and expedite process for the recognition of
immigrants’ foreign credentials. 3 Ontario introduced legislation meant to
1
See Canada, Citizenship and Immigration Canada, Skilled workers and professionals: Who can
apply, online: Citizenship and Immigration Canada
.
2
See Canada, Human Resources and Social Development Canada, Temporary Foreign Worker
Program, online: Human Resources and Social Development Canada
.
3
See Stephen Harper pledges action on immigrant credentials, online: Stand Up for Canada:
Conservative Party of Canada 2006 Election Campaign .
See

82 Underneath the Golden Boy
promote fairness and transparency in the registration practices of specific selfregulated
professions. 4 Other provinces, suffering from labour shortage, began
assessing their options and implementing programs for dealing with the
recognition of foreign credentials. 5
This paper will discuss Manitoba’s main attempt to solve the foreign
credential dilemma: The Fair Registration Practices in Regulated Professions
Act. 6 To understand how Manitoba ended up with this legislation and to
understand its vulnerabilities, this paper will touch on the development and the
strengths and weaknesses of Ontario’s Fair Access to Regulated Professions Act. 7
Finally, the paper will suggest tactics and strategies for making the Manitoba
legislation effective in accomplishing its stated goal.
II. MANITOBA’S BILL 19: THE FAIR REGISTRATION PRACTICES IN
REGULATED PROFESSIONS ACT
On 26 September 2007, Bill 19, The Fair Registration Practices in Regulated
Professions Act was introduced in the Manitoba legislature. 8 The drafters’ intent
also Foreign credentials recognized in a Conservative Canada, online: CanadaVisa.com Canada
Immigration Lawyers .
4
Fair Access to Regulated Professions Act, Schedule 1, infra note 7. The Act applies to: The
Association of Professional Engineers of Ontario, The Association of Professional Geoscientists
of Ontario, The Association of Ontario land Surveyors, The Certified General Accountants
Association of Ontario, The College of Early Childhood Educators, The College of
Veterinarians on Ontario, The Institute of Chartered Accountants of Ontario, The Law
Society of Upper Canada, The Ontario Association of Architects, The Ontario Association of
Certified Engineering Technicians and Technologists, The Ontario College of Social Workers
and Social Service Workers, The Ontario College of Teachers, The Ontario College of
Teachers, The Ontario Professional Foresters Association, and The Society of Management
Accountants of Ontario. .
5
Initiatives like the Provincial Nominee Program were implemented in Alberta, Manitoba,
Newfoundland and Labrador, Ontario, Saskatchewan, British Columbia, New Brunswick, Nova
Scotia, Prince Edward Island, and the Yukon. See Canada, Citizenship and Immigration
Canada, Provincial Nominees: Who can apply, online: Citizenship and Immigration Canada
.
6
The Fair Registration Practices in Regulated Professions Act, S.M. 2007, c. 21, online:
Manitoba Laws http://web2.gov.mb.ca/laws/statutes/2007/c02107e.php#. This Act is to come
into force on a date to be fixed by proclamation.
7
Fair Access to Regulated Professions Act, 2006, S.O. 2006, c. 31.
8
Supra note 6. Manitoba, Legislative Assembly, Debates and Proceedings (Hansard), Vol. LIX,
No. 10 (26 September 2007) at 333 (Hon. Nancy Allan), online: Manitoba Legislative
Assembly .

Effective Foreign Credential Recognition Legislation 83
was to create legislation that would encourage transparent, objective, impartial
and fair registration practices. 9 The bill passed through its first and second
readings, the discussions at the Standing Committee on Justice, the third
reading, and received Royal Assent. 10 It is set to come into force on a date fixed
by proclamation. 11
It became apparent during the seconding reading of the proposed legislation
and the committee discussions that the regulated professions felt that the bill
was drafted in haste. 12 Nineteen presenters gave the Standing Committee on
Justice their opinions on the new piece of legislation. 13 Concerns of additional
bureaucratic red tape, 14 the loss of independence, 15 the excessively wide scope of
the legislation, 16 unclear and unduly burdensome provisions, 17 the fact that the
commissioner would report to the minister as opposed to the entire house, 18 to
name a few, were raised by the regulatory bodies. Of these, few were integrated
into the bill; only three amendments were made. 19
A. Canadian Jurisdictions with Similar Legislation or Initiatives
Manitoba’s The Fair Registration Practices in Regulated Professions Act was
largely modeled on Ontario’s Fair Access to Regulated Professions Act, 2006. 20
At the time it was introduced, Fair Access to Regulated Professions Act, 2006
9
Manitoba, Legislative Assembly, Debates and Proceedings (Hansard), Vol. LIX, No. 24B (23
October 2007) at 1586 (Mavis Taillieu), online: Manitoba Legislative Assembly
.
10
For first reading see supra note 8; for second reading see ibid; for minutes of the Standing
Committee on Justice see Legislative Assembly,Standing Committee on Justice, Vol. LIX, No. 2
(29 October 2007) at 10-47, online: Manitoba Legislative Assembly
; for third reading see
Manitoba, Legislative Assembly, Debates and Proceedings (Hansard), Vol. LIX, No. 33 (7
November 2007) at 2019-2023, online: Manitoba Legislative Assembly
.
11
See The Fair Registration Practices in Regulated Professions Act, supra note 6.
12
See supra note 9 at 1586-1595.
13
Standing Committee on Justice, supra note 10.
14
Ibid. at 10-13 (Sharon Eadie).
15
Ibid. at 14-15 (Douglas Bedford).
16
Ibid. at 18-19 (William D.B. Pope).
17
Ibid.
18
Ibid. at 14-15 (Douglas Bedford).
19
See Manitoba, Legislative Assembly of Manitoba, Amendments adopted at Committee Stage,
online: Legislative Assembly of Manitoba .
20
Supra note 7. See also supra note 10.

84 Underneath the Golden Boy
was hailed as an innovative piece of legislation that would play a major role in
Ontario's comprehensive plan to break down the barriers that prevent
newcomers from integrating into Canadian society. 21
1. Ontario’s Fair Access to Regulated Professions Act, 2006
On 8 June 2006, Fair Access to Regulated Professions Act, 2006, 22 known also as
Bill 124, was introduced to the Legislative Assembly of Ontario. 23 By requiring
that regulatory body registration procedures be quick, fair and open, Bill 124
aimed to remove bureaucratic hurdles and help newly landed immigrants find
jobs in their chosen fields quickly. 24
The drafters of Bill 124 relied heavily upon Justice Thomson’s Review of
Appeal Processes from Registration Decisions in Ontario's Regulated
Professions. 25 The report sought to develop a framework on which an
independent appeal process could be based. According to the report, an
independent appeal should be guided by principles of fairness, accountability,
objectivity, transparency, and collaboration. 26 The process would include a
panel—autonomous of the original assessing authority—that would review the
authority’s decisions. 27 Since the regulatory body's decision determines the
applicant’s ability to practice his or her chosen the "access to independent appeal
21
Ontario, Ministry of Citizenship and Immigration, “Breaking Down Barriers for Skilled
Newcomers: What you need to know about Bill 124 The Proposed Fair Access to Regulated
Professions Act, 2006”, online: Ministry of Citizenship and Immigration Ontario
.
22
Supra note 7.
23
Bill 124, An Act to Provide for Fair Registration Practices in Ontario’s Regulated Professions,
2nd Sess., 38th Leg., Ontario, 2006, online: Legislative Assembly of Ontario
.
24
Ontario, Ministry of Citizenship and Immigration, Results-based Plan Briefing Book 2007-2008,
online: Ministry of Citizenship and Immigration Ontario
.
25
In September 2004 the Ontario government appointed former Ontario Justice George
Thomson to review existing appeal processes within different regulatory bodies. George M.
Thomson, Review of Appeal Processes from Registration Decisions in Ontario's Regulated
Professions, Report to the Ontario Minister of Citizenship and Immigration, November 2005,
online: Legislative Assembly of Ontario
[Review of Appeal
Processes Report]. See also, Ontario, Ministry of Training, Colleges and Universities, Press
Release, “Government Moves to Reduce Barriers to Employment for the Internationally
Trained”, CNW Group (29 September 2004), online: Ontario Newswire
.
26
Review of Appeal Processes Report, ibid. at viii.
27
Ibid. at viii & xii. The report stressed the importance for internationally trained professionals to
have an opportunity for an independent appeal and review process.

Effective Foreign Credential Recognition Legislation 85
is vital." 28 That said—if fair registration practices successfully increase the
effectiveness, fairness and clarity of internal registration procedures and review
processes within regulatory bodies—then the need for an independent appeal
will be reduced. In other words, as put by Mr. George Thomson: "The best
independent appeal process is one that does not need to be used often. We
should therefore promote good internal processes within regulatory bodies that
reduce the demand for independent appeals and that lay the foundation for
effective appeals when they are needed." 29
Using Justice Thomson’s report as a launching pad, the drafters of Bill 124
incorporated various creative strategies into the legislation to improve
recognition practices.
One innovative step was the creation of the Office of the Fair Registration
Practices Commissioner (the Fairness Commissioner) to ensure regulatory
bodies’ compliance with the bill. 30 The Commissioner’s functions include
assessing the registration practices of regulatory bodies, determining their audit
standards, deciding the time when the registration practices are to be reviewed,
providing advisory functions to the bodies and applicants, and, most importantly,
reporting to the ministers on the registration practices of the regulated
professions. 31 Manitoba adopted the idea of a fairness commissioner in Bill 19.
The role of the Commissioner is limited. According to the Act, the
Commissioner is appointed by the Lieutenant Governor in Council, and reports
to the Minister of Citizenship and Immigration. 32 The legislation does not
indicate that the Commissioner is intended to be independent, or that she must
in fact be independent; she could be a member of the minister’s staff. This brings
into question the legitimacy of the role and of the work that she does. Also, the
Fairness Commissioner does not have the authority to intervene in procedures,
28
Ibid. at ix & xviii. The report recommended enabling appeal processes for the following
decisions: denial of registration; the granting or denial of provisional, limited or conditional
registration; imposition of conditions; failure to decide within a reasonable time; and a refusal
to accept or process an application. Ibid at 66.
29
Ibid. at ix.
30
Bill 124, supra note 23, cls. 13(1)-(2). For more information about the Office of the Fairness
Commissioner, and of the role of the Commissioner see The Office of the Fairness
Commissioner, online: .
31
The Commissioner may also advise regulatory bodies, government agencies, community
associations as well as ministers on the broad scope of matters. See Bill 124, supra note 23, cl.
13(3). See also Ontario, Citizenship and Immigration, “Accessing and Recognizing Credentials
in Canada: Ontario’s New Fair Access to Regulated Professions Act, 2006” (Public Policy
Forum Seminar, Regina, SK, 19 April 2007), online: Public Policy Forum
at 7-8.
32
Fair Access to Regulated Professions Act, supra note 7, ss. 13(1), (3).

86 Underneath the Golden Boy
question the decisions of the regulatory bodies, or represent the interests of an
applicant to a body. Instead the Commissioner composes a series of reports and
audits on the practices of the regulated professions. 33 These include an annual
report to the minister, who may choose when to submit the report to the
Lieutenant Governor in Council. 34
When the legislation was first introduced, critics warned that the principles
of fairness would be replaced by political correctness. 35 Moreover, instead of
promoting open or expedient regulatory procedures, critics pointed out that the
Fairness Commissioner’s office would only create additional delays. 36 Some
argued that the power granted to the Commissioner to conduct audits was a
threat to self-regulation. 37 There was concern that audits would reduce the
flexibility of the registration process, add new costs to it, and generally replace
the process of assessing professional competency with a purely bureaucratic
assessment of credentials. 38
It has now been more than a year since the Office of the Fairness
Commissioner was created, and the product of the office, the first set of audits
33
Ibid., ss. 13(3), 15.
34
See ibid. s. 15(6). The Minister must submit a copy of the report to the Lieutenant Governor in
Council who will cause it to be laid before the Assembly if it is in session or, if not, at the next
session. However, it does not specify within what timeframe the Minister must submit the
report. See The Office of the Fairness Commissioner, 2007-2008 Annual Report (Toronto:
Queen’s Printer for Ontario, 2008), online: Office of the Fairness Commissioner
[Annual Report].
35
George Jonas, “Keep the Fairness Fairy Out of It”, National Post (15 July 2006). The concern is
that “‘[f]airness’ will be interpreted as if it were a synonym for ‘equality,’ and ‘equality’ as if it
were a synonym for ‘parity.’ If professional associations were inclined to expedite matters for
exceptional practitioners, the [Commissioner] would either stop them or make sure that
matters were also expedited for unexceptional ones. If an association decided to view diplomas
from first-rate institutions in the developed parts of the world at par with Canadian diplomas,
the FC's office would make every effort to stop it from ‘discriminating’ against diplomas issued
by second-rate institutions in undeveloped regions.”
36
Ontario, Legislative Assembly, Official Report of Debates (Hansard), No. 101A (3 October
2006) at 5168 (Elizabeth Witmer), online: Legislative Assembly of Ontario
.
[Bill 124: Second Reading (3 October 2006)].
37
Ibid.
38
The College of Physicians and Surgeons of Ontario, News Release, “More Bureaucracy Equals
More Barriers: The Fair Access to Regulated Professions Act, 2006 will do little to improve
access for international medical graduates (IMGs) in Ontario” (8 June 2006), online: The
College of Physicians and Surgeons of Ontario
cited in ibid.

Effective Foreign Credential Recognition Legislation 87
and reports, were made public in July of 2008. 39 The office reviewed the
registration practices of the professional regulatory bodies and declared that it
had “[developed] a solid foundation by gathering vital information and
establishing consultative relationships with stakeholders.” 40 In its initial analysis
the office found that most of the regulated professions are striving towards
transparent, objective, impartial and fair registration practices. 41 It did note,
however, that “[n]ot all of the regulated professions are moving at the same
pace, and some deeply rooted systemic registration issues will take time to
resolve… .” 42
The investigatory efforts of the office relied mainly on self-reporting by the
professional bodies by usingprevious surveys; reports and legislation on the
registration practices of the regulated professions; interviews with staff of
regulatory bodies; the websites of professional bodies; and statistical information
provided by the professional bodies. 43 The data is one-sided and may not reflect
the diverse interests at stake.
In order to avoid the possibility of bias, in conducting their research, the
Office of the Fairness Commissioner should seek statistical information from
sources independent of the professional bodies, interview all the relevant
stakeholders (current members of the profession, foreign professionals,
representatives from the Foreign Credential Referral office, etc.), review a
sample of the bodies’ decisions (including their reasons) and compare the
information with the legislation, regulations and any further codes the
professional bodies may have. The research is only valuable if it identifies the
real issues in each profession and attempts to develop viable solutions.
It can be argued that in the year following the establishment of the position,
the Commissioner did not achieve substantial change. She merely reported the
status quo and declared her intentions for future compliance. 44 Future
39
The Fairness Commissioner was appointed in April 2007, and the Office of the Fairness
Commissioner was established within the month. For full access to the audits, the report on the
audits, and the first annual report see The Office of the Fairness Commissioner
.
40
Annual Report, supra note 34 at 24.
41
See Ontario, Office of the Fairness Commissioner, Ontario’s Regulated Professions: Report on
the 2007 Study of Registration Practices, (Toronto: Queen’s Printer for Ontario, 2008) at 8,
online: Office of the Fairness Commissioner
[Report on the Study
of Registration Practices].
42
Ibid.
43
Report on the Study of Registration Practices, supra note 41 at 7.
44
See Annual Report, supra note 34 at 25.

88 Underneath the Golden Boy
compliance may be difficult. The consequences for non-compliance, a fine of
$100 000, may not be sufficient motivation for a professional body focused on
their own self-interests to abandon practices deemed by the Commissioner to be
unfair. 45
A related criticism of the Fair Access to Regulated Professions Act, 2006 is
that fairness simply does not exist substantively in the legislation. As set out in
the legislation, the Fairness Commissioner does not provide any practical
assistance for individual applicants. Neither does she have the power to prevent
discrimination by the assessors against the applicants on grounds such as race or
culture. Fairness in the Fair Access to Regulated Professions Act has little to do
with the protection of foreign-trained professionals’ human rights, correcting
systemic bias faced by immigrants from certain countries, or facilitating
recognition for individual applicants. Instead, it appears that for the architects of
Bill 124, fairness was purely a procedural term.
Another feature of Ontario’s bill was the establishment of the Access
Center for Internationally Trained Individuals (Access Center). 46 The role of the
Access Center is to provide information regarding requirements for and
assistance with registration, conduct research and analysis on the problems
related to the registration of foreign-trained professionals, and advise and assist
various government and community agencies, ministries, institutions,
professional associations, employers, and regulated professions on the training
and registration of internationally trained professionals. 47
A significant shortcoming of the Access Center is that it strictly does
orientation and referrals, and does not do more to assist or support newcomers in
having their credentials recognized. The Access Center’s functions are limited to
referring foreign professionals to the regulatory bodies without providing any
legal or professional assistance; 48 it is up to the applicant to defend his or her
cause before an internal review or appeal panel. The sole responsibility of the
Access Center is to provide information regarding the process. 49
45
Fair Access to Regulated Professions Act, supra note 7, at s.30(3)(b).
46
Bill 124, supra note 23, cl. 17(1).
47
Ibid. , cl. 17(2)(a)-(d).
48
Ontario, Legislative Assembly, Official Report of Debates (Hansard), No. 110 (19 October
2006) at 5648 (Rosario Marchese), online: Legislative Assembly of Ontario<
http://www.ontla.on.ca/house-proceedings/transcripts/files_pdf/2006-10-19_pdfL110.pdf >
[Bill 124: Second Reading (19 October 2006)].
49
Ontario, Legislative Assembly, Standing Committee on Regulations and Private Bills, Fair
Access to Regulated Professions Act, 2006, No. T-20 (7 December 2006) at 311 (Riet
Verheggen) online: Legislative Assembly of Ontario .

Effective Foreign Credential Recognition Legislation 89
During the Standing Committee on Regulations and Private Bills
(“Standing Committee”) debates, presenters argued numerous points and
recommended related amendments. 50 The challenge was for Bill 124 to strike the
right balance between, on the one hand, removing barriers in the recognition
process, and, on the other hand, avoiding replacing self-regulation with stateregulation.
The latter was crucial as one of the goals of the legislation was to
preserve the independence of the professions and their regulatory authorities. 51
However, in the attempt to realize this balance, the bill lost a great deal of the
potential power it had to facilitate the process of recognition.
The main criticism of Bill 124 is that it did not incorporate Justice
Thomson's recommendation for the establishment of an independent appeal
body. 52 During the Standing Committee debates, most presenters stated that
without an independent appeal tribunal it would be difficult to achieve
objectivity and fairness 53 —especially in the case of appeals of regulatory body
decisions that were to be heard by the same regulatory body that originally
rejected the application. 54 In the absence of an independent appeal body, the
only way an applicant can have his case heard by a third party would be through
the court, either by statutory appeal or judicial review. However, this can be
50
See Ontario, Legislative Assembly, Standing Committee on Regulations and Private Bills, Fair
Access to Regulated Professions Act, 2006, online: Legislative Assembly of Ontario
.
51
Bill 124: Second Reading (3 October 2006), supra note 36 at 5165, 5169 (Norm Miller, Lisa
Macleod).
52
Review of Appeal Processes Report, supra note 25.
53
An independent appeal tribunal exists under the Regulated Health Professions Act, 1991,
R.S.O. 1991, c. 18. Decisions of health care professional regulatory bodies may be appealed to
the Health Profession Appeal and Review Board. However, there are no such tribunals for
many other professional regulatory bodies. See Ontario, Legislative Assembly, Standing
Committee on Regulations and Bills, Fair Access to Regulated Professions Act, 2006, No. T-15
(15 November 2006) at 199 (Anne Coghlan), online: Legislative Assembly of Ontario <
http://www.ontla.on.ca/committee-proceedings/transcripts/files_pdf/2006-11-15_pdfT015.pdf
> [Standing Committee Meeting 15November 2006].
54
Bill 124: Second Reading (3 October 2006), supra note 36 at 5173(Peter Tabuns). The need
for an independent appeal tribunal was emphasized by the College of Medical Laboratory
Technologists of Ontario; the Policy Roundtable Mobilizing Professions and Trade; MP Olivia
Chow; the Institute of Chartered Accountants of Bangladesh, North American Chapter; the
Chinese Professionals Association of Canada; the Thorncliff Neighbourhood Office; and
others. See Standing Committee Meeting 15November 2006, ibid. See also Ontario, Legislative
Assembly, Standing Committee on Regulations and Private Bills, Fair Access to Regulated
Professions Act, 2006, (21 November 2006), online: Legislative Assembly of Ontario
[Standing Committee Meeting 21/November 2006].

90 Underneath the Golden Boy
both expensive and risky for new immigrants who are, for the most part, already
struggling financially. 55
An independent appeal body would provide more transparency,
accountability and the "appearance of fairness to the public." 56 As it is, the only
provision ensuring objectivity in the internal review requires that a decision
maker involved in the original decision will not act as a decision maker in the
review or appeal. 57
While the legislation was well-intentioned, the Fair Access to Regulated
Professions Act, 2006 is ineffective. Some argue that since the legislation does
not accomplish what it sets out to do for foreign-trained professionals, it is no
more than a symbolic gesture. 58 The difference between the Bill's intent to
ensure fair and transparent registration procedures, and what the Bill actually
delivers, is significant. 59
Consequently, one question should be at the forefront of any discussion of
the Fair Access to Regulated Professions Act, 2006: 60 why did the Ontario
Legislative Assembly pass legislation that lacks teeth
In the debates and public hearings of Bill 124, numerous flaws in the
legislation were identified and amendments to it were suggested; however, none
of these recommendations were adopted. 61 The Fair Access to Regulated
Professions Act, 2006 that received royal assent is identical to the bill at its first
reading. The legislation's power to facilitate registration processes and help
foreign-trained professionals integrate into the Canadian labour market is
weakened by rhetorical language, unclear explanations of "transparent,
55
Bill 124: Second Reading (3 October 2006), ibid.
56
Ontario, Legislative Assembly, Standing Committee on Regulations and Private Bills, Fair
Access to Regulated Professions Act, 2006, No. T-17 (22 November 2006) at 231-232
(Chinniah Ramanathan), online: Lergislative Assembly of Ontario
[Standing Committee Meeting 22/November 2006].
57
Fair Access to Regulated Professions Act, supra note 7, cl. 9(5). See also Bill 124: Second
Reading (3 October 2006), supra note 54 (Peter Tabuns).
58
Bill 124: Second Reading (3 October 2006), ibid. at 5173.
59
Ontario, Legislative Assembly, Official Report of Debates (Hansard), No. 104A (10 October
2006) at 5324 (Frank Klees), online: Legislative Assembly of Ontario
[Bill 124: Second Reading (10 October 2006)].
60
Fair Access to Regulated Professions Act, supra note 7.
61
Ontario, Legislative Assembly, Official Report of Debates (Hansard), No. 135 (12 December
2006) at 6891-6896 (Frank Klees), online: Legislative Assembly of Ontario
[Bill 124: Third Reading (12 December 2006)].

Effective Foreign Credential Recognition Legislation 91
objective, impartial and fair" registration practices, 62 and the limitation of
fairness to administrative procedures. Not only is the administrative regime
created by Bill 124 not effective in influencing regulatory body registration
practices, it does little to ease the difficulties faced by foreign-trained
professionals.
The role of the Fairness Commissioner is merely to be an observer of the
practices of professional bodies; composing reports for the Minister of Citizenship
and Immigration detailing the processes and procedures of all the self-regulated
professions. The position is not independent from the ministry that implemented
the legislation, which raises questions of effectiveness and legitimacy. In
addition, the role does not come with the authority to fulfill a practical purpose
such as intervening on behalf of a foreign educated professional in a dispute with
a professional body, or demanding that an applicant’s case be re-considered.
Similarly, the Access Center provides applicants with information about
where they can get their credentials recognized, but does not assist them in the
practical process.
The most notable failing of the legislation is the absence of an independent
appeal body—the main recommendation of Justice Thomson’s report. 63 This
absence was strongly supported by the professional regulatory bodies. 64 While
Ontario’s legislation does not seem to ease the plight of foreign-trained
professionals, it does present a threat to the regulated professions. The
professional bodies found the language of the bill overly restrictive and
confusing. They raised the following concerns:
1) The bill erodes self-regulation and there is the potential it will be
replaced by state-regulation. 65 Because the Fairness Commissioner has
the authority to influence entry requirements, there is the possibility
that the office will begin supervising professional bodies; which conflicts
with the principle of independence self-regulated professions. 66 This, in
turn, may interfere with the ability of regulatory bodies to ensure that
applicants meet professional standards. 67
62
Fair Access to Regulated Professions Act, supra note 7, cl. 6.
63
Review of Appeal Processes Report, supra note 25 at viii, xii.
64
Standing Committee Meeting (22November 2006) supra note 56 at 245-46 (Kim Allen).
65
Standing Committee Meeting (15 November 2006) supra note 53 at 181 (Don Cattani).
66
This was also the reason the Law Society of Upper Canada supported the government's
decision not to create an independent appeal body. See also Standing Committee Meeting (22
November 2006), supra note 56 at 235-36 (Glenda McDonald).
67
The Fairness Commissioner may impose different requirements or restrictions in respect to any
class of regulated professions. Fair Access to Regulated Professions Act, 2006, supra note 22, cl.

92 Underneath the Golden Boy
2) The sole contribution of the legislation is another layer of
bureaucracy. 68
3) Audits and numerous reporting requirements are costly procedures that
reduce flexibility. There is the risk that standardization will replace the
individualized registration process. Also, audits may be limited to
measuring technical credentials instead of actual competence. 69
Moreover, the additional reporting and auditing costs will eventually be
transferred to the applicants. 70
4) The audit standards are unclear: the terms "transparent,” "fair,” and
"objective" must be defined if regulatory body practices are to be
assessed against them. 71
5) There is the potential for duplication of reporting duties: conflicts
between the obligations under the bill and those under the professional
body’s authorizing legislation may exist. 72
It was more than likely the above concerns—coupled with the
vigourousness with which the professional bodies acted in protecting their turf
and the government’s own enthusiasm for delivering a solution—that persuaded
the provincial government not to amend the legislation to include the
recommended changes.
Nova Scotia’s Fair Access to Regulated Professions Act
Recently Nova Scotia followed Ontario’s lead and introduced Bill 126, the Fair
Access to Regulated Professions Act. 73 The draft does not vary substantially from
either Manitoba’s Bill 19 or Ontario’s Fair Access to Regulated Professions Act,
14(c). See also Standing Committee Meeting (15 November 2006), supra note 53 at 198-99
(Anne Coghlan).
68
Standing Committee Meeting ( 22 November 2006), supra note 56 at 235-36 (Glenda
McDonald).
69
Ibid. At 235, 258 (Rocco Gerace, Sharon Saberton).
70
Bill 124: Second Reading (3 October 2006), supra note 36 at 5167 (Elizabeth Witmer).
Regarding additional costs of the audits see also Standing Committee Meeting (15 November
2006), supra note 53 at 183 (Norm Williams). Also see Standing Committee Meeting (22
November 2006), supra note 56 at 235-36 (Glenda McDonald).
71
Standing Committee Meeting (15 November 2006), ibid. At 181, 183 (Don Cattani, Norm
Williams).
72
For example, under the Regulated Health Professions Act (supra note 53), health professions
have a duty to report annually to the Ministry of Health. Ibid. at 176 (Tina Langlois). For other
professions, see ibid. at 181 (Don Cattani). See also Standing Committee Meeting (22
November 2006), supra note 56 at 236, 239 (Glenda McDonald & Louis Cooke).
73
Nova Scotia, House of Assembly, Debates and Proceedings, No. 08-17 (24 April, 2008) at 1905
(Hon. Mark Parent).

Effective Foreign Credential Recognition Legislation 93
2006. Like its counterparts, it includes a commissioner-type role, called the
Review Officer, but does not incorporate an independent appeal body. The bill
has entered into its second reading, but at the time of writing no further progress
had been made. 74
B. Summary of the Current Legislation
While an excellent idea in theory, Ontario’s Fair Access to Regulated
Professions Act does not accomplish what it purports to. Failing to incorporate
Justice Thomson’s recommendation of an independent panel, and instead
creating the Access Center and reporting mechanisms like the Fairness
Commissioner, detracts from the goal of the legislation. Neither reporting
instrument serves the practical purpose of getting more foreign trained
professionals working within the province in their respective professions.
Manitoba’s Bill 19 is essentially a copy of Ontario’s act. Instead of taking
heed of the criticism of the Fair Access to Regulated Professions Act, reviewing
its strengths and weaknesses, and spending the time to make Bill 19 effective,
the Manitoba Legislature pushed through the duplicate legislation with few
amendments.
C. Professional Self-Regulated Bodies
If there is an obvious demand in the marketplace for more skilled professionals,
and the federal and the provincial governments are developing programs and
legislation to support immigrant professionals in having their credentials
recognized, it begs the question: why do there continue to be barriers for those
professionals to enter the workforce One answer is that certifying more
professionals is not in the interests of the professional self-regulating bodies.
Through legislation, professional bodies have been delegated the power to
determine the entrance requirements for their profession. While it makes sense
to have those in the profession evaluate the training and credentials of those
seeking to join the profession, it also raises the issue of conflicts of interest. It can
be assumed that the occupational regulatory body is not only obligated to protect
public interests per se but also to act in the best interests of the members of the
profession. 75 The Competition Bureau points out that “self-regulating professions
74
Nova Scotia, House of Assembly, Debates and Proceedings, No. 20 (29 April 2008) at 2300-
2303; Nova Scotia, House of Assembly, Debates and Proceedings, No. 38 (27 May 2008) at
4073-4076.
75
Todd-Jeffrey Weiler, “Professional Self-Regulation and Federal Competition Policy: The
Calarco Case” (January 1997) 7 W.R.L.S.I. 119 at 126.

94 Underneath the Golden Boy
must acknowledge that the private interest of its members will inevitably be at
odds with the common good at some times.” 76
By restricting the labour supply through training and educational
requirements and caps on licences, the self-regulatory bodies hold monopolies
over their respective industries, ensuring large workloads and high wages for
their members. It is assumed that preventing unskilled and unqualified
professionals from harming clients will preserve the quality of service. Instead,
with no competition the cost of services in the industry is increased—not
necessarily based on the value of the service—but because a limited number of
professionals are permitted to perform the service.
If the impact of the decisions made by the professional self-regulating bodies
is felt by those making them, it is understandable for the decision-makers to
make decisions that are favourable to their interests. All decisions start and end
with the professional self-regulating bodies. This is in contrast to the principles
enunciated by the Competition Bureau to assist regulators develop and maintain
effective and efficient regulations that maximize the interests of the consumer. 77
Obstacles to entrance faced by foreign-trained professionals indicate that
self-regulation has not worked. To ensure impartial decisions and a healthy,
competitive market there must be a check and balance to the system.
D. Recommendation: Legislation with Teeth
To be effective, fair recognition legislation must have teeth. Manitoba should
learn from Ontario’s mistakes. The Fair Registration Practices in Regulated
Professions Act, as it currently stands, is more a declaration of a desire to have
professions within the province use fair practices than a guarantee that they will
do so. 78 During the second reading of Bill 19, Mr. David Faurschou, the member
from Portage la Prairie, stated:
[W]e need to have some type of mechanism by which to oversee the entry into
professional organizations and also to safeguard those individuals that are wanting to join
professional bodies here in the province of Manitoba, thereby providing a fair and
equitable assessment of their skills and abilities to the benefit of not only the professional
organization but to the benefit of all Manitobans. 79
76
Competition Bureau Canada, Self-regulated professions: Balancing competition and regulation
(Gatineau: Competition Bureau, 2007), online: Competition Bureau Canada
.
77
Ibid. at 37-39.
78
Supra note 6.
79
See supra note 9 at 1591 (David Faurschou).

Effective Foreign Credential Recognition Legislation 95
To achieve the goals that the legislation purports to support, certain steps
must be taken. First, the term “fairness” must be defined. It should mean no
unfair barriers to entry, and no unnecessary obstacles. This clearly sets out the
intention and the scope of the legislation.
Second, it is essential that the legislation have a fairness body or panel. The
panel would consider appeals of decisions of the regulatory bodies governed by
the legislation. Such a panel must be independent of the profession and its
regulatory body. This would serve two functions. First, for the immigrant it
would confirm the fairness of the process by providing an autonomous party that
could assess the case. Second, the regulatory body would be less likely to make
unfair rulings because their decisions could be reviewed.
The right to an independent appeal adds a human rights aspect to the
recognition problem. Review of a decision by an independent panel ensures that
no discriminatory practices are administered in such a decision. Without an
independent appeal, an applicant relies on a review by the same organization
that issued the original unfavourable decision, hoping that any discrimination
present in the first decision will be put aside in the second.
Moreover, an independent review might ensure that, on a case-by-case
basis, the regulatory body administers no unwarranted discriminatory practices. 80
The act of discriminating with respect to the right to membership in a
professional association with no bona fide or reasonable cause for the
discrimination is one of the practices explicitly prohibited by (Manitoba’s) The
Human Rights Code (“The Code”). 81 The Code allows professional bodies to
make discriminatory decisions provided there is bona fide or reasonable cause to
support such decisions. An independent review of decisions on a case-by-case
basis would strengthen the system by providing a safeguard against unnecessary
and unwarranted discrimination. 82 An independent appeal process indicates that,
if fair registration practices do not exist within regulatory bodies, action can be
taken. 83
Third, the legislation should not be solely procedural in nature. While it
does cover the procedural steps taken by professional bodies in order to reduce
the number of unfair decisions, the legislation should also have substantive
80
The Human Rights Code, S.M. 1987-88, c. 45, s. 9(1), 9(2). , But see s. 12. See ss. 14(1),
14(2),14(6)(a).
81
Ibid. s. 14(6)(a).
82
Ibid.
83
Such fair registration practices include the issuance of written decisions, the providision of
sufficient reasons to support the decision, and clear and transparent criteria for the decisionmaking
process. See Review of Appeal Processes Report, supra note 25 at xviii.

96 Underneath the Golden Boy
effects. The independent body should be able to intervene when it feels that a
bad decision has been made. Two options should be available to the panel: they
could either opt to have the decision sent back to the professional body for
reconsideration, or, they could substitute their own decision for that of the
professional body. Most importantly, in either case, the decisions of the fairness
panel should be binding on both the professional body and the applicant. This
suggests that the administrative standard of review should be one of correctness,
rather than reasonableness, granting less deference to the self-regulating
professional bodies.
This is not a new idea: having an independent, administrative body has
been done before. Under The Code, an Adjudication Panel has the power to
review the decisions of other bodies that involve discrimination complaints. 84
Similar to those of courts and regulatory tribunals, the decisions of the Human
Rights Commission (“HRC”) are based on the testimonial, documentary and real
evidence before it. Like the independent panel suggested here would be, the
HRC is an administrative body, and there is no evidence that the scope of the
power bestowed on it is beyond what is required. Additionally, it is not argued
that the HRC’s function does not justify the loss of power suffered by the bodies
whose decisions it reviews. As such, the suggested panel should be modeled after
the HRC.
E. Arguments Against Having a Panel
The idea of an independent appeal body—while attractive to legislators,
employers struggling to find qualified professionals, and immigrants who face
barriers to practicing their profession—will likely be opposed by many of the selfregulated
professions. They may raise a few obvious arguments in support of
maintaining their control over professional entrance standards without
involvement from third parties. The first is that the power to set standards and
determine whether applicants satisfy requirements was bestowed on them by the
government. It simply makes sense that those who understand the demands and
expectations of the profession should set and regulate the standards.
While it is true that each profession has an overarching piece of legislation
that empowers them to make such decisions, the legislation does not grant
complete authority over everything related to a specific profession. For example,
the Lieutenant Governor in Council (practically speaking, the provincial
84
The Human Rights Code, supra note 80, s. 8(1), 37, 43(2).

Effective Foreign Credential Recognition Legislation 97
cabinet) must approve any regulation made under an act. 85 This means that the
final authority still lies with the government and not with the self-regulating
bodies. Historically the government has not acted contrary to the
recommendations of professional bodies. However, this is not necessarily in the
best interests of the public. Due to their position as the elected representatives of
the majority, Cabinet has the power to not approve regulations. Their
responsibilities to the public should not be dismissed out of respect for the
expertise of professionals.
The second argument is that an independent appeal panel will not have the
expertise necessary to either insist that a regulatory body’s decision be
reconsidered, or to replace it with their own. The self-regulated professional
body selects each member of their panel for their individual expertise and
experience, which brings a breadth of knowledge about the profession to the
table. When it comes to panel rulings in a particular profession, who but the
members of that profession are able to make the best decisions Additionally,
who is an independent panel to second-guess the findings of a professional body
The response is simple. As mentioned above, the independent appeal body
should be set up like the HRC. The decisions of the commission are not based
on the individual knowledge or expertise of its members, but rather on the use of
evidence. Expert evidence removes the need for a panel of experts; an expert in
a given area can explain why the entry standards and tests are (or are not)
appropriate and necessary. Other forms of evidence, such as studies, could be
used to evaluate the standards.
Due process should also be incorporated into the legislation. This would
provide the professional self-regulatory body the opportunity to defend its
decisions. It would have the same opportunity as the applicant and the panel to
use evidence in support of its findings.
III. CONCLUSION
The intent of The Fair Registration Practices in Regulated Professions Act is to
ensure that transparent, objective, impartial and fair registration practices are
used in the assessment of a professional’s qualifications. 86 To achieve that
laudable goal, changes must be made to the legislation.
The independent review panel recommended by Justice Thomson should be
part of the proposed legislation. It ensures fairness. And although the argument
85
See e.g. The Health Service Act, R.S.M. 1987, c. H30, s. 6(1); The Dental Health Services
Act, R.S.M. 1987, c. D33, s. 9(1); The Podiatrist Act, S.M. 2001, c. 36, s. 48(2).
86
Supra note 6.

98 Underneath the Golden Boy
exists that to prevent the abuse of self-regulation it is being replaced by stateregulation,
most pieces of legislation that delegate powers to the professional
bodies require amendments to first be approved by the Lieutenant Governor in
Council. In such cases, professional bodies have not been handed a carte
blanche to self-govern, but rather are given limited authority subject to the
approval of those in power. The concept of an independent panel that would
review the decisions of self-regulating bodies is not a new idea; it is the mandate
of the Human Rights Commission to review decisions where there are
discrimination complaints. The use of due process and expert evidence ensures
fairness to both the regulatory bodies and the applicants. If necessary, the
legislation could be phased-in over a two-year period to give the regulatory
bodies the time to amend their codes and policies to comply with the
requirements of the legislation.
As Manitoba’s immigrant and foreign-trained population increases, the issue
of credential recognition is becoming more and more pressing. Newcomers come
to the province not only to start a new life for themselves and their families, but
also to become contributing members of Canadian society. It is in the best
interests of the public to enact effective legislation that guarantees fairness in
access to the regulated professions.

Electronic Employee Monitoring: Potential
Reform Options
MELANIE R. BUECKERT ∗
I. INTRODUCTION
A
by-product of the present information economy is the increased use of
electronic monitoring technologies in the workplace. As a result, legal
reformers are faced with the vexing question of how to best regulate the use of
such technologies, particularly in light of the well-known power imbalance that
characterizes most employment relationships. This article briefly reviews the
existing legislative framework surrounding workplace privacy in Canada and
evaluates several potential reform options. In the end, a combination of legal and
technological measures may be employees’ best protection against the excessive
use of electronic employee monitoring technologies by their employers.
A. Defining Electronic Employee Monitoring
The issue of workplace privacy is, like the larger topic of privacy itself, complex
and multifaceted. One of the ways in which employees’ privacy interests may be
engaged in the workplace is through electronic employee monitoring. For the
purposes of this paper, the three-prong definition of “electronic monitoring”
constructed by Lasprogata, King and Pillay is adopted:
First, it includes an employer’s use of electronic devices to review and evaluate the
performance of employees. For example, an employer may use a computer to retrieve and
review an employee’s email messages sent to and from customers in order to evaluate the
employee’s performance as a customer service representative. Second, it includes
“electronic surveillance” in the form of an employer’s use of electronic devices to observe
the actions of employees while employees are not directly performing work tasks, or for a
reason other than to measure their work performance. For example, an employer may
electronically review an employee’s email messages as part of an investigation of a sexual
∗
Melanie R. Bueckert obtained her LL.B. in 2003, graduating as the gold medalist from the
University of Manitoba’s Faculty of Law. She was called to the Manitoba bar in 2004 and is
currently employed as a legal researcher with the Manitoba Court of Appeal. She earned her
LL.M. from the University of Manitoba in 2008, completing her thesis on electronic employee
monitoring. Her forthcoming text on the law of employee monitoring in Canada will be
published by LexisNexis Canada Inc. in the fall of 2009.

100 Underneath the Golden Boy
harassment complaint. ... Third, electronic monitoring includes an employer’s use of
computer forensics, the recovery and reconstruction of electronic data after deletion,
concealment, or attempted destruction of the data. For example, an employer may use
specialized software to retrieve email messages related to an investigation of alleged theft
of its trade secrets by retrieving and reconstructing email messages sent by an employee
(the alleged thief) to someone outside the company. 1
There are a number of reasons why employers rely on electronic employee
monitoring technologies. 2 These include:
• productivity (including limiting personal use of company resources
(sometimes referred to in relation to the use of computers, internet or
e-mail as ‘cyber-slacking’);
• avoiding legal liability (e.g., for sexual harassment; discrimination;
copyright infringement; defamation);
• compliance with workplace policies (such as acceptable computer,
internet and e-mail usage);
• prevention or detection of ‘moonlighting’ or breaches of confidentiality
(including corporate espionage);
• prevention of or response to unauthorized access (including hacking
into the corporate computer network);
• internet bandwidth regulation and network performance issues;
• network security (which may be threatened by computer viruses and
other malware or phishing scams);
1
Gail Lasprogata, Nancy J. King & Sukanya Pillay, “Regulation of Electronic Employee
Monitoring: Identifying Fundamental Principles of Employee Privacy through a Comparative
Study of Data Privacy Legislation in the European Union, United States and Canada” (2004)
Stan. Tech. L. Rev. 4 at para. 18 [emphasis added]. Throughout this paper, the terms
“monitoring” and “surveillance” are used interchangeably.
2
See e.g. ibid. at para. 3; Kris Klein & Vivian Gates, Privacy in Employment: Control of Personal
Information in the Workplace (Toronto: Thomson Canada Limited, 2005) [Klein and Gates]
at 52; Lisa J. Sotto & Elisabeth M. McCarthy, “An Employer’s Guide to US Workplace Privacy
Issues” (2007) 24 The Computer & Internet Lawyer 1 [Sotto] at 9; Charles Morgan, “Employer
Monitoring of Employee Electronic Mail and Internet Use” (1999) 44 McGill L.J. 849
[Morgan] at 852; E. Anne Uteck, Electronic Surveillance and Workplace Privacy. (LL.M.
Thesis, Dalhousie University Faculty of Law, 2004) [unpublished] at 20-21 [Uteck]; Michael
A. Geist, “Computer and E-mail Workplace Surveillance in Canada: The Shift from
Reasonable Expectation of Privacy to Reasonable Surveillance” (2003) 82 Can. Bar Rev. 151 at
155; Isabelle Lauzon & Linda Bernier, La surveillance de vos employés: où, quand, comment
(Cowansville: Les Éditions Yvon Blais Inc., 2007) at 49-50; Diane Veilleux, “Le droit à la vie
privée – sa portée face à la surveillance de l’employeur” (2000) 60 R. du B. 1 at 37; Shelley
Wallach, “Who’s Info is it Anyway Employees’ Rights to Privacy and Protection of Personal
Data in the Workplace” (2007) 23 Int’l J. Comp. Lab. L. & Ind. Rel. 195 at 211; Barbara
McIsaac, Rick Shields & Kris Klein, The Law of Privacy in Canada, looseleaf (Scarborough:
Carswell, 2000) [McIsaac] at 2.5.4.2; Avner Levin, “Big and Little Brother: The Potential
Erosion of Workplace Privacy in Canada” (2007) 22 C.J.L.S. 197 [Levin, “Brother”] at 217.

Electronic Employee Monitoring 101
• prevention or detection of unauthorized use of computer systems for
criminal or terrorist activities;
• preparation of employer’s defence to lawsuits and/or administrative
complaints (such as discrimination, harassment or termination);
• response to discovery requests in litigation (electronic evidence);
• vehicle or fleet maintenance;
• employee or public safety; and
• other legal obligations.
However, the mere possibility of employee misconduct is insufficient
grounds for electronic monitoring. Many argue that, as in the criminal context,
reasonable grounds for suspicion should be shown before any monitoring is
undertaken, unless concerns for safety or security are such that they justify
indiscriminate monitoring of the workspace. 3
While there is no doubt that a certain level of supervision is inherent in the
employment relationship, “There is a qualitative difference between traditional
surveillance and electronic surveillance.” 4 This difference often manifests itself in
the intensity of the surveillance. While a human supervisor can walk the shop
floor and monitor the employees, such surveillance is neither constant nor
infallible. Furthermore, the supervisor’s memory is not a computer databank,
which can be accessed years later to retrieve information that would otherwise
never have been captured or remembered about an employee.
This inherent difference between traditional and electronic surveillance is
evinced by another common problem related to the electronic monitoring of
employees, namely, the subsequent use of information for secondary purposes.
The most eloquent explanation of this conundrum is offered by Morin, after
citing examples involving a cashier operating a cash register, a truck driver’s
location being tracked by satellite and a telephone operator’s calls being
monitored:
3
Francis P. Durnford, “Keeping Tabs: The Employer’s Right to Monitor Employee Internet and
E-mail Activity within the Privacy Law Framework” (2007) 17 E.L.L.R. 65. (“[T]he presence of
online distractions such as Facebook are simply not reason enough for employee monitoring...”,
at 68.) See also Fernand Morin, “Nouvelles technologies et la télésubordination du salarié”
(2000) 55 R.I. 725. (“Le risque de quelques maladresses ou l’existence d’un doute relatif à une
malversation de la part de certains salariés ne sauraient justifier une surveillance kafkaïenne de
tous, partout et à flux continu.” at 740)
4
Morgan, supra note 2 at 901.

102 Underneath the Golden Boy
Ces saisies parallèles des données, ces produits dérivés et les observations pratiques que
l'on peut en dégager s'effectuent à l'instar de l'empreinte dans la neige du marcheur: il
pose le pied pour avancer et non pas pour y laisser une trace, néanmoins elle s'y trouve... 5
Ontario’s Information and Privacy Commissioner has made use of a similar
analogy. Like the popular concept of a “carbon footprint”, she refers to the
notion of one’s “digital footprint”, encompassing such things as the websites one
visits and one’s cell phone usage and credit card activity. 6 It is the path of these
digital footprints which employers track using electronic employee monitoring
techniques.
B. Technologies Involved in Electronic Employee Monitoring
A number of technologies may be used to electronically monitor employees. The
first generation of these tools enabled audio and video surveillance. Employers
might monitor their employees’ telephone calls, or install video cameras to scan
the workplace. As the dynamics of work have changed, computer, internet and
e-mail monitoring have come to the fore. The flexibility that new technologies
provide to the workforce also means that monitoring employees’ locations
become important. In mobile workplaces, location awareness technologies like
global positioning systems (“GPS”) and radio frequency identification (“RFID”)
are used to track workers’ movements. Even in more traditional, non-mobile
workplaces, many companies use access cards to monitor their employees’
activities. As well, certain workplaces have integrated biometric systems into
their access control regimes. Biometrics may also be used to streamline payroll or
point-of-sale systems. 7
Variations and combinations of these technologies are used in a wide variety
of workplaces across Canada. It is for this reason that legal reforms regarding
electronic employee monitoring are worthy of consideration, particularly given
the state of the existing legal regime.
5
Morin, supra note 3 at 732. See also Levin, “Brother”, supra note 2 at 218 and Avner Levin et
al., Under the Radar The Employer Perspective on Workplace Privacy (June 2006) at 3,
online: Ryerson University
.
6
Ann Cavoukian, “Technology, Privacy and the Law: The Challenges Ahead” (2006) 7 Internet
& E-Commerce Law in Canada 57.
7
Biometric information is derived from an individual’s unique measurable biological
characteristics, including behavioural and physiological biometrics, and may be used to identify
or verify the identity of an individual.

Electronic Employee Monitoring 103
C. Sources of Privacy Law in Canada
Canadian privacy law does not flow from a single source. Instead, it more closely
resembles a patchwork quilt, with different laws at the federal and provincial
levels and in the public and private spheres. 8 At the highest level, the Canadian
Charter of Rights and Freedoms (Charter) provides a measure of privacy
protection to individuals and government employees vis-à-vis the state. 9 Public
sector privacy legislation is generally linked to the notion of access to
information. 10 The federal government has also enacted certain specific measures
to combat the interception of private communications, which may be found in
the Criminal Code. 11 However, the consent defence attached to these offences
essentially renders them impotent in the employment context.
With respect to the private sector, the effectiveness of the federal
government’s Personal Information Protection and Electronic Documents Act
(PIPEDA) 12 in protecting privacy in the workplace is hampered by Canada’s
constitutional division of powers between the federal and provincial levels of
government. 13 Given that labour and employment are matters under provincial
jurisdiction, this federal legislation only extends to employees of federally
8
An in-depth review of Canadian privacy law is beyond the scope of this paper. For further
background, see McIsaac and Klein, supra note 2.
9
Part 1 of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982,
c. 11. Section 32 of the Charter delineates the boundaries of its application. Some of the
leading cases on privacy under the Charter are Hunter v. Southam Inc., [1984] 2 S.C.R. 145;
R. v. Dyment, [1988] 2 S.C.R. 417; R. v. Duarte, [1990] 1 S.C.R. 30; Thomson Newspapers
Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices
Commission), [1990] 1 S.C.R. 425; R. v. Plant, [1993] 3 S.C.R. 281; R. v. Sharpe, [2001] 1
S.C.R. 45; and R. v. Tessling, [2004] 3 S.C.R. 432.
10
Privacy Act, R.S.C. 1985, c. P-21; Freedom of Information and Protection of Privacy Act,
R.S.B.C. 1996, c. 165; Freedom of Information and Protection of Privacy Act, R.S.A. 2000, c.
F-25; Freedom of Information and Protection of Privacy Act, S.S. 1990-91, c. F-22.01; The
Freedom of Information and Protection of Privacy Act, S.M. 1997, c. 50; Freedom of
Information and Protection of Privacy Act, R.S.O. 1990, c. F.31; An Act Respecting Access to
Documents Held by Public Bodies and the Protection of Personal Information, R.S.Q. c. A-2.1;
Protection of Personal Information Act, S.N.B. 1998, c. P-19.1; Freedom of Information and
Protection of Privacy Act, S.N.S. 1993, c. 5; Freedom of Information and Protection of Privacy
Act, R.S.P.E.I. 1988, c. F-15.01; Access to Information and Protection of Privacy Act, S.N.L.
2002, c. A-1.1; Access to Information and Protection of Privacy Act, R.S.Y. 2002, c. 1; Access
to Information and Protection of Privacy Act, S.N.W.T. 1994, c. 20.
11
R.S.C. 1985, c. C-46, ss. 184, 342.1(1)(b).
12
S.C. 2000, c. 5.
13
Constitution Act, 1867 (U.K.), 30 & 31 Vict., c. 3, reprinted in R.S.C. 1985, App. II, No. 5, ss.
91, 92.

104 Underneath the Golden Boy
regulated works, undertakings and businesses. 14 Complementary provincial
legislation is therefore required to furnish other employees with a similar level of
privacy protection. 15
Before these types of comprehensive data protection regimes were
implemented, statutory invasion of privacy torts were introduced in several
provinces. 16 However, due to the often prohibitive cost of litigation, reliance has
not often been placed upon these statutes. Also, as with the Criminal Code
provisions mentioned above, the broad consent defence contained in these
statutes renders them effectively inapplicable to the workplace context. 17
Similarly, there has been limited development of the common law of privacy in
Canada. 18
D. Summary of the Manitoba Position
In Manitoba, as elsewhere in Canada, Charter privacy protections are available
to government employees. Public sector freedom of information and protection
of privacy legislation has also been in place for some time. 19 A similar regime
applies to trustees of personal health information. 20 PIPEDA applies to employees
of federal works, undertakings and businesses. While substantially similar private
14
Supra note 10, s. 4(1)(b). The phrase “federal work, undertaking or business” is defined in s.
2(1).
15
Three provinces have enacted private sector privacy legislation that is substantially similar to
PIPEDA (supra, note 10), namely, British Columbia (Personal Information Protection Act,
S.B.C. 2003, c. 63 [BC PIPA]), Alberta (Personal Information Protection Act, S.A. 2003, c. P-
6.5 [AB PIPA]) and Quebec (An Act Respecting the Protection of Personal Information in the
Private Sector, R.S.Q., c. P-39.1). Ontario’s health privacy legislation, Personal Health
Information Protection Act, 2004, S.O. 2004, c. 3, Sch. A, has also been recognized as
substantially similar to PIPEDA, but it is not relevant for the purposes of this paper.
16
Such legislation exists in four of Canada’s common law provinces, namely, British Columbia
(Privacy Act, R.S.B.C. 1996, c. 373), Manitoba (The Privacy Act, R.S.M. 1987, c. P125 The
Privacy Act), Newfoundland and Labrador (Privacy Act, R.S.N. 1990, c. P-22) and
Saskatchewan (Privacy Act, R.S.S. 1978, c. P-24). These initiatives were inspired by the work
of the Uniform Law Conference of Canada .
17
See e.g. The Privacy Act, ibid., s. 5(a).
18
See e.g. Geoffrey England, Individual Employment Law (Toronto: Irwin Law, 2000) at 139 and
Geoffrey England & Roderick Wood, Employment Law in Canada, 4 th ed., looseleaf (Markham:
LexisNexis Butterworths, 2005) at §8.271.
19
The Freedom of Information and Protection of Privacy Act, supra note 10.
20
The Personal Health Information Act, S.M. 1997, c. 51.

Electronic Employee Monitoring 105
sector privacy legislation has been proposed, it has not yet been implemented. 21
Some limited protection of employees’ personal information is provided by The
Personal Investigations Act. 22 However, that Act defines a “personal
investigation”, in part, as “any inquiry by any person to obtain factual or
investigative information from any source other than the subject with a view to
entering into or amending an agreement with the subject for credit, insurance,
employment or tenancy... .” 23 For this reason, it does not appear that electronic
employee monitoring conducted during the course of the employment
relationship, without a view to amending the existing employment agreement,
would be affected by this legislation.
E. Options for Reform
Thus, as can be seen, there is a large gap in the legal protections currently
available to employees subjected to electronic monitoring by their employers in
Canada. Reform is required to remedy this gap in employees’ privacy protections.
There are numerous options that could be explored, namely: (1) employee
privacy education campaigns and greater industry self-regulation; (2) enactment
of substantially similar private sector privacy laws in all provinces, modeled after
those in British Columbia, Alberta and Quebec; (3) amendment of existing
employment standards legislation to address the issue of electronic employee
monitoring; (4) enactment of stand-alone surveillance legislation, governing
employees as well as all other members of society; and (5) amendment of the
Criminal Code to specifically address the issue of electronic employee
monitoring. Each of these options will be examined in turn.
1. Improved Employee Education and Greater Industry Self-Regulation
The least drastic reform option would involve a public education campaign,
explaining to employees that they have the ability to bargain for increased
privacy protections in the workplace. The primary drawback associated with this
less aggressive approach is that it does little to alter the power imbalance
characteristic of most employment relationships. Those employees who are
already able to negotiate privacy protections on their own behalf will not likely
be greatly assisted by such a campaign; moreover, it would not likely alter the
position of employees who currently lack the bargaining power to seek privacy
protections from their employers.
21
Bill 216, The Personal Information Protection and Identity Theft Prevention Act, 2nd Sess.,
39th Leg., 2007. In the interests of full disclosure, it should be noted that the author was
involved with the drafting of Bill 216
22
R.S.M. 1987, c. P34.
23
Ibid., s. 1.

106 Underneath the Golden Boy
Greater industry self-regulation is unlikely, except as a last-ditch attempt to
avoid the imposition of more stringent legislative provisions or as a prophylactic
measure against increased unionization driven by employee privacy concerns. As
neither of these scenarios currently exists in Canada, it does not appear that
greater industry self-regulation will occur in the near future.
2. The Role of Unions
Given the current state of the law regarding electronic employee monitoring in
Canada, unions have the opportunity to play an important role in upholding
employees’ privacy interests in the workplace. 24 Whether or not they will do so,
or will succeed in doing so, is still an open question. Unfortunately, there does
not appear to be a great deal of legal scholarship on this particular aspect of
workplace privacy in Canada. One of the most thorough studies of the issue was
undertaken by Kiss and Mosco in 2004. They searched the Human Resources
and Skills Development Canada database, which contains 5 495 representative
collective agreements from across Canada, in order to determine the extent to
which such agreements included express provisions regarding electronic
surveillance—their research revealed 76 agreements. 25
Their work followed-up on a similar study conducted in 1995 which showed
virtually no response by unions to electronic surveillance practices in the
workplace. As such, they concluded that “some progress is being made” 26 but
“developments in this area are slow.” 27 Kiss and Mosco adopted the following
hypothesis regarding the limited number of collective agreements containing
provisions that dealt with electronic surveillance uncovered by their research:
A number of reasons could explain the limited response by Canadian unions [to
electronic surveillance practices in the workplace]. The relative decline of the industrial
economy in which unions thrived has challenged the very survival of numerous unions in
North America. The growth of a large temporary workforce and of companies such as
Wal-Mart that are skilled in the use of new technologies to cut costs has posed serious
problems for traditional unions. Like their American counterparts Canadian unions have
had to focus on fundamental issues like job security, wages, and organizing. Important as
privacy is, and most unions recognize the problem that surveillance poses, unions have
chosen to place it lower on the list of policy priorities. Furthermore, although this is
changing, electronic surveillance and privacy have historically been applied to women
workers such as telephone operators and data entry workers, whose limited power in
24
Simon Kiss & Vincent Mosco, “Negotiating Electronic Surveillance in the Workplace: A Study
of Collective Agreements in Canada” (2005) 30 Canadian Journal of Communication 549.
(“[C]ollective bargaining offers unions a wide range of options to structure, limit, influence,
and control...” the practice of electronic employee monitoring, at 562).
25
Ibid. at 550. This translates to approximately 1.4%.
26
Ibid. at 555.
27
Ibid. at 553.

Electronic Employee Monitoring 107
unions has made it all the more difficult to give surveillance a more prominent place on
the trade unions[’] agenda. 28
Further:
Limited attention to surveillance may be a function of surveillance’s lower status in the
hierarchy of trade union and worker bargaining priorities. It is not implausible to imagine
trade unions conceding surveillance measures in return for job and wage protection.
Alternatively, it may be that the pace of technological change is outstripping union ability
to integrate these changes into bargaining processes. 29
Kiss and Mosco found that public sector unions had been more successful in
obtaining collective agreement protection from electronic monitoring than their
private sector counterparts. As they observed, “[t]his is not a surprising finding.
First, the Canadian public sector boasts a higher unionization rate than the
private sector. Second, postsecondary education unions have particular concerns
about privacy and anti-surveillance measures that contribute to the observed
predominance of public-sector unions.” 30
The two most represented national unions in the sample were the Canadian
Auto Workers (C.A.W.) and the Canadian Union of Public Employees
(C.U.P.E). University faculty unions made up the third largest group of unions
with surveillance-related collective agreement provisions. Again, this finding is
not surprising, as C.A.W. and C.U.P.E. are two of the three largest unions in
Canada. 31 In addition, Kiss and Mosco found that “some of the strongest
language stems from agreements between unions as employers and unions that
represent the union’s employees.” 32
Kiss and Mosco discerned four types of surveillance-related clauses, which
they described as “low privacy protection”, 33 “moderate privacy protection”, 34
“high privacy protection” 35 and “worker-friendly surveillance.” 36 The low
category “included cases where the employer was explicitly empowered to engage
in surveillance activities or where the only restriction on surveillance was a
28
Ibid. at 555-556.
29
Ibid. at 561.
30
Ibid. at 556, which includes a table that sets out their findings by language and public versus
private sector.
31
Ibid., which includes a table that sets out their findings by industrial sector.
32
Ibid. at 560.
33
Ibid. at 558.
34
Ibid. at 558.
35
Ibid. at 558.
36
Ibid. at 558.

108 Underneath the Golden Boy
matter of informing employees.” 37 The moderate level included clauses that
accepted existing surveillance practices but sought to impose some limits, “such
as a halt to further expansion of surveillance activities.” 38 Generally speaking,
moderate provisions accepted electronic monitoring in general, but sought to
prevent its use for keeping track of individual workers’ pace or productivity. The
high category included clauses that severely limited surveillance practices, most
often only to the prosecution of criminal offences. These clauses were usually
structured as a guarantee that surveillance would not be used, except in
narrowly defined situations. The worker-friendly category captured collective
agreement language, which permitted surveillance for the purposes of worker
safety and protection of their property. 39
Whether a particular provision engenders worker-friendly surveillance
would seem to be open for debate. Indeed, with slightly different drafting or
“spin”, such a provision could well constitute a low level of worker property
protection. In addition, initially permitting surveillance under the guise of
worker safety or protection may make it easier for surveillance to be used for
other purposes in the future (i.e., may facilitate ‘function creep’). From the
perspective of protecting workers’ privacy, it is not at all clear that these types of
“worker friendly” provisions are indeed in the long-term interests of employees,
or whether they are even objectively comparable with other forms of collective
agreement provisions on the topic of electronic surveillance.
After their extensive review of these collective agreements, Kiss and Mosco
summarized the approaches that may be taken to electronic monitoring in
collective agreements, in the following manner:
• Unions can allow surveillance practices and defer to management.
• Unions can insist on signage in the workplace, informing employees and
customers of the presence of surveillance technologies.
• Unions can require that the employer inform the union about the
introduction of surveillance practices.
37
Ibid. at 558.
38
Ibid. at 558.
39
Ibid. at 558-559, which includes a table showing the breakdown of the collective agreements by
category. Of the 76 agreements classified, 32 fell within the moderate category while 24 were
captured by the high category, together combining for nearly three-quarters of all of the
agreements reviewed. There were five worker-friendly agreements, which represented less than
10% of the total sample. As Kiss and Mosco note at 561, “Although surveillance practices can
be put in place to protect the interests of employees, the overwhelming majority of collective
agreement clauses on the matter involved unions attempting to restrict employers’ use of
electronic surveillance practices.”

Electronic Employee Monitoring 109
• Surveillance practices can be prohibited or prohibited save for criminal
investigations.
• Unions can insist that surveillance technologies be put in place to
protect workers’ health, safety, and property.
• Unions can prevent data gathered by electronic means from being used
in productivity evaluation or criminal proceedings.
• Unions can require that information above and beyond what was
gathered by electronic means be used in any disciplinary or criminal
proceeding.
• Unions can require that employees be informed when they will be
monitored electronically or unions can require the consent of
individuals before surveillance can take place. 40
Kiss and Mosco reached the eminently reasonable and arguably self-evident
conclusion that “there is reason to expect growth in the number of collective
agreements covering electronic surveillance” in the coming years. 41 It would
seem equally reasonable to assert, based on their research, that such agreements
will continue the trend of predominantly favouring moderate or high levels of
employee privacy protection, perhaps in even greater percentages. If other
methods of workplace privacy law reform do not move forward, more employees
may turn to unions to protect themselves.
3. Enactment of Substantially Similar Private Sector Privacy Legislation in All
Provinces
Another potential avenue for reform would be the enactment of substantially
similar private sector privacy legislation in all of the provinces. While it would
involve the passage of new legislation, this option for reform would require the
least amount of political effort, as the necessary templates have already been
developed in British Columbia, Alberta and Quebec. 42 For instance, Manitoba’s
Bill 216 borrows heavily from Alberta’s private sector privacy legislation. 43
While private sector legislation addressing electronic employee monitoring
need not be substantially similar to PIPEDA in other respects, if it were
broadened enough to cross the “substantially similar” threshold, this type of
reform would have the added benefit of simplifying the privacy law regime to
40
Ibid. at 561.
41
Ibid. at 562.
42
Supra note 15.
43
Supra note 21.

110 Underneath the Golden Boy
which private sector organizations are subject. 44 Instead of having a federal law
regulating consumer privacy and a provincial law regulating employee privacy, a
substantially similar provincial private sector privacy law could regulate both
consumer and employee privacy.
This approach to reform has the additional benefit of addressing all aspects
of employee privacy, rather than only targeting electronic monitoring. It would
also avoid the pitfall of being technology-specific and would likely be drafted
broadly enough so as to be capable of anticipating and expanding to meet future
challenges. 45 If legislation is tied to specific forms of technology, then it must be
constantly updated to address new technological developments. In this way, the
law is relegated to a reactive role, always trying to keep pace with advances in
technology. While no legislation can accurately predict and regulate future
developments, more broadly drafted proactive legislation can provide guidance
and some degree of certainty when new technologies are introduced. While
technological developments may require legislative amendment, at least the
framework for addressing the new technology would already be clearly
established.
The primary difficulty associated with the enactment of private sector
privacy legislation relates to enforcement. To date, it would appear that an
ombudsperson-type role has been accepted as appropriate in the context of the
access to information regime. This model has been extended into the data
protection realm. While accessibility is a mandatory component of any effective
privacy protection regime, it is questionable whether the existing ombudsperson-
44
According to s. 26(2)(b) of PIPEDA, if a province enacts substantially similar legislation,
PIPEDA ceases to apply in that province.
45
A prime example of piecemeal technology-specific legislation is the RFID measures
implemented in several American states. Several American states have passed legislation
banning the forced implantation of RFID chips into employees, in response to certain
employers making such implantation a mandatory condition of employment. Wisconsin, North
Dakota and California have all passed laws prohibiting forced RFID implantation. See, Anita
Ramasastry, “Outlawing Employer Requirements that Workers Get RFID Chip Implants: Why
It's the Right Thing for States to Do, Although Current Statutes May Need Refinement” (16
October 2007), online: Writ .
Voluntary implantation is still permissible. The state of Washington has since passed a broader
bill aimed at RFID technology more generally. See, Electronic Communication Devices, c. 138,
2008 Wash. Acts . At the time of writing, Alaska and New
Hampshire were considering similar legislation. See, “Washington Passes First Radio Frequency
ID Law” Adlaw (15 May 2008), online: Reed Smith
. See also “2008 Privacy Legislation
Related to Radio Frequency Identification” (3 July 2008), online: National Conference of State
Legislatures .

Electronic Employee Monitoring 111
based model is best suited to this area of the law. At the very least, privacy
commissioners should be granted the power to make orders that are enforceable
like court orders. 46 So long as legislators are unwilling to provide privacy
commissioners and their staff with these types of enforcement powers, other
intermediate reform measures must be considered.
4. Amendment of Existing Employment Standards Regimes
In answer to the enforcement concerns raised by the reform option of enacting
substantially similar private sector privacy legislation, the main benefit of
achieving reform through amendments to existing employment standards
legislation is that enforcement mechanisms are already well-established under
such regimes. While additional resources would be required to properly operate
and maintain such an expanded system, the basic structure for making
complaints and appealing decisions is already in place. Like the possibility of
enacting private sector privacy legislation, this reform option would preserve
accessibility, as it relies upon an informal administrative process rather than
expensive litigation.
The main problem with this reform option is that employment standards
officers are not workplace privacy experts. While they could develop this
expertise over time, it is debatable whether privacy, which some view as a
fundamental human right, is properly adjudicated in this type of practical,
pragmatic forum. In order to counteract this criticism, any legal reforms along
these lines would have to ensure that sufficiently broad remedial powers were
granted to employment standards personnel, to make systemic remedies similar
to those associated with human rights regimes available to solve these types of
workplace privacy problems.
5. Enactment of Stand-alone Surveillance Legislation
Another possibility for reform is the enactment of stand-alone surveillance
legislation. Like private sector privacy legislation, this type of surveillance statute
would not necessarily be confined to the employment context. Specifically, a
provincial government could pass legislation that defines surveillance, indicates
that surveillance without consent is prohibited except in certain circumstances,
and sets out those exceptions. It might even distinguish between covert and
46
This power has been given to the Information and Privacy Commissioners of British Columbia
and Alberta, but not the federal Privacy Commissioner. See, BC PIPA (supra note 14) Part 11;
AB PIPA (supra note 14), Part 5 (particularly s. 52(6)); PIPEDA (supra note 10), Part 1,
Division 2.

112 Underneath the Golden Boy
overt surveillance. This is the reform approach that has been advocated in
Australia. 47
If such legislation were to be implemented in Canada, useful guidance could
be obtained from the existing Australian legislation on this subject. 48 For
instance, New South Wales’ Workplace Surveillance Act 2005 defines
“surveillance” as follows:
“[S]urveillance” of an employee means surveillance of an employee by any of the
following means:
(a) “camera surveillance”, which is surveillance by means of a camera that monitors or
records visual images of activities on premises or in any other place,
(b) “computer surveillance”, which is surveillance by means of software or other
equipment that monitors or records the information input or output, or other use, of a
computer (including, but not limited to, the sending and receipt of emails and the
accessing of Internet websites),
(c) “tracking surveillance”, which is surveillance by means of an electronic device the
primary purpose of which is to monitor or record geographical location or movement
(such as a Global Positioning System tracking device). 49
The same section defines “surveillance information” to mean “information
obtained, recorded, monitored or observed as a consequence of surveillance of
an employee”. Subsection 5(1) confirms that the phrase “at work” is meant to be
construed liberally:
For the purposes of this Act, an employee is “at work” for an employer when the
employee is:
(a) at a workplace of the employer (or a related corporation of the employer) whether
or not the employee is actually performing work at the time, or
(b) at any other place while performing work for the employer (or a related corporation
of the employer).
The legislation goes on to address the notification of employees regarding
workplace surveillance, 50 prohibited surveillance, 51 as well as covert
surveillance. 52
One potential pitfall with this type of legislative reform is that, of the reform
options identified herein, it is the most susceptible to losing its technological
47
See e.g. New South Wales Law Reform Commission, Surveillance: An Interim Report (Sydney:
New South Wales Law Reform Commission, 2001) and Victorian Law Reform Commission,
Workplace Privacy: Final Report (Melbourne: Victorian Law Reform Commission, 2005).
48
See e.g. Surveillance Devices Act 1999 (Vic.), as am. by Surveillance Devices (Workplace
Privacy) Act 2006 (Vic.); Workplace Surveillance Act 2005 (N.S.W.); Surveillance Devices
Act 2007 (N.S.W.).
49
Ibid., s. 3.
50
Part 2, ss. 9-14.
51
Part 3, ss. 15-18.
52
Part 4, ss. 19-38.

Electronic Employee Monitoring 113
neutrality. In drafting any such regime, care would have to be taken to keep the
definition of surveillance as broad as possible, without being tied to existing
technologies.
Furthermore, it is uncertain whether this form of legislative initiative would
adequately address the privacy implications of biometrics. If this path to
legislative reform is followed, companion legislation regarding the use of
biometrics in the workplace (or more generally) may also have to be
implemented. 53
6. Additional Criminal Code Provisions
One final potential avenue for reform is the enactment of specific Criminal Code
provisions to address electronic employee monitoring. However, given the
lacklustre track record of the existing Criminal Code provisions regarding the
interception of electronic communications, it seems unlike that this would be a
fruitful law reform exercise. 54 While new provisions could be added without
broad consent defences, specifically for the purpose of protecting employees’
privacy, the fact that enforcement would remain a public matter would likely
deprive affected employees of any significant personal remedy. However, the
threat of a criminal prosecution might be the necessary incentive for employers
to take employee privacy issues seriously.
A further potential difficulty with this type of reform is that any such
amendments might be seen as colourable attempts on the part of the federal
government to regulate employment matters, which are properly within the
jurisdiction of the provinces. As such, this type of legislative provision could be
open to a constitutional challenge. 55
53
A useful starting point for such legislation may be found in ss. 44 and 45 of Quebec’s Act to
establish a legal framework for information technology, R.S.Q. c. C-1.1. However, the
availability of a consent defence should be re-examined in the workplace context.
54
The American experience with similar legislation, the Electronic Communications Privacy Act
of 1986, P.L. 99-508, confirms that this is not a viable path to reform. See e.g. Klein and Gates,
supra note 2 at 53-55; Karen Eltis, “The Emerging American Approach to E-mail Privacy in the
Workplace: Its Influence on Developing Caselaw in Canada and Israel: Should Others Follow
Suit” (2003) 24 Comp. Lab. L. & Pol’y J. 487; Paul M. Schwartz & Joel R. Reidenberg, Data
Privacy Law (Charlottesville: Michie, 1996) at 374-375; Lasprogata, supra note 1; Sotto, supra
note 2.
55
In fact, Quebec has already challenged the constitutional validity of PIPEDA, supra note 10.
See Quebec Order-in-Council No. 1368-2003-12-30 (English version available online at
http://www.steptoe.com/assets/ attachments/603.pdf) dated December 17, 2003; the Quebec
Court of Appeal file number is 500-09-014067-037. A decision has not yet been rendered in
the matter.

114 Underneath the Golden Boy
II. CONCLUSION
Given the limited protection presently granted to employees’ privacy interests, it
would seem that any effective reforms will require major legislative intervention,
not just incremental judicial change. Three viable avenues are (1) the
enactment of private sector privacy laws in all of the provinces (which may or
may not be substantially similar to PIPEDA 56 ), which specifically address the
topic of electronic employee monitoring; (2) the inclusion of privacy protections
in existing employment standards legislation across Canada; 57 or (3) the
enactment of stand-alone surveillance legislation.
Each of these three potential initiatives emanates from a different core.
Private sector privacy legislation places the emphasis on privacy; amendments to
existing employment standards regimes would merely be an outgrowth of
employment law; and the enactment of stand-alone surveillance legislation
would be primarily focused on the protection of individuals from the evils of
surveillance. Given that any such legislative reforms would have to be politically
motivated, the trend of public opinion and the impetus for the reform would
likely dictate which of these three models was chosen.
Regardless of which route is taken, the accessibility of the regime must be
ensured and effective remedial powers given to its enforcers. The
implementation of additional unjust dismissal regimes or the creation of
specialized labour courts could assist in achieving both of these objectives. As
Uteck observes:
What is at stake in the privacy debate is not so much the claim to protect the individual
employee from privacy invasions, as the establishment of ground rules and limits of
acceptable institutional behaviour in the context of rapid changes in the technologies of
surveillance and information technology. 58
Guidance in this task may be taken from international developments,
including the legislative approaches to electronic employee monitoring adopted
by other countries. For instance, Canadians should learn from the United States’
experience with the ECPA and its tendency to implement technology-specific,
reactive legislation. Conversely, the in-depth surveillance studies undertaken by
56
Supra, note 12.
57
As England observes in Individual Employment Law, supra note 18 at 139: “Canadian
employment standards acts currently do not contain comprehensive safeguards against undue
interference by employers with the privacy of their employees. This situation may change if
employers are perceived to be abusing the various technologies that potentially create such a
risk, such as video monitoring, computerized files, and electronic and voice mail.”
58
Uteck, supra note 2 at 183. This is another reason why piecemeal technology-specific reforms
should be avoided.

Electronic Employee Monitoring 115
law reform commissions in Australia, and the resulting legislative initiatives,
should receive careful consideration if similar legislation is advocated in Canada.
If legal reformers fail to pursue these options, employees will be required to
either accept violations of their privacy in the workplace or rely on technological
measures to combat such incursions. This would mean that more tech-savvy
employees, or at least those with access to greater resources, would benefit from
better workplace privacy protections. This inequitable result could be avoided
through law reform, which would serve to level the workplace privacy playing
field.
Nevertheless, lawyers ought to consider the role to be played by such
privacy protection technologies when drafting legislation dealing with electronic
employee monitoring. For instance, a workplace surveillance law could state that
an employee’s use of privacy protection technologies (such as anonymous proxy
servers or encryption programs) does not, by itself, constitute grounds for
enhanced surveillance or scrutiny of their activities. Such legislation might also
include a non-retaliation clause, similar to whistleblower protections contained
in other legislation, for employees who chose to arm themselves with
technological protections against privacy invasions in the workplace.
Generally speaking, law reform initiatives should attempt to see beyond the
latest technological developments to assist in crafting laws that anticipate future
technological advancements, rather than relegating law reform to a reactive
‘catch-up’ exercise. At the same time, in some cases, law reform objectives may
be more quickly and easily obtained through reliance on appropriate
technologies. With respect to electronic employee monitoring, an appropriate
fusion of legal reform and privacy protection technologies may be the ultimate
solution to this complex legal problem.

116 Underneath the Golden Boy

The Good Samaritan Protection Act:
You Can Lead a Horse to Water, but You Can’t
Make it Drink
KATHRINE BASARAB
I. INTRODUCTION
W
hen faced with an emergency, many people fear making a bad situation
demonstrably worse. The idea that “if I do nothing, it’s not my fault if it
gets worse” is imbedded in the minds of many Manitobans—and rightly so.
There is no positive duty for persons to act when faced with a crisis. What
Manitobans are afraid of is the common-law principle that governs assistance in
situations where a person has already suffered an injury. Though all law students
learn this common law principle in their first year at law school, there may be
people unfamiliar with the concept, and it bears repeating here. Individuals who
provide assistance in emergencies can be held liable if their attempt to provide
relief exacerbates existing injuries or inflicts new injuries. 1 While would-be
rescuers may not turn their mind to the fact at the time, if they make the
situation worse, they could be sued for negligence and damages could be
awarded to the extent that they made an existing medical emergency worse.
Enter The Good Samaritan Protection Act. 2 Legislators specifically designed
this bill to provide partial immunity from liability to those providing emergency
assistance, except in cases of gross negligence. Both the Liberal Party of
Manitoba (Liberal(s)) and the New Democratic Party of Manitoba (NDP) went
to great pains to pass Good Samaritan legislation. After some negotiation,
legislators resolved that there would be bipartisan movement on the bill
sponsored by the NDP member, and Bill 214 ultimately became law on 7
December 2006. 3 There are, however, serious questions as to whether such
legislation was truly necessary. This paper will provide a history of Manitoba’s
1
Manitoba, Legislative Assembly, Debates and Proceedings, Vol. LVIII No. 14A (5 December
2006) at 487. [Debates (5 December 2006)]
2
C.C.S.M. c. G65.
3
Ibid.

118 Underneath the Golden Boy
Good Samaritan legislation, take the reader from the bill’s inception through
royal assent, as well as provide arguments that show Manitoba already had laws
in place that dealt quite well with the liability problems that could arise in
situations where volunteers offer well-intentioned, but misguided first aid.
II. BACKGROUND
The Good Samaritan legislation has a bifurcated history in the Manitoba
Legislature. Both the Liberals and the NDP introduced virtually identical
legislation, and both parties were intent on having their respective bills enacted
into law. Both political parties, albeit through different channels, arrived at a
conclusion that Good Samaritan legislation was necessary for Manitoba.
However, as is frequently the case, the bill sponsored by the government, rather
than the bill sponsored by a private member, is the piece of legislation that
actually becomes law.
A. Liberal History
Leah Ross, one-time editor of Underneath the Golden Boy and current associate
at Aikins, MacAulay, & Thorvaldson LLP, worked as Liberal Leader Dr. Jon
Gerrard’s executive assistant. She recalled learning about the common law
principle regarding liability in situations where first-responders exacerbate an
existing problem from her first year law course in Torts and Compensation
Systems. 4 Specifically, Professor Linda Vincent made reference to the fact that
many other provinces had Good Samaritan legislation that protected people
from liability in situations where they provided first aid or emergency assistance
to someone in distress, and that there was no parallel legislation in Manitoba on
the issue. 5
Ms. Ross researched the issue on behalf of the Liberal Party of Manitoba and
drafted Bill 201—The Good Samaritan Act with the assistance of other Liberal
staff members. In drafting Bill 201, all relevant parallel legislation was compared
and studied. Ms. Ross discovered that Good Samaritan legislation exists in seven
provinces and two territories in Canada, 6 and all 50 states in the United States of
4
Telephone interview of Leah Ross (20 November 2007). [Ross 1]
5
Ibid.
6
See Good Samaritan Act, R.S.B.C. 1996 c. 172; Emergency Medical Aid Act, R.S.A. c. E-7;
The Emergency Medical Aid Act, R.S.S. 1978, c. E-8; Good Samaritan Act, S.O. 2001, c. 2;
Volunteer Services Act, R.S.N.S., 1989, c. 497; Emergency Medical Aid Act, R.S.N.L. 1990, c.
E-9; Volunteers Liability Act, R.S.P.E.I., c. V-5; Emergency Medical Aid Act, R.S.Y. 2002, c.
70; Emergency Medical Aid Act, R.S.N.W.T. 1998, c. E-4.

The Good Samaritan Protection Act 119
America. 7 In addition, some jurisdictions impose positive duties on persons to
assist in an emergency. Quebec, for example, is the only Canadian province
where there is a duty imposed on everyone to help a person in peril. 8 The
Quebec Charter of Human Rights and Freedoms 9 contains a provision that
imposes an obligation to render aid if the rescuer can accomplish it without
serious risk to the Good Samaritan or a third person. In similar fashion, the
Quebec Civil Code 10 obligates every person to act as a bon père de famille (a
reasonably prudent person). Failure to act prudently would amount to fault and
lead to a legal remedy for the victim. 11 The bill was drafted and Dr. Gerrard
went about trying to get the bill passed through the legislature.
B. NDP History
The story of Mr. David Munro brought the need for “Good Samaritan”
legislation to St. James-Assiniboia MLA Bonnie Korzeniowski’s attention. 12 Mr.
Munro, former Boeing employee, and resident of Gimli, died of a massive heart
attack while at work in the summer of 2004. His co-workers looked on
helplessly, because none of them was in a position to assist Mr. Munro in his
final moments of life. Because of this tragedy, Boeing undertook to train as many
staff as possible in cardiopulmonary resuscitation (“CPR”). A total of 42
employees took the training, to prevent future tragedies at the work place. 13
Boeing Industries went even further, purchasing an automatic external
defibrillator (“AED”) and training employees in how to use the device.
Problems arose with the installation of the AED device. Employees were
hesitant to use the device, and had questions about liability in situations when
the device would be employed. Also, the cost of insurance for the device was
prohibitively expensive for all but the biggest of industries. 14 The insurance cost
of the lone AED device at the Boeing factory was several hundred thousand
dollars. 15 These concerns were voiced to Ms. Korzeniowski by one of Boeing’s
7
Ross 1, supra note 4.
8
Memorandum from Leah Ross, “Arguments Against Good Samaritan Legislation” Good
Samaritan Act Memo, Liberal Caucus files, 2005, at 1 [Ross 2].
9
Charter of Human Rights and Freedoms, R.S.Q., c. C-12.
10
Civil Code of Quebec, S.Q., 1991, c. 64.
11
Supra note 8.
12
Manitoba, Legislative Assembly, Debates and Proceedings, Vol. LVIII No. 16A (7 December
2006) at 579-580. [Debates (7 December 2006)]
13
Ibid. at 580-81.
14
Interview of MLA Bonnie Korzeniowski (26 November 2007) [Korzeniowski].
15
Ibid.

120 Underneath the Golden Boy
employees. Ms. Korzeniowski’s team conducted research, and drafted Bill 214 –
The Good Samaritan Protection Act.
III. BILL 201 – THE GOOD SAMARITAN ACT
The Liberal Party twice attempted to introduce Bill 201. Dr. Jon Gerrard first
introduced the bill (known as Bill 202 when first circulated) in the fall of 2005.
It was seconded by Liberal MLA Kevin Lamoureux from Inkster. Dr. Gerrard
thought the legislation would protect volunteers and encourage rescuers to assist
victims. 16 There was an impasse, and due to the priority of other bills and a lack
of support of the other parties, the bill failed to get past first reading.
Dr. Gerrrard re-introduced Bill 201 on 17 November 2006, but it became
clear to him that his bill was going to die on the table yet again, unless his party
worked with the government to ensure that the legislation was enacted before
the end of 2006. While bills move quickly once they are at the committee stage,
getting Bill 201 to second reading was proving especially difficult. Dr. Gerrard
entered into negotiations with Ms. Korzeniowski, each offering the other an
opportunity to second their respective bills. 17 On its face, the NDP bill appeared
to be a somewhat stronger interpretation of Good Samaritan law, thus, Dr.
Gerrard came to second the bill sponsored by Ms. Korzeniowski, and withdraw
his own bill from consideration by the Legislative Assembly on 5 December
2006.
IV. RESCUERS’ PSYCHOLOGY
The Boeing employees’ reticence to use the AED devices was not without
substance. Research has shown that the level of responsibility felt by bystanders
when posed with a crisis is inversely proportional to the number of people
present at the time. Psychologists Latané and Darley, authors of the landmark
text The Unresponsive Bystander: Why Doesn’t He Help 18 discovered a
phenomenon they termed “diffusion of responsibility.”
16
Jon Gerrard, “Good Samaritans and Legislation to Protect Them”, Liberal Caucus file, 3
November 2005, at 1 [Gerrard 1]
17
Interview of MLA Dr. Jon Gerrard (22 November 2007) [Gerrard 2]
18
Bibb Latané & John M. Darley (New York: Appleton-Century-Croft, 1970) at 6; see also
Mitchell McInnes, “Psychological Perspectives on Rescue: The Behavioural Implications of
Using the Law to Increase the Incidence of Emergency Intervention” (1991) 20 Man. L.J. at
667. [McInnes 1]

The Good Samaritan Protection Act 121
When only one bystander is present in an emergency, if help is to come it must come from
him. Although he may choose to ignore [it]…any pressure to intervene focuses uniquely
on him. When there are several observers present, however, the pressures to intervene do
not focus on anyone; instead the responsibility for intervention is shared among all the
onlookers. As a result, each may be less likely to help. 19
As numbers increase, potential rescuers will find it easier to justify their
inaction to themselves and others. 20 While the Boeing employees may have stood
by helpless because they did not know what to do, it is equally likely that there
was expectation that “someone else” would jump to the rescue, therefore “I” do
not have to shoulder that responsibility.
Apprehension in the face of an emergency is another reason why bystanders
may not be quick to assist. The apprehension by bystanders is not just fear of
making the situation worse, but also issues concerning a person’s vanity,
insecurity, and self-interest. 21 “More discomforting than the humiliation that
attends upon the attempted provision of help when none is required is the
condemnation that attends upon the provision of help that is considered
inappropriate.” 22 People do not want to be found out as not knowing what to do,
and would rather stand idly by than assist someone who very obviously needs
help. The adage “better safe than sorry” applies to the bystander’s own pride, not
to a possible victim’s well-being. 23
Perhaps more shocking is the notion that rescuers, consciously or
unconsciously, embark on an assessment of the emergency to see if they will
somehow benefit by trying to assist the injured person. The Piliavin & Piliavin
model of bystander behaviour elaborates on the cost assessment that bystanders
undertake when deciding on whether or not to intervene. The premise is that
observation of an emergency arouses aversive physiological and emotional
feelings in the observer, and there is a cost-benefit analysis made by the observer
as to whether or not intervening to rid oneself of the aversive feelings is worth
the risk. 24 In the Boeing example, doing nothing, while unpleasant (and tragic to
19
Ibid. at 90.
20
McInnes 1, supra, note 16 at 667.
21
Ibid. at 673.
22
Ibid. at 673-4.
23
Ibid. at 673.
24
J.A. Piliavin & I.M. Piliavin, “Effect of Blood on Reactions to a Victim” (1972) 23 Journal of
Personality and Social Psychology 3 at 353; see also J. Peter Rothe et al., “Dynamic Influences
on Bystander Actions: Program Recommendations from the Field” (1 June 2002) Alberta
Centre for Injury Control and Research, Department of Public Health Sciences, University of
Alberta at 4.

122 Underneath the Golden Boy
Mr. Munro), leads to the absolute certainty that no one will be sued for causing
further damage.
Perhaps the most compelling reason why bystanders would choose not to
assist comes from rules associated with the delivery of first aid. It is widely known
that those who undertake to perform first aid must either complete it or
continue until medical personnel arrive. This principle is consistent with the
concept that a duty of care attaches to the rescuer as soon as the rescue is
commenced. A duty of affirmative action may be created where a person, who is
under no duty to rescue, voluntarily embarks on a course of conduct designed to
assist a person in danger. 25 For example, if a rescuer starts CPR on an apparent
heart attack victim, the rescuer cannot then stop CPR ten seconds later because
they no longer feel like performing the life-saving technique. If you start, you
must finish. There is, however, no positive duty for persons to act: that is, there
is no duty to start. Morals aside, if you do not do anything, absent an existing
fiduciary or trust relationship, 26 there is no legal remedy available to the person
who could potentially have benefited from your assistance.
V. BILL 214 – THE GOOD SAMARITAN PROTECTION ACT
Attempts to introduce Bill 214 were also made twice by the government. Ms.
Korzeniowski first introduced the bill in the fall of 2005, shortly after Dr.
Gerrard’s introduction of Bill 201. Again, due to priority of other bills, a lack of
support for the bill, and the existence of a competing bill, it failed to get past first
reading.
After some negotiation with Dr. Jon Gerrard, Ms. Korzeniowski reintroduced
Bill 214 on 5 December 2006—Dr. Gerrard seconded the bill. First
and second readings took place on the same day and Ms. Korzeniowski indicated
at second reading that the introduction of Bill 214 was timed specifically to
coincide with the International Day of the Volunteer, which was (no surprise) 5
December 2006.
A. Debate
The first in-House debate on The Good Samaritan Protection Act occurred on 5
December 2006, when Ms. Korzeniowski introduced Bill 214 to the Legislative
Assembly. Both first and second readings took place on the same day.
25
Philip Osborne, The Law of Torts, 3 rd ed. (Toronto: Irwin Law, 2007) at 78. [Osborne]
26
Certain relationships in law engender a duty of care, where a person must act. For example:
parent-child, teacher-pupil, and doctor-patient. Ibid. at 4.

The Good Samaritan Protection Act 123
Ms. Korzeniowski, before speaking to the merits of Bill 214, thanked Dr.
Gerrard for his cooperation and support of her bill. She then went on to talk
about a situation at Boeing, a company located in her riding of St. James-
Assiniboia, where an employee collapsed from a major heart attack in 2004 while
co-workers stood around helpless to do anything except make him comfortable. 27
The Boeing workers, because of this tragedy, went to great lengths to educate
themselves on CPR and first aid to prevent future such tragedies. Boeing went as
far as purchasing an AED and training staff on how to use it. The staff however,
found the defibrillator to be intimidating, and one employee who happens to be a
friend of Ms. Korzeniowski, asked her why Manitoba had no Good Samaritan
legislation. 28 His question led to Bill 214.
Ms. Korzeniowski went on to state that changes to CPR techniques and
more frequent calls for AEDs in public places make the legislation even more
necessary and timely. The addition of the AED to the lexicon of first aid rescue
techniques necessitated removal of impediments to the installation of the device
in public places. 29 Businesses that are reluctant to install the device need no
longer fear, for Bill 214 will protect them from being sued if an untrained
individual uses the device in an emergency.
Ms. Korzeniowski also pointed out the differences between Bill 214, and Bill
201, the private members’ legislation put to the Legislative Assembly by Dr.
Gerrard. She indicated that Bill 214 covers not just people who provide direct
medical aid to an injured party, but also those people who provide advice to
persons in emergencies. As well, she indicated that Bill 214 clarifies coverage in
the case of a member of a volunteer organization such as ski patrols,
Neighbourhood Watch, etc. 30 While there may have been a perception that the
legislation does not cover those who receive honoraria for their services, a
clarifying section was specifically included in Bill 214 to avoid misconceptions
regarding volunteers.
Dr. Gerrard, in seconding Bill 214, highlighted the need for such legislation
in Manitoba, and its intent to keep people from being so reluctant to help a
stranger in need for fear of legal repercussions. Dr. Gerrard also emphasized the
fact that Good Samaritan legislation exists in seven provinces and two territories
in Canada, and that it was high time that Manitoba enacted similar legislation. 31
In addressing the fact that he had twice attempted to pass similar legislation
27
Debates (5 December 2006), supra, note 1 at 485-6.
28
Ibid.
29
Korzeniowski, supra note 12.
30
Debates (5 December 2006), supra note 1 at 487.
31
Ibid.

124 Underneath the Golden Boy
without success, Dr. Gerrard indicated that supporting Ms. Korzeniowski with
her legislation was the best way to ensure that Manitobans receive the benefit of
Good Samaritan legislation. 32 He did, however, make it clear that his party had
attempted as early as 2005 to pass similar legislation through the Assembly
without success.
Several other opposition members spoke in general terms about supporting
Bill 214, including Steinbach MLA Kelvin Goertzen, Springfield MLA Ron
Schuler, and Southdale MLA Jack Reimer. As well, Inkster MLA Kevin
Lamoureux made some comments. All opposition members supported the bill;
however they gave credit for the initial idea and subsequent bill to Dr. Gerrard
and the Liberal caucus, rather than to Ms. Korzeniowski and/or the government.
Mr. Schuler specifically congratulated the members of the Liberal caucus for
initially bringing the legislation forward, and noted that having Dr. Gerrard
second the bill is a great show of bipartisanship. Mr. Reimer’s comments were
brief, and had more to do with the series finale of the NBC comedy Seinfeld than
they did with any perceived excellence or shortcomings of the proposed
legislation.
B. Committee Stage
The Standing Committee on Legislative Affairs met to discuss Bill 214 on 5
December 2006. The bill was, in fact, sent to committee on the same day it was
debated at the Legislative Assembly. There were two presenters at the
committee stage: one a private citizen, the other an organization. Both
presentations supported the bill.
The first presenter was Ms. Leah Ross. Even though the bill went to
committee on very short notice, Ms. Ross managed to drive in from Carman,
Manitoba to speak at the committee meeting. Ms. Ross spoke favourably about
the legislation. Ms. Ross recounted instances where her father, a medical doctor,
was called up on many situations to assist persons in medical distress. She
highlighted the fact that this bill protects not just off-duty medical professionals,
but rather every Manitoban who lends a hand to a person in a time of need. 33
While Ms. Ross praised the bill, she noted in her comments that the pith
and substance of the NDP-sponsored bill varied little (if at all) from the bill
sponsored by Dr. Jon Gerrard, the bill that was ultimately pulled from
consideration by the Legislative Assembly. When read side-by-side, the bill’s
interpretation of the meaning of the word “assistance” vis-à-vis the word “aid”
32
Gerrard 2, supra note 15.
33
Manitoba, Legislative Assembly, Standing Committee on Legislative Affairs, 38 th Leg. 5 th sess.,
Vol. LVIII No. 1 (5 December 2006) at 5. [Committee]

The Good Samaritan Protection Act 125
was identical. 34 Where the private member’s bill provided coverage for all
Manitobans, the government’s bill includes a clarifying provision that, in Ms.
Ross’ opinion, clarifies very little: “Dr. Gerrard’s bill had said that the bill applies
to everyone, and this bill says it applies to everyone; however that includes ski
patrol workers, other individuals.” 35 She lambasted the NDP for blatantly
copying a bill previously introduced by an opposition member, and commended
Dr. Gerrard and the opposition members for tolerating the NDP’s nonsense.
The second presenter was Ms. Eileen Jones, a representative of the Heart
and Stroke Foundation of Manitoba (“HSFM”). Ms. Jones applauded the bill,
and highlighted how it will directly affect the implementation of programming by
HSFM. Specifically, she went over the approach taken by HSFM in educating
the public on what to do when faced with persons suffering from cardiac arrest.
HSFM has incorporated the use of automated external defibrillators (AEDs),
more commonly known as portable defibrillator units as part of its
cardiopulmonary resuscitation (CPR) protocol.
Ms. Jones stated that Good Samaritan legislation is vital to HSFM because,
currently, public education programs on the use of AEDs had reached a
standstill. Many participants in MSFM’s CPR-training programs brought forward
concerns about being sued for attempting CPR and defibrillation. 36 Ms. Jones
stated that the biggest obstacle to expending education regarding resuscitation
efforts in situations of cardiac arrest was the lack of Good Samaritan
legislation—legislation that would prevent potential recipients of first aid from
then turning around and suing the person who gave them first aid.
Good Samaritan legislation would address another concern of Ms. Jones
related to liability insurance. At present, in order for the owner of an AED
device to obtain liability insurance for the AED, a doctor must sign-off on every
event at which an AED device is used. Ms. Jones maintained that the AEDs, as
a result of the signing requirement, were used less frequently due to worries that
a doctor would not have signed off on its use. 37 She indicated at committee that
the existence of Good Samaritan legislation would eliminate the need for doctors
to sign off on every use of the AED, as well as eliminate the need for physicians
to be in charge of the AED-training programs. 38
34
Ross 1, supra note 4.
35
Committee, supra note 31.
36
Ibid. at 7.
37
Ibid.
38
Ibid. at 7-8.

126 Underneath the Golden Boy
C. Third Reading
Bill 214 was read for the third time on 7 December 2006, just two days after the
bill was read for the first time, and on the day the Legislative Assembly closed
sessions in anticipation of the winter holidays. MLA Korzeniowski repeated
much of her statements from the debates, noting that the bill is more
comprehensive than legislation of other jurisdictions (in that it covers advice
and not just assistance) and adding comments about the positive effects the bill’s
existence will have on organizations that promote first aid in times of emergency.
The bill “…is about letting people do what is good and right and not have to
give a second thought to reprisal when that second could cost or save a life.” 39
She also expressed thanks to Dr. Gerrard for his “considerable input” on the
legislation.
Key differences from what Ms. Korzeniowski said during debate included the
reading of a letter sent to her by Boeing Industries—the company whose
predicament was the impetus for the NDP to introduce Bill 214. The letter
thanked Ms. Korzeniowski and the other MLAs who supported Bill 214. The
letter applauded Ms. Korzeniowski for “…investing in [Manitoba’s] citizens by
helping remove any hesitation to be more involved when a fellow citizen is in
need, through the enactment of [Good Samaritan] legislation.” 40 This letter gives
insight into the alternate purpose of the legislation—promotion of volunteerism
and advertisement to the general community that helping a person in need does
not expose one to liability. The letter also made it clear that the staff at Boeing
had been working with Ms. Korzeniowski for at least one year on the legislation,
leading one to believe that the timing of Bills 201 and 214 was purely
coincidental.
Dr. Gerrard added a few comments, thanking the members of the Assembly
for their cooperation, and highlighting that Bill 214 will save lives. Where the
public perception was that the common law rule applies in Manitoba, this
legislation removes virtually all fear for the would-be rescuer. 41
VI. IS “GOOD SAMARITAN” LEGISLATION REALLY NECESSARY
There are mixed opinions as to whether or not Good Samaritan legislation is
truly necessary. The argument for the legislation is obvious: it ensures that
would-be rescuers are shielded from liability (except in cases of gross negligence)
when they offer first aid, and in so doing, exacerbate the existing problem. The
39
Debate (7 December 2006), supra note 8 at 580.
40
Ibid.
41
Ibid.

The Good Samaritan Protection Act 127
legislation is concrete evidence that the public can give first aid assistance and
not face a law suit if they make the problem worse. Enacting legislation of this
type goes a long way to eliminate the public misconception about providing
assistance to those in need of help. Having such legislation would promote
volunteerism and altruism in Manitoba. Eight other Canadian jurisdictions
already have legislation, and it is important for Manitobans to not be “left out in
the cold” regarding liability in emergencies.
There is, however, no empirical evidence against which to test claims of the
negative liability approach; legislative initiatives in Canada have rested primarily
on the supposition that lowering the duty of care in emergency situations will
encourage bystanders to rescue victims. 42 In the face of public perception that
they cannot assist for fear of being sued, having a statute that protects the public
is useless if the public is unaware of the statute’s existence. Ms. Korzeniowski
admitted that there was not a lot of publicity directly related to the passing of
The Good Samaritan Protection Act, save one or two newspaper articles in the
Winnipeg Free Press. 43 A search of on-line news archives yielded a solitary
reference to the Act, and another reference to the ill-fated Liberal bill. 44 If one of
the Act’s purposes is to allay public fear regarding liability, a lack of publicity
would indicate that most Manitobans are unaware of the Act, and thus remain
fearful about the repercussions of helping a person in need.
The Manitoba Law Reform Commission studied the Good Samaritan issue
in 1973. The study was prompted by Alberta’s enactment of its Emergency
Medical Aid Act (now know as the Emergency Measures Act). The Commission
determined that having Good Samaritan legislation is not necessary and “cannot
be demonstrated to provide any public benefit at this time.” 45 The Commission
believed that two conditions needed to be present before Good Samaritan
legislation could be shown to produce a benefit or suppress an evil:
Firstly, there would have to be such a spate of lawsuits against doctors, nurses, policemen,
firemen and others that they would begin to become overly wary about rendering
emergency assistance. Secondly, those lawsuits would have to be decided so consistently
in favour of the plaintiffs that the public and the government would become convinced
42
Ross 2, supra note 6.
43
Korzeniowski, supra note 12.
44
See: “New Law Protects Good Samaritans” CBC News Online at
http://www.cbc.ca/news/story/2006/12/27/good-samaritan.html [2006 Legislation]; “Proposed
Law Protects Good Samaritans” CBC News Online at
http://www.cbc.ca/canada/manitoba/story/2005/11/08/mb_good-samaritan-20051108.html
[2005 Bill]
45
Manitoba Law Reform Commission, The Advisability of a Good Samaritan Law in Manitoba
(Manitoba Law Reform Commission, 1973) at 9. [Report]

128 Underneath the Golden Boy
that many were wrongly decided or that the law exacted too high a standard of
performance and care. 46
The Commission points out that the likelihood of the two conditions ever
arising is very slim. For one, Canadians are not as litigious as our American
neighbours are. Problems arose in the United States because lawsuits seemed to
have deterred physicians and others from stopping to render assistance, for
example, in traffic accidents or other medical emergencies. 47 Legislation was
enacted in the United States to allay the public’s fear of lawsuit.
Second, the Commission findings note that problems arise in situations
where there are juries in civil suits. 48 The astronomical American damage awards
are what caused fear in Canadian citizens, but such astronomical damage awards
are impossible in Canada because negligence cases are rarely, if ever, decided by
juries. The Commission thought it inconceivable that a victim would turn
around and sue the rescuer (especially if the rescuer were some kind of medical
professional). The Commission opined that most victims would be grateful to the
rescuer, and not pursue legal action, even if some negative consequence did arise
from the rescue. 49 In sum, the Commission found that no pressing need existed
for the legislation. Where legislation is usually enacted to cure some kind of
perceived problem, no such problem existed, and enacting Good Samaritan
legislation would have been moot.
One must be mindful, however, that the Commission delivered its report in
1973 and without the benefit of knowledge about relatively easy medical
procedures performable by laypersons. The Heimlich Manoeuvre, for example,
was not invented until 1974, 50 and was not universally accepted until years later.
Similarly, while CPR existed in some form in 1973, it was largely perceived to be
a procedure to be performed by doctors alone; mass, public education about how
to perform the technique did not begin in the United States until promulgation
of the “chain of survival” concept by the American Heart Association, a concept
that encourages bystander CPR. 51
46
Ibid. at 9-10.
47
Ibid. at 9.
48
Ibid.
49
Ibid. at 4.
50
The first article on the subject of the life-saving manoeuvre was not published by Dr. Henry
Heimlich until 1974. See Dr. Henry Heimlich, “Pop Goes the Café Coronary” (1974)
Emergency Medicine 6 at 154-55.
51
Michael Ardagh, “A Brief History of Resuscitation” (7 May 2004) 117 The New Zealand
Medical Journal at 1193; also see: American Heart Association, Cardiac Life Support Sub-
Committee and the Emergency Cardiac Care Committee, “Improving survival from sudden
cardiac arrest: The “chain of survival” concept” (1991) Circulation 83 at 1832-47.

The Good Samaritan Protection Act 129
Even in the absence of Good Samaritan legislation, the degree of care that
rescuers are expected to exercise is not particularly great. Proponents of the
legislation argue that “…[w]ithout the Act, a person rendering emergency
assistance would be liable for injuries caused by that assistance if, in the
provision of the assistance, the person was negligent.” 52 However, a person
confronted with an emergency will not be required to exhibit the level of
prudence required in a non-emergency situation. The law already provides for
exactly the situation contemplated by Good Samaritan legislation. While it is
arguable that emergencies necessarily create greater chances for rescuers to act
in a negligent manner, the fact that a person is acting in an emergency by
necessity lowers the degree of care owed by the rescuer.
The current standard of care for rescuers to meet is that of reasonableness.
A Good Samaritan is expected to act reasonably in the circumstances presented.
“Emergencies tend to breed excitement, confusion, and anxiety, which may rob
the defendant of his usual power to exercise prudent judgment and due care. In
retrospect, he may make a poor choice, perform badly, or exacerbate the
situation.” 53 Courts already recognize this fact and tend to be lenient on those
who attempt to rescue others in distress. The law is mindful of the fact that
people cannot give a second thought to reprisal in a situation where that second
or two could mean life or death for the injured party.
The case of Horsley v. McLaren 54 illustrates the law as it applies to situations
of sudden peril. The Supreme Court of Canada considered the actions of a
pleasure-boat owner when a passenger fell overboard and died in the ice-cold
water. Where the correct rescue technique was to employ a bow-on procedure,
the defendant backed the boat toward the passenger. A majority of the Court
held that while a mistake may have been made in the heat of the moment, the
defendant acted in good faith and did his best to rescue his passenger. 55 This
principle, while more than 35 years old, is still sound jurisprudence and would
hold as equally today as it did for Mr. McLaren in 1972.
The situations contemplated by Good Samaritan legislation do not arise
very frequently. Prior to the enactment of the Good Samaritan legislation, there
were no suits successfully brought against rescuers. 56 Only three of the Good
52
S.M. Wexler, “Case Comment Fraser v. Kelowna Motorcycle Club” (1994) 52 The Advocate 2
at 251.
53
Osborne, supra note 23 at 6.
54
(1971), [1972] S.C.R. 441 [Horsley]
55
Osborne, supra note 23 at 36.
56
Ross 2, supra note 8 at 1.

130 Underneath the Golden Boy
Samaritan statutes have received judicial consideration. 57 Alberta has had Good
Samaritan legislation on its books for more than thirty years, but has only
litigated one case on the subject. 58 Even though it is likely that some victims are
reluctant to sue their rescuers, a lack of jurisprudence on the topic indicates that
it is equally likely that there is no pressing need for legislation. In these
circumstances, where cases requiring litigation rarely arise, leaving the ultimate
decision to a judge who has become familiar with the facts and nuances of the
case may be the more prudent strategy.
VII. CONCLUSION
The Good Samaritan Protection Act was passed quickly, to coincide with both
the International Day of the Volunteer and the end of the 38 th session of
Manitoba’s Legislature. With the increase of volunteerism around the holiday
season, one can understand why there was a push to pass the legislation near the
end of the calendar year. The legislation, however (at least from the legal
perspective), was unnecessary. Both common law principles and long-standing
case law cover most, if not all, situations in which a rescuer’s liability is at issue.
In her final comments to the Legislative Assembly, Ms. Korzeniowski aptly
pointed out that she believes that “…people will jump in and act without
thinking about possible legal liability. We’ve seen and heard about acts of
heroism many times…” 59 The law recognizes that people, while altruistic, are
not perfect, and that their actions in an emergency may not necessarily reflect
their behaviour in a non-emergency situation. The statute addresses the concern
that imposition of a duty of care on voluntary rescuers may create a significant
disincentive to altruistic behaviour. 60 One would think that most citizens would
jump in to assist regardless of the existence of protective legislation, and without
turning their minds to the existence of any such legislation before offering
assistance.
To the extent that The Good Samaritan Protection Act makes training of
the public in the use of AEDs easier, and makes the public less fearful of using
the devices, it is a good idea. If the law changes people’s minds, causing them to
deliver first aid rather than stand idly by, then all the better. If the law assists
57
See Re: Osinchuk [1983] A.J. No. 933 [Osinchuk], Nelson v. Victoria County (Municipality)
(1987) 81 N.S.R. (2d) 334 [Nelson], Fraser v. Kelowna Motorcycle Club [1988] B.C.J. No. 343
[Fraser]
58
Osinchuk, supra note 55.
59
Debates (7 December 2006), supra note 8 at 580.
60
Osborne, supra note 18 at 79.

The Good Samaritan Protection Act 131
organizations involved in educating the public in the delivery of their services,
and reduces insurance costs for first aid devices, this too is laudable. More
publicity of the Act’s existence would go a long way in making Manitobans
aware of the fact that they would not be liable in circumstances where they
provide well-intentioned but incorrect rescue procedures.
However, as the saying goes: you can lead a horse to water, but you can’t
make it drink. Irrespective of how much publicity (if any) was received by the
Act, it does not impose a positive duty on persons to act in times of distress. If
the aim of the legislation was to get Manitobans to be more altruistic in times of
need, the Legislative Assembly ought to have drafted law that imposes a positive
duty on its citizens. Where the eternal optimist would state that Manitobans
would help regardless of the law’s existence, a cynic would point out that nobody
does anything unless there is a personal benefit. When given the option between
doing something, but possibly being sued for your actions, and doing nothing and
not being sued, most people would choose the latter. Helping is still optional. If
helping were a codified duty, the less damaging alternative to the rescuer would
be to help, and more people would ultimately lend a helping hand.

132 Underneath the Golden Boy

The Consumer Protection Amendment Act
(Prepaid Purchase Cards)
CINDY NADLER
I. BACKGROUND
T
he popularity of gift cards in recent years has soared. According to Statistics
Canada, currently 82% of large retailers offer gift cards, whereas only 53% of
large retailers did in 2003. 1 Similarly, the American gift card market grew to $45
billion U.S. in 2003 from $1 billion in 1995, and in 2007 projections suggest that
the gift card market will reach $70 billion U.S. 2 Gift cards also comprise a
significant portion of retailer revenues. For example, Starbucks has reported that
11% of its North American revenues consist of gift card purchases. 3
Consumers like gift cards because they are convenient and are often the
perfect gift for the friend or relative who has everything. Retailers like them
because they can attract a new customer base, and consumers usually spend
more than the value of their gift card once in the store. 4 They are also difficult
to counterfeit, can often be reloaded, and retailers can analyze spending patterns
and behaviours through their use. 5 Another significant advantage for retailers is
that a certain proportion of gift cards are never redeemed by the consumer, and
even if they are eventually cashed in, the retailer still has the advantage of
investing that outstanding amount until the card is redeemed. 6 Sometimes these
1
Bahta et al, “Gift Cards: The Gift of Choice”, (December 2006), online: Statistics Canada
[Bahta].
2
Maryanna Lewyckyj, “Legislation will rein in retailers who cash in on early expiry dates”, The
Toronto Sun (26 Sept 2006), also see Ontario Ministry of Government Services, News Release
(29 May 2007), online at
3
“Gift Card Expiry Dates may be Banned Here” The Winnipeg Free Press (26 September 2006)
4
Bahta, supra note 1.
5
Monica Weise, “Analysis in Brief: Gift Cards: A Win-Way Way to Give” (Ottawa: Statistics
Canada: 2005), online: Statistics Canada, online at
6
Ibid.

134 Underneath the Golden Boy
unused amounts are significant. For example, in 2006, Best Buy reported that
they had a $43 million dollar surplus from unused gift cards alone. 7
Some of the larger retailers anticipated government intervention and
discontinued automatic expiry dates before the government made it incumbent
on them to do so. For example, Starbucks, Pier 1, and Future Shop have recently
set aside expiry dates in relation to their gift card policies. 8 However, there are
many retailers who have not, and recently several provincial governments have
stepped in and introduced legislation that deals with retail gift card expiry dates,
dormancy, or inactivity fees, as well as consumer disclosure requirements. 9
This has had a variety of effects and implications on different groups,
including not only retailers, but also consumers, in ways that were likely
unanticipated by the Legislature. Manitoba’s version of the legislation which
takes its form in amendments to The Consumer Protection Act came into force
on 1 November 2007. 10
The bill that amended The Consumer Protection Act, The Consumer
Protection Amendment Act (Prepaid Purchase Cards), is actually quite vague, as
the bulk of the effects of the legislation are determined by the regulations. The
bill itself defines prepaid purchase card as:
“[P]repaid purchase card" means, subject to the regulations, an electronic card, written
certificate or other voucher or device with a monetary value, that is issued or sold in
exchange for the future purchase or delivery of goods or services, and includes a gift card
and gift certificate. [Emphasis added]. 11
The Regulations were registered on 31 July 2007. 12 Essentially, they prohibit
fees on gift cards with the exception of three circumstances: (i) fees may be
charged for the replacement of lost or stolen gift cards, (ii) fees may be charged if
the card was a given to the recipient for free, and (iii) a maximum monthly fee of
$2.50 may be charged on multi-store gift cards (i.e., a gift card issued by a mall)
7
“Gift Card Expiry Dates Will Die” The Toronto Sun (1 October 2007).
8
“Manitoba wants gift cards that stand the test of time” CBC News, (26 September 2006),
online:
9
Manitoba, Ontario, British Columbia, and Nova Scotia have all introduced legislation
regulating gift cards. They will be discussed in greater detail later in this paper.
10
Bill 4, The Consumer Protection Amendment Act (Prepaid Purchase Cards), 5th Sess., 38 th
Leg., Manitoba, 2006 (assented to 7 December 2006, S.M. 2006, c. 27) [Bill 4].
11
Ibid.
12
Man. Reg. 98/2007.

The Consumer Protection Amendment Act 135
if the card has not been used for 12 months. 13 If the retailer charges a fee in
contravention of the Regulations, the consumer is entitled to a full refund. 14
The Regulations also require the disclosure of certain information. The
retailer must provide the consumer with information pertaining to all the
restrictions, limitations, and conditions that the supplier has imposed on the use
of the card as well as how information may be obtained about the card (i.e., the
card’s balance). 15
The Regulations also address expiry dates. The Regulations eliminate expiry
dates in all but two situations: (i) where the card is issued for a specific good or
service (i.e., a “Spa day”), and (ii) when the holder of the card has not paid for it
(i.e., a promotional or chartable gift card). 16 The Retail Council of Canada had
advocated for the “specific good exception” as the value of these types of services
(for example a Spa treatment) versus a straight cash value tends to vary over
time. 17
The Regulations do not specifically discuss prepaid wireless phone cards, but
a representative from Manitoba Consumer and Corporate Affairs advised that
they are federally regulated and so the provincial government has no jurisdiction
to regulate them. 18
An interesting feature of the Regulations is that a requirement is placed on
the Minister of Finance to review the legislation’s effectiveness and consult with
affected stakeholders within 18 months of it coming into force. 19 The Director of
Consumer and Corporate Affairs Branch advised that this section was added as
this is a new area of regulation for the Government (or any government in
Canada for that matter) 20 and its effects and implications are largely unknown.
13
Ibid, s. 2(1).
14
Ibid, s. 2(2).
15
Ibid, s. 3(1).
16
Ibid, s. 4(1).
17
Lanny McInnes, “Retail Council of Canada’s Response to the Discussion Paper on Prepaid
Purchase Cards” Retail Council of Canada (16 April 2007), available online: Retail Council of
Canada,
[Retail Council of Canada Submission].
18
Interview of Consumer Services Officer at Manitoba Consumer and Corporate Affairs (31
October 2007).
19
Man. Reg. 98/2007, s. 7.
20
Ontario was the first province to introduce gift card legislation, but their legislation came into
force on 1 October 2007, only a month before the Manitoba legislation.

136 Underneath the Golden Boy
This section of the Regulation was designed to ensure that the government will
accommodate and address unforeseen negative consequences if they occur. 21
The first portion of this paper will discuss Bill 4’s progression through the
legislative process. Next, this paper will address the other Canadian provinces
that have introduced or implemented similar legislation. Finally, the paper
considers the effects of this legislation on various stakeholders within Manitoba.
II. INTRODUCTION OF BILL 4: THE CONSUMER PROTECTION
AMENDMENT ACT (PREPAID PURCHASE CARDS)
The Honourable Gregory Selinger, Minister of Finance, introduced Bill 4 of the
5 th Session, 38 th Legislature, The Consumer Protection Amendment Act
(Prepaid Purchase Cards) on 21 November 2006. 22 Mr. Selinger described the
bill at first reading as amending The Consumer Protection Act “to prohibit
expiry dates on most gift cards and other prepaid purchase cards and to require
the disclosure of certain information to consumers.” 23
A. SECOND READING
On 27 November 2006, Mr. Selinger motioned that Bill 4 be read a second time
and referred to a Committee. He pointed out that the convenience and
practicality of prepaid gift cards had caused the popularity of prepaid gift cards to
substantially increase in recent years. He observed that consumers were spending
more on gift cards and retailers were making them more accessible. Mr. Selinger
went on to note that the considerable growth in the retail gift card market had
prompted retailers to impose a number of terms and conditions associated with
the use of gift cards. The condition that most concerned Mr. Selinger was the
expiry dates on the cards which required unsuspecting consumers to use up the
value of the gift card by a certain date. He stated that many consumers believed
the gift cards “were as good as cash” (in that they would never expire) and he
described the consumer’s subsequent predicament of being in possession of a
valueless gift card, as “frustrating and unfair”. 24
21
Interview of the Director of Consumer and Corporate Affairs Branch (31 October 2007).
22
Bill 4, supra note 10.
23
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 5 (21 November 2006)
[Debates (21 November 2006)] at 135 (Greg Selinger).
24
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 9 (27 November 2006)
[Debates (27 November 2006)] at 309-310 (Greg Selinger).

The Consumer Protection Amendment Act 137
Mr. Selinger went on to describe how the new legislation would remedy this
unfortunate situation by not only prohibiting expiry dates on gift cards, but also
by allowing the Government to regulate fees associated with gift cards which
penalize the consumer for not using the gift card within a certain period of
time. 25
Interestingly, Mr. Selinger also mentioned that his staff was consulting with
members of the Ontario Government. Ontario introduced similar legislation on
19 October 2006 which came into force on 1 October 2007. 26 This paper will
discuss Ontario’s legislation in detail. Mr. Selinger pointed out that his staff had
consulted with the Ontario Government to “ensure fairness and consistency in
the legislation.” 27
Second reading of Bill 4 continued on 30 November 2006. Mr. Gerald
Hawranik, a Progressive Conservative Member from Lac du Bonnet, had some
interesting comments to add to the debate. He pointed out that, in the interest
of retaining customers, most retail businesses will honour expired gift cards.
However, he did acknowledge that some retailers will strictly adhere to the
expiry date, which, absent any government intervention, was fully within their
rights to do. Mr. Hawranik stated that type of behavior was what Bill 4 was
designed to guard against. 28
Mr. Hawranik went on to say that the amendments to The Consumer
Protection Act prohibiting expiry dates on gift cards would not be sufficient. He
stressed the need for consumer education; specifically that consumers should be
told to use up the value of the gift card within a reasonable period of time. Mr.
Hawranik mentioned that, potentially, there could be adverse effects on
businesses if this education was not required—namely the negative effect on the
cash flow and financial statements of small businesses. 29
Mr. Hawranik pointed out that Bill 4 had the potential to harm those it was
intended to protect—the consumers. For example, without expiry dates, Mr.
Hawranik noted that consumers (uneducated about the potential pitfalls of gift
cards) may be left with valueless gift cards in the event that vendor has moved to
another Province, gone bankrupt, or otherwise closed. To support the
25
Ibid.
26
Bill 152, Ministry of Government Services Consumer Protection and Service Modernization
Act, 2 nd Sess., 38 th Leg., Ontario, 2006 (assented to 20 December 2006), S.O. 2006, c. 34.
27
Supra, note 24
28
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 12B (30 November 2006)
[Debates (30 November 2006)] at 430 (Gerald Hawranik).
29
Ibid at 430-431.

138 Underneath the Golden Boy
proposition that businesses are leaving Manitoba, Mr. Hawranik cited a 2005
Statistics Canada report which indicated that 9 880 Manitobans left the
province that year. He postulated that part of that number consisted of
businesspeople who took their capital and growth potential with them. Mr.
Hawranik then closed his comments by taking a bit of a stab at the current NDP
Government, specifically Mr. Selinger, for often quoting Statistics Canada
reports when they reflected favorably on his government, but selectively ignoring
them when they did not. 30
III. COMMITTEE STAGE
On 4 December 2006, consideration of Bill 4 went to the Standing Committee
on Social and Economic Development. Two oral presentations were made, one
on behalf of Polo Park–Cadillac Fairview and the other on behalf of Rogers
Communications. Furthermore, the Retail Council of Canada as well as a private
citizen, Edward Bachewich, submitted written submissions in relation to the
bill. 31
A. Polo Park—Cadillac Fairview: Multi-Store Gift Cards
(“MSGCs”)
The first presenter, Deborah Green, was the General Manager of Polo Park
Shopping Centre, which is owned by Cadillac Fairview Corporation Ltd. Cadillac
Fairview owns many of Canada’s large retail shopping centres, such as the
Toronto Eaton Centre, the Bay Centre in Victoria, and the Chinook Centre in
Calgary. 32 Ms. Green indicated she was present at the Committee to represent
Cadillac Fairview as well as the increasing number of companies who offer
“multi-store gift cards” (“MSGCs”). She explained that the MSGC allows
consumers to redeem the card at various unaffiliated retailers within a shopping
centre. Cadillac Fairview’s MSGC is redeemable in any Cadillac Fairview
shopping mall across the country. 33 This gives the consumer the option of using
30
Ibid at 431.
31
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 1 (4 December 2006)
[Debates (4 December 2006)].
32
Portfolio Map, Cadillac Fairview, (2008), online: Cadillac Fairview
[Cadillac Fairview Portfolio].
33
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 1 (4 December 2006)
[Debates (4 December 2006)] at 7 (Deborah Green).

The Consumer Protection Amendment Act 139
the card in over 4 000 stores and restaurants nationwide. 34 According to
Cadillac Fairview’s Manager of Corporate Communications, Mr. Heath
Applebaum, who spoke before the Ontario Standing Committee on Social Policy
when Ontario was considering similar legislation, Cadillac Fairview has sold
more than two million MSGCs since the card’s inception in 2004. 35 The Cadillac
Fairview version of the card is known as the “shop!” card. 36
Ms. Green emphasized the differences between single retailer gift cards and
MSGCs. The MSGC operates on a much larger scale than the single retailer gift
card, as MSGCs are issued by the shopping centre, not the individual retailer
and a third party company, StoreFinancial Services of Canada Co., implements
and processes the service. According to Ms. Green, Cadillac Fairview does not
profit from issuing the MSGC; it is simply a service they offer because there is a
demand for it from both their tenants (the shopping centre retailers) as well as
consumers. Ms. Green explained that a sponsor bank that uses a global payment
system operates the MSGC program. When the gift card is sold, and value is
added to it, the funds are deposited with the sponsor bank. When the consumer
uses the MSGC, the global system pays the funds to the retailer, similar to a
debit or credit card transaction. 37
Ms. Green pointed out some other notable differences between single
retailer gift cards and the MSGC. The MSGC allows the consumer to return
goods to the retailer and have that amount credited back to their MSGC
account balance. Consumers may also access their MSGC account information
24 hours a day via the internet or a toll free telephone number. Finally, MSGCs
are superior to cash as lost, stolen, or damaged MSGCs may be replaced. 38
With respect to service fees, Ms. Green indicated that the MSGC offered by
Cadillac Fairview has an upfront service fee of $1.50 which is tacked onto the
price of the gift card at the time of purchase, and generally the range of fees for
most MSGCs are between $1.00 and $1.50. 39 These fees are quite transparent as
34
Cadillac Fairview, about the “shop!” card, online:
35
Ontario Government Recognizes Differences Between Mall and Retail Gift Cards, Cadillac
Fairview, online: Cadillac Fairview
36
Supra note 34.
37
Supra note 33 at 8.
38
Ibid.
39
Ibid.

140 Underneath the Golden Boy
the consumer pays the fee when purchasing the gift card. 40 With respect to
maintenance fees, Ms. Green advised that most MSGCs generally do not charge
maintenance fees if their value is redeemed within a period of twelve months.
With respect to the Cadillac Fairview’s MSGC “shop!” card specifically, it has a
$2 maintenance fee which only comes into effect if the card is not used within
15 months of the date of purchase. Cadillac Fairview selected this timeline since
most MSGCs are purchased in the fall before the holiday season, and the 15
month period provides the consumer with two holiday seasons during which they
can use the card. Ms. Green advised that 95% of the MSGCs sold by her
company are redeemed for their full value within that time frame. 41 In this
context, the writer spoke with Mr. Applebaum. He advised that Cadillac
Fairview’s research indicated the majority of those unused cards consisted of
cards that were lost or damaged, had negligible sums of money left on them, or
were cards that the consumers had decided simply decided not to use. However,
there is no expiry date for the Cadillac Fairview “shop!” card, nor has there ever
been. 42
Ms. Green also addressed the issue of consumer disclosure. Cadillac
Fairview’s policy is to advise the purchaser of the costs associated with their
MSGC at the time the card is purchased. Cadillac Fairview also posts signs
informing consumers of the MSGCs fees at the location where the cards are
purchased, 43 and according to Mr. Applebaum, this process of advising the
consumer is not done in complicated legalese language. 44 The fees are also
written on the MSGC receipt as well as on the MSGC packaging. Furthermore,
the existence of the $2 maintenance fee which comes into effect after fifteen
months is written on the back of the gift card itself. Ms. Green attributed the
fact that the majority of consumers use their MSGCs within a fifteen month
period to Cadillac Fairview’s extensive consumer disclosure policies. 45
As mentioned above, the “shop!” card was not designed to generate a profit
for Cadillac Fairview. Rather, it operates more like a bank card. Mr. Applebaum
advised that the sponsor bank holds the money received from “shop!” card
purchases in trust until the gift card is redeemed, and the $2 maintenance fee
which comes into effect after fifteen months represents the amount charged to
40
Interview of Heath Applebaum (29 October 2007).
41
Supra note 33 at 8.
42
Supra note 40.
43
Supra note 33 at 9.
44
Supra note 40.
45
Supra note 33 at 9.

The Consumer Protection Amendment Act 141
Cadillac Fairview by the bank for keeping the money in the account, similar to a
personal bank account fee. 46
It should be kept in mind that Cadillac Fairview does offer a number of
services associated with the card, such as the replacement of lost, stolen, or
damaged cards, as well as telephone or internet account accessibility. The card
also comes in gift packaging and customers also have the option of returning
merchandise and having their “shop!” card account credited. The only money
directly coming into Cadillac Fairview from this program is the $1.50 service
charge levied on each card sold. In fact, according to Mr. Applebaum, without
that $1.50 service fee, the MSGC service wouldn’t be feasible. 47 Mr. Applebaum
has indicated the whole system was designed to be more like a customer loyalty
card: Cadillac Fairview doesn’t directly profit from the sale of the card, but does
so indirectly through their tenants’ increased profitability. 48
Ms. Green concluded by stressing the difference between the single retailer
gift card and the MSGC. She stated that as the two products were significantly
different, they should be regulated in different ways. She ended her presentation
by stating that Cadillac Fairview received only one fee-based inquiry per 10 000
MSGCs issued and that her company wanted to collaborate with the Manitoba
Government to ensure that Cadillac Fairview could continue to offer the MSGC
within Manitoba. 49
Although Ms. Green did not have sufficient time to address the portion of
her submission which was directed towards gift card regulation in the United
States, the Committee agreed that this portion of her submission would be
written into Hansard. Essentially this portion of Ms. Green’s submission
exemplified how the United States legislation has acknowledged the differences
between MSGCs and single retailer gift cards. For example, according to Ms.
Green, since 2000, 24 states have enacted legislation that deal with gift card fees
and expiry dates. Ms. Green proceeded to break down the different states into
categories based on how they regulated gift cards. Some of them allowed expiry
dates and fees given that certain requirements were met (such as consumer
disclosure), some of them specifically prohibited expiry dates for single retailer
gift cards, but most of them specifically exempted MSGCs from any sort of
government regulation. In fact, Ms. Green said there were only two states out of
46
Supra note 40.
47
Paul Turenne “Polo Park takes gift cards out of tills” The Winnipeg Sun (27 October 2007),
online: The Winnipeg Sun
[Turenne].
48
Supra note 40.
49
Supra note 33 at 9.

142 Underneath the Golden Boy
the 24 which have implemented legislation that have prohibited expiry dates and
fees with respect to MSGCs. She advised that the validity of the legislation was
being challenged in both states. 50
After her presentation was complete, Ms. Green was asked by Progressive
Conservative Member Mr. Hawranik whether she had been consulted by the
government on the effect the legislation would have on the company she
represented and its interests. She advised Mr. Hawranik that she personally was
not consulted by Mr. Selinger, and that she was simply asked to make a
presentation to the Committee to represent Cadillac Fairview. In a recent article
from the Toronto Sun, a spokesperson for Mr. Selinger advised that:
We believe that we provided stakeholders with plenty of lead time. We engaged in a
public consultation process on the regulation in March of this year [2007] and we
consulted with specific stakeholders during the drafting process. 51
In response to this comment, Mr. Applebaum stated that Cadillac Fairview
is part of a coalition of companies with similar interests that was formed to
educate the Government about the differences between the multi-store gift card
and the single retailer gift card (the Multi-store Gift Card Coalition). 52 He
advised that there has been a great deal of communication back and forth, but
that perhaps the Manitoba Government did not fully appreciate or accept that
Cadillac Fairview simply could not possibly continue to offer this program, as it
was, without charging a service fee. 53 Currently, the Regulations only permit
maintenance fees for MSGC accounts which have been dormant for a year, but
prohibit all other fees to be charged. 54 Since Cadillac Fairview cannot levy the
$1.50 service charge which is paid upon purchasing the card, they will not be
offering their MSGC this holiday season. This will be discussed further below.
B. Rogers Communications - Prepaid Wireless Cards
The next presenter, Ms. Laura Kwiatkowski, was the General Manager for
Rogers Communications, Midwest. The primary issue that concerned Rogers in
relation to Bill 4 was the potential ramifications the proposed legislation could
have on prepaid wireless phone cards. Rogers wanted to draw the attention of
the Committee to the significant differences between traditional retail gift cards
and the prepaid wireless phone cards their organization offered, given that the
50
Supra note 33 at 9-10.
51
Turenne, supra note 47.
52
Supra note 40. See also Multi-store Gift Cards Coalition, online:
53
Interview with Heath Applebaum (29 October 2007).
54
Man. Reg. 98/2007, s. 2(1)(3).

The Consumer Protection Amendment Act 143
definition of a “prepaid card” was rather wide. 55 As mentioned above, Bill 4
defined prepaid purchase card as:
"[P]repaid purchase card" means, subject to the regulations, an electronic card, written
certificate or other voucher or device with a monetary value, that is issued or sold in
exchange for the future purchase or delivery of goods or services, and includes a gift card
and gift certificate.56
Ms. Kwiatkowski conveyed Rogers’ position clearly; essentially, Rogers they
did not want the legislation’s definition of “prepaid purchase card” to encompass
their prepaid wireless phone cards. She went on to point out the many
differences between Rogers’ prepaid card and the traditional gift card. 57
The first important difference is that Rogers’ prepaid wireless phone cards
are often purchased by the ultimate consumer, not as a gift. As a result, the
consumer is generally aware of the card’s terms and conditions and often uses
the card soon after purchasing it: so the cards serve very different purposes. 58
Another noteworthy difference is that the traditional gift card is very similar
to using cash, whereas the prepaid wireless card is more like a billing system for
wireless airtime access. 59
Third, Rogers submitted that traditional retail gift cards can usually be used
to redeem a number of different items within a store (or a shopping centre, as
pointed out by Cadillac Fairview’s presentation with respect to MSGCs),
whereas the consumer of a prepaid wireless phone card can only redeem the card
for one thing—wireless airtime minutes during a specified time period. 60
A significant difference between the two types of cards is that networks
which offer wireless services have a certain network capacity. In order to manage
that capacity, the service provider needs to know what range of usage is available
to prepaid customers. A traditional retailer, on the other hand, does not need to
purchase more stock simply because they have sold more gift cards. 61
With respect to expiry, traditionally the cards are sold for one-month
periods. If the consumer does not use up the full value of the airtime within that
month, they can transfer those minutes over to the next month so long as they
55
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 1 (4 December 2006)
[Debates (4 December 2006)] at 11 (Laura Kwiatkowski).
56
Bill 4, supra note 10.
57
Supra note 55 at 11 -12.
58
Ibid.
59
Ibid.
60
Ibid.
61
Ibid.

144 Underneath the Golden Boy
have activated a new card, keeping their status active. Rogers advised that they
take steps to inform customers when their prepaid card is close to expiring so
that customers do not lose those minutes. 62
Furthermore, Rogers argued that with a single-retailer gift card the
consumer does not receive anything until they actually redeem the card, whereas
Rogers and its competitors offer a program that allows a consumer access to their
network 24 hours a day, seven days a week. Rogers also offers the customer
ongoing 9-1-1 access even if the customer does not have any minutes left on the
prepaid wireless card. 63
The final difference Ms. Kwiatkowski mentioned is that, even when the
consumer of a prepaid wireless card is not using their wireless device, costs are
still accumulating for the network service providers as the device is still
“communicating with the network”. There is also a cost to maintaining the 9-1-1
service as well as IT costs. According to Ms. Kwiatkowski, Rogers does not
recoup these outlays until the card expires or the minutes are consumed. This is
not the case with respect to a single retailer gift card. 64
With respect to other jurisdictions, Ms. Kwiatkowski advised that twentyseven
American States have enacted gift card/prepaid card legislation. Not one
of those states has enacted legislation that eliminates expiry dates for wireless
prepaid phone cards. In fact, 21 of the states clearly exempt these types of cards
from the legislation and the remaining six simply require certain disclosures to be
made with respect to expiry dates. 65
Ms. Kwiatkowski closed by asking the government to specifically exempt
wireless prepaid cards from the definition of prepaid cards in Bill 4, or
alternatively, to ensure that the Regulations acknowledge the difference between
the traditional single retailer gift card and the prepaid wireless card. 66
She further advised that her company made a similar request to the Ontario
Government with respect to their gift card legislation, and that they were still
considering her company’s position at that time. Eventually Ontario concluded
that they did not have jurisdiction to legislate these types of cards as
communications were the subject of federal jurisdiction. 67 According to an
62
Ibid.
63
Ibid.
64
Ibid.
65
Ibid at 12.
66
Ibid.
67
Ontario Ministry of Government Services, News Release (29 May 2007), online:
[Ontario Government News Release].

The Consumer Protection Amendment Act 145
article released shortly after the Standing Committee session, Mr. Selinger
advised that the government would “take a careful look” at how wireless service
providers’ systems work, but his ultimate objective was the protection of the
consumer. 68 Ultimately, however (as mentioned above) the Manitoba
Government did not regulate prepaid wireless cards, as they agreed with Ontario
that they were within the ambit of federal jurisdiction. 69
C. Retail Council of Canada (RCC) – Written Submissions
The Retail Council of Canada is a not-for-profit organization that represents the
interests of Canadian retailers. One of its functions is to advocate on behalf of
retailers and present their views to the federal and provincial governments
regarding a variety of matters such as taxation issues, environmental protection
issues, human resources training, employment and labour relations, and market
practices. 70 Lanny McInness, the Director of Government Relations and
Member Services for Manitoba and Saskatchewan, submitted detailed written
submissions to the Standing Committee with respect to Bill 4. 71
The Retail Council of Canada submitted that the retail market plays a
significant role in Manitoba’s economy. It employs over 69 000 people in the
province—making it Manitoba’s third largest employer. 72
According to Mr. McInnes, Manitoba retailers were not made aware of the
new gift card legislation until the Government’s Speech from the Throne made
on 15 November 2006. He indicated this was a sharp contrast to the Ontario
Government, who worked with retailers before and throughout the legislative
process. This concerned retailers, as this news came shortly before their busiest
season. Mr. McInnes advised that the Manitoba Government could have
avoided this slight upheaval if Mr. Selinger had simply advised Manitoba
retailers that they planned to implement this legislation. 73
68
Mia Rabson, “Rogers seeks exclusion from ban on gift-card expiry dates” The Winnipeg Free
Press, (5 December 2006).
69
Supra note 18.
70
Retail Council of Canada, online:
71
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 1 (4 December 2006)
[Debates (4 December 2006)] at 28-31 (Lanny MacInnes).
72
Ibid at 28.
73
Ibid at 28-29.

146 Underneath the Golden Boy
The RCC’s main areas of concern were: (i) the definition of ‘prepaid cards’;
(ii) expiry dates; (iii) service fees; (iv) disclosure; and (v) timing in relation to
the legislation’s implementation. 74
(i) With respect to the definition, the RCC pointed out that Ontario’s
version of the legislation did not include a definition of “prepaid cards”, and
that having one might improperly include certain types of cards which the
Legislature did not intend to include. The Ontario legislation defines “gift
card agreements” 75 but requires the consumer to make a “payment in full
when entering into the agreement.” 76 It also specifically exempts gift cards
for charitable purposes. 77 Manitoba’s legislation (as it was in December
2006) did not distinguish between promotional gift cards and gift cards
which were purchased, so it was unclear whether the legislation would
exempt promotional gift cards. Mr. McInnes stated that Manitoba
Consumer and Corporate Affairs advised him that the legislation would
exclude promotional cards via the Regulations, 78 but it seemed that his
organization wanted greater assurances that this was the case. Overall, Mr.
McInnes stressed the importance of exempting the promotional cards from
the legislation as consumers and charities would be precluded from enjoying
their benefits and retailers would lose the opportunity to use these cards as
part of a marketing strategy. 79 Fortunately, the Regulations reflected his
concerns, and promotional or charitable cards are permitted to have expiry
dates. 80 However, the Regulations do seem to suggest that consumer
disclosure is still required as the Regulation relating to disclosure refers to
gift cards “issued or sold.” 81 The Manitoba Regulations also go a step further
by allowing retailers to charge fees in relation to free gift cards. 82 The
Ontario legislation does not have a similar provision.
(ii) Expiry dates were another area of concern for the RCC. Mr. McInnes
corroborated what was earlier said by Ms. Green: the majority of gift cards
are redeemed within a short period of time. According to Mr. McInnes, the
main reason why retailers insist on expiry dates is because the revenue from
74
Ibid at 29-30.
75
O. Reg. 17/05 amended by O. Reg. 187/07, s. 23.
76
Ibid.
77
Ibid s. 25.1(a).
78
Supra note 71 at 29.
79
Ibid. Also see Retail Council of Canada Submission, supra note 17 at 4.
80
Man. Reg. 98/2007, s. 4(1)(b).
81
Ibid s. 3(1).
82
Ibid s. 2(1)(2).

The Consumer Protection Amendment Act 147
gift cards must be recorded as a liability on their balance sheet until the
value of the card is redeemed. Having a specific expiry date is a method of
ensuring those contingent liabilities are eventually removed from the
company’s balance sheet. Another reason for the expiry dates is that as gift
cards become older, it may be more difficult for the retailer who issued the
card to ascertain what value remains on the card. Presumably this is because
the technology the store has used to issue and redeem gift cards changes
over time. Mr. McInnes advised that the RCC appreciates that some
consumers have problems with expiry dates, and that the Ontario
Government was working with RCC to develop a method of eliminating
expiry dates that balances the rights of all parties. 83
(iii) On the topic of service fees, again, much of what Mr. McInnes said
corroborated Ms. Green’s submissions. He indicated that, depending on the
type of infrastructure surrounding the gift card, the implementation and
issuance of a gift card service could be quite costly. The service fees are
designed so the retailer can recover some of the expenses associated with
the gift card program. Mr. McInnes also mentioned that, where a third party
is engaged to open gift card accounts (as in the case of Cadillac Fairview),
the cost to the company to keep that gift card account open is sometimes
more than the card’s remaining value. 84
(iv) With respect to disclosure, the RCC acknowledged that consumer
awareness was an important part of the gift card system, but a lack of
physical space on the card sometimes prohibits the dissemination of all
pertinent information to the consumer. 85 The RCC recently recommended
that the Regulations should not indicate exactly how and where this
information should be provided, as that requirement might hinder unique
and distinctive card design. 86 Essentially the RCC advised it was working
with the Ontario Government to develop the requirements for consumer
disclosure, and they hoped that Manitoba would adopt rules similar to
Ontario in this regard. 87 Interestingly the Manitoba Regulations do not
specify exactly where and how the information should be displayed, but they
do require that the information is given “clearly in a way that is likely to
bring it to the holder’s attention.” 88
83
Supra note 71 at 29-30.
84
Ibid at 30.
85
Ibid.
86
Retail Council of Canada Submission, supra note 17.
87
Supra note 71 at 30.
88
Man. Reg. 98/2007, s. 3(2).

148 Underneath the Golden Boy
(v) Finally, on the issue of timing, the RCC expressed their appreciation for
being heard by the Committee prior to the implementation of the legislation
and Mr. McInnes advised that he anticipated that the Government would
continue to consult with retailers and other interested parties prior to the
legislation coming into force. 89
D. Edward Bachewich, Private Citizen
The final submission with respect to Bill 4 was made by a private citizen, Mr. Ed
Bachewich. His written submission addressed many of the advantages and
disadvantages of gift cards that were discussed earlier in this paper. 90
Mr. Bachewich made a number of suggestions to the government regarding
gift card legislation. He suggested that expiry dates should be eliminated, that
the balance of a gift card should be redeemable as cash, that a gift card issued by
company no longer in business should be redeemable at an entirely different
business, that the value of gift card purchases should be held in trust until the
gift card is used, that gift cards should be cash equivalents, and that mail-inrebates
should be eliminated. 91 Some of these suggestions had far reaching
implications and would involve the government encroaching considerably on the
regulation of the retail industry which would likely attract a great deal of
criticism. The government did not amend the legislation to include any of his
suggestions.
E. Comments of the Critic from the Official Opposition, Mr.
Hawranik
Progressive Conservative Member Mr. Hawranik asked Mr. Selinger whether he
was going to specifically exempt the prepaid wireless cards from the definition
section of Bill 4 (or via the Regulations) or whether he was, in fact, planning on
exempting them at all. The minister dodged the question by stating that his
office still needed to clarify whether or not the prepaid wireless cards actually fell
within federal or provincial jurisdiction—given the fact that communications fall
within the ambit of the federal government. 92 Thus, the final word with respect
to the legislation’s applicability to prepaid wireless cards at the close of the
89
Supra note 71 at 30.
90
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 1 (4 December 2006)
[Debates (4 December 2006)] at 31-33 (Edward Bachewich).
91
Ibid at 32.
92
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 1 (4 December 2006)
[Debates (4 December 2006)] at 18 (Greg Selinger).

The Consumer Protection Amendment Act 149
Committee Stage was still unclear. They were ultimately not found to be within
provincial jurisdiction and so they were unaffected by the new legislation. 93
Another issue brought up by Mr. Hawranik was one of the issues addressed
by the RCC, namely, the legislation’s application to promotional gift cards. Mr.
Hawranik’s concern was that the definition of “prepaid purchase card” in the bill
seemed to include promotional cards, by virtue of the word ‘or’ between the
words “issued” and “sold”: 94
“[P]repaid purchase card" means, subject to the regulations, an electronic card, written
certificate or other voucher or device with a monetary value, that is issued or sold in
exchange for the future purchase or delivery of goods or services, and includes a gift card
and gift certificate. 95 [Emphasis added]
Mr. Hawranik did not support the notion that promotional gift cards should
fall within the scope of this legislation. He indicated he believed these types of
cards would simply cease to exist if the legislation eliminated expiry dates for
promotional gift cards. He advised Mr. Selinger that a simple remedy to this
problem would be to amend the word “or” to “and.” Mr. Hawranik was
concerned that if this issue was not addressed in the legislation or regulations, it
was likely that the provision would be challenged, and the court would likely
hold that promotional cards should not have expiry dates. 96
Unfortunately, Mr. Selinger refused to amend the definition section. He
stated the importance of keeping the legislation “flexible” to accommodate the
“rapidly changing” variety of prepaid cards offered. He felt the Regulations
should reflect these kinds of issues. He also suggested that the government
would consider regulating the consumer disclosure requirements with respect to
promotional cards. Mr. Selinger stressed the importance of ensuring that
consumers were not duped into believing they were getting something for free
when certain strings were attached. However, despite the fact that he did not
give an unequivocal promise that the Regulations would exempt promotional
cards from having expiry dates, he did admit that it might be possible given
sufficient consumer disclosure. He advised Mr. Hawranik that he would keep
him up to date as he and his staff worked through the Regulations. 97 At that
point all clauses of the bill were passed and the bill was to be reported.
Ultimately, the government did exempt charitable and promotional cards from
93
Supra at note 18.
94
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 1 (4 December 2006)
[Debates (4 December 2006)] at 18 (Gerald Hawranik).
95
Bill 4, supra note 10.
96
Supra note 94.
97
Supra note 92 at 18-20.

150 Underneath the Golden Boy
the prohibition on expiry dates in the Regulations, 98 although it seems these
types of cards still must disclose certain information the consumer. 99 Also, the
government went one step further by allowing fees to be associated with these
types of cards. 100
IV. CONCURRENCE AND THIRD READING, ROYAL ASSENT, AND
COMING INTO FORCE
On 6 December 2006, Bill 4 was concurred, read for a third time, and passed.
Progressive Conservative member Jack Reimer from Southdale put some
supportive comments on the record regarding Bill 4, but his comments were
reflective of an unenlightened consumer who didn’t fully understand the farreaching
implications of this legislation. His view, essentially, was that it was
commendable that the government was stepping in to protect the vulnerable
consumer from impending expiry dates. 101 However, there were several issues he
did not discuss. He did not specifically address service or maintenance fees of
any kind, or discuss their relative merits. Furthermore, as he failed to
differentiate between the various types of gift cards, it is unclear from his
comments whether he even appreciated their differences and how this legislation
has the potential to negatively affect certain retailers, which in turn would
ultimately affect consumer choice. At first blush, one might think this legislation
could do no harm, but on closer inspection there are many parties potentially
affected.
The next speaker was the Honorable Jon Gerrard, the leader of the
Manitoba Liberal party. He advised that he supported the purported purpose of
Bill 4, but that he did have some concerns with it. He suggested that the bill was
essentially smoke and mirrors. Although the bill prohibited expiry dates, there
was nothing in the bill itself to prevent a company from charging inactivity
fees. 102 This is true strictly speaking, although the bill specifically gives the
98
Supra note 80.
99
Supra note 81.
100
Supra note 82.
101
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 15 (6 December 2006)
[Debates (6 December 2006)] at 567 (Jack Reimer).
102
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 15 (6 December 2006)
[Debates (6 December 2006)] at 567 (Jon Gerrard).

The Consumer Protection Amendment Act 151
Lieutenant Governor the authority to make Regulations pertaining to “inactivity
fees or service fees”. 103
Next, Mr. Gerrard addressed the way in which the government introduced
the legislation. He took the opportunity to reiterate the comments of the RCC,
and criticized the government for the lack of information provided to retailers
when the legislation was first considered. He repeated the RCC’s concerns
regarding the “prepaid purchase card” definition, agreeing with the RCC that the
definition was vague and that the government should have looked more to
Ontario’s legislative model. Mr. Gerrard noted that there had been no
conclusive statement by the government with respect to the legislation’s
treatment of promotional cards. He suggested this was an ambiguity which
would only cause more confusion among retailers. Overall, Mr. Gerrard
indicated his party will be closely analyzing the government’s implementation of
the legislation and the Regulations to ensure its application actually addresses its
intention. 104
The bill was given Royal Assent the following day, 7 December 2006. 105
Clause 3 of Bill 4 indicated the Act was to come into force on a day to be fixed
by proclamation. 106 On 11 August 2007 the Manitoba Gazette reported that the
Act was to come into force on 1 November 2007. 107 The Regulations pertaining
to this bill were registered on 31 July 2007. 108
V. OTHER PROVINCIAL LEGISLATION PERTAINING TO GIFT CARDS
A. Ontario
Ontario, through Bill 152, Ministry of Government Services Consumer
Protection and Service Modernization Act, 2006, 109 was the first Canadian
jurisdiction to regulate gift cards. 110 It amended the Ontario Consumer
103
Bill 4, supra note 10, s.173(f).
104
Supra note 102 at 568.
105
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 16B (7 December 2006)
[Debates (7 December 2006)] at 636.
106
Bill 4, supra note 10, Clause 3.
107
Acts and parts of Acts coming into force after 2006 by proclamation, online, Manitoba Laws:
108
Supra note 12.
109
Supra note 26.
110
Ontario Government News Release, supra note 67.

152 Underneath the Golden Boy
Protection Act 111 and came into force on 1 October 2007. The Ontario
legislation is similar to the Manitoba legislation: the bulk of the legislative effect
comes from the Regulations. 112 The legislation does not define “prepaid purchase
card” as the Manitoba legislation does, but does define the terms “gift card” and
“gift card agreement” as follows:
"[G]ift card" means a voucher in any form, including an electronic credit or written
certificate, that is issued by a supplier under a gift card agreement and that the holder is
entitled to apply towards purchasing goods or services covered by the voucher;
"[G]ift card agreement" means a future performance agreement under which the supplier
issues a gift card to the consumer and in respect of which the consumer makes payment in
full when entering into the agreement. 113
The effects of the new Regulations are very similar to Manitoba’s legislation
and are essentially threefold; (i) the elimination of expiry dates, (ii) the
elimination of gift card fees (except fees associated with the replacement of lost
or stolen cards or fees charged to customize a gift card) and (iii) the requirement
that certain information be disclosed to the consumer (i.e., any applicable fees,
limitations on the use of the card, etc.). 114 The apparent harmonization of the
two pieces of legislation is no coincidence. The Manitoba Director of Consumer
and Corporate Affairs advised that Manitoba worked openly with Ontario
officials to have a mutual understanding of the Ontario Government’s legislative
intent. Manitoba had consistency in mind, as gift cards have cross border
implications. 115
A noteworthy difference between the two pieces of legislation is Ontario’s
treatment of the MSGC. Unlike the Manitoba legislation, which only permits a
monthly account maintenance fee for accounts which have been dormant for a
year, 116 the Ontario Regulations specifically exempt MSGCs from the legislation
for a period of 270 days. 117 This delay was allowed so that the government could
analyze how to regulate these cards. 118 Also similar to Manitoba’s approach, the
Ontario Ministry of Government Services has not regulated prepaid wireless
phone cards since it concluded that they are the subject of federal jurisdiction. 119
111
Consumer Protection Act R.S.O. 2002, c. 30.
112
O. Reg. 17/05 amended by O. Reg. 187/07.
113
Ibid s. 23.
114
Ontario Government News Release, supra note 67.
115
Interview of Director of Consumer and Corporate Affairs (31 October 2007).
116
Man. Reg. 98/2007, s. 2(1)(3).
117
Supra note 113, s. 25.4(1).
118
Ontario Government News Release, supra note 67.
119
Ibid.

The Consumer Protection Amendment Act 153
B. British Columbia
On 28 May 2007, Private Members Bill M 219, The Business Practices and
Consumer Protection Amendment Act 120 was introduced. According to Guy
Genter, who introduced the bill, it does not seek to regulate expiry dates with
respect to promotional cards. 121 However, the bill’s definition of ‘gift certificate’
seems to suggest otherwise:
“[G]ift certificate” means a record evidencing a promise by the seller or issuer of the
record that consumer goods or services will be provided to the bearer of the
record…[Emphasis added]. 122
‘Issue’ is defined as follows:
“[I]ssue” means to sell or otherwise provide a gift certificate to any person… [Emphasis
added]. 123
In any event, the bill proposes to eliminate expiry dates, service fees, and
dormancy fees without exception. 124 The bill also has a rather unique
requirement—foreign to both the Ontario and Manitoba legislation. If a
consumer makes a purchase with a gift card that is less than the card’s value, the
retailer is obligated to give whatever amount is remaining on the card to the
consumer in the form of either cash or a gift card. 125 Furthermore, where the
remaining balance is less than five dollars, the retailer must make the balance of
the card available in cash upon demand of the consumer. 126 It is possible that
this could potentially engender the development of fraudulent gift cards.
Furthermore, the legislation should be looked at more carefully as it seems to
cover a number of types of gift cards without differentiating between them. In
any event, the bill has not progressed past first reading. 127
The British Columbia Government also expressed some interest in
regulating gift cards. The Ministry of Public Safety and Solicitor General issued a
120
Bill M 219, Business Practices and Consumer Protection Amendment Act, 3 rd Sess., 38 th Leg.,
British Columbia 2007.
121
British Columbia, Legislative Assembly, Debates of the Legislative Assembly, Vol. 21. No. 7 (28
May 2007) [Debates (28 May 2007)] at 8229 (Guy Gentner).
122
Supra note 120 s. 14.1(1).
123
Ibid.
124
Ibid s. 14.2(1).
125
Ibid s. 14.2(3).
126
Ibid s. 14.2(4).
127
Legislative Assembly of British Columbia, Progress of Bills, online:

154 Underneath the Golden Boy
public consultation directed at obtaining the public’s views with respect to gift
card regulation. 128 The consultation closed on 15 June 2007.
On 10 April 2008, the Honourable John Van Dongen, Minister of Public
Safety and Solicitor General, introduced Bill 17, the Public Safety and Solicitor
General (Gift Card Certainty) Statutes Amendment Act. 129 It received Royal
Assent on 1 May 2008. 130 It amends the Business Practices and Consumer
Protection Act. The bill defines prepaid purchase card as:
[A] card, written certificate or other voucher or device with a monetary value that is
issued or sold to a person in exchange for the future supply of goods or services to a
consumer, and includes a gift card and gift certificate... 131
Essentially the bill prohibits expiry dates, prohibits fees (subject to the
regulations), and requires certain disclosures to be made to the consumer such as
information relating to restrictions and limitations. 132 It also requires vendors of
gift cards to explain how information may be obtained about the card, including
how to ascertain the card’s remaining balance. 133 The bill also gives the
Lieutenant Governor the authority to make regulations refining the definition of
“prepaid purchase card,” exempting certain types of prepaid purchase cards from
the legislation, and governing fees and disclosure associated with prepaid
purchase cards. 134 Similar to the Manitoba legislation, the bulk of the bill’s
legislative effect seems to come from the Regulations, which had not been
published as of 10 June 2008. 135 The bill comes into force by regulation of the
Lieutenant Governor. 136
128
British Columbia Ministry of Public Safety and Solicitor General, “Regulating Gift Cards and
Certificates: Consultation Paper and Questionnaire”, online:
129
Bill 17, Public Safety and Solicitor General (Gift Card Certainty) Statutes Amendment Act,
2008 4 th Sess. 38 th Leg., British Columbia, 2008 (assented to 1 May 2008), S.B.C. , c. 15 [Bill
17].
130
British Columbia, Legislative Assembly, Debates of the Legislative Assembly No. 2 (1 May
2008) [Debates (1 May 2008)] at 11899.
131
Bill 17, supra note 129, s. 3.
132
Bill 17, supra note 129, s. 3.
133
Ibid.
134
Ibid.
135
British Columbia Government, Cumulative B.C. Regulations Bulletin (10 June 2008), online:
136
Bill 17, supra note 129, s. 24.

The Consumer Protection Amendment Act 155
C. Nova Scotia
On 11 January 2007 Private Members Bill No. 133, An Act to amend Chapter
92 of the Revised Statutes, 1989, the Consumer Protection Act, 137 was
introduced by NDP Member Mr. Percy Paris and given its first reading. 138
Essentially the bill proposes to amend the Consumer Protection Act 139 to permit
the Governor in Council to make Regulations with respect to expiry dates on gift
cards. 140 Like the British Columbia private member’s bill, the Nova Scotia bill
has not progressed past first reading. 141
However, Bill 38, An Act to Amend Chapter 92, of the Revised Statutes,
1989, the Consumer Protection Act, (another private member’s bill introduced
by NDP Member Percy Paris) was first read on 28 November 2007 and came
into force on 13 December 2007. 142 The bill is quite brief. In its entirety, it allows
for the Governor in Council to make regulations:
[I]mposing restrictions, including the regulation or prohibition of expiry dates on goods,
including gift certificates or gift cards, that are exchangeable or redeemable for goods or
services. 143
As of June 2008, no regulations under this bill had been filed. 144
D. Saskatchewan
Saskatchewan also recently decided to regulate prepaid purchase cards. On 13
March 2008, Saskatchewan Party Member Don Morgan introduced and first
137
Bill 133, An Act to amend Chapter 92 of the Revised Statutes, 1989, the Consumer Protection
Act, 1 st Sess., 60 th General Assembly, Nova Scotia, 2007.
138
Nova Scotia, Legislative Assembly, Debates and Proceedings (11 January 2007) at 2964 (Percy
Paris).
139
Consumer Protection Act, R.S.N.S. 1989, c. 92.
140
Supra note 137.
141
Nova Scotia Legislature, House Business, Status of Bills, 1 st Session, 60 th General Assembly,
Progress of Bills 2006, online:
142
Bill 38, An Act to Amend Chapter 92 of the Revised Statutes, 1989, the Consumer Protection
Act, 2 nd Sess. 60 th General Assembly. Nova Scotia, 2007.
143
Ibid.
144
Nova Scotia, Department of Justice, Registry of Regulations, Listed by Act, online:
http://www.gov.ns.ca/just/regulations/rxaa-l.htm#conpr (viewed 22 June 2008).

156 Underneath the Golden Boy
read Bill 12, The Consumer Protection Amendment Act, 2008. 145 It received
Royal Assent on 28 April 2008 and will come into force on proclamation. 146
The legislation is quite comprehensive. A director may be appointed under
the bill to administer the amendments and regulations pertaining to prepaid
purchase cards. 147 Similar to the other provinces’ legislation, the bill prohibits
expiry dates and fees (subject to the regulations) and requires information to be
provided to the consumer. 148 However, unlike other provinces, this bill has
comprehensive sections dealing with the powers the director has to demand
documents or records from “any person”. 149 Furthermore, a search warrant may
be issued by a justice or provincial court judge if satisfied by information under
oath that there are reasonable grounds to believe that someone has contravened,
is contravening, or will contravene the sections dealing with prepaid purchase
cards. 150 The director can also order compliance and can apply to court for an
order directing compliance, or for any other order or remedy. 151 The bill also
creates an “offences and penalties” section for those who contravene the new
sections: for a first offence individuals face fines up to $5 000 and imprisonment
for up to a year. Corporations face fines up to $100 000. The penalties increase
for second or subsequent offences. 152 The court can also order restitution. 153
Finally, the Lieutenant Governor may also make Regulations governing fees and
consumer disclosure and exempting certain types of prepaid purchase cards. 154
VI. THE RAMIFICATIONS OF BILL 4
At Bill 4’s Second Reading, on 27 November 2007, Minister of Finance Gregory
Selinger said:
145
Bill 12, The Consumer Protection Amendment Act, 2008, 1 st Sess., 26 th Leg., Saskatchewan,
2008 (assented to 28 Apr 2008) S.S. 2008, c. 4. [Bill 12].
146
The Legislative Assembly of Saskatchewan, Progress of Bills, 1 st Sess. 26 th Legislative Assembly,
online: .
147
Bill 12, supra note 145, s. 77.12.
148
Ibid. s. 77.13 - 77.15.
149
Ibid. s. 77.18.
150
Ibid. s. 77.19.
151
Ibid. s. 77.20 and 77.21.
152
Ibid. s. 77.22.
153
Ibid. s. 77.23.
154
Ibid. s. 77.28.

The Consumer Protection Amendment Act 157
The legislative amendments in Bill 4 will allow the government to ensure the proper
balance between the rights of consumers and the interests of the retail industry with
respect to fees and conditions. 155
Based on the foregoing discussion, this begs the question (simply stated),
“Where is the balance” At first blush it seems the scales are tipped largely in
favor of protecting the consumer. However, a closer analysis reveals that it is
unlikely that the legislation will really protect those whom it was designed to
protect. It is conceded that the Regulations dealing with consumer disclosure
requirements and expiry dates will likely satisfy the bill’s purported objective of
consumer protection. However, the same cannot be said about the effects of the
legislation on MSGCs in Manitoba.
Polo Park did not offer their MSGC, (“shop!”) in the 2007 holiday season:
Cadillac Fairview was not provided with sufficient time to create a new card that
would be in compliance with the new legislation that came into force shortly
before the holiday season (1 November 2007). According to Cadillac Fairview
communications manager Heath Applebaum, 40 000 “shop!” cards were sold
within the preceding 12 months, a 25% increase from the previous year. 156 Was
it really within the best interests of those consumers who wanted to purchase
“shop!” cards that the card was not offered
Cadillac Fairview owns and manages retail properties in several other
provinces, 157 and Manitoba was the only province where the “shop!” card was
not offered for the 2007 holiday season. 158 It is unclear why the Manitoba
Government did not allow an exemption period similar to Ontario’s. Delaying
implementation would have allowed more time to consider how to implement
this legislation to balance the various stakeholder rights, while also allowing the
“shop!” cards to be offered during the 2007 holiday season. When the writer
asked the Director of Consumer and Corporate Affairs if she had any comments
with respect to this, she essentially said that the decision not to offer the card
was a business decision entirely within the discretion of Cadillac Fairview, not a
decision of the government, so she really was not in a position to comment. 159
Essentially, Cadillac Fairview has responded to the new legislation by
discontinuing sales of the “shop!” card at Polo Park. However, “shop!” cards
purchased outside Manitoba at other Cadillac Fairview shopping centres may
155
Manitoba, Legislative Assembly, Debates and Proceedings, LVIII No. 9 (27 November 2006)
[Debates (27 November 2006)] at 310 (Greg Selinger).
156
Supra at note 40, also see: Turenne, supra note 47.
157
Cadillac Fairview Portfolio, supra note 32.
158
Supra at note 40.
159
Supra at not 115.

158 Underneath the Golden Boy
still be redeemed within Manitoba. 160 Furthermore, according to Cadillac
Fairview, all “shop!” cards purchased prior to 1 November 2007 may also be
redeemed at Polo Park. 161 When asked about the potential effects on retailers in
Polo Park, Mr. Applebaum advised that 52 of the 165 retailers in Polo Park do
not have their own gift card programs: they are relatively expensive to set up,
and many smaller retailers do not have the time and resources necessary for their
implementation. He advised that the sales of these smaller retailers, who all
relied on the Cadillac Fairview “shop!” card, will be the most severely impacted
by the loss of the card. 162 Arguably, this will also have an effect on the end price
the consumer may pay at these smaller retailers, as these retailers will have to
make up for lost sales which have accompanied the elimination of the “shop!”
card. It might be argued that Cadillac Fairview could offer a very basic model of
its previous card in Manitoba without all the additional services such as the card
replacement program and the online account access. However, since the
program is a national gift card program, Cadillac Fairview indicated they did not
have sufficient time or notice to create an alternative type of gift card for Polo
Park that would be in compliance with the legislation. 163
Mr. Applebaum accurately framed the crux of the controversy behind this
legislation: does the Government have the right to impose how much a company
should charge for a service where the evidence clearly indicates this is a service
consumers are quite willing to pay for Essentially Cadillac Fairview’s position is
that the government should not intervene and that consumers should be able to
purchase what they choose to as long as full disclosure is made to them. 164
The other major shopping centre in Winnipeg, the St. Vital Centre, has also
made some changes to its multi-store gift card policy. The St. Vital Centre card
is slightly different than the Cadillac Fairview “shop!” card as it is only accepted
at St. Vital retailers, 165 as opposed to several major shopping centres across
Canada. The St. Vital Card is also not accepted at most food vendors in the
mall. 166 Although there was never a service fee levied when purchasing the card,
prior to the legislation coming into force, St. Vital charged a $2 monthly
160
“shop!” cards: Attention Polo Park Shoppers, Polo Park, online:
161
Ibid.
162
Supra at note 40.
163
Supra note 160.
164
Supra at note 40.
165
St. Vital Centre, Gift Cards, online:
166
Ibid.

The Consumer Protection Amendment Act 159
maintenance or inactivity fee that came into effect when the card was not used
for a period of 15 months. 167 St. Vital uses the same third party company as
Cadillac Fairview to manage their multi-store gift cards, StoreFinancial
Services, 168 so presumably they have similar costs for maintaining inactive
accounts. Instead of providing consumers with more protection, however, due to
the new legislation St. Vital has reduced the required inactivity time period from
15 months to 12 months, as 12 months is specifically mentioned in the
Regulations. 169 The applicable Regulation reads as follows:
If a supplier issues or sells a prepaid purchase card entitling the holder to apply it towards
purchasing goods or services from multiple unaffiliated sellers, the supplier may — if the
card has not been activated for 12 months — charge a maximum monthly fee of $2.50
thereafter. [Emphasis added] 170
It is arguable that the legislation sets the reasonable standard at 12 months.
What incentive would a gift card issuer have to lengthen the time period before
charging maintenance fees beyond that reasonable standard
According to Holly Plato, Marketing Director of St. Vital, although St.
Vital’s gift cards were always in compliance with the legislation, 20VIC (the
company that manages St. Vital) and StoreFinancial Services came to an
agreement that they would change their gift card maintenance fee policy. Now
the maintenance fee commences after twelve months of inactivity (presumably
because the policy would be in perfect compliance with the legislation while also
being more profitable).
So as it stands, fees start accumulating and affecting a consumer’s gift card
balance after 12 months, rather than the pre-legislation policy of 15 months.
The consumer now has three months less grace. It is ironic that the purported
purpose of this legislation is the protection of consumers when consumers are
actually losing the benefit of an extra three months before inactivity fees reduce
their cards’ balances.
VII. CONCLUSION
The elimination of expiry dates and the requirement for consumer disclosure
benefits consumers. They are rationally connected to the goal of consumer
protection. Furthermore, these particular Regulations do not place an
167
Interview of Holly Plato, Marketing Director of St. Vital Shopping Centre (5 November 2007).
168
Ibid. Also, see, When clicking on the link to check your
balance for the St. Vital gift card it leads to a StoreFinancial Services-managed site.
169
Supra note 167.
170
Man. Reg. 98/2007, s. 2(1)(3).

160 Underneath the Golden Boy
unreasonable burden on the backs of retailers. The Manitoba Government
should be commended for deciding not to regulate charitable or promotional gift
cards. However, the way in which the government chose to regulate MSGCs has
resulted in two very unfortunate situations. Ironically, the first leaves consumers
without the option of purchasing an enormously popular holiday gift, namely,
the multi-store gift card, and the second results in consumers having less time
before their gift card balance is consumed by dormancy fees.
On a more optimistic note, the built-in statutory review mechanism
promulgated in the Regulations that requires the minister to review the
effectiveness of the legislation and consult relevant stakeholders within 18
months 171 will hopefully prompt the government to consult more carefully with
affected groups and make the appropriate changes to reflect the foregoing
concerns.
171
Man. Reg. 98/2007, s. 7.

The Road to Hell: Examining The Organic
Agricultural Products Act
MEAGHAN DANIEL
W
hile debating The Organic Agricultural Products Act 1 (“OAPA”) during a
meeting of the Standing and Special Committee on Social and Economic
Development, Mr. Goertzen, the Conservative MLA for Steinbach said, “I think
we all know that a lot of bad legislation has been passed with good intentions at
times.” 2 A particularly apt description, since the purpose of the Act is divorced
from its provisions. When introducing this legislation, the Minister of
Agriculture, Food and Rural Initiatives, the Honourable Rosann Wowchuk,
summarized its intended function: “By creating provincial standards for organic
food production in Manitoba that mirror federal standards, OAPA will provide
the same assurance to Manitoba consumers and will assist Manitoba producers in
their marketing efforts.” 3 Thus characterized as a benign piece of legislation
designed to fill the provincial gap left by federal regulations, in truth, the
provincial legislation will only affect intra-provincial trade, targeting small-scale
local producers. Once the legislation comes into force, local and commercial
producers will not be uniformly assisted, but instead stratified; Manitoba
consumers will derive a very limited benefit; and the environment, omitted from
the stated purpose but not from the effects of this legislation, will be damaged.
Despite these defects, this bill drifted from its first introduction and received
Royal Assent without amendment or timely debate on its provisions.
The OAPA sets out a series of permissive powers for a minister. The
minister who is appointed by the Lieutenant Governor in Council to administer
the OAPA is charged with the responsibility to draft regulations that create
standards for organic certification. Only producers certified in accordance with
1
Bill 13, The Organic Agricultural Products Act, 1 st Sess., 39 th Leg., Manitoba, 2007 (assented
to 8 Nov. 2007). [OAPA].
2
Manitoba, Legislative Assembly, Standing and Special Committee on Social and Economic
Development, in Official Reports of Debates (Hansard), (17 October 2007) at 26 (Mr.
Goertzen).
3
Manitoba, Legislative Assembly, Debates and Proceedings, in Official Reports of Debates
(Hansard),Vol. LVIII No. 25 (11 April 2007) at 753 (Hon. Rosann Wowchuk).

162 Underneath the Golden Boy
the regulations will be allowed to market or label their products as ‘organic’. 4
The regulations could include designating a certification body; 5 proscribing the
length, renewal, suspension, and cancellation of the certification period; 6
exempting a person or product from the Act as a whole or any part; 7 and setting
a method of appealing decisions of the certification body. 8 To enforce these
regulations, the minister may appoint inspectors who would have sweeping
statutory powers of search and seizure, sanctioned to use force to complete the
inspection. 9 Individuals in contravention of the OAPA could be summarily
convicted and face a $20 000 fine, six months of jail time, or both. 10
The OAPA was introduced to the House as Bill 18 on 11 April 2007. It had
only reached the stage of second reading on 18 April, when the government was
dissolved for the 22 May 2007 election. Though Bill 18 died, the government
revived and reintroduced it to the House as Bill 13 on 2 October 2007. In her
introduction of Bill 18 in April, the Honourable Rosann Wowchuck took the
opportunity to explain the bill’s purpose and added two assurances that the
drafting was sound. Ms. Wowchuk claimed that the standards created by the
provisions would mirror federal organic standards and that local agricultural
policy organizations had aided in the creation of the provisions—including the
Keystone Agricultural Producers, the Canadian Wheat Board, the Organic Food
Council of Manitoba, and the Organic Producers Association of Manitoba. 11
At the second reading on 18 April, Ms. Wowchuk elaborated on the
importance of the legislation and reiterated assurances that the legislation
mirrored federal standards and that the government had drafted it in
consultation with local agricultural policy groups. 12 Emphasizing the relationship
between consumers and producers by mentioning the growth of the organic food
sector and its overall importance to the agricultural industry, Ms. Wowchuk
claimed that creation of provincial standards made economic sense for
Manitoba’s farmers. 13 It is notable that at no time during the introduction of the
4
OAPA, supra note 2 at s. 2.
5
Ibid. at s. 3(a).
6
Ibid. at s. 3(d) and s. 3(f).
7
Ibid. at s. 19(1)(p).
8
Ibid. at 3(g).
9
Ibid. at s. 10(2).
10
Ibid. at s. 15(1).
11
Manitoba, Legislative Assembly, Debates and Proceedings, in Official Reports of Debates
(Hansard),Vol. LVIII No. 30 (18 April 2007) at 753 (Hon. Rosann Wowchuk).
12
Ibid. at 957 (Hon. Rosann Wowchuk) .
13
Ibid. at 956-957.

The Organic Agricultural Products Act 163
bill, or at any point in Ms. Wowchuk’s brief presentation at the second reading,
did she mention ecological considerations.
The government’s claim of consultation with local expert or experienced
agricultural policy-makers is of limited value in ensuring that this legislation
considers the unique needs of the Manitoba organic producers. Considering that
one of the goals of the legislation is to emulate federal regulations, it is difficult
to see how the Legislative Council could have also incorporated the individual
opinions of local organizations. If Ms. Wowchuk’s promise of coordination was
true, local organizations could have only influenced the provisions as far as
regulatory uniformity was maintained between federal and provincial
certification standards. 14
Ms. Wowchuk’s first assurance is questionable; however, it is apparent on
the face of the legislation that her second assurance is true. Existing federal
statutes and regulations were repeatedly consulted and considered while the
OAPA was drafted. Many provisions of the OAPA are directly lifted from the
Canadian Agricultural Products Act 15 and the accompanying Organic Products
Regulations. 16 The Organic Products Regulations also address concerns of false
claims regarding organic produce by concentrating on marketing and labelling of
organic goods. 17 According to the regulations, use of the ‘Canada Organic’ logo
or the designations ‘Canada Organic’ or ‘Biologique Canada’ on product labels is
only permitted where producers meet the certification standards for organic
production. 18 The certification process is mandatory for all producers who wish
to market and/or label a product as organic if that product is intended for interprovincial
or international trade. However, claims of organic content made on
produce intended for trade solely within a province is not affected by the federal
regulations. 19
14
Manitoba, Legislative Assembly, Debates and Proceedings, in Official Reports of Debates
(Hansard),Vol. LIX No. 13B (2 October 2007) at 657 (Hon. Rosann Wowchuk). This
assurance was referred to and likely relied on by other members of the legislature. See
Manitoba, Legislative Assembly, Standing and Special Committee on Social and Economic
Development, in Official Reports of Debates (Hansard), (17 October 2007) at 14 where the
Honourable Stan Struthers said in defence of the bill, “I want to make clear that the federal
regulations that have been mentioned here by my colleague from Lakeside, these are intended
to dovetail with those. It's not adding more bureaucracy. It's not all of that; it's about those
working together.”
15
Canada Agricultural Products Act, R.S.C. 1985, (4 th Supp.) c. 20. [CAPA].
16
Organic Products Regulations, S.O.R./2006-338 (coming into force 14 December 2008).
17
“Organic Products” (22 December 2006), online: The Canadian Food Inspection Agency
.
18
Supra note 16 at s. 2(1).
19
Organic Products Regulations, S.O.R./2006-338 (coming into force 14 December 2008) at s. 3.

164 Underneath the Golden Boy
Bill 13 had its second first reading on 2 October 2007. During the second
reading on 15 October 2007, Ms. Wowchuk repeated parts of her speech from
April and instructed the other members to consult her comments from April if
they required more information. 20 The second reading stage is the first prospect
for meaningful debate, an opportunity wasted on 15 October, as members of the
Assembly were moved only to speak in favour of the legislation. Three
conservative members, Ralph Eichler, the MLA for Lakeside, Peter Dyck, the
MLA for Pembina, and Larry Maguire, the MLA for Arthur-Virden, spoke of
their personal regard for Bill 13, with Mr. Eichler stating for the record that Bill
13 enjoyed general Conservative support. The Honourable Jon Gerrard added
that it also enjoyed Liberal support, and that he was looking forward to the
committee stage in order to scrutinize the details of the provisions. Mr. Eichler
and Mr. Maguire both noted the existence of 200 certified farms in Manitoba,
but this statistic was stated without context as neither member mentioned
uncertified producers or the total number of farms in the province. 21
On 18 October 2007, Bill 13 was set before the Social and Economic
Development Committee for discussion. Mel Groening, a concerned citizen
taking the opportunity to make an oral submission to the committee, was the
first person to voice potential problems with the OAPA. An uncertified organic
farmer, Mr. Groening highlighted how the OAPA might affect local producers,
consumers, and perhaps most importantly, the environment—mentioned in the
economically-focused discussion for the first time. 22
Mr. Groening brought the situation of Manitoba’s small-scale, local
producer to the attention of the committee, specifically; the direct, indirect and
potential costs imposed by this legislation and forced certification. With this
legislation, farmers and corporations will face direct costs in the certification
fees—paid upfront to obtain initial certification and periodically to maintain
status. Indirect costs will be incurred through loss of sales as the expenses of
certification are added to the sale price of products, thus lowering their
marketability. Hidden costs will also accumulate as time is wasted on the
certification process—which will likely include application paperwork and
detailed records of field histories.
20
Manitoba, Legislative Assembly, Debates and Proceedings, in Official Reports of Debates
(Hansard),Vol. LIX No. 19 (15 October 2007) at 1130 (Hon. Rosann Wowchuk).
21
Manitoba, Legislative Assembly, Debates and Proceedings, in Official Reports of Debates
(Hansard),Vol. LIX No. 19 (15 October 2007) at 1331(Mr. Eichler) and 1334 (Mr. Maguire).
22
Manitoba, Legislative Assembly, Standing and Special Committee on Social and Economic
Development, in Official Reports of Debates (Hansard), (17 October 2007) at 11-28 (Mr.
Groening).

The Organic Agricultural Products Act 165
Certain provisions in the OAPA threaten the imposition of further costs on
the already taxed farmer. Section 12(1) provides that the government and
certification body can recover from the owner of a product:
Any prescribed fees or charges and any costs incurred by the government or the
certification body in relation to anything required or authorized under this act, including,
but not limited to,
the inspection, sampling, testing or analysis of a place, agricultural product or other thing,
or the storage, removal, disposal or return of an agricultural product or other thing,
required or authorized under this Act; and
the forfeiture, disposal, seizure or detention of an agricultural product or other thing
under this Act. 23
Any organic producer, regardless of their marketing and labelling practices,
will have apprehension regarding these potential costs. Feeding this
apprehension is a presumptive provision—section 16 of the OAPA—which
provides that a person in possession of an amount of produce greater than that
which they could reasonably consume will be deemed to be “in possession of the
product for the purposes of marketing it.” 24 As Mr. Groening noted, stockpiling
organic carrots could trigger trafficking suspicions and begin the inspection,
seizure, and investigation process, all of which can and will be charged to the
farmer. 25 If one is found in contravention of the Act, a farmer could face fines of
up to $20 000. 26
The ability to risk or absorb these costs is directly related to the size of the
producer. Organic farming is already an expensive production method:
Organic agriculture, because it doesn’t rely on synthetic (chemical) inputs to control pests
and weeds, is significantly more labour and management intensive. Farmers hand weed,
apply mulch, and sometimes hand pick insect pests rather than spraying pesticides. Crop
rotations and cover crops are also used to control pests and weeds, which means that
farmers aren’t earning revenue on every acre of land at all times. Organic farms are often
small farms, so organic producers don’t enjoy economies of scale in the same way as large
industrial farms, and sometimes, particularly during the transition to being certified
organic, yields are lower. 27
In addition to the direct costs, the ability to fulfill the paper requirements
will also be related to the size of the producer; small producers are often one-
23
OAPA, supra note 2 at s. 12(1).
24
Ibid. at s. 16. It is worth noting the chilling effect this may have on farmers wanting to be
partially organic.
25
Manitoba, Legislative Assembly, Standing and Special Committee on Social and Economic
Development, in Official Reports of Debates (Hansard), (17 October 2007) at 12 (Mr.
Groening); OAPA, supra note 2 at s. 12(2).
26
OAPA, supra note 2 at s. 15(1).
27
The Organic Food Council of Manitoba “Why does Organic Food Cost More” (3 September
2007) online: .

166 Underneath the Golden Boy
farmer operations. According to the Manitoba Organic Report of 2002, most
organic farms are comparatively smaller than conventional farms and therefore
do not have an excess of profits with which to meet these costs. 28 According to
Mr. Groening’s experience, some small-scale farmers will not be able to afford
the direct costs, much less expose themselves to the risk of inspection. 29
Mr. Groening used the example of certification targeted at organic Maple
Sugar production in Quebec to highlight the costs associated with organic
regulations. He stated organic regulation pushed nearly half of maple sugar
producers to leave the industry, as “[m]any people just are afraid of legislation.
They don’t have time for the paperwork and they don’t want the fees and they
just simply drop out of production.” 30 However, it has also been suggested that
premiums paid for organic produce compensate for extra paperwork and fees. 31
While small-scale organic farmers are often unable to afford production of
official organics, corporations are embracing the label and profit it represents.
According to Business Week magazine, corporate farmers and distributors are
responsible for the exponential growth of the organic industry:
The corporate giants have turned a fringe food category into a $14 billion business. They
have brought wider distribution and marketing dollars. They have imposed better quality
controls on a sector once associated with bug-infested, battered produce rotting in crates
at hippie co-ops. Organic products now account for 2.5% of all grocery spending (if
additive-free "natural" foods are included, the share jumps to about 10%). 32
In glib terms, Business Week describes the transition in organics from
movement to mass market. Organic farming organizations are speaking out
28
Manitoba Regional Office of Agriculture and Food Canada “Manitoba Organic Report” online:
. This citation is not online…however, it is cited
elsewhere as Wuerch, D., H. Urbina and K. Diachun 2002 Manitoba Organic Report:
Agriculture and Agri-Food Canada. Winnipeg.
29
Manitoba, Legislative Assembly, Standing and Special Committee on Social and Economic
Development, in Official Reports of Debates (Hansard), (17 October 2007) at 15 (Mr.
Groening).
30
Maclean’s magazine reports that in 2005, 25% of small-scale organic farms went out of business
due to an inability to compete after market regulations were set. Citing prohibitively expensive
fees of $1,000 just to begin, as well as a quota system, the organic maple syrup sector is
shrinking. Pamela Cuthbert, “The Less Sweet Side of Maple Syrup” Maclean’s (26 March
2007), online: Macleans.ca
.
31
See Diane Brady, “The Organic Myth” Business Week (16 October 2006), online:
Businessweek.com
.
32
Supra note 31.

The Organic Agricultural Products Act 167
about this phenomenon, what is termed the ‘corporate capture of organics.’ 33
The Organic Food Council of Manitoba notes that companies such as Wal-Mart,
Kraft, and Pepsi are buying into organics, and that the industry is suffering, as,
“…in order to supply such high output corporations, organic farms are growing,
getting bought out, and assimilating some of the large scale industrial practices of
today’s conventional food system.” 34 Legislation that burdens the small-scale
producer will not uniformly help all Manitoba producers, but contribute to the
corporate capture of organics.
Perhaps the Legislative Assembly did not come to a similar conclusion
because of the focus in their discussions on consumer health. At the second
reading of the OAPA, Mr. Eichler mentioned that “…the various grocery stores,
Wal-Mart and Safeway, Sobeys and many of the others have, in fact, the organic
association itself has done a tremendous job in increasing awareness on eating
healthy and healthy products.” 35 In terms of immediate health benefits, corporate
organics may be better than corporate conventional farming. However, the
ideals behind the organic movement were not solely based on healthy eating but
were part of an active resistance to corporate production:
The organic movement began as a grassroots response to chemical agriculture and the
industrialization of the food system. Social justice, the economic viability of the family
farm, whole, healthful food, and strong relationships between farmers and consumers
were some of the ideals of the organic pioneers. 36
Without a fundamental understanding of the organic industry or its ideals,
without recognizing the current market shift from small-scale to large corporate
producer, and without even mentioning that this legislation is limited to intraprovincial
producers, the Legislative Assembly did not fully evaluate whether
this bill will help Manitoba organic producers.
As only certain producers will be able to market their products more
effectively, the OAPA will only help certain consumers of organic produce—
those who are unconcerned about the origin of their produce. If this legislation
does reduce the number of small organic farms, eliminating falsely labelled
organic goods will have come at the cost of reducing the availability of local
organic produce. Those who are concerned with lessening their food miles (and
thus their impact on the environment) will not have the same consumer choice.
33
Organic Food Council, Manitoba Chapter “Our Stance on Local vs. “Big Organic” (3
September 2007), online: .
34
Ibid.
35
Manitoba, Legislative Assembly, Debates and Proceedings, in Official Reports of Debates
(Hansard),Vol. LIX No. 19 (15 October 2007) at 1331 (Mr. Eichler).
36
Supra note 33.

168 Underneath the Golden Boy
Macey’s study of the state of organic farming, suggests that changed certification
options and increased fees were a direct cause of a decrease in certified organic
producers. 37 It is noteworthy that on a national scale, while the number of
certified producers has decreased, the actual production of organic goods has
increased, as each producer is farming a larger acreage than before. 38
To evaluate the protection Manitoba consumers will gain from this
legislation, it is helpful to consider the origin of organic food in the grocery store.
In 2001, organic producers represented just 2% of the total number of farms in
Manitoba and spatially 28 967 acres. 39 In 2000, it was estimated that organic
retail sales volume in Manitoba lay somewhere between .05%–1% of total retail
sales. 40 The rest of the retail sales were predominately composed of American
products as figures cited in the report showed that 85%–90% of organic goods
sold in Canada came from the United States. 41 At that time, fewer than 20 local
producers were selling Manitoba products to Manitoba organic retailers with 90–
95% of eggs, dairy, vegetables, and meat moving directly from producer to
consumer. 42
While seven years have passed since the above figures were compiled, this
report based its conclusions on 200 organic and aspiring-organic producers in
Manitoba, the same figure cited by Mr. Eichler and Mr. Maguire in the House on
11 October 2007. These figures suggest that the assistance to the Manitoba
consumer will be minimal at best, and potentially non-existent, if direct chains of
production between producer and consumer are severed by stressing smaller
operations.
Ecologically speaking, as progressive as organic regulation may seem, in
truth the members of the Manitoba Legislative Assembly are late to the party.
Food activist and PhD candidate at the University of Toronto, Irena Knezevic
notes that all organic food is not created equal. Some organic food travels large
distances to get to the consumer and the ecological footprint of these food miles
is far greater than that of conventional local food. 43 The previous focus on the
method of production has clearly shifted to the global system of agriculture and
37
Anne Macey, “The State of Organic Farming in Canada in 2002” EcoFarm and Garden
(Winter 2004) 44 at 44.
38
Supra note 37.
39
Supra note 28.
40
Ibid.
41
Ibid.
42
Ibid.
43
Michelle Martin, “Corporations Jump on Organic Wagon” Saskatoon Star Phoenix (2 June
2001) A14.

The Organic Agricultural Products Act 169
trade: “While organic food production has many environmental benefits, the
increase in demand for organic versions of all kinds of foods has resulted in
added long-distance transportation that emits enormous amounts of carbon
dioxide.” 44 It is becoming increasingly apparent that in choosing between organic
and local, the ‘greenest’ choice is local produce.
The Legislative Assembly deserves credit for making organic agriculture a
subject for discussion, especially as organics progress into the mainstream of the
retail industry. During this transition, Manitoba organic producers could use the
support of the Government, but this support would likely be stronger if provided
through a different method than regulation of the industry. Briefly, in the
committee meeting on Bill 13, one member, Mr. Faurshou demonstrated some
awareness that regulation was not the best answer:
We cannot over-regulate an infant industry such as the organic industry is in our
province. We have to get more consumers understanding and accepting organic
production. That is why we still have to have a producer-to-consumer direct channel that
does not bear the heavy burden of the regulation, and, ultimately, the expense of such
regulation. 45
Mr. Faurschou raised an excellent point for debate, one that was pursued by
Mr. Struthers. Mr. Struthers disagreed with the idea that this was overregulation,
commenting that organic production methods had been used in
Manitoba for generations, even before ‘white folks’ arrived here, essentially
arguing that organic production is hardly in its infancy. If this bill was about
organic production methods, that would have been an excellent point. However,
the OAPA is clearly about organic marketing.
The environment, consumers, and local producers would all be better off if,
instead of regulating the marketing strategies of Manitoba’s organic producers,
producers enjoyed the support of legislation that valued local organic food
distribution. In creating and debating legislation on organic marketing, it is
crucial to understand the intricacies of marketing organic produce. On a website
under the domain of the Manitoba Agriculture and Rural Initiatives a
comparison is made between organic and conventional cropping. Listed under
differences is the observation that, “organic producers market much of their own
44
Supra note 33.
45
Manitoba, Legislative Assembly, Standing and Special Committee on Social and Economic
Development, in Official Reports of Debates (Hansard), (17 October 2007) at 25 (Mr.
Faurschou).

170 Underneath the Golden Boy
produce.” 46 In regulating the marketing of organic produce, legislators should
have carefully considered this crucial difference in marketing schemes.
While somewhat of a simplification, the Manitoba Legislative Assembly
could have taken one of two roads. The first would have been to vote down the
legislation and let the industry develop unregulated by the government.
Currently, with the operation of the CAPA and the Organic Products
Regulations, there is a mandatory system of certification in place for interprovincial
and international trade, and a voluntary system of certification for
trade occurring within Manitoba. Without debating the merits, there were clear
reasons for implementing a mandatory system at the national level. In a costbenefit
analysis of organic regulation, the Canadian Food Inspection Agency
reported that without a national regulatory system acceptable to the European
Union (“EU”), the EU would not have accepted Canadian organic produce for
its import market. 47 Voluntary regulation was not enough as, “The variety of
certification requirements combined with voluntary standards limit trade growth.
National regulations with the federal government as the competent body would
improve the ability of Canada to market its organic products in foreign
markets.” 48 Producers concerned with marketing organic products in foreign
markets needed certification for their goods to be recognized across borders, a
situation where the relationship between the producer and the ultimate
consumer have considerable distance between them.
However, similar arguments do not apply to trade of organic products within
the borders of Manitoba. It would have been easy for Manitoba to stay with a
voluntary system, as one has been in place for nearly 20 years. The Organic
Producers Association of Manitoba Co-operative Inc. (“OPAM”) incorporated
as a non-profit organization in 1988 49 and the organization states its primary
purpose as the promotion of organic production and consumption, primarily
46
Lynda Lowry, “Organic Production vs. Conventional Cropping” (September 2007) online:
Manitoba Agriculture, Food and Rural Initiatives
.
47
“Cost Benefit Analysis of the Effects of Federal Regulation for Organic Products: Final Report”
(31 August 2006), online: Canadian Food Inspection Agency
.
48
Supra note 47.
49
“History of the Organic Producers Association of Manitoba Co-operative Inc. (OPAM)” (11
May 2005), online: Organic Producers Association of Manitoba Co-operative Inc.
.

The Organic Agricultural Products Act 171
through providing a credible certification system.” 50 The Standards Council of
Canada (“SCC”) accredited OPAM in the following subject areas:
• Certification of producers, processors, handlers and traders of organic
food, feed and fibre;
• Certification of organic products derived from the above through
organic food, feed and fibre processing techniques as defined by the
suppliers; and,
• Certification of organic production inputs and organic processing
ingredients. 51
A producer can apply to the OPAM certification system to trade in Canada
and/or Europe, and to the United States Department of Agriculture accredited
certification system. Although just one of the many existing organic certification
bodies across Canada, OPAM already has certification criteria, documentation,
and third party inspection processes in place. 52 As an SCC accredited body, the
OPAM certification process meets the minimum standards as set by the federal
regulations, and complies with the Canadian Standards. 53 With OPAM in place
and operating in accordance with federal regulations, the province could easily
opt to concentrate their legislative efforts elsewhere.
The problem with simply keeping the voluntary system or the status quo was
it did not fully address the government’s concern that Manitoba consumers were
being duped with false claims of organic produce. However, as stated above, with
the small size of the organic sector, fake Manitoba organics probably do not
compose a large portion of products. Moreover, if concerned consumers were
trusted to learn the difference between a product marketed as organic and one
certified as organic by an organization such as OPAM, they could protect
themselves from inadvertently consuming conventionally farmed goods.
50
“Mission Statement of the Organic Producers Association of Manitoba Co-operative Inc.
(OPAM)” (11 May 2005), online: Organic Producers Association of Manitoba Co-operative
Inc. .
51
“Subject Areas of Accreditation” (24 September 2007), online: Standards Council Canada
.
52
“Certification Process” (11 May 2005), online: Organic Producers Association of Manitoba Cooperative
Inc. . According to the
Canada Organic Growers website there are 23 certification bodies across Canada. See “Organic
Certification Bodies” (19 July 2007), online: Canadian Organic Growers
.
53
Hugh Martin, “Organic Food and Farming Certification” (1 May 2002), online: Ministry of
Agriculture Food and Rural Affairs
.

172 Underneath the Golden Boy
The second path for the Legislative Assembly to travel, the one ultimate
chosen, was to pass the OAPA without amendment and force organic farmers to
certify or cease production as ‘organic’ farmers. Embracing a mandatory standard
prevents false claims that produce is organic and ensures fair trading practices.
The negative aspects of traveling this road have been argued largely above.
However, on the coming into force of the OAPA, despairing local producers can
look to a small legislative loophole. In the OAPA, there is a saving provision
which allows the Minister to protect the consumer and the certified producers,
without punishing the small-scale farmer. Section 10(1)(p) allows the minister
making regulations to provide exemptions for people, products, or entire classes
of products. This provision has many possibilities. For instance, if within the
regulations an exemption is drafted to protect direct producer-to-consumer
relationships some of the potential harmful effects of this legislation can be
mitigated. 54
The committee did not recommend any amendments to Bill 13. However,
on 5 and 6 November, at the third reading of Bill 13, the tenor of the Assembly
was considerably changed. In the second reading of this bill, the only comments
made were positive and supportive of this legislation. In the third reading,
concerns were expressed with underlying resignation that damage control would
depend on the regulations. Len Derkach, conservative member for Roblin-
Russell, spoke regarding the potential for strategic exemptions:
I believe that there could be some exception to some, if you like, farm-gate sales. I know
that, you know, we have always in this country and in this land lived by farmers being
able to sell their product from their farm gate. That's been a good thing... If a farm gate
wants to sell organic eggs, for example, I see nothing wrong with a farmer being able to
take his product directly to the market, wherever it might be. It might be the farmer's
market. It might be a neighbour. It might be somebody in an urban area….I'm hoping
that the minister in her regulation, will not impose a penalty if that, in fact, is a desire of a
producer…. So, Mr. Speaker, I guess we have to await the regulations. 55
In addition to the concerns of Mr. Derkach, Mr. Eichler and Mr.
Lamoureux both spoke about their concerns regarding this legislation. Mr.
Lamoureux stated that he believed that passing the bill would ultimately be a
54
It should be noted that not every consumer has the luxury of forming a direct relationship with
a producer.
55
Manitoba, Legislative Assembly, Debates and Proceedings, in Official Reports of Debates
(Hansard),Vol. LIX No. 31(5 November 2007) at1941 (Mr. Derkach).

The Organic Agricultural Products Act 173
mistake. 56 Despite these statements, Bill 13 was passed, given Royal Assent on 8
November 2007, and will come into force on a day fixed by proclamation. 57
At committee, Mr. Groening related a conversation between farmers
regarding this bill.
“When a local farmer in our area heard about this bill, he told me, what’s this You’re
farming the way you should be and have an ideal system in place and have to battle for
survival against this legislation. I can cover my land with all kinds of toxic stuff and no
one bothers me.” 58
Far from simply filling in where the federal regulations left off, the effects of
the OAPA are confined to Manitoba producers who wish to market their
products within local markets. A very different type of producer than the farmer
doing a considerable amount of inter-provincial or international trade, the local
producer is likely to be smaller and less able to meet regulatory burdens. By
encumbering these producers, the government is assisting in the greater
movement from sustainable practices to mass-market organic produce. By
delaying debate until the third reading and concurrence, the Legislative
Assembly missed their chance. It will be up to the minister in making regulations
to mitigate the potential effects of this legislation.
56
Manitoba, Legislative Assembly, Debates and Proceedings, in Official Reports of Debates
(Hansard),Vol. LIX No. 32B (6 November 2007) at 1984 (Mr. Lamoureux).
57
Manitoba, Legislative Assembly, Debates and Proceedings, in Official Reports of Debates
(Hansard),Vol. LIX No. 34B (8 November 2007) at 2100.
58
Manitoba, Legislative Assembly, Standing and Special Committee on Social and Economic
Development, in Official Reports of Debates (Hansard), (17 October 2007) at 13 (Mr.
Groening).

174 Underneath the Golden Boy

Apology Legislation: Should it be Safe to
Apologize in Manitoba
An Assessment of Bill 202
LEANDRO ZYLBERMAN
O
n 12 April 2007, Liberal Leader Dr. Jon Gerrard introduced Bill 217 at the
5 th Session of Manitoba’s 38 th Legislature. 1 The bill—also known as the
Apology Act—allows a person to make an apology without it constituting an
admission of legal liability. The following will assess Dr. Gerrard’s bill, later reintroduced
as Bill 202, to determine its merit and possible effects if passed. Prior
to doing so however, a brief discussion of the various forms of apologies and their
importance will ensue. It is necessary to first understand this to properly assess
the bill’s value. This paper will also present a survey of apology legislation in the
United States, Australia, and Canada, including policy considerations
throughout. Finally, a discussion of Manitoba’s bill will follow, contemplating its
benefits and disadvantages, to determine its merit and, consequently, whether it
ought to be introduced in the province.
I. INTRODUCTION: THE IMPORTANCE OF APOLOGIZING
Prior to embarking upon a discussion of apology legislation, it is necessary to
understand a few basic principles. Doing so will bring the significance and
requirements of such legislation to light. First, it is imperative to analyze the
different types of apologies and their importance as, depending on what form an
apology takes, its effect will vary. Second, analyzing the substance of apologies is
necessary to understanding their effectiveness.
There are two types of apologies, public and private. Government apologies
are a good example of the former, since they are made in public for public
purposes. The latter primarily encompass apologies for tortious wrongs,
1
Bill 207, The Apology Act, 5 th Sess., 38 th Leg., Manitoba, 2007.

176 Underneath the Golden Boy
particularly negligence. 2 It is important to note that regardless of its type, an
apology will not be effective unless it includes an acknowledgement of fault. An
apology has no meaning or force unless the person who is expressing regret is
also taking responsibility for a wrong committed. 3 In other words, the
effectiveness of an apology depends directly on its substance.
A person who admits regret and takes full responsibility for their wrongs
qualifies as having submitted a “full apology.” In contrast, a mere expression of
regret is called a “partial apology.” In the context of civil liability, partial
apologies are also called “safe apologies.” This is primarily because an apology
that does not acknowledge fault is not incriminating and thus runs no risk of
legal liability. 4 In discussing apologies, Prue Vines states,
Is saying ‘I’m sorry’ an apology Many people would say that it is not. That is a mere
expression of regret, which might operate as a soothing device for small hurts or where
the person speaking has no responsibility. An apology does not exist unless the person
who is expressing regret is also taking responsibility for a wrong which they have
committed. This definition appears to apply whether we are considering an apology from a
moral theory point of view or from a psychological point of view. This kind of apology is
called a ‘full’ apology. A mere expression of regret is called a ‘partial’ apology. 5
An example of a full apology would be a person saying, “I am sorry your car
was damaged, it was my fault.” In contrast, a partial apology would have no
acknowledgement of fault, so that the person would only say, “I am sorry your
car was damaged.” Full apologies have great power because, when issued, they
have the power to correct whatever harm has been inflicted because the
apologizer takes responsibility for the harm done. The apology therefore forces
the apologizer into a humbling position that rebalances the relationship by
rebuilding the victim’s self-esteem and social status, 6 thus allowing the healing
process to begin. This is why full apologies are valuable to society. Unfortunately,
due to a fear of legal liability, many people have come to avoid full apologies.
Overall, a full apology is important because, inter alia, it has the power to
heal; it can restore self-respect and dignity; and it acknowledges that a mistake
has been made and that the offending party will not repeat the action in
2
Prue Vines, “The Power of Apology: Mercy, Forgiveness or Corrective Justice in the Civil
Liability Arena” (2007) Vol. 1 The Journal of Law and Social Justice 1 at 5-6; online:
.
3
Ibid. at 7.
4
Ibid. at 8.
5
Ibid. at 7
6
Ibid. at 14.

Apology Legislation: Bill 202 177
question. 7 The importance of an apology has been summarized as follows by
Howard Kushner in The Power of an Apology: Removing Legal Barriers:”
Apology is more than an acknowledgement of an offence together with an expression of
remorse. It is an ongoing commitment by the offending party to change his or her
behaviour. It is a particular way of resolving conflicts other than arguing over who is
bigger and better. It is a powerful and constructive form of conflict resolution, embedded,
in modified form, in religion and in the judicial system. It is a method of social healing
that has grown in importance as our way of living together on our planet undergoes
radical change. It is a social act in which the person, group, or nation apologizing has
historically been viewed as weak, but more than ever is now regarded as strong. It is a
behaviour that requires of both parties attitudes of honesty, generosity, humility,
commitment, and courage. 8
Due to the importance of full apologies, which primarily derives from their
power to heal, the need for apology legislation to ensure they are issued ought to
be considered. In assessing the need for apology legislation, the British Columbia
Ministry of Attorney General paid close attention to the effects of such
legislation in the United States. For instance, in 1994 researchers conducted a
study of a group of patients and their families who had filed medical malpractice
suits. It revealed that 37% of those interviewed might not have commenced
litigation if they had been given a complete explanation and an apology. The
positive effects of issuing apologies have been noticed in hospitals in the
University of Michigan’s Health System as well, where, since 2002, doctors have
been encouraged to apologize for their mistakes. Malpractice lawsuits and
notices of intent to sue have since fallen from 262 in 2001 to about 130 a year. 9
In addition, Howard Kushner, the acting Ombudsman for British Columbia,
noted that recent research in the United States indicates that 30% of medical
malpractice lawsuits would not have gone to court if the doctors had apologized
to the plaintiffs. 10
It may also be useful to consider Australia’s experience with apology
legislation to determine if its effects support its adoption in Manitoba. An
Australian study of medical complaints showed that 97% of complaints that
resulted in an explanation and/or apology had not proceeded to litigation.
However, some caution is urged by a more recent study rejecting the idea that
7
Howard Kushner, The Power of an Apology: Removing Legal Barriers, (Special Report No. 27
presented to the Legislative Assembly of British Columbia, February 2006) online: Special
Reports
at 14.
8
Ibid. at 15.
9
British Columbia Ministry of Attorney General, supra note 7 at 2.
10
Howard Kushner (British Columbia Ombudsman), ibid at 13.

178 Underneath the Golden Boy
there is a simple relationship between disclosure and reduced litigation,
particularly in the medical context. 11
Overall, the experience of the United States and Australia indicates that if
apology legislation is introduced in Manitoba, a likely result will be a decrease in
lawsuits following medical malpractice situations. This may be applied to all sorts
of situations, and not just medical malpractice suits. Thus, if Manitoba were to
experience the same effect as these two countries, many Manitobans are likely to
receive an apology from the wrongdoer and forego the trouble and expense of
litigation. In other words, such legislation will allow Manitobans who are
satisfied with an apology to heal sooner, rather than upon embarking on a
lawsuit.
Analyzing apology legislation not only requires understanding the different
types of apologies but also the importance of a properly executed apology. Since
full apologies promote and facilitate healing, the aim of apology legislation
should be to protect such apologies instead of partial apologies. In addition, they
should be statutorily protected to ensure that wrongdoers feel comfortable and
safe issuing them. Finally, apology legislation may result in a decrease in lawsuits.
II. DEVELOPMENT OF APOLOGY LEGISLATION AROUND THE WORLD
A. United States of America
The earliest apology provisions arose in the United States in 1986 in
Massachusetts. 12 By 2007, over 30 states had adopted apology-type legislation.
Although approximately 20 of these have incorporated legislation to provide full
protection for apologies, in each case this is limited to apologies given in the
context of the provision of health care. A further eight have legislated to provide
partial protection for apologies made by any person. However, this was limited to
apologies that do not include any admission of responsibility or fault. Four states
have legislated to provide partial protection only in the context of the provision
of health care. 13
California’s Evidence Code falls in the group of eight states that address the
issue by providing partial protection for apologies made by any person. Section
1160 of the Evidence Code states:
11
Prue Vines, supra note 2 at 27.
12
Prue Vines, supra note 2 at 35; Mass Gen Laws ch. 233, § 23D.
13
Chris Wheeler, Apologies: A Practical Guide, online: Quick links – Apologies
at 34.

Apology Legislation: Bill 202 179
(a) The portion of statements, writings, or benevolent gestures expressing sympathy or a
general sense of benevolence relating to the pain, suffering, or death of a person involved
in an accident and made to that person or to the family of that person shall be
inadmissible as evidence of an admission of liability in a civil action. A statement of fault,
however, which is part of, or in addition to, any of the above shall not be inadmissible
pursuant to this section. 14
It is important to note that the word “accident” means an occurrence
resulting in injury or death to one or more persons, which is not the result of
wilful action by a party. 15 This is crucial because it limits protection of an apology
only to unintentional harm caused by one party to another. In other words, the
section only grants protection to an apology related to unintentional harm.
Most importantly, the section only extends protection to “partial apologies,”
as the Evidence Code does not protect admissions of fault. This is unfortunate
because, as stated previously, partial apologies do not have the same healing
effect as full apologies. It could be argued that Evidence Code fails to protect
meaningful apologies, only granting limited protection to apologies that do not
demonstrate that the wrongdoer is taking responsibility for the act complained
of. Thus, in order to achieve the full healing potential of an apology, the
Evidence Code would have to be expanded to protect admissions of fault.
Having conducted a 22 state survey, Megan E. Bisk explains that it is
possible that the rationale behind restricting protection to partial apologies only
is that apology legislation has a limited impact on the manner in which
defendants act prior to consulting with an attorney. In other words, since many
will not be aware of the legislation until they consult an attorney, such
legislation will have no bearing on their actions immediately following an
incident. 16 However, this is only a theory, as there seems to be no clear or official
explanation for the variation in apology protection.
Utah Senator David Thomas introduced apology legislation at the 2006
General Session, titled Restrictions on Use of Physician Disclosures
(“Restrictions”). This piece of legislation pertains to the abovementioned group
of 20 American states that have introduced apology provisions only dealing with
health care. The bill passed third reading on 27 February 2006 and was signed by
14
California Evidence Code, Div. 9, Ch. 3, §1160; online: .
15
Ibid. at §1160(b)(1).
16
Megan E. Bisk, “Apology Statutes: A 22 State Survey,” online:
at 5.

180 Underneath the Golden Boy
the governor on 17 March 2006. 17 The law provides admissibility standards for
disclosures by health care providers in malpractice actions.
Section 78-14-18 states:
[I]n any civil action brought by a patient as an alleged victim of an unanticipated
outcome of medical care, or in any arbitration proceeding related to such civil action, any
and all statements, affirmations, gestures, or conduct expressing apology, fault, sympathy,
commiseration, condolence, compassion, or a general sense of benevolence which are
made by a health care provider to the alleged victim, a relative of the alleged victim, or a
representative of the alleged victim and which relate to discomfort, pain, suffering, injury,
or death of the alleged victim as the result of the unanticipated outcome of medical care
shall be inadmissible as evidence of the admission of liability or as evidence of an
admission against interest. 18 [emphasis added.]
Two aspects of this legislation are noteworthy. First, the Restrictions are
limited by the fact that they only grant protection to apologies issued by health
care providers. Consequently, victims of wrongs committed by any other person
may not receive full and proper apologies due to a fear of incurring civil liability.
Second, the Restrictions allow for expressions of fault. Therefore, health care
providers will be able to issue full apologies, not only asking for forgiveness but
also acknowledging their wrongdoing. This is a key factor that distinguishes the
section from California’s law and allows victims of medical malpractice to receive
a full apology.
B. Australia
1. Legislation
New South Wales (N.S.W.) was the first common law jurisdiction to legislate
legal protection to the general public for a full apology. That is, one that includes
an admission or acceptance of fault or responsibility. It did so by introducing a
broad statutory protection through amendments to the Civil Liability Act 2002
that came into effect on 6 December 2002. 19
Part 10, s. 69 of the Civil Liability Act 2002, states that an apology made by
or on behalf of a person in connection with any matter alleged to have been
caused by that person (a) does not constitute an express or implied admission of
fault or liability by the person in connection with that matter, and (b) is not
relevant to the determination of fault or liability in connection with that matter.
17
Utah Legislature, S.B. 41 Substitute Restrictions on Use of Physician Disclosures (Thomas, D.),
online: Bill Status .
18
U.S., S.B.41, Restrictions on Use of Physician Disclosures, 2006 Gen. Sess., Utah, 2006,§ 78-
14-18 (enacted).
19
Chris Wheeler, supra note 13 at 33.

Apology Legislation: Bill 202 181
Furthermore, evidence of an apology made by or on behalf of a person in
connection with any matter alleged to have been caused by the person is not
admissible in any civil proceedings as evidence of the fault or liability of the
person in connection with that matter. 20
The apology provisions of the Act mean that an apology does not constitute
an admission of liability, and will not be relevant to the determination of fault or
liability in connection with civil liability of any kind. Further, due to the
definition of “apology” in s. 68 as an expression of sympathy or regret, or of a
general sense of benevolence or compassion, in connection with any matter,
whether or not the apology admits or implies an admission of fault in connection
with the matter, 21 an apology is not admissible in court as evidence of fault. 22
However, there are some instances where issuing an apology in N.S.W. might
still be problematic.
Section 3B of the Civil Liability Act 2002 limits the protection for apologies
established in Part 10. For instance, the provisions of the Act do not apply to
civil liability in respect of an intentional act that is done with intent to cause
injury or death. In addition, the Act does not apply to sexual assault or other
sexual misconduct or civil liability in proceedings relating to an award of
personal injury damages where the injury or death concerned resulted from
smoking or other use of tobacco products. 23
Since the incorporation of apology provisions into the N.S.W. Civil Liability
Act 2002, every other state and territory in Australia has followed the N.S.W.
lead and brought in legislation that provides varying levels of protection for
apologies or expressions of regret in relation to civil liability. 24 An indication that
the protections of the N.S.W. Act are working well is that statutory protections
largely equivalent to it were incorporated into all Australian defamation laws
when they were reviewed in 2005. 25
2. Policy
In recent years, the number of Australians that have come to value the
importance of apologies has grown significantly. An excellent example of the
country’s appreciation of apologies is Australia’s “Sorry Day.” The first National
Sorry Day was held on 26 May 1998, offering the community a chance to
20
Civil Liability Act 2002, (N.S.W.), s. 69.
21
Ibid. at s. 68.
22
Chris Wheeler, supra note 13 at 33.
23
Civil Liability Act, supra note 20 at s. 3B.
24
Chris Wheeler, supra note 13 at 34.
25
Ibid. at 35.

182 Underneath the Golden Boy
apologize to Australia’s indigenous peoples for the removal of children from their
families. One such day saw 250 000 people walking across the Sydney Harbour
Bridge in support of the cause. Sorry Day was held between 1998 and 2004,
when it was renamed as a National Day of Healing for all Australians. 26
These events demonstrate the value that the Australian people place on an
apology; showing that an apology is not only important to those receiving it but
also to those issuing it. Otherwise, Australia’s Sorry Day would not have been as
successful. Consequently, apology legislation, by contributing a safe environment
in which to issue an apology, fulfills an important social function: that of
allowing people to issue and receive apologies.
C. Canada
Unlike Australia and the United Sates, apology legislation has yet to become
widespread in Canada. To date, the only provinces that have adopted apology
legislation are British Columbia and Saskatchewan. The former did so in 2006
with the introduction of The Apology Act, making British Columbia the first
Canadian jurisdiction to introduce such legislation. The latter did so in 2007,
when Saskatchewan amended its Evidence Act to include apology provisions.
Other provinces have considered the adoption of such legislation. For instance,
Mr. Don Inverarity, the MLA for Porter Creek South, unsuccessfully introduced
an apology bill in the Yukon in 2007.
1. British Columbia
Mr. Lorne Mayencourt, the MLA for Vancouver-Burrard, introduced apology
legislation (Bill M202) on 27 February 2006 in British Columbia as a private
member’s bill. Mr. Mayencourt described the purpose of the bill as specifying
that an apology is not an admission of liability and is not admissible in legal
proceedings. In addition, he argued that it would remove the current
disincentive to apologize for one’s behaviour, which often hinders the resolution
of disputes. Finally, Mr. Mayencourt stated that the Act allows individuals to
apologize to one another, promoting forgiveness and the re-establishment of
relationships. 27 He stated:
A simple, sincere apology is often the key to avoiding a long and bitter and costly dispute.
Apologies help to build public confidence in the administration of justice, and they build
stronger communities by allowing people to be civil, to address and to move on with their
26
Australian Government, Culture and Recreation Portal, “Sorry Day,” online: Australian Stories
.
27
British Columbia, Legislative Assembly, Debates of the Legislative Assembly (Hansard), Vol. 6,
No. 13 (27 February 2006) at 2495 (Hon. Bill Barisoff).

Apology Legislation: Bill 202 183
lives. The Apology Act encourages the humane way of apologizing for wrongdoings and
promotes open and direct dialogue between persons in conflict. 28
However, the bill was not passed—probably because private members’ bills
are rarely passed—and had to be re-introduced at a later session.
Attorney General Wally Oppal introduced a second incarnation of The
Apology Act on 28 March 2006—this time as Bill 16. 29 Upon introducing the
bill, Mr. Oppal explained that it is a necessary piece of legislation because British
Columbia’s current laws discourage people from apologizing. The Act, he
suggested, would eliminate concerns that an apology amounts to an admission of
liability and would consequently encourage natural, open, and direct dialogue
between aggrieved parties. 30 Mr. Oppal shared a few stories with the Assembly
proving that, oftentimes, what an injured person wants is an explanation and an
apology as to what happened. For example, Mr. Oppal recounted an instance
where two women were arrested when two cars came to a grinding halt in front
of them and a number of undercover police officers jumped out of the cars,
pointing guns at them, and told them to get on the ground. This was a case of
mistaken identity. In conversing with the victims, Mr. Oppal discovered that
had the police apologized and explained their error, nothing else would have
been done. Moreover, had the legislation been in place, allowing the officers to
apologize, the incident would have ended that night. Instead, the victims lodged
formal complaints that damaged the officer’s reputations. 31
Although the bill received much support on its second reading, with Mr.
Mayencourt, Ms. McIntyre (MLA for West Vancouver-Garibaldi), Mr. Hawes
(MLA for Maple-Ridge Mission), Mr. Farnworth (MLA for Port Coquitlam-
Burke Mountain) and Mr. Black (MLA for Port Moody-Westwood) endorsing it,
it is important to note that there are potential drawbacks to its coming into
force. In weighing the benefits and negative factors of apology legislation in its
report on such legislation, the British Columbia Ministry of Attorney General
points to three key issues. First, public confidence in the courts could be
adversely affected if a person who has admitted responsibility in an apology is
found not liable. Second, insincere and strategic apologies could be encouraged.
Third, apologies encouraged by such legislation might create an emotional
vulnerability in some plaintiffs who may accept settlements that are
28
Ibid. at 2496.
29
British Columbia, Legislative Assembly, Debates of the Legislative Assembly (Hansard), Vol. 8,
No. 5 (28 March 2006) at 3359 (Hon. Bill Barisoff).
30
Ibid.
31
British Columbia, Legislative Assembly, Debates of the Legislative Assembly (Hansard), Vol. 8,
No. 7 (29 March 2006) at 3457 (Hon. Bill Barisoff).

184 Underneath the Golden Boy
inappropriately low. 32 Therefore, when assessing whether to introduce such
legislation, a jurisdiction should consider both its benefits and drawbacks to
determine if the former outweigh the latter.
British Columbia’s Apology Act 33 came into force in 2006 and provides
extensive protection to apologies. The Act accomplishes this by incorporating a
broad definition of “apology” that includes an implicit or explicit admission of
fault in connection with the matter. It does not limit its protection to medical
malpractice, unlike some of the American legislation previously discussed.
Section 2(1) of the Act establishes that an apology made by or on behalf of a
person in connection with any matter (a) does not constitute an express or
implied admission of fault or liability by the person in connection with that
matter; (b) does not constitute a confirmation of a cause of action in relation to
that matter for the purposes of s. 5 of the Limitation Act; (c) does not, despite
any wording to the contrary in any contract of insurance and despite any other
enactment, void, impair or otherwise affect any insurance coverage that is
available, or that would, but for the apology, be available, to the person in
connection with that matter; and (d) must not be taken into account in any
determination of fault or liability in connection with that matter. 34 Lastly, s. 2(2)
establishes that despite any other enactment, evidence of an apology made by or
on behalf of a person in connection with any matter is not admissible in any
court as evidence of the fault or liability of the person in connection with that
matter. 35
The general effect of s. 2(1) of The Apology Act is that it allows people to
apologize, either for themselves or on someone else’s behalf, in connection with
any matter. This apology cannot be interpreted as an expression of fault or
liability and is not a confirmation of a cause of action. What separates the Act
from other apology legislation in the world is that it extends the protection of an
apology to insurance matters. The Act allows a person to apologize without
affecting their insurance coverage. This provision is clearly designed to address
the standard policy term that an insured person must not assume any obligations
with respect to an accident or occurrence for which liability coverage is sought. 36
Section 2(2) supersedes any other enactment to ensure that evidence of a full
32
British Columbia Ministry of Attorney General, Discussion Paper on Apology Legislation,
online: Dispute Resolution Office, Research and Publications—Consultation Papers
at 4.
33
S.B.C. 2006, c. 19.
34
Ibid. at s.2.
35
Ibid. at s.2(2).
36
Clark Wilson LLP Insurance Bulletin, Apology Accepted, online: Insurance, Case Law Review
Archive .

Apology Legislation: Bill 202 185
apology is not admissible in court. In addition, unlike other apology legislation,
the British Columbia Act does not limit protection of apologies only to situations
of unintentional wrongdoing. This means that British Columbia’s Act provides
the widest protection available for apologies and, in doing so, increases the
circumstances in which people may issue a full apology.
Analyzing the success of British Columbia’s Act is difficult because it is still
a fairly new piece of legislation. However, it seems that the goal of allowing
people to apologize without fear of incurring civil liability will be accomplished
due to the Act’s wide scope. Restricting protection to only partial apologies or
limited circumstances would not allow everyone to apologize, only permitting
certain victims to enjoy the benefit of receiving an apology. Therefore, since the
purpose of such apology legislation is to encourage every wrongdoer to apologize,
such legislation will only achieve its full potential if its scope is unlimited.
2. Saskatchewan
Saskatchewan is Canada’s second province to statutorily remove apologies from
being admissible in court. However, unlike British Columbia, Saskatchewan did
not introduce an apology act. Instead, it amended its current Evidence Act by
adopting an apology provision. The Honourable Frank Quennell, the MLA for
Saskatoon Meewasin, first introduced Bill 21, An Act to Amend the Evidence
Act, on 6 November 2006. The bill was referred to the Standing Committee on
Intergovernmental Affairs and Infrastructure on 12 March 2007. A motion for
return followed shortly after, and amendments to the bill received first and
second reading, together with an overall third reading of the bill on 9 May 2007.
The bill received Royal Assent on 17 May 2007 and was incorporated into The
Evidence Act as s. 23.1. 37
On 13 November 2006, Mr. Quennell addressed the Assembly in support of
Bill 21. He stated that introducing such reform to The Evidence Act was
necessary to allow people to apologize in circumstances where they have
wronged someone or in the case where insurance coverage is at issue. Without
such legislation, Mr. Quennell argued, people and institutions will not apologize
because they have received legal advice that these statements could be used in a
future or ongoing lawsuit. 38
Speaking at a different session, Mr. Randy Weekes, the MLA for Biggar,
while supporting the cause, expressed that caution ought to be employed in
accepting the bill. He was primarily concerned with the possible legal
37
S.S. 2006, c. E-11.2.
38
Saskatchewan, Legislative Assembly, Saskatchewan Hansard, No. 11A (12 November 2006) at
358 (Hon. P. Myron Kowalsky).

186 Underneath the Golden Boy
complications of protecting apologies in “very serious instances.” 39 In other
words, it may not be advantageous to protect apologies in circumstances where,
for instance, harm was inflicted intentionally. Taking such concerns into
consideration and following several Assembly meetings, the bill received Royal
Assent on 17 May 2007 and became part of The Evidence Act under s. 23.1. 40
Section 23.1 of Saskatchewan’s Evidence Act has been drafted to resemble
British Columbia’s legislation. Therefore, its effect is to protect full apologies in
connection with any event, regardless of the wrongdoer’s intent, and extends
protection to insurance matters.
3. Yukon
Mr. Inverarity, the MLA for Porter Creek South, introduced Bill 103, Apology
Act, in the Legislative Assembly of Yukon on 24 April 2007; it was negatived on
30 April 2008. 41 Prior to Mr. Inverarity’s introduction of the bill, the Yukon
Ombudsman recommended that apology legislation be adopted in the Territory
in its 2006 Annual Report. 42
In expressing support for apology legislation, the 2006 Report draws from
the arguments laid out by British Columbia’s Ombudsman, Howard Kushner.
After stressing the importance of an apology and the current legal impediments
experienced by those residing in jurisdictions that are not legislated, Mr.
Kushner is quoted as making reference to the fact that there was evidence
emerging in the United States in the area of medical malpractice litigation
supporting the view that apologies can reduce litigation and promote the early
resolution of disputes. 43 In addition, the 2006 Annual Report points to the fact
that drafting of apology legislation is not a taxing exercise, and should be
pursued, since it is often composed of few sections. For instance, British
Columbia’s Act only has two sections. 44 The 2006 Annual Report concludes with
Yukon’s Ombudsman recommending the adoption of such legislation. It states:
[P]ositive change can take place when there is institutional support for admitting an
error, explaining why it happened and what is being done to prevent a recurrence, and to
39
Saskatchewan, Legislative Assembly, Saskatchewan Hansard, No. 17A (22 November 2006) at
555 (Hon. P. Myron Kowalsky).
40
Saskatchewan, Legislative Assembly, Saskatchewan Hansard, No. 64A (17 May 2007) at 1675
(Hon. P. Myron Kowalsky).
41
Yukon Legislative Assembly, Online: House Business—Progress of Bills
.
42
Office of the Ombudsman & Information and Privacy Commissioner, 2006 Annual Report,
online: Reports at 9.
43
Ibid.
44
Ibid.

Apology Legislation: Bill 202 187
make a sincere apology. Providing a legislative base for doing so through an Apology Act
is an important step in that direction. 45
Mr. Inverarity’s Bill 103 emulates British Columbia’s Act with one
exception: the bill does not mention that an apology does not constitute a
confirmation of a cause of action in relation to that matter for the purpose of the
Limitation of Actions Act. 46 This means that, potentially, an apology could be
used in the Yukon as evidence of confirmation of a cause of action. However,
this only amounts to a minor difference because it is difficult to believe that a
person will be reluctant to apologize for fear of confirming a cause of action.
Policy arguments for adopting such legislation are similar to those stated
previously in British Columbia’s and Saskatchewan’s legislatures. Mr. Inverarity
hoped that the adoption of this bill would clarify the role of apologies from a
legal standpoint, lead to earlier and less costly resolution of some disputes, and
allow corporations, governments, and individuals to offer an apology without
fear of legal liability. 47
D. The Manitoba Experience
1. Legislative Assembly Discussions
The Honourable Dr. Jon Gerrard, the MLA for River Heights, first introduced
The Apology Act in Manitoba as Bill 217 48 during the 1 st Session of the 38 th
Legislature on 12 April 2007. At first reading, Dr. Gerrard explained the purpose
of the bill was to allow health-care providers to apologize when a medical error
occurs without exposing them to legal liability. 49 It would also apply in areas
covered by insurance. 50 Dr. Gerrard requested support from Manitoba’s Minister
of Health, the Honourable Theresa Oswald, as a way of helping all within the
health care system to get past, what he described as, “[T]he persistent culture of
sealed lips and closed circumstances that characterize the system and be able to
apologize.” 51 Ms. Oswald then promised to seriously consider the bill due to its
potential effect on victims of the health care system, who (having received an
apology) would be able to heal. More interestingly, Ms. Oswald stated, “Perhaps
45
Ibid. at 10.
46
R.S.Y. 2002, c. 139.
47
Yukon Liberal Party, Arthur Mitchell, Inverarity Will Table Apology Legislation, online: Press
Releases – 12 April 2007 .
48
Supra, at note 1.
49
Manitoba, Legislative Assembly, Debates and Proceedings, Official Report (Hansard), No. 26
(12 April 2007) at 789 (Hon. George Hickes).
50
Ibid.
51
Ibid. at 797.

188 Underneath the Golden Boy
I’m the singular person in this House who has not made a wisecrack about this
bill today.” 52 After receiving such poor treatment, it is not surprising that Bill 217
did not advance past its first reading.
Displaying great tenacity, Dr. Gerrard re-introduced an apology bill during
the 1 st Session of the 39 th Legislature, this time as Bill 202, on 12 June 2007. 53 Dr.
Gerrard once again requested support from the Minister of Health, Ms. Oswald.
However, rather than stating her position, Ms. Oswald avoided the issue by
focusing on other matters. For instance, Ms. Oswald stated that, “I’m glad today
is one of the days when the member of the Liberal Party is interested in
conducting House business rather than obstructionism.” 54
On 27 September 2007, Dr. Gerrard moved that the bill be read a second
time and referred to committee. In doing so, he pointed out that the effect of
The Apology Act (in conjunction with other bills requiring accountability from
health care practitioners) would be to improve Manitoba’s health care system. It
would not only allow health-care professionals to apologize, it would also help
families and patients deal with the fact that there has been an error or medical
mistake made. 55 Once again, the bill was not taken seriously in the House. Kevin
Lemoureux, the MLA for Inkster, inquired why the Premier would not
acknowledge the value of, inter alia, Bill 202 and allow it to go to committee
where the public could provide input. In response, the Honourable Gary Doer,
Premier of Manitoba, replied, “There’s lots of good sales going on, but I would
also like to point out to the member opposite, he does not need legislation to
apologize to this Chamber.” 56 It is reactions such as Mr. Doer’s that prompted
Dr. Gerrard—while requesting second reading of Bill 204, The Personal Health
Information Amendment Act (a complementary bill to Bill 202)—to state the
following:
Sadly last week, the NDP blocked and adjourned bill after bill after bill. They are the
blocking and adjournment party. This is a sad testament to what has happened to the
NDP in this legislature last week. 57
52
Ibid. at 798.
53
Bill 202, The Apology Ac, 1s Sess., 39 th Leg., Manitoba, 2007, (assented to 8 November 2007).
54
Manitoba, Legislative Assembly, Debates and Proceedings, Official Report (Hansard), No. 5
(12 June 2007) at 123 (Hon. George Hickes).
55
Manitoba, Legislative Assembly, Debates and Proceedings, Official Report (Hansard), No. 11A
(27 September 2007) at 440 (Hon. George Hickes).
56
Manitoba, Legislative Assembly, Debates and Proceedings, Official Report (Hansard), No. 11B
(27 September 2007) at 470 (Hon. George Hickes).
57
Manitoba, Legislative Assembly, Debates and Proceedings, Official Report (Hansard), No. 13A
(2 October 2007) at 636 (Hon. George Hickes).

Apology Legislation: Bill 202 189
In addition, Dr. Gerrard stated on the Manitoba Liberal Party’s official
website that the NDP government decided to purposely stonewall liberal
legislation based solely on the fact that the bills were not their idea. 58 As of 6
October 2007, Bill 202 has yet to receive a second reading.
2. Merit of Bill 202
Prior to discussing the bill’s value, it is necessary to note that Bill 202
incorporates all of the provisions in British Columbia’s Apology Act but one.
Thus, like Saskatchewan’s Evidence Act, Manitoba’s bill, if passed, would not
protect apologies from being used as a confirmation of a cause of action in
relation to the matter for which the apology was issued. This is important
because, due to such resemblance, the experience and research conducted in
British Columbia, Saskatchewan, and the Yukon could be applied to Manitoba.
In doing so, it will be easier to assess whether the bill ought to be passed. It is
interesting to note that although Dr. Gerrard continuously mentioned in
Assembly meetings that the bill is intended to allow health-care workers to
apologize, the application of Bill 202 is not limited to such workers, but extends
its protection to all persons.
In addition, s. 2(1)(b) of Bill 202 extends protection of apologies to
insurance matters by stating that an apology made by or on behalf of a person in
connection with a matter does not void, impair, or otherwise affect insurance
coverage that is either available or would, but for the apology, be available, to
the person in connection with the matter. 59 In other words, the legislation is
structured to ensure that an apology cannot be taken to be an expression of
liability for the purposes of voiding an insurance contract. Such a provision is
necessary because, oftentimes, insurance policies contain provisions that void
the contract if an admission of liability is made. 60 Therefore, if introduced as law,
Bill 202 would prevent insurance companies from cancelling an insurance
contract following an apology. Furthermore, the apology will be deemed to have
no bearing on the renewal of the insurance policy because the bill specifically
mentions that an apology does not affect insurance protection in instances
where, but for the apology, coverage would be available to the wrongdoer.
However, it is important to note that if the wrongdoer is found liable through
other means, insurance coverage may be altered.
Yet another issue arising under such legislation pertains to the
interpretation of an apology. The question is whether an adjoining explanation
58
The Manitoba Liberal Party, NDP Puts up Brick Wall to Stop Hot Liberal Legislation, online:
Archive, September 2007 .
59
Supra note 52 at 2(1)(b).
60
British Columbia Ministry of Attorney General, supra note 32 at 6.

190 Underneath the Golden Boy
to an apology of the wrong committed may be used as evidence or, if deemed to
be part of the apology, is also protected. Although this is not specifically
addressed in the legislation, a careful study of the definition of “apology” reveals
that adjoining explanations may indeed be protected. The word “apology” is
defined in s. 1 of Bill 202 to include a “statement that one is sorry or any other
words or actions indicating contrition or commiseration, whether or not the
words admit or imply an admission of fault in connection with the matter.” 61 It is
possible that adjoining explanations will be characterized as “any other words
indicating contrition or commiseration” since such statements do not have to
contain admissions of fault. Such an interpretation is supported by Mr. Oppal’s
recounting of an arrest conducted on the basis of mistaken identity, where he
discussed the incident by characterizing the apology and adjoining explanation
as one. 62 Thus, if such an interpretation of explanations is correct, they may be
protected as well.
Allowing people to apologize without a fear of civil liability inevitably means
that more people will receive apologies from their wrongdoer. In addition, since
Manitoba would protect full apologies, introducing such legislation will help
people heal sooner, having received an admission of fault. Sometimes, this is
what victims want: to receive an apology and be allowed to forgive the
wrongdoer. As stated earlier, some of the functions of an apology include
healing—a re-balancing for both the victim and wrongdoer. 63 Thus, introducing
such legislation will be of great service to both victims and wrongdoers.
With regard to the negative factors of apology legislation mentioned
earlier, 64 it is likely that the positive effects of such legislation will outweigh the
negatives. For instance, if public confidence in the courts were to be adversely
affected if a person who has admitted responsibility in an apology is not found
liable, the courts could issue a statement explaining their decision and how,
perhaps due to a lack of evidence or high standard of liability required by the
particular charge, the person could not be found guilty. In the case where a
wrongdoer would issue a full apology while secretly not feeling remorse, it is
important to remember that the goal of protecting apologies is to allow victims
to receive one and commence the healing process. Thus, if someone receives a
61
Supra note 52 at s.1.
62
British Columbia, Legislative Assembly, supra note 31.
63
Ibid. at 18.
64
Namely, that (i) the public confidence in the courts could be adversely affected if a person who
has admitted liability in an apology is not found liable; (ii) insincere and strategic apologies
could be encouraged; and (iii) apologies encouraged by such litigation might create an
emotional vulnerability to some plaintiffs who may accept settlements that are inappropriately
low.

Apology Legislation: Bill 202 191
full apology in such a circumstance, the victim will heal and the wrongdoer’s lie
will have no adverse effect on society. Since these negatives can be addressed on
a case-by-case basis, the overall benefit of protecting apologies will outweigh any
possible drawbacks. Therefore, Manitoba should follow British Columbia and
Saskatchewan and adopt such legislation.
III. CONCLUSION
After considering the different types of apologies and different types of apology
legislation, the following conclusions may be drawn. First, apologies have great
power. When a person apologizes and acknowledges fault, they accept
responsibility for a wrong done, allowing the victim to begin the healing process.
Therefore, the effect of apology legislation will depend, inter alia, on the type of
apologies it protects: protecting full apologies will be more beneficial to
wrongdoers and victims. Second, having considered apology legislation in the
United States, Australia, and Canada, it is clear that all persons advocating for
such a law have the same argument: many people fear apologizing due to the
potential of incurring legal liability. Introducing such legislation will allow
wrongdoers to apologize and, in turn, allow victims to commence the healing
process. Third, studies conducted in the United States and Australia reveal that
the effect of such legislation is to reduce litigation, since oftentimes what victims
want is an apology and only consider litigation after not receiving one. Fourth,
Dr. Gerrard’s bill, emulating British Columbia’s Act, would provide very broad
protection, extending to full apologies issued in connection with any matter.
Bill 202 was eventually passed into force by Manitoba’s Legislative Assembly
on 8 November 2007. On that day, Dr. Gerrard, seconded by Ms. Oswald,
moved for third reading. Bill 202 not only received third reading, but also Royal
Assent there and then. At that time, Dr. Gerrard described the event as not only
a win for health-care providers who are now able to apologize without having to
worry about accompanying legal liability but also for families and those affected
by medical errors, who will now be able to deal with such instances in a less
accusatory and more enlightened manner. 65 Consequently, Manitoba has joined
some of the most progressive jurisdictions by protecting all sorts of apologies,
regardless of who is the apologizer.
65
Manitoba, Legislative Assembly, Debates and Proceedings, Official Reports (Hansard), No. 34B
(8 November 2007) at 2082-2083 (Hon. George Hickes).

192 Underneath the Golden Boy

The Employment Standards
Code Amendment Act
JOHN JACOBS
Well, you know, Mr. Speaker, I'm being heckled by the
opposition because I have actually taken about 14 minutes to
talk about this bill. I think we can talk about this bill for 14
minutes after we've waited 30 years for it, 30 years. You had 12
years to do it. You did nothing. You blew your opportunity. I'm
almost finished. You can just chill. 1
- Nancy Allan, Minister of Labour and Immigration, at second
reading of Bill 2, commenting on previous governments’ failure
to review employment standards legislation
I. INTRODUCTION
M
anitoba’s Employment Standards Code 2 (the Code) provides approximately
500 000 Manitoba workers with a basic floor of workplace rights. The
Code received a major legislative overhaul in 2006, culminating in the
Employment Standards Code Amendment Act 3 and a revised Code. This paper
will review the amendment process and explain some of the positions and
motivations of the interested parties. Because of the broad scope of the Code
and the multiplicity of amendments, this paper will concentrate on the
amending process, its motivating factors, and its perceived failings rather than
individual amended clauses.
1
Manitoba, Legislative Assembly, Debates and Proceedings Official Report (Hansard), Vol.
LVIII No. 9 (November 27, 2006) at 307.
2
Employment Standards Code, C.C.S.M. c. E110.
3
Bill 2, The Employment Standards Code Amendment Act, 5 th Sess., 38 th Leg., Manitoba, 2006.

194 Underneath the Golden Boy
II. THE EMPLOYMENT STANDARDS CODE
Manitoba’s Employment Standards Code sets out statutory requirements and
minimums in a broad array of matters such as vacations, holidays, bereavement
leave, hours of work and overtime pay. A related set of regulations 4 helps
interpret the The Code and sets out Manitoba’s minimum wage. The Code is
viewed as a floor of rights which may be exceeded, but below which employers
and employees must not contract. 5 It is particularly important to non-unionized
workers and workers in lower status jobs.
The Code applies to provincially regulated workers—federally regulated
workers are governed by the Canada Labour Code. 6 Manitoba workers and
employers are also governed by other provincial acts. These include acts
pertaining to workplace safety and health, workers compensation, craft licensing
acts, and a retail holiday closing act. There are exemptions in Manitoba’s
Employment Standards Code for volunteers, agricultural workers, fur and dairy
farmers, fishers, horticultural and market garden producers, certain domestic
workers, family members in family businesses, some salespeople, professionals
and related students, certain Crown employees, and temporary election workers.
By definition, employers and independent contractors are not employees and the
Code has no application to them.
The Code’s predecessor was first assembled as a consolidation of other acts
in 1957. A substantial amendment was made in 1970 reducing the maximum
workweek to 40 hours and providing for paid general holidays. Parental leave
was added in 1990. New millennium amendments have dealt with maternity,
parental, and compassionate care leave. The Code has not had a major overhaul
for over 30 years.
III. REVAMPING THE CODE: MOTIVATION
At every step of the amending process—throne speeches, readings and debate in
the legislature, public hearing advertisements and committee records—we were
reminded that the review of employment standards was intended to reflect the
realities of the modern workplace and reflect the changing face of today’s
workforce. There was a growing sense that the contingent workforce had grown
in size, and was not well served by an employment standards regime that was
4
Man. Reg. 6/2007.
5
Geoffrey England, Individual Employment Law (Toronto: Irwin Law, 2000) at 79.
6
Canada Labour Code, R.S.C. 1985, c. L-2.

The Employment Standards Code Amendment Act 195
built to handle full-time, single-income family breadwinners. Manitoba’s
legislation was out of step with other provinces in many areas, and this,
according to committee records and Hansard, appears to have been a major
motivating factor for its overhaul.
The actual decision to review and revamp The Code most likely resulted
from input from several entities.
The Employment Standards Branch, which regularly deals with and resolves
complaints from employees and employers, is well positioned to comment on
current issues and report common complaints to legislators. The Branch was well
aware, for example, of the recent Michalowski decision 7 (which intensified calls
for review of overtime and working hour exemptions). The Branch would be well
aware of complaints from employees concerning call-in pay. Lobby groups on
both sides of the employer/employee relationship make their views known to the
appropriate MLAs. The Assistant Deputy Minister of Labour and Immigration
meets with his counterparts from other Canadian jurisdictions as a member of
the Canadian Association of Administrators of Labour Legislation.
In the fall of 2005, the legislature recognized that Manitoba was out of step
with workplace realities and other jurisdictions. In light of lobby pressure,
current issues, and recurrent complaints, the government decided it was time to
act.
IV. REVAMPING THE CODE: PLAY-BY-PLAY
A. Announcement of Legislative Review
The notion of a thorough review of the Code was announced in a Speech from
the Throne on 27 October 2005, at the 4 th Session of the 38 th Legislative
Assembly. Lieutenant-Governor John Harvard stated that:
Proposals will also be introduced this session to modernize Manitoba's Employment
Standards Code, the first such effort in over 30 years. The changes are designed to reflect
trends in the modern workforce, such as introduction of new technologies and the
demands placed on today's families. 8
This announcement fell under a section of the Throne Speech titled
“Empowering Citizens – L'affirmation des Manitobains et des Manitobaines.”
7
Nygaard International Partnership Associates (re), 2006 MBCA 115.
8
Manitoba, Legislative Assembly, Debates and Proceedings Official Report (Hansard), Vol. LVII
No. 1 (27 October 2005) at 9.

196 Underneath the Golden Boy
B. Public Hearings
A government press release followed the throne speech on 10 November 2005,
soliciting input from the public on specific areas. The Minister of Labour and
Immigration was quoted as saying the review was driven by the evolution of the
workplace, the changing face of today’s workforce, and the demands on today’s
families. 9
The release was accompanied by a “Discussion Guide,” 10 requesting public
input in the following areas of employment law:
• Hours of work and overtime
• Agricultural worker exclusions
• Compliance and enforcement
• Termination notice
• Holiday pay for part-time workers
• Wage deductions
• Employment of children
• Unpaid leaves
• Work-life balance
Public Hearings were held in Winnipeg, Brandon, and Thompson. The
hearings were chaired by an employment lawyer, an arbitrator, and mediator
Michael Werier. Employment Standards Division Executive Director David
Dyson and key members of his staff attended the hearings.
This ad hoc group met with the public on five occasions in December of
2005, heard thirty-eight oral submissions, and later received a total of seventy
written submissions. Presenting parties included individuals, employers, unions,
representatives of employer organizations, and special interest and lobby groups.
The group produced a report on the public hearings on 26 January 2006,
highlighting the positions taken by various parties and areas of concern and
consensus.
C. Labour Management Review Committee – Structure and
Report
The Labour Management Review Committee (the “LMRC”) is an advisory
committee created by a unanimous resolution of the legislature and falling under
9
Manitoba Government, News Release, “Province Calls for Input on Employment Standards
Review” (10 November 2005), online: Government of Manitoba
.
10
Manitoba Government, Discussion Guide: Employment Standards for Modern Workplaces and
Modern Families (2005), online: Government of Manitoba
.

The Employment Standards Code Amendment Act 197
the umbrella of the Department of Labour and Immigration (the “Department”).
The committee acts as a consultative body and is generally convened when the
government contemplates changes to employment and labour law. The
committee’s mandate is to “…promote a harmonious labour relations climate
and to foster effective labour management cooperation in support of the
economic and social well being of Manitobans.” 11 In the past, the committee has
aided the government in legislative and regulatory changes regarding
employment standards, workers compensation, labour relations, and the roster of
provincial labour arbitrators. The committee has existed for over forty years and
is unique to Manitoba.
The committee is comprised of labour and management representatives.
Chair Michael Werier is appointed by the labour minister, and caucus members
are appointed by “each other.” 12 At present, employee interests are represented
by the President of the Manitoba Federation of Labour and three current or
former union representatives (the labour caucus). Employer interests are
represented by an employer-side labour and employment lawyer, and three
human resource managers (the management caucus). Committee meetings are
chaired but informal, few minutes are kept, and there is limited communication
with the press. Representatives of the Department, including its Executive
Director, often attend with voice but no vote and to act as a liaison between
government and the committee. 13
It is worth noting that there is no public interest representative on the
LMRC. It is hard to imagine who that representative might be, or how the public
interest might be determined, given that the Manitoba government is
responsible to both employers and employees.
It is also worth noting that all members of the labour caucus are either
active or recently retired union representatives. Generally, union members enjoy
terms and conditions at work that well exceed the minimums granted by
employment standards. As such, employment standards issues are a greater
concern to the non-unionized. One might then ask: why are union
representatives speaking for the non-unionized Several answers come to mind.
11
Manitoba Labour and Immigration, Research, Legislation and Policy, online: Government of
Manitoba .
12
Source: interview of Rick Rennie, Director of Research, Legislation and Policy Branch,
Department of Labour and Immigration, November 2007. Somehow, per Mr. Rennie, the
appointment process “just works.”
13
One party indicated, confidentially, that Department representatives are very influential in
LMRC meetings, as government legislating power trumps the advisory power of the committee.

198 Underneath the Golden Boy
One, union representatives have always attempted to advocate for the
working person, unionized or not. It is the “right” thing to do, and union
representatives have the expertise and are familiar with the subject area. Two,
no one else is organized to speak for the non-unionized. Three, speaking for the
non-unionized may make unions look good in the eyes of the non-unionized—a
shrewd organizing tactic. And finally, unions have always viewed minimum
standards such as the minimum wage as an anchor that holds down the wages
and benefits of people higher on the economic food chain. Advocating for and
achieving higher minimum employment standards help union members—the
union representative’s core constituency—achieve even higher terms and
conditions at work.
The LMRC was tasked with reviewing proposed changes to the Code (as
produced by the government and flowing from the public hearings). On 3
February 2006, only one week after receiving the report on public hearings, the
Department presented the LMRC with plain-language draft proposals for
legislative amendments. The committee also received an inter-jurisdictional
comparison of employment standards across Canada. 14 By May, the committee
had met five times and reached consensus recommendations on most of the
Department’s statutory proposals, with a separate study to follow on proposed
regulatory changes.
The committee’s formal report on statutory changes, dated 18 May 2006,
outlined the committee’s response to all seventeen of the Department’s proposed
statutory changes, and also responded to proposed administrative changes
outside of the original mandate. Some government proposals were agreeable to
the committee; some were rejected as low-priority proposals that would get in
the way of consensus on other issues, some resulted in recommendations for
modification, and others resulted in a request for more time for further study.
Chair Michael Werier noted that committee members worked very hard, “in a
spirit of collegiality to reach a consensus which would serve the best interests of
all Manitobans.” 15
The LMRC’s report on regulatory changes was produced on 9 November
2006. The Committee had conducted five formal meetings, and a number of
14
Produced, according to Mr. Rennie (supra note 12), using a staff research study for the recently
commissioned Federal Labour Standards Review in Ottawa. Mr. Rennie noted that one likes to
be very careful to update such work, and to bear in mind that the written law may not reflect
its actual application.
15
Manitoba, Labour Management Review Committee, Interim Report of the Labour
Management Review Committee on the Review of the Employment Standards Code, at 14,
online: Government of Manitoba .

The Employment Standards Code Amendment Act 199
individual meetings with other caucuses and constituencies. Consensus
recommendations were reported on all eleven proposals, with modifications
suggested on several issues. It must be noted that on the thorny issue of
including agricultural workers in the definition of “employee,” and thus
subjecting them to employment standards laws, the committee asked for and
received more time. The issue was not dealt with until 2008.
It is remarkable that the LMRC reached consensus on so many important
issues. The members of the committee, who would normally take strong
positions in opposition to one another, appear to have wrestled their way to a
compromise agreement behind closed doors. It was hard for any interested party
to argue with consensus recommendations once employee and employer
representatives had reached an agreement, as evidenced by the lack of hard
lobbying during the formal legislative process (discussed below).
The Labour Management Review Committee was praised by the minister,
the Opposition, and labour and employer representatives at every step of the
review and legislative processes. Chair Werier noted that all the committee
members “…donated significant time to reaching a consensus on issues that
serve the best interests of all Manitobans.” 16
D. Bill 2, 5th Session, 38th Legislature—The Employment
Standards Code Amendment Act – First and Second Readings
The recommendations of the LMRC were transformed into a legislative bill
touching on many areas of the Code. The actual drafting was done by a central
pool of legislative drafters, in consultation with the Department of Labour
Immigration.
Changes to the Code were announced in a Speech from the Throne on 15
November 2006, at the 5 th Session of the 38 th Legislative Assembly. The
Lieutenant-Governor announced, in a section titled “Healthy Families—Des
familles en santé”:
A set of changes will be introduced to modernize the Employment Standards Code to
reflect the current realities of today's economy, the changing face of the labour force and
the needs of families. 17
16
Manitoba Government Labour Management Review Committee, Report of the Labour
Management Review Committee on the Review of the Employment Standards Code –
Regulatory Issues, at 14, online: Government of Manitoba
.
17
Manitoba, Legislative Assembly, Debates and Proceedings Official Report (Hansard), Vol.
LVIII No. 1 (15 November 2006) at 5.

200 Underneath the Golden Boy
First reading of Bill 2 took place two days later. The Employment Standards
Code Amendment Act (Bill 2) 18 was moved by Minister of Labour and
Immigration, the Honourable Nancy Allan, and seconded by the Minister of
Healthy Living, Ms. Irvin-Ross. Ms. Allan stated briefly that Bill 2:
“…implements consensus recommendations of the Labour Management Review
Committee, introduces amendments that will improve and modernize our
employment standards provisions to better meet the needs of today's workers,
employers, families and young people.” 19 A five-page news release followed,
outlining the bill’s provisions in some detail.
Second reading took place 27 November 2006, moved by Ms. Allan and
seconded by the Minister of Finance, Greg Selinger. Ms. Allan gave a lengthy
speech outlining the need for change to reflect the realities of the modern
workplace and workforce, praised the LMRC for reaching consensus
recommendations, and pointed out that all of the committee’s recommended
changes had been incorporated into Bill 2. The minister then presented a plainlanguage
summary of the key elements of Bill 2.
Liberal Leader Jon Gerrard spoke briefly on Bill 2, generally supporting the
bill, and stated that he would like to see something on advance workplace
scheduling rules and a February holiday.
E. Bill 2 – In Committee
Bill 2 went to the Standing Committee on Social and Economic Development
on 4 December 2006. There were two presenters and one written submission
from the public.
Shannon Martin represents the Canadian Federation of Independent
Businesses and their 4 800 Manitoba members. Mr. Martin trotted out a quiver
of survey statistics showing what percentage of his members opposed specific
clauses of Bill 2, but in the end noted that the minister went above and beyond
in consulting stakeholders, and that the proposed legislation contained “some
excellent compromises”. 20
Darlene Dziewit is the President of the Manitoba Federation of Labour and
represents 96 000 unionized workers in Manitoba. She also sits on the Labour
Management Review Committee’s labour caucus. Her comments to the
Standing Committee following second reading were congratulatory. She
18
Supra note 3.
19
Manitoba Legislative Assembly, Debates and Proceedings Official Report (Hansard), Vol. LVIII
No. 3 (17 November 2006) at 39.
20
Manitoba, Legislative Assembly, Standing Committee on Social and Economic Development,
in Hansard Vol. LVIII No. 1 (10:00 a.m. December 4, 2006) at 4.

The Employment Standards Code Amendment Act 201
endorsed the legislation because it was achieved through consultation, review,
and consensus.
Bill Gardner is a Winnipeg labour and employment lawyer and President of
the Manitoba Employers Council (and a member of the LMRC Management
caucus). His written submission was presented but not read, and he was not
present. His organization supported the bill as a compromise that strikes a
reasonable balance between competing interests.
Questions were asked of the two presenters in attendance by Progressive
Conservative Labour and Immigration Critic Ron Schuler, Liberal Leader Jon
Gerrard, and Nancy Allan. There was also a line-by-line discussion and
committee vote on the bill’s clauses. Ron Schuler sought clarification on one
item (agricultural exclusions) and objected to two others (qualifications for
personal leave and graduated notice provisions/forfeiture). Mr. Schuler merely
stated that small businesses in particular were not pleased with some aspects of
the bill, but noted that the bill reflected the consensus process. Minister Allan
stated politely that “I wouldn’t want to cherry-pick this bill because I think it
would come unravelled pretty quickly.” 21
Kevin Lamoureux also thanked the minister for her earlier Minister’s
Briefing—a meeting between the minister, the Deputy Minister, staff, and
opposition critics Ron Schuler and Kevin Lamoureux. The meeting was held to
explain the provisions of Bill 2 and allow for questions.
The committee passed all clauses of the bill without a hitch. Some questions
were asked, and some dissent was registered, but due to the work of the LMRC,
the committee stage was very quiet. There was little criticism of the restricted
scope of the bill.
F. Bill 2 – Third Reading and Royal Assent
Third reading took place 6 December 2006, moved by Government House
Leader Dave Chomiak and seconded by Minister Allan. Debate ensued the
following day.
During debate, Ron Schuler reiterated the concerns of small business
owners. In fact, Mr. Schuler asked the minister to state the status of agricultural
exclusions for the record, as Hansard can be used as an interpretive tool. He also
noted that the committee minutes could help interpret the status of agricultural
exclusions. And finally, Mr. Schuler noted that at a predicted voting ratio of
thirty-five to twenty, this bill was going to pass without modification. Liberal
21
Manitoba, Legislative Assembly, Standing Committee on Social and Economic Development,
in Hansard Vol. 18 No. 1 (10:00 a.m. December 4, 2006) at 15.

202 Underneath the Golden Boy
MLA Kevin Lamoureux praised the process and the bill, thanked everyone
involved, and spoke a little about final offer selection, which has nothing to do
with employment standards. Jon Gerrard spoke about the obvious benefits of
consultation, and expressed concern that agricultural exclusions, being part of
the regulations under the Code, could be changed with the stroke of a pen.
Bill 2 passed by voice vote, received Royal Assent the same day, and came
into force on 30 April 2007.
V. ANALYSIS OF THE PROCESS
A. Timelines
During Question Period, 21 November 2005, Progressive Conservative Labour
Critic Ron Schuler criticized the government for tight timelines in the review
process—only two weeks had been allowed between the review announcement
and the deadline to register for a public hearing presentation, with a further one
or two weeks to prepare for and attend one of the public hearings, and a further
month to submit written submissions. Mr. Schuler also suggested that the review
had a deliberately anti-business animus since it was scheduled over the
Christmas shopping season—a time when the retail, wholesale, and restaurant
industries are preoccupied with work and unable to focus on legislative analysis.
Minister Allan replied that the timeframe was appropriate. 22
Many presenters at the public hearings complained about the short
timelines and seasonal timing—it was difficult for presenters to canvass their
constituents and articulate a position on the issues. 23 For example, the Canadian
Centre for Policy Alternatives stated that the “quick and dirty” review process
was intended to minimize participation by working people, and to encourage
submissions from the “usual suspects”: union and employer representatives. 24
The Human Resource Management Association of Manitoba stated that
proper consultation with employer representatives was impossible: “Not allowing
enough time for us to obtain input from our membership is in fact a significant
22
Manitoba, Legislative Assembly, Debates and Proceedings Official Report (Hansard), Vol. LVII
No. 16 (21 November 2005) at 525.
23
Manitoba, Report on Public Hearings on the Manitoba Government Review of the
Employment Standards Code, online: Government of Manitoba
.
24
Canadian Centre for Policy Alternatives - Manitoba, Presentation to Employment Standards
Code Review Commission, online: CCPA
.

The Employment Standards Code Amendment Act 203
lost opportunity for this government to get valuable insights from the people who
work most closely with these issues.” 25
Clearly more time should have been allowed, especially in light of the
importance of the issues, the number of people affected, and the length of time
since the last review.
B. Scope of Study
The scope of changes to the Code was restricted from inception. The
Department decided which eight areas of law would be studied and changed,
asked the public to address those areas, and asked the LMRC to study those
areas. Hearing and LMRC Chair Michael Werier heard public submissions that
were outside the government’s call. While he stated that LMRC members felt
that other topics could be added on with consensus, very little action was taken
on outlying issues.
Presenters at the hearing stage had demanded legislative change in the
following additional areas:
• Minimum wage
• Just-cause dismissal
• Additional holidays
• Increased vacations
• Benefits for part-time workers
• Workplace harassment
• Severance pay
• Paid breaks
• Reporting pay
• A closure tax
The LMRC did not address these issues as they were outside the mandate
given by the Department. The government took no legislative action.
Some minor topics were added to the agenda. For example, the Department
added a handful of suggestions on administrative matters. However, despite
suggestions at public hearings, only one major change was made to the LMRC’s
major areas of study: domestic worker exclusions were fine-tuned at the behest
of public hearings submissions. 26
25
Human Resource Association of Manitoba, Submission to Employment Standards Review,
online: Government of Manitoba
.
26
Oddly, this submission was not noted in the Report on Public Hearings, but was later added by
the Department to the LMRC’s study mandate, “[a]s a result of submissions made at the public
hearings.” LMRC, Interim Report, supra note 15 at 7.

204 Underneath the Golden Boy
Some mandated issues were deferred: the issue of the Code’s exclusion of
agricultural workers was left on the LMRC’s agenda, not to be dealt with until
after Bill 2 was enacted. During Question Period, 23 May 2006 (during the
LMRC’s study but before first reading), Progressive Conservative Member of the
Legislative Assembly for Lakeside, Ralph Eichler, asked the government for the
Minister of Agriculture’s position on whether agricultural workers would remain
exempt from the Code. Mr. Eichler stated that agricultural workers have a
unique status that is a poor fit for the Code, and that sixty-eight percent of
agribusinesses in Manitoba would suffer if agricultural workers were included in
the Code. Minister Allan replied that, under s. 144(4) of the Code, consultation
is required before any such change. That consultation was deferred at the
request of the LMRC and the government did not then make changes to the
definition of agricultural workers. This is a very thorny issue, alive in many
legislative jurisdictions in Canada, 27 and one wonders if the LMRC would have
achieved consensus on all issues had they tackled this issue in earnest and within
a tight timeframe.
Just four months after passage of Bill 2, the government did introduce a bill
creating a new February statutory holiday. 28 The issue of a February holiday, not
part of the Department’s proposed changes, had been demanded at the public
hearing stage by several labour groups. In committee, after second reading of Bill
16, Shannon Martin of the Canadian Federation of Independent Business was
highly critical of the fact that the government introduced the bill without
consultation. The LMRC had apparently only been used to work out details of
when the holiday would take place, beginning with the assumption that there
would be a new holiday. The new February holiday was not well received by
employers. Hansard records indicates that a newspaper poll and a hugely
successful public petition (promoted by local radio station 92 CITI FM) led to
Bills 16 and 21—indicating that public hearings and government initiative are
not the only way to impel change and that employment standards laws may
change without full consultation with stakeholders. 29
In all, the government set the scope for Code review, and largely ignored or
deferred calls for reform outside of that scope. That there was no public outcry at
the Standing Committee on Social and Economic Development after second
27
Witness the legal squabbling over the UFCW’s attempts to certify a group of farm workers in
Manitoba in 2006/2007.
28
Bill 21, The Statutory Holidays Act (Various Acts Amended), 5 th Session, 38 th Leg., Manitoba,
2006, and Bill 16, The Statutory Holidays Act (Various Acts Amended), 1 st Session, 39 th Leg.,
Manitoba, 2007.
29
Manitoba, Legislative Assembly, Debates and Proceedings Official Report (Hansard), Vol.
LVIII No. 30 (18 April 2007) at 947.

The Employment Standards Code Amendment Act 205
reading indicates either that all issues had been dealt with by the LMRC, or that
the wind had been knocked out of the public sails through the earlier public
hearing process.
VI. INFLUENCE OF, AND COMPARISON TO, OTHER JURISDICTIONS
Analysis of Hansard, committee minutes, public hearing, and LMRC documents
shows that the legislation in other Canadian provinces was a powerful influence
in creating and passing Bill 2.
For example, from the LMRC’s Interim Report on statutory changes, “…a
primary factor used by the committee when evaluating each proposal was a
desire to consider Manitoba’s current legislation as compared to other Canadian
jurisdictions.” 30 And from a government news release following first reading,
“The proposed legislation would bring Manitoba into the Canadian mainstream
in many areas… .” 31 In this regard, Manitoba followed, not led, other provinces
in statutory employment rights.
Manitoba simply does not lead in the area of employment law reform. For
example, although calls were made in public hearings for workplace anti-bullying
legislation, and although Manitoba Liberals have proposed such legislation in the
past, 32 Bill 2 did not address this issue. Only Quebec (and recently
Saskatchewan) have successfully legislated proscriptions on workplace nonhuman-rights-code
bullying.
Likewise, the February holiday issue shows that comparison with other
provinces is influential. At second reading of Bill 21 (The Statutory Holidays
Act which ultimately gave rise to the February holiday), Minister Allan noted
that adding a February holiday would help bring Manitoba’s labour laws further
into the Canadian mainstream. And the LMRC accepted a proposal on
graduated notice provisions because, “The Committee considered the graduated
notice provisions in other Canadian jurisdictions and believed that the proposed
changes were appropriate.” 33
Clearly, Manitoba is playing catch-up in Canadian workplace law.
30
LMRC, Interim Report, supra note 15 at 8.
31
Manitoba, News Release, “Province to Introduce Amendments to Employment Standards
Code” (17 November 2006), online: Government of Manitoba
.
32
Bill 210, The Workplace Safety and Health Amendment Act (Harassment in the Workplace),
4 th session 38 th Leg., Manitoba, 2006, was introduced by Jon Gerrard but did not become law.
33
LMRC, Interim Report, supra note 15 at 9.

206 Underneath the Golden Boy
This is not to say that all employment standards in all jurisdictions were
matched by Manitoba through the Department’s mandate or the review process.
The issue of pro-rated benefits for part-time workers, not in the Department’s
mandate, was brought up by more than one presenter. Despite this being law in
Saskatchewan, no action was taken.
VII.
COMPARISON TO THE FEDERAL LABOUR STANDARDS
REVIEW—PROCESS AND OUTCOME
In 2004 the federal government announced a review of the Canada Labour
Code, Part III. 34 This code is roughly equivalent to Manitoba’s Employment
Standards Code and provides basic workplace protections for approximately 840
000 federally regulated workers. Commissioner Harry Arthurs consulted 35
scholars, who commissioned 23 research studies from leading scholars around
the world. Nine “staff studies” looked into the operation of the federal code,
extensive public hearings were held across Canada (generating response from
171 groups and individuals), 154 formal briefs were received, and private
meetings were held between the commissioner and industry and labour
stakeholders. There were two advisory panels—one of impartial experts, and one
of labour and management representatives.
The result is a thorough and complete report. Unlike the process in
Manitoba, the commission’s mandate was a complete review of the Code and its
operation, with a much broader scope of suggested areas of study. The process
was comparatively open. All issues could be canvassed, and there was plenty of
“lead time” to consult constituencies and prepare submissions—nine months
were allowed for oral presentations, and eleven months for written briefs.
The federal review process garnered rave reviews from some. The Canadian
Centre for Policy Alternatives produced a 22-page report arguing that the
commissioner’s recommendations follow employee-friendly European trends,
rather than American trends, and noted that many unions endorse the federal
report almost without reservation. 35
34
Supra note 6.
35
Brian B. McArthur, Canadian Centre for Policy Alternatives, In Praise of the Arthurs Report
on Canadian Federal Labour Standards, online: CCPA
.

The Employment Standards Code Amendment Act 207
While interested parties did indeed have their say, it would appear that all
was for naught. The final, 300-page report 36 , two years in the making, was
submitted to the Federal Minister of Labour in October 2006. No legislative
changes have been made or are rumoured to be made. By comparison, the
Review in Manitoba was restricted in scope, had a volunteer study committee,
commissioned no reports, and was rushed. But changes were made to Manitoba’s
employment standards laws, and not to federal labour standards. Perhaps it is
better to have a little of something than a lot of well-analyzed nothing.
VIII. EFFECTIVENESS OF THE CHANGES
The review of the provincial Employment Standards Code was intended to
reflect the realities of the modern workplace and reflect the changing face of
today’s workforce. Did Bill 2 effect positive change in the workplace and at
home
Certainly the restricted scope reveals the major flaw, since there were
proposals outside the scope of review that would have helped meet the
Department’s goals. Public hearings witnessed a desire for change to nonmandated
aspects of employment standards (as noted above under “Scope of
Changes”). How and why the Department arrived at a list of eight study areas,
not less and not more, without considering such also-submitted issues—such as
just-cause dismissal (available to all unionized employees in Manitoba),
psychological harassment (available to all employees in Quebec and
Saskatchewan), employee reinstatement in non-union workplaces (available to
federally regulated employees), and minimum vacations (much higher in some
countries, as noted by more than one public-hearing presenter)—remains a
mystery to the outsider. Perhaps in the absence of the LMRC consensus these
outlying, non-mandated issues would have received more attention—and at
least would have made a bigger noise—in the committee stage following second
reading.
As for the issues that were tackled by Bill 2, the following is a summary of
the major changes:
• Easier qualifications for holiday pay;
• Introduction of leave for bereavement and family reasons;
• Expansion to definition of family for various leaves;
• Introduction of graduated notice of termination of employment ;
36
Harry Arthurs, Fairness at Work: Federal Labour Standards for the 21 st Century, online:
Government of Canada
.

208 Underneath the Golden Boy
• Clarifications of overtime and hours of work exemptions for managers
and higher-status employees;
• Clarification of overtime rules for pieceworkers;
• Changes to rules regarding employment of children ;
• Restrictions added to permissible wage deductions;
• Introduction of reporting pay;
• Easing of qualification for protection of domestic workers;
• New compliance rules including fines for repeat offenders;
• Changes to rules regarding overtime averaging permits and hours of
work variances;
• Limits added to director’s liability;
• Improvements to wage recovery.
With the exception of changes to the definition of domestic workers, all of
these changes are well within the Department’s original mandate.
Some changes clearly helped the Department achieve its stated goal of
responding to the changing face of today’s workforce and workplace. For
example, the recent increase in part-time work, and of workers who hold
multiple part-time jobs, results in workers who would not qualify for holiday pay
under the old Code. This led to calls for a new holiday pay system. Bill 2
removed threshold provisions, so that such workers receive holiday pay as a
percentage of hours worked regardless of days worked. This is a victory for the
multitude of part-time workers in Manitoba. Further, employees now receive
three unpaid bereavement days and three unpaid family responsibility days. This
is a gain for many workers, and recognizes the reality that the single-incomemale-breadwinner
family, if it ever existed, is not the only family model. Some
protection has been granted for those who must juggle work and family
responsibilities.
Other proposals were a partial win. The new graduated notice provisions are
an improvement over the old Code, but are still exceeded by the common law.
This leaves all workers with improved protection through the Employment
Standards Branch. However, workers who do not receive an amount of notice
(or pay in lieu of notice) commensurate with the common law must turn to the
courts and file a lawsuit.
Changes made to overtime and hours of work exemptions for managers and
higher-status employees will help clarify a lingering issue highlighted by the
recent Michalowski case. Abuse of lower-paid employees through unpaid
overtime is now clearly proscribed, but only employee rights awareness and
enforcement of the law will stop the practice—whether awareness and
enforcement are likely or possible remains to be seen.

The Employment Standards Code Amendment Act 209
Clarification of overtime rules for pieceworkers, restrictions on wage
deductions, the introduction of reporting pay, improvements to wage recovery,
and re-jigging the definition of a domestic worker may seem insubstantial from
afar, but in reality may mean a lot to lower paid workers. As with many other
issues, awareness and enforcement are key. Many lower-status workers may be
unaware of their rights, and many employers may be taking advantage of them.
In that regard, the law, while improved, may be of little help.
Changes to rules regarding overtime averaging permits and hours of work
variances bring up a very political issue. On the one hand, some workers want
scheduling flexibility to assist them with work-life balance. On the other hand, if
we enable more flexible scheduling some employers may take advantage of
workers by disguising as consensual that which is truly unilateral. Further, by
transferring the hours of work variance approval scheme from the Labour Board
to the Director of Employment Standards, we have taken the decision from an
independent tribunal and given it to a government body, opening up the
possibility of political interference.
The introduction of administrative penalties for repeat Code offenders is a
good idea. By keeping this in the Department’s control, speedy punishment
could be meted out. While only time will tell if the Director will actually apply
the fine system, a significant deterrent effect is produced.
In my view, these amendments are substantial enough to merit approval.
However, Bill 2 only targeted a few specific issues. The very people employment
standards are meant to protect are still without meaningful standards. This
amending process did not substantially approach the problems of living on
minimum wage, lack of benefit equity with regular, full-time employees, and
juggling multiple part-time jobs with home and life issues. To approach these
issues would require wide-open input, careful study, serious research, extensive
debate, and (most daunting) a shift in the way we think about and value work. It
is possible to create employment standards legislation that offers equitable
treatment to all, including disadvantaged groups in non-standard employment
relationships. But this requires a re-evaluation of the way we think about
different groups of workers, and the amending process surrounding Bill 2 was not
up to the task.
IX. CONCLUSION
The Labour Management Review Committee’s consensus process was, in my
opinion, a very positive way to legislate. Stakeholders were consulted and
managed to agree to a package of proposals they themselves modified. Members
of the LMRC put aside their usual positional stances and worked together to
achieve something both sides of the labour/management divide can live with.

210 Underneath the Golden Boy
The existence of consensus was also a major factor in silencing criticism in the
legislature and at the committee and report stages. The minister’s comments,
quoted on the title page of this paper, were in response to what can only be seen
as minimal criticism in the legislature. The review process dampened opposition
heckling, and quieted down the public at committee hearings following second
reading. That the Manitoba government has created a committee that can do
this strikes one as a major coup for any representational democracy.
Nonetheless, there are outstanding issues in the working lives of today’s
families that were not tackled by this process. The scope of this review was
decided by the government behind closed doors and, despite public demands for
wider scope, little was added. A more thorough canvass of workplace issues
(involving the public and properly researched) would reveal how well our
current employment standards legislation serves the goal of providing basic
protection to Manitoba workers.
If the public wants to see more change in employment standards legislation,
it would appear they need a petition from 92 CITI FM.

The Registered Retirement Savings
Protection Act
RYAN JOHNSON
I. INTRODUCTION
O
n 1 November 2007, a new judgment enforcement exemption came into
effect in the Province of Manitoba. The Registered Retirement Savings
Protection Act1 (“The RRSP Act”), which received Royal Assent on 7
December 20062, is designed to ensure that Registered Retirement Savings Plan
(“RRSP”)3 investments of debtors are not subject to the enforcement remedies
that would otherwise be available to their creditors.
This paper will examine the following:
• A general overview of debtor-creditor law in Manitoba and The RRSP
Act’s place within this regime,
• The parties affected by The RRSP Act,
• Similar legislation in other jurisdictions and law reform efforts,
• The legislative process that occurred to bring The RRSP Act into
effect, and
• Potential issues that could arise with the implementation of The RRSP
Act.
II. OVERVIEW OF DEBTOR-CREDITOR LAW IN MANITOBA
A. Division of Powers
When examining debtor-creditor law in Canada, it is important to recognize the
roles of both the federal government and the provinces and the effect that the
1
The Registered Retirement Savings Protection Act, S.M. 2006, c. 29. Proclaimed in force 1
November 2007, M. Gaz. 2007.I.293.
2
Manitoba, Legislative Assembly, Debates and Proceedings Official Report (Hansard), 58 (7
December 2006) at 637.
3
Registered Retirement Income Funds (RRIF) and Deferred Profit Sharing Plans (DPSP) are
also not subject to enforcement.

212 Underneath the Golden Boy
laws of both levels of government have upon each other. The federal
government has jurisdiction in the area of bankruptcy and insolvency, 4 while
provincial governments have jurisdiction in property and civil rights. 5 Therefore,
Manitoba’s debtor-creditor regime is distinct from the federal Bankruptcy and
Insolvency Act. 6 An important aspect of bankruptcy worth noting is that
exemptions from divisible property include, “any property that…is exempt from
execution or seizure under any laws applicable in the province.” 7 This results in a
significant connection between federal bankruptcy laws and provincial property
rights. The RRSP Act will result in RRSPs held by bankrupt Manitobans to be
exempt from the property that is divisible by their creditors. 8
B. Enforcement Remedies for Creditors in Manitoba
The process in which creditors exercise their rights from judgment to enforce
payment from their debtors has been described as, “[N]ot so much a ‘system’ as
it is a collection of discrete procedures aimed at specific types of
assets…[whereby] a creditor must resort to one or more of the remedies…in
order to reach all of the debtor’s property.” 9 Why is this the case The remedies
available to creditors have their genesis in the common law, 10 can come from the
courts of equity, 11 are guided by dedicated enforcement statutes, 12 are limited by
4
The Constitution Act, 1867 (U.K.), 30 & 31 Victoria, c. 3, s. 91(21).
5
Ibid., s. 92(13).
6
Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3.
7
Ibid., s. 67(1)(b).
8
Bill C-62, An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors
Arrangement Act, the Wage Earner Protection Program Act and chapter 47 of the Statutes of
Canada, 2005, 39 th Parl. 2 nd Sess., 2007, cl. 32(1) (as passed by the House of Commons 29
October 2007). This amendment adds RRSPs as a specific exemption to the divisible property
of a bankruptcy throughout Canada, except those amounts added to the RRSP within 12
months of the bankruptcy.
9
Manitoba Law Reform Commission, Review of the Garnishment Act (Winnipeg: Queen’s
Printer, 2005) at 2.
10
The writ of fieri facias allowed for the seizure of goods, chattels, leases, and crops. The writ of
elegit allowed for the possession of the debtor’s land. Early common law exemptions from
enforcement included only the wearing apparel and goods on the person. For an analysis of
common law creditors’ remedies, see C.R.B. Dunlop, Creditor-Debtor Law in Canada, 2 nd ed.
(Scarborough, ON: Thomson Canada Ltd., 1994), chapter 4.
11
Receivership occurs where the court appoints a receiver to collect the personal estate and any
amounts owing to the debtor. Where equitable execution is ordered, the receiver has the power
to sell the personal property of the debtor. Amounts held by the receiver are then distributed to
the creditor(s). The Mareva injunction (Mareva Campania Naviera S.A. v. International Bulk
Carriers S.A. [1980] 1 All E.R. 213 (C.A.)) is a creditor remedy directed at the person (rather
than the property) whereby the debtor is ordered, prior to judgment, to not dispose of specified

The Registreed Retirement Savings Protection Act 213
ancillary statutes, 13 and are created, to a significant extent, by the Court of
Queen’s Bench Act 14 and the Queen’s Bench Rules. 15
The intricate nature and requirements of the different remedies available to
creditors may lead to missteps by lawyers. An argument could fail due to the
selection of an improper writ. 16 In other cases, the choice of one remedy could be
significantly less attractive in its result when compared to another remedy. 17
C. The RRSP Act’s Place in the Regime
While the creditor remedies regime in Manitoba is a smorgasbord of processes,
The RRSP Act is poured over all of these processes, save one – The Fraudulent
Conveyances Act. 18 The result is a near-blanket exemption for RRSPs.
Subsection 3(1) of The RRSP Act states the following:
Subject to subsection (2), all rights, property and interests of a planholder in a registered
plan are exempt from any enforcement process.
Subsection 3(2) lists the exceptions to the exemption:
Subsection (1) of this section and subsections 168(1) and 173(2) of The Insurance Act do
not apply to an enforcement process…
(a) to satisfy an order made under The Family Property Act or under similar legislation of
any other province or territory of Canada; or
(b) by a designated officer, as defined in section 52 of The Family Maintenance Act, in
enforcement proceedings the officer may take under Part VI of that Act;
in respect of a registered plan.
The definition of “enforcement process” is as follows:
(a) garnishment, execution, seizure or attachment; or
assets. For an analysis of equitable creditors’ remedies, see C.R.B. Dunlop, supra note 10 at 91
and 160.
12
Executions Act, C.C.S.M. c. E160, Fraudulent Conveyances Act, C.C.S.M. c. F160,
Garnishment Act, C.C.S.M. c. G20, Judgments Act, C.C.S.M. c. J10.
13
Consumer Protection Act, C.C.S.M. c. C200, Family Maintenance Act, C.C.S.M. c. F20,
Limitation of Actions Act, C.C.S.M. c. L150.
14
Court of Queen's Bench Act, C.C.S.M. c. C280, ss. 55, 59, 60, 61.
15
Court of Queen's Bench Rules, Man. Reg. 553/88, rr. 41, 44, 45, 46, 60.
16
In Watt v. Trail and Christie (2000) 227 N.B.R. (2d) 334 (C.A.), the plaintiff first attempted
to obtain judgment, unsuccessfully, by seizure and sale. The action was later argued successfully
using equitable execution in Watt v. Trail and Christie (2001) 237 N.B.R. (2d) 319. (C.A.).
17
A constructive trust gives the creditor a preferred status when compared to creditors who
simply have the remedy of damages.
18
Fraudulent Conveyances Act, supra note 12.

214 Underneath the Golden Boy
(b) any other remedy or legal process to enforce payment of an amount payable by a
planholder. 19
Garnishment 20 , execution, seizure, 21 and attachment 22 are all enforcement
remedies available to creditors as per the Court of Queen’s Bench Act and
Queen’s Bench Rules. These remedies do not apply to the RRSPs of a debtor
except where the creditor (usually the former spouse or common law partner,
but it could also be the caregiver of the debtor’s child) has a Family Maintenance
Act or Family Property Act 23 order. “Any other remedy or legal process to
enforce payment” will include the remedies from equity, including equitable
execution. 24
Further evidence of this near-blanket exemption is found when considering
“absconding debtors.” Absconding debtors are those debtors who leave the
province in order to frustrate the enforcement of a judgment. While the
Executions Act 25 and the Judgments Act 26 both revoke the exemptions found in
each of those particular acts where the debtor has absconded, The RRSP Act
does not have such a provision. RRSPs would still be exempt and would not be
revoked from an absconding debtor. 27
One particular statute within the creditor remedies regime can nullify the
RRSP exemption—The Fraudulent Conveyances Act. Section 5 of The RRSP
Act states the following:
5(1) If a provision of this Act conflicts with a provision of another Act, this Act prevails
unless the other Act expressly provides that it or the provision prevails despite this Act.
19
The Registered Retirement Savings Protection Act, supra note 1, s. 1.
20
Supra note 15, rr. 46.14, 46.15, 60.08, Garnishment Act, supra note 12.
21
Supra note 15, r. 60.07, Executions Act, supra note 12.
22
Supra note 15, rr. 46.01 to 46.13.
23
Family Property Act, C.C.S.M. c. F25.
24
The Mareva injunction would probably not be a “remedy…to enforce payment” because it does
not enforce payment, but rather this injunction creates a personal order that the debtor not
dispose of specified assets. However, it is difficult to see how a Mareva injunction would be of
use to a creditor seeking to make a claim to the debtor’s RRSP. The Mareva injunction is
simply a motion that is a part of the plaintiff/creditor’s main action to enforce the judgment
against the debtor and the main action is unenforceable due to the RRSP exemption.
25
Executions Act, supra note 12, s. 29 “The exemptions in this Act mentioned cannot be claimed
by or on behalf of a debtor who is in the act of removing with his family from the province or is
about to do so, or who has absconded, taking his family with him.”
26
Judgments Act, supra note 12, s. 15; same text as note 24.
27
If the debtor moves to another province then the debtor’s property in the RRSP would not
likely be in Manitoba anymore—it would be in the new province, so there would be no need for
an absconding provision. A question would arise if the debtor absconds to another country.
Does the property in the RRSP still remain in Manitoba

The Registreed Retirement Savings Protection Act 215
5(2) Despite subsection (1), nothing in this Act affects the operation of The Fraudulent
Conveyances Act.
Moreover, section 2 of The Fraudulent Conveyances Act is as follows:
Every conveyance of real property or personal property and every bond, suit, judgment,
and execution at any time had or made, or at any time hereafter to be had or made, with
intent to defeat, hinder, delay or defraud creditors or others of their just and lawful
actions, suits, debts, accounts, damages, penalties, or forfeitures is void as against such
persons and their assigns. [emphasis added.]
Subsection 5(2) will likely be used in the following instance: where the
debtor, realizing his or her obligations to the creditor, intentionally contributes
to his or her RRSP in spite of these obligations. 28
III. PARTIES AFFECTED BY THE RRSP ACT
The two parties that are most significantly affected by The RRSP Act are: (a)
debtors and (b) creditors. It is also worth noting the other parties that are
affected, albeit to a more modest extent. These parties include: (c) RRSP
trustees and depositaries, (d) the spouse or common law partner of the debtor,
and (e) the public.
A. Debtors
What types of debtors are affected by this legislation The simple answer is those
debtors who are “planholders” as per the definition in section 1 of The RRSP
Act. The following investment vehicles are included as exempt plans: (i) RRSPs,
(ii) Registered Retirement Income Funds (“RRIF”) and (iii) Deferred Profit
Sharing Plans (“DPSP”). Who can invest in RRSPs Subsection 146(1) of the
Income Tax Act (“ITA”) 29 defines a “retirement savings plan” as being
contract/arrangement between an individual and the RRSP trustee or depositary.
Individuals do not include corporations and therefore corporations cannot hold
RRSPs. 30
However, this legislation affects sole proprietorship and partnerships. In
fact, Manitoba legislators were of the view that small business owners were a
constituent in need of protection. During debate on second reading,
28
A situation where it could be argued that there is no “intent to defeat, hinder, delay or defraud
creditors” would be one where the planholder has pre-authorized a direct, monthly transfer of
funds from their bank account to their RRSP account.
29
Income Tax Act, R.S.C. 1985 (5 th Supp.), c. 1.
30
This is obvious on its face as corporations do not retire. The term “individuals” does include
trusts, though. Testamentary trusts will hold RRSPs following the death of a planholder.

216 Underneath the Golden Boy
Conservative opposition member from Lac du Bonnet, Mr. Gerald Hawranik,
submitted that Bill 6 would be “good news for small business owners who have,
by and large, registered retirement savings plans to take care of themselves in
their retirement.” 31 The NDP government was also of this view. 32 The Canadian
Federation of Independent Business supported the bill by sending a
representative to the Standing Committee on Social and Economic
Development. 33
B. Creditors
What types of creditors does this legislation affect Unsecured creditors are
affected by this legislation because the debtor’s RRSPs will be exempt from
enforcement. This legislation does not affect secured creditors. Section 146 of
the ITA defines who can invest in RRSPs and what the Minister of National
Revenue accepts as a registered plan:
(1) Definitions – In this section…
‘Retirement savings plan’ means
(a) a contract between an individual and [an authorized person], or
(b) an arrangement under which payment is made by an individual or the
individual’s spouse or common-law partner [in trust or by investment contract] to
be used…by that corporation…for the purpose of providing for the individual,
commencing at maturity, a retirement income…
(2) The Minister shall not accept for registration…unless…it complies with the
following conditions…
(c.3) the plan, where it involves a depository, includes a provision stipulating that
(i) the depository has no right of offset…and
(ii) the property held under the plan cannot be pledged, assigned or in
any way alienated as security for a loan…
On its face, the ITA seems to indicate that an RRSP cannot be used as
security for a loan because the tax advantages of an RRSP are not transferable
(except in very limited circumstances, see section II.D.). This is true. But where
an RRSP is used as security for a loan, then, depending on the form of the RRSP
(deposit contract, or trust), one of two outcomes can occur:
• The RRSP becomes de-registered at that time and is therefore no
longer an RRSP, 34 or
31
Supra note 2, 58 (30 November 2006) at 437, (Mr. Gerald Hawranik).
32
Ibid. (Hon. Greg Selinger).
33
Manitoba, Legislative Assembly, Standing Committee on Social and Economic Development,
58 (4 December 2006), at 13.
34
Re Whaling (1999) 6 C.B.R. (4 th ) 1 (Ont. C.A.) at 16. In this case, the Whalings’ executed a
loan (using their CIBC RRSP as security) with CIBC in May 1992. In November 1992, the Mr.
Whaling made an assignment in bankruptcy. In December 1992 the trustee in bankruptcy
asked the CIBC to de-register the RRSP so that the assets may be distributed to creditors. But

The Registreed Retirement Savings Protection Act 217
• The property in the RRSP that is used as security shall be included in
the planholder’s income. 35
It is important to establish exactly who a creditor is. Often what comes to
one’s mind is a lender of money such as a bank or a credit union. This is the one
of the types of creditors that the MLA for Springfield, Mr. Ron Schuler,
mentioned during third reading of Bill 6: “I think this legislation is there to
protect small businesses from unscrupulous bankers like that [described earlier in
his speech], that they would go so far as to try to strip an individual of their last
little bit of savings.” 36 Other types of creditors that often come to mind are
suppliers and contractors. However, creditors affected by this legislation (and the
enforcement regime in general) are not simply creditors established by contract.
Unintended creditors established by the judgment of damages for actions in tort
are also creditors within the parameters of this legislation. Debate in the
legislature and submissions in committee failed to mention or recognize these
unique creditors. Section V.D. will examine this issue more closely.
C. RRSP Trustees and Depositaries
This legislation affects RRSP trustees and depositaries to a limited extent. In
marketing their services, they could include the fact that RRSPs are exempt
from creditor enforcement. 37 From a practical standpoint though, this motivation
to purchase these services would likely be of less significance than the traditional
reasons to invest in RRSPs: (i) saving for retirement and (ii) tax deferral on
income and gains from investments.
D. Spouses and Common Law Partners
Spouses and common law partners of debtors have an interest in the debtor’s
RRSPs by virtue of two conditions:
“changes in the plan gave the CIBC the right to off set the funds in the plan against the
Whalings’ debts and constituted a pledging of the funds in the RRSPs as security.
Consequently, the plan no longer complied with s. 146(2) [of the ITA],” and therefore the
RRSP was, in fact, de-registered in May 1992. What is interesting in this case is that there was
no action by the Whaling’s, the CIBC, or the Minister to de-register the RRSP at this time. So
not only did the bankrupt estate of Mr. Whaling have to pay the bank as a secured creditor, but
there was also a tax liability incurred because of the de-registration.
35
In Re Boulin [2003] 1 S.C.R. 666 at 46, Dechamps J. notes “that there is no prohibition on
using the moneys held in a trust RRSP as security” but there are consequences in doing so—the
requirement to include these amounts in the taxpayer-borrower’s income. See also: Income Tax
Act, supra note 29, s. 146(10).
36
Supra note 2, 58 (6 December 2006) at 570, (Mr. Ron Schuler).
37
C.R.B. Dunlop, “Should Creditors Have Access to Future Income Savings Plans” 66 Sask. L.
Rev. 279 at 289.

218 Underneath the Golden Boy
1. The beneficiary status that allows the spouse, in the event of the death
of the holder of the RRSP prior to maturity, to rollover the deceased’s
RRSP into their own portfolio without incurring an immediate capital
gains tax liability 38 , and
2. The ability to transfer RRSP amounts without immediate capital gains
tax liability where there has been a breakdown of the relationship. 39
E. The Public
The affect of the legislation upon the public as a whole is uncertain. The
Minister of Finance, the Hon. Greg Selinger, inferred that there could be future
implications to the public if such a statute were not in place. In introducing the
bill at second reading, Mr. Selinger noted, “A large portion of Manitoba's
population is approaching retirement and the prospect of a longer life span. It is
important that governments not only continue to encourage individuals to save
for the years when they will not have employment income, but also to protect
those retirement savings.” 40 It remains unknown just how many future retirees
the RRSP Act will keep from the social assistance roles. Conversely, there is the
potential that these creditors may themselves require social assistance should
they be unable to collect debts.
IV. SIMILAR LEGISLATION AND LAW REFORM EFFORTS
A. Uniform Law Conference of Canada, 1999
In 1997, the Uniform Law Conference of Canada tabled a discussion paper
regarding the exigibility of future income security plans (RRSPs, DPSPs, and
RRIFs). 41 The next year the Conference received a consultation report that had
sought the views of selected stakeholders in regards to this issue. 42 The results of
this report found that a strong majority of respondents favoured legislation to
protect RRSPs, citing the need for equal treatment of RRSPs with Registered
Pension Plans (“RPPs”), which are currently exempted by legislation. The
38
Income Tax Act, supra note 29, s. 146(1): definition of “annuitant.”
39
Ibid. s. 146(16).
40
Supra note 2, 58 (30 November 2006) at 436, (Hon. Greg Selinger).
41
Uniform Law Conference of Canada, Minutes of Meeting (held August 17, 1997) at 54.
42
Ibid. (held August 16, 1998) at 45. The stakeholders included: the Canadian Bar Association,
bankers, insolvency practitioners, consumers’ associations, credit institutes, credit unions, life
insurers, financial advisors, chartered accountants, Revenue Canada, insolvency trustees,
pensioners groups, and women’s groups. See: “Working Group Report: Uniform Bill and
Commentary—Creditor Access to Future Income Security Plans” (Appendix B of the Uniform
Law Conference of Canada, August 1999) at 175.

The Registreed Retirement Savings Protection Act 219
primary concern expressed was the perceived inadequacy of the public pension
and social welfare system and the need for protection of all retirement plans.
This was considered a societal issue that outweighed the impact upon creditor’s
rights. 43 Other concerns included: (i) debtor abuse whereby the debtor uses his or
her RRSPs to shelter assets from creditors and (ii) the need for certain
exceptions to the exemption. Debtor abuse could be addressed by already
existing fraudulent conveyances legislation and by the “locking-in” of RRSPs. 44
There was consensus that family maintenance should be an exception to the
exemption, but some respondents also had concerns for other creditors,
including tort judgment creditors and criminal restitution creditors. 45 The
consultation report recommended that RRSPs, DPSPs, and RRIFs should be
exempt from exigibility. 46 The 1998 Conference decided that a draft Act, based
upon this report’s recommendations, would be tabled at the 1999 Conference. 47
The 1999 Conference resolved to adopt the Uniform Registered Plan
(Retirement Income) Exemption Act. 48 Section 3 of this Act exempted RRSPs,
DPSPs, and RRIFs from “any enforcement process.” 49 While no exceptions to the
exemption were included, commentary accompanying the Uniform Act
recognized that the provinces could include exceptions to this exemption. 50
B. Saskatchewan—Registered Plan (Retirement Income)
Exemption Act, 2002
The Registered Plan (Retirement Income) Exemption Act received Royal
Assent in Saskatchewan on 30 May 2002. 51 This Act is almost identical to the
Uniform Registered Plan (Retirement Income) Exemption Act. Furthermore,
Saskatchewan’s Act does include the suggested exception to the exemption of
RRSPs when enforcing family maintenance orders. 52 The similarity of the two
43
Darcy McGovern, “Consultation Report: Creditor Access to Future Income Security Plans”
(Appendix F of the Uniform Law Conference of Canada, August 1998) at 262.
44
Ibid. at 264.
45
Ibid. at 263 and 267.
46
Ibid. at 269.
47
Supra note 41 (held August 16, 1998) at 47.
48
Ibid. (held August 15, 1999) at 44.
49
“Working Group Report: Uniform Bill and Commentary —Creditor Access to Future Income
Security Plans” supra note 42 at 169.
50
Ibid. It was expected that one of these exceptions would be maintenance enforcement.
51
Saskatchewan, Legislative Assembly, Debates and Proceedings (Hansard), 45 (30 May 2002) at
1722.
52
S.S. 2002, c. R-13.01, s. 3(3).

220 Underneath the Golden Boy
acts should not be surprising for two reasons: (i) the Uniform Act was based
upon the Saskatchewan creditor enforcement regime, and (ii) the 1998 Uniform
Conference’s consultation report was presented by Mr. Darcy McGovern. In
2002, Mr. McGovern, as a representative of legislative services of the
Department of Justice, appeared before the Saskatchewan Legislature’s
Committee of the Whole regarding Bill 23, which would become the Registered
Plan (Retirement Income) Exemption Act. 53 It should be noted that the debates
in the Saskatchewan Legislature did not distinguish between the various possible
types of creditors, whether they be banks or those who had suffered a personal
injury. 54
V. LEGISLATIVE PROCESS
A. Planning Stage
The 4 December 2006 submission by the Canadian Federation of Independent
Business (“CFIB”) at the Standing Committee on Social and Economic
Development gives an indication of the planning behind this legislation. In
Committee, Mr. Shannon Martin of CFIB said:
By way of background, in 2004, Department of Finance officials approached CFIB to seek
our members' views on this issue. As a result, we asked the following question: Should the
Manitoba government introduce legislation to protect RRSPs from debt collection Two
thirds of our members supported this legislation, 25 percent of our members rejected the
idea, and 9 percent of our members were undecided. 55 [emphasis added.]
B. Introduction of Bill 6
Bill 6, The Registered Retirement Savings Protection Act, was introduced to the
legislature on 28 November 2006. The motion to introduce the bill was
adopted. 56
C. Second Reading
The bill was addressed in second reading debate by all three parties, but there
was more consensus than there was conflict. The finance minister presented the
NDP government’s two main reasons for the bill: (i) the social importance of
having sufficient financial resources in retirement, and (ii) an issue of fairness 57 —
53
Supra note 51, 45 (29 May 2002) at 1682.
54
See Sections II.B. and V.D. for discussion on the different types of creditors.
55
Supra note 33.
56
Supra note 2, 58 (28 November 2006) at 317.
57
Ibid. 58 (30 November 2006) at 436, (Hon. Greg Selinger).

The Registreed Retirement Savings Protection Act 221
RPPs were protected from enforcement by legislation 58 , while RRSPs were not.
The finance minister also assured the Legislature that RRSPs would still be
subject to creditor enforcement orders with respect to family maintenance and
division of family property. 59
Speaking for the Conservative opposition, Mr. Hawranik was agreeable to
the substance of the bill, but took the opportunity to attack the government in
regards to taxes on small business. 60 Liberal leader, the Hon. Jon Gerrard of River
Heights, described the bill as a “positive move” 61 but did have a reservation
about the bill. His was concerned that the legislation could have an effect upon
an individual’s ability to borrow. Mr. Gerrard suggested “that an individual
might have a choice in being able to use some of the assets in a registered
retirement savings plan that could be borrowed against in a way that wouldn't
mean that they would have to take the assets out.” 62 This was the only mention
of the debtor’s freedom to contract during the debates and committee meeting
and there was no response by the government to Mr. Gerrard’s suggestion.
D. Committee
The Standing Committee on Social and Economic Development met on 4
December 2006, calling one witness—the CFIB’s Mr. Martin. As mentioned in
section II.A., Mr. Martin brought to the Committee’s attention the survey of its
members, the majority of whom were in favour of the government introducing
legislation to protect RRSPs from judgment enforcement.
Mr. Hawranik expressed concern that when an RRSP matures to become an
RRIF, the income that is paid out to the retiree would be subject to enforcement
remedies. Mr. Selinger’s response was that income received by retirees of RPPs
were also subject the same remedies and that the legislation fairly
accommodated both types of pensions. 63 The discussion in section V.A. will
examine Mr. Hawranik’s concern. All clauses of the bill passed committee stage
without amendment.
58
Pension Benefits Act, C.C.S.M. c. P32, ss. 31, 31.1 and Garnishment Act, supra note 12, ss. 14,
14.1, 14.2, 14.3.
59
Supra note 2, 58 (30 November 2006) at 437, (Hon. Greg Selinger).
60
Ibid. (Mr. Gerald Hawranik).
61
Ibid. at 438, (Hon. Jon Gerrard).
62
Ibid. See section II.B. and notes 34 and 35 for a discussion on how an RRSP can be used as
security for a loan and the consequences of doing so. Although it is not clear if Mr. Gerrard’s
use of the term “borrowed against in a way” means using the RRSP as security or simply listing
the RRSP as an asset on a loan application. If an RRSP is used as security then there are serious
consequences: see notes 34 and 35.
63
Supra note 33 at 23.

222 Underneath the Golden Boy
E. Third Reading
On third reading, debate in support of the government’s bill was brought forward
by the opposition Conservatives and the Liberals without response from the
NDP government. Conservative MLA, Mr. Schuler of Springfield, considered
the positive effect that the legislation would have upon small business owners to
be the most important aspect of the bill. 64 Fellow Conservative, Mr. Hawranik,
was also supportive of the bill but echoed the concern that he expressed in
committee. 65 Mr. Gerrard noted that the Liberals would support the legislation
but also “expect[ed] [that] over time we may need to come back and visit and
that there are issues which individuals will come forward with.” 66
F. Royal Assent and Proclamation
Bill 6 was given Royal Assent on 7 December 2006 with a coming into force date
to be fixed by proclamation. 67 Proclamation was granted on 5 May 2007, fixing
the coming into force date to be 1 November 2007. 68
G. Genesis of The RRSP Act
It is important to ask the question, what was the genesis of The RRSP Act The
answer to this question can be looked at from two legitimate perspectives. First,
it could be claimed that The RRSP Act was a reactive and preventative measure
that would protect people’s retirement investments. The debates in the
Legislature show that protection of retirement investments was a basis for The
RRSP Act. 69 It could also be claimed that The RRSP Act was a response by the
Legislature to both the 1999 recommendation by the Uniform Law Conference
and the 2002 Saskatchewan legislation. There is acknowledgment of the
Saskatchewan legislation in the debates 70 and of the Uniform Law Conference
recommendation in committee. 71
If The RRSP Act was born, in part, out of the Uniform Law Conference and
the Saskatchewan Act (which itself was influenced by the Uniform Law
Conference), then are there any issues that the Uniform Law Conference raised
64
Supra note 2, 58 (6 December 2006) at 569, (Mr. Ron Schuler).
65
Ibid. at 571, (Mr. Gerald Hawranik).
66
Ibid. at 571, (Hon. Jon Gerrard).
67
Ibid. 58 (7 December 2006) at 637.
68
Supra note 1.
69
Supra note 2, 58 (30 November 2006) at 436, (Hon. Greg Selinger), at 437 (Mr. Gerald
Hawranik), and at 438 (Hon. Jon Gerrard).
70
Ibid. at 437 (Mr. Gerald Hawranik) and at 571 (Mr. Ron Schuler).
71
Supra note 33 at 23 (Hon. Greg Selinger).

The Registreed Retirement Savings Protection Act 223
or issues that were deferred to the provinces by the Conference that should have
also been of concern to, acknowledged by, and/or addressed by the Legislature
As mentioned in Section III.A., the Uniform Law Conference’s recommended
Act did not include any exceptions to the exemption of RRSPs, but it did
acknowledge that “to the extent that individual jurisdictions wish to create
further exceptions to this exemption, such as allowing exigibility to enforce
maintenance orders, such exceptions would need to be added to this draft.” 72
Aside from the unanimous agreement that family maintenance orders should be
an exception, there was no discussion in the Legislature as to any other possible
exceptions. Section V.D. will examine other types of creditors that could be
considered for an exception to the exemption.
VI. POTENTIAL ISSUES
A. Income Paid by an RRIF is Subject to Creditor’s Remedies
As noted in the committee section (IV.D.), a concern of the debtor is that, once
the RRSP matures into an RRIF and income is being paid to the debtor, the
creditor will enforce an existing judgment by garnishment of the income being
paid. Aside from the fairness issue that was the minister of finance’s response to
Mr. Hawranik’s concern, the minister also expressed the need for “a balanced
approach” between the protection for debtors and the corresponding impact
upon creditors. 73
Concerns similar to Mr. Hawranik’s have also been expressed in regards to
the Saskatchewan Act. C.R.B. Dunlop notes that “if…one assumes that the
obligation to pay [a monthly RRIF payment] is a debt due or accruing due, can
the plan holder claim the wage or salary exemption” 74 While the intent of the
Legislature is to treat RPPs and RRSPs/RRIFs equally (see Section V.C. for
fairness issues), there are details that create what seem to be minor differences
that could be significant differences in certain circumstances. With RPPs,
payments of pension benefits are treated as wages 75 and can be garnished in the
same manner as any garnishing order for wages (this means that typically, 70% of
the wages are exempt from garnishment). 76 Pension benefits can be periodic
payments or lump-sum payment (this may be possible upon request before
72
“Working Group Report: Uniform Bill and Commentary —Creditor Access to Future Income
Security Plans”, supra note 42 at 169.
73
Supra note 33 at 23 (Hon. Greg Selinger).
74
Supra note 37 at 294.
75
Garnishment Act, supra note 12, s. 14(2).
76
Ibid. s. 5.

224 Underneath the Golden Boy
retirement due to disability). 77 But The RRSP Act remains silent as to whether
payments from RRSPs or RRIFs are to be treated as wages. If the planholder of
an RRSP becomes ill prior to retirement age and decides to take amounts out of
his or her RRSP, these amounts may not be treated as wages by the Garnishment
Act and thus 100% of the amount would be subject to enforcement. The status
of payments from RRIFs is also undecided. Section 14(4) of the Garnishment
Act may or may not include payments from RRIFs as being “pension benefits.”
Prior to the introduction of Bill 6, the Manitoba Law Reform Commission
released a Review of the Garnishment Act. 78 This review recommended that the
wage exemption be extended to payments from RRSPs, DPSPs and RRIFs. 79
There is no provision in The RRSP Act, nor was an amendment made to the
Garnishment Act, that provides for this exemption.
B. Effect upon the Ability to Borrow and the Cost of Borrowing
Mr. Gerrard brought this issue to the Legislature’s attention during the second
reading of the bill but there was no government response. Will the fact that a
prospective lender has no method to bring an effective enforcement process
against a borrower’s RRSPs cause a loan (that otherwise would have been made)
to be denied Will this increase the interest rate to account for a higher risk
loan It could depend on the other assets of the borrower. Where other assets
would cover the unsecured loan or where another asset can be used as security,
then the effect of the RRSP exemption should be minimal. It would more likely
be in instances where the RRSP is the only significant asset of the borrower that
this issue could arise.
The RRSP Act does not prevent property in the RRSP from being used as
security for a loan. However, when an RRSP is used as security, then the RRSP
will either, (i) become de-registered and thus the investment will no longer be an
RRSP, 80 or (ii) the amount of property in the RRSP that is used to secure the
loan shall be included in the borrower’s income. 81 The negative tax
consequences of obtaining a loan in this manner should cause a potential
borrower to pause for thought.
77
Pension Benefits Act, supra. note 58, ss. 21(6)(b), 37(j).
78
Supra note 9.
79
Ibid. at 25.
80
Income Tax Act, supra note 35, s. 146(2)(c.3).
81
Ibid. s. 146(10). See also: section II.B. and notes 34 and 35.

The Registreed Retirement Savings Protection Act 225
C. Fairness – Distinctions between RRSPs and RRPs
A valid fairness argument that does not appear to have been considered by the
Legislature would have been to make RPPs subject to enforcement remedies. 82
Wells v. Foster states the common law rule regarding assignment of a pension.
Parke, B. stated the following:
The correct distinction made in the cases on this subject is, that a man may always assign
a pension given to him entirely as a compensation for past services…In such a case, the
assignee acquires a title to it both in equity and at law. 83
Thus a pension is simply another form of property. If a pension can be
assigned to anyone then the pension will also be available to satisfy a debt owed
by the new owner. Furthermore, should the original pension holder retain
possession then the pension would be available to satisfy a debt owed. This is still
true today. But pension statutes 84 have done away with the assignment of
pensions to others. However, these statutes, along with family law statutes, allow
for pensions to be assigned/transferred by the pension holder to his or her spouse
or common-law partner (or former spouse) in certain circumstances. The effect
of this ability to assign/transfer pensions creates the spouse as the sole class of
potential creditors to an RPP holder.
An historical examination of English and Canadian pension statutes shows a
willingness of legislators to include clauses to prevent judgment enforcement
against pensions and to not allow for the assignment or transfer of pensions. An
early example of this is from 1706, when Queen Anne granted a £5 000 annual
pension (as well as the to-be-built Blenheim Palace and an estate at Woodstock)
to the Duke of Marlborough 85 . When a claim was made against that pension, the
Court determined:
That neither the said Duke of Marlborough, or [his heirs]…shall have Power by any Act,
Assurance or Conveyance in Law whatsoever, to hinder, bar, or disinherit any [heirs]
from holding, enjoying, or taking the fame according to the Limitations thereof made by
this Act, but that every such Act, Assurance, or Conveyance, shall be and is hereby
declared and enacted to be void. 86
82
Removal of the RPP exception was discussed briefly by the Uniform Law Conference. See:
Darcy McGovern, supra note 43 at 255.
83
Wells v. Foster [1841] 8 M. & W. 149 at 152, 151 E.R. 987 (Ex. Pl.).
84
Pension Benefits Act, supra note 58, s. 31(1): “[a pension plan] is exempt from execution…and
cannot be assigned, charged, anticipated or given as security”.
85
Publick Acts, Anne 5 Annæ, c.4.
86
In Davis v. Marlborough (The Duke of,) (1818) 1 Swans. 74, 36 E.R. 303, Lord Chancellor
Eldon refused to grant an order for a receiver of the £5 000 pension where the plaintiff claimed
that this pension was assigned to him by Lord Marlborough.

226 Underneath the Golden Boy
Military pensions 87 and old age pensions 88 have also been exempted from
enforcement and not assignable. In Manitoba, non-government RPPs have been
exempt from enforcement since 1976. 89 To abandon a policy that has become
institutionalized would likely be a difficult sell to the voters. 90
An argument against fairness is the fact that RPPs and RRSPs are not the
same. One of the main intentions of both types of plans is to defer present
income in favour of an income upon retirement. RPPs cannot be cashed out
prior to retirement except in rare circumstances. 91 Withdrawals from RRSPs,
however, can take place at the whim of the planholder—provided that the
planholder is willing to forgo the tax deferral that would occur if the withdrawal
took place in retirement. One of the reasons for the legislation, as stated by Mr.
Selinger, was the importance of governments “to encourage individuals to save
for [retirement].” 92 Since RRSPs do not have to be used for retirement, this
reasoning becomes less persuasive.
D. Impact upon Creditors
An underlying reason for the encouragement of retirement savings and RRSPs is
for Manitoba and Canada to have retirees who require less social assistance
and/or dependence on the public pension system. Thus, the protection of
debtor’s RRSPs would seem to be a logical policy in order to establish a
population of self-sufficient retirees.
There may be issues with the inflexibility of The RRSP Ac though. If there
are no means for the creditor to pursue an effective enforcement remedy to
satisfy his or her judgment in a timely manner, 93 then this will obviously be to the
detriment of the creditor. While there is probably little public sympathy for
typical creditors who voluntarily choose to lend money or sell on credit—banks
for example—there are other types of creditors.
87
Pension Act, S.C. 1919, c. 43, s. 21(3).
88
Old Age Pensions Act, S.C. 1927, c. 35, s. 16.
89
Pension Benefits Act, S.M. 1975, c. 38, s. 27.
90
Darcy McGovern, supra note 43 at 255.
91
Pension Benefits Act, supra note 58, ss. 21(6)(b), 37(j). “Retirement age” and “early retirement
age” is specified in the pension plan itself. See sections 21(7) and 21(10).
92
Supra note 2, 58 (30 November 2006) at 436, (Hon. Greg Selinger).
93
If the debtor with RRSPs was in their twenties, then this source would not be available to a
creditor, provided the debtor did not make any withdrawals from the RRSP for 40 or more
years. Limitation of Actions Act, C.C.S.M. c. L150, s. 2(1)(l.1) sets the limitation period for
enforcement of a Canadian judgment to 10 years after the date on which the judgment became
enforceable.

The Registreed Retirement Savings Protection Act 227
Some respondents to the questionnaire of the consultation report to the
Uniform Law Conference in 1998 were concerned that a blanket exemption of
RRSPs should not be given to all types of debts. 94 Where a debt is created
unintentionally (for example, where a tortfeasor is found to be responsible for a
personal injury) the circumstances could result in the debtor (with the protected
RRSPs) in a much better financial position (both presently and in the future)
than the injured creditor. It is doubtful that the legislature’s intention is to
create situations where the creditor is worse off than the debtor. If this
legislation and the enforcement regime prove to be inflexible, these situations
could arise. Unfortunately, there is no evidence in the Legislature’s debates or
committee proceedings that indicates any distinction of the types of creditors.
This may have been because this was not a concern of the legislators or perhaps
the legislators did not realize that The RRSP Act would impact all creditors
without distinction. Or maybe the wait-and-see approach, as described by Mr.
Gerrard, 95 was the intent of the Legislature: The RRSP Act’s weaknesses could
be addressed in the future.
VII. CONCLUSION
The RRSP Act is a piece of legislation that continues the long-standing policy of
protecting retirement savings from creditor enforcement remedies. However, the
legislation does not address these important issues.
1. Will there be differences between the amounts that can be garnished
from RPP payments and amounts garnished from RRIF payments
2. Will lenders require borrowers to use their RRSP as security for a
loan—resulting in serious and unforeseen tax consequences
3. Will RRSP holders be permitted to use protected savings for nonretirement
purposes—an advantage rarely available to RPP holders
4. Will there be situations where a creditor’s unfortunate circumstances
outweigh the debtor’s need to maintain their retirement savings
Mr. Gerrard’s comment in third reading recognized the Legislature’s need to
keep abreast of any unresolved issues:
Certainly, there are aspects of this bill that I expect over time we may need to come back
and visit and that there are issues which individuals will come forward with… . 96
94
Darcy McGovern, supra note 43 at 263.
95
Supra note 2, 58 (6 December 2006) at 571, (Hon. Jon Gerrard).
96
Ibid.

228 Underneath the Golden Boy
With the extension of an enforcement exemption to RRSPs, one might ask
the question, “Are there other savings plans that are also deserving of
protection” Can the reasoning behind this legislation, ensuring sufficient
financial resources in retirement, be extended to Registered Educational Savings
Plans (“RESPs”) 97 and Registered Disability Savings Plans (“RDSPs”) 98 The
answer to these questions may be as follows. If governments and the public are
not able (or willing) to provide a sufficient social safety net for retirees or the
disabled, or sufficient educational funding for post-secondary students, then
these same governments can legislate to ensure that the personal/family savings
to be used for their intended purposes will be protected from creditor
enforcement remedies.
97
Currently, RESPs are not exempt from enforcement. MacKinnon v. Deloitte & Touche Inc.
(2007) 30 C.B.R. (5th) 81 (Sask. Q.B.) at 26: “To my knowledge, neither Parliament nor any
Provincial or Territorial Legislature has passed legislation exempting registered education
savings plan from enforcement.” It is the parent who is the planholder and thus has the
property interest. In Re Payne (2001), 29 C.B.R. (4th) 153 (Alta. Q.B.), it was held that the
RESP is not a trust arrangement between a settlor-parent and beneficiary-child held in trust by
the trust company-trustee (despite the definition of “beneficiary” in the Income Tax Act, supra
note 35, s. 146.1(1)). It is not exclusively for the benefit of a child because the RESP may be
collapsed by the parent at any time prior to maturity. It should be noted that there may be a
trust relationship for RESPs, but this is actually where the parent is the trust’s settlor, the trust
company managing the trust is the trustee, and the parent is also the trust’s beneficiary (until
the specified date of maturity, at which time the child, provided they are a student, becomes
the beneficiary).
98
Department of Finance, Canada. Budget Plan, Chapter 3 (Budget 2007), online:
. The 2007 federal budget announced plans,
to be implemented in 2008, to create a new tax deferral, similar to RRSPs, for savings plan of
families with disabled children or adults. Arguments can be made, perhaps even stronger than
the arguments made by those supporting The RRSP Act, that RDSPs should be protected from
creditor enforcement whether the RDSP is considered to be in hands of the parent until
maturity (as is the case with RESPs—see note 96) or when the RDSP is being held in trust
solely for the benefit of the disabled adult.
Since the time of writing, this has been passed into law. See Budget and Economic Statement
Ipelemtnation Act, 2007 (2007, c. 35) Part 4. Online:

2008 Franchise Law Symposium
W
ith the enactment of franchise-specific laws in four jurisdictions, the need
for uniformity in franchise legislation in Canada is greater than ever.
Alberta, Ontario, Prince Edward Island and (most recently) New Brunswick
have passed laws targeting franchising. Quebec offers limited protection in its
Civil Code.
The regulation of franchising is designed to protect the franchise by
imposing pre-sale disclosure requirements on the franchisor and creating
substantive duties of good faith, fair dealing, and rights of association. Problems
arise when individual jurisdictions take their own path without considering the
practical implications on business.
Franchising has been regulated for dozens of years outside of Canada.
International franchisors are accustomed to operating in diverse regulated
environments and have the resources to deal with complexities associated with
expansion. It is the domestic franchisor who is finding the patchwork of laws
across Canada onerous.
When the Manitoba Law Reform Commission (“MLRC”) requested a
response to their Consultation Paper on Franchise Law last year, little
consideration had been given to the regulation of franchising since Manitoba’s
legislature failed to pass Bill 18, The Franchises Act into law in 1992. The
Desautels Centre for Private Enterprise and the Law and the Asper Chair of
International Business and Trade Law at the University of Manitoba’s Robson
Hall took on the challenge of investigating the matter further.
What resulted was not just a paper but an open discussion between
academics, students, legislators, solicitors, litigators, and industry leaders from
across Canada. They converged in Winnipeg on 14 March to share unique
experiences and views on the state of franchising at the 2008 Franchise Law
Symposium.
It was clear to all in attendance that lawyers and their clients preferred the
predictability of uniformity across jurisdictions, if a regime were to be imposed at
all. The original consultation paper and the materials presented at the 2008
Franchise Law Symposium are printed in the following section.

230 Underneath the Golden Boy

Franchise Law: Consultation Paper 2007
MANITOBA LAW REFORM COMMISSION
CHAPTER 1: INTRODUCTION
A. Background to the Project
he Manitoba Law Reform Commission has noted that franchising is a
Tgrowing
and relatively unregulated field of business activity; there has been
occasional media attention focusing on the inequality between franchisors and
franchisees and recently, on alleged franchising frauds in Manitoba. 1 In recent
years, three provinces and several countries have enacted new or revised
franchise legislation. In January 2006, the Commission received a suggestion that
a review of possible reforms to franchise law would be valuable in Manitoba, 2 and
the Commission agreed to undertake the project.
B. Scope
This paper considers whether the regulation of franchises is desirable in
Manitoba. It provides an introduction to the history and various models of
franchising, an overview of existing franchise regulation in Canada and other
countries and a comparison of the elements of Canadian legislative regimes.
Finally, it asks whether franchise legislation is needed in Manitoba, and if so,
what elements should be included in the legislation.
1
For example, A. Paul, “City man burned by pizza franchise scam” Winnipeg Free Press
(February 12, 2007); P. Turenne, “Bitter business tale: Pizza franchise turned out to be scam”
Winnipeg Sun (February 12, 2007). See also T. Davis, “A town tackles a giant” Winnipeg Free
Press (June 17, 1995) A17; residents of the Town of Oakville organized a rally to protest a new
General Motors policy that was forcing a dealer to close his dealership and to press for
legislation that would make it more difficult for franchisors to dictate terms to franchisees.
According to the report, GM was requiring dealers to undertake expensive renovations, and
had refused approval for the Oakville dealer to sell his dealership instead. In the article, NDP
MLA Jim Maloway and the President of the Manitoba Motor Dealers Association advocated
for franchise legislation in Manitoba.
2
The review was suggested by A.L. Weinberg, Q.C., Myers Weinberg LLP, Winnipeg, Manitoba.

232 Underneath the Golden Boy
C. Invitation to Comment
The Commission invites public comment in the matters discussed in this paper
and hopes that all interested persons and organizations will accept the invitation
to share their thoughts on the issues raised. Once comments have been received,
the Commission will consider them and prepare its final report. In accordance
with The Law Reform Commission Act, 3 the Commission will then submit the
report to the Minister of Justice and Attorney General for consideration.
Anyone wishing to respond to the issues raised, or to comment on any other
relevant issue, is invited to write to the Commission at the following address:
Manitoba Law Reform Commission, 432-405 Broadway, Winnipeg, Manitoba,
R3C 3L6
Submissions may also be sent by fax to (204) 948-2184 or by email to
lawreform@gov.mb.ca. We regret that we are unable to receive oral submissions.
Unless clearly marked to the contrary, the Commission will assume that
comments received are not confidential, and that respondents consent to our
quoting from or referring to their comments, in whole or in part, and attributing
the comments to them. Requests for confidentiality or anonymity will be
respected to the extent permitted by freedom of information legislation.
The deadline for submissions is August 20, 2007.
CHAPTER 2: FRANCHISING OVERVIEW
A. General
Franchises are widespread in today’s society. Consumers do business daily with a
broad range of franchised brands - buying fast-food, coffee, gas, and real estate,
hiring cleaning services, booking vacations, and having their taxes prepared.
However, the prevalence of franchising as a way of doing business is a relatively
recent phenomenon.
In its earliest sense, a franchise was a “special privilege to do certain things
conferred by government on an individual or corporation, and which does not
belong to citizens generally of common right”. 4 This meaning is still relevant;
the government grants franchises to companies such as telecommunications and
utility service providers to encourage the development of a ‘public good’ by the
3
The Law Reform Commission Act, C.C.S.M. c. L95.
4
Black’s Law Dictionary, 6 th ed., s.v. “franchise.” For example, in ancient England the monarchy
would grant a subject the right to collect taxes; in more recent times a government may grant a
utility company a monopoly franchise to encourage the development of a ‘public good’ by the
private sector.

Franchise Law Consultation Paper 2007 233
private sector. In the modern commercial environment, however, franchising
now generally refers to a specific and prevalent method of doing business.
In its simplest terms, a franchise is a license from [the] owner of a trademark or trade
name permitting another to sell a product under that name or mark. More broadly stated,
a “franchise” has evolved into an elaborate agreement under which the franchisee
undertakes to conduct a business or sell a product or service in accordance with methods
and procedures prescribed by the franchisor, and the franchisor undertakes to assist the
franchisee through advertising, promotion and other advisory services. 5
A franchise is a contract between two businesses, in which the franchisor
grants the franchisee the right to operate its business system in return for
payment of fees and royalties. The business system typically includes intellectual
property (such as trademarks, trade names and logos), the right to sell products
or services, access to business knowledge and methods, and other physical and
intangible assets. 6 Franchisors may operate some of their units directly and
franchise others.
A key element of a franchise is the ongoing relationship between the parties.
The franchisor often provides continuing support or direction regarding the
operation of the business. The franchisee agrees to sell the franchisor’s product,
often exclusively, and to comply with the franchisor’s standards. While the
franchisee is an independent business, it will usually be required to operate in a
way that is substantially similar to or indistinguishable from the operation of the
franchisor and its other franchisees. 7
Franchising has been described as “an organizational choice for distributing
goods and services.” 8
As a form of business organization, franchising is seen as occupying a middle ground
between two poles of the organizational continuum. At one end of the continuum is
vertical integration (for example, a producer that owns its own retail outlets). At the
other end is an isolated commercial transaction (for example, a producer that makes a
one-time sale to a retailer). In franchising the vertical relationship, often between a
supplier and a retailer, is continuous and sometimes intense. The franchisee may gain the
good will associated with the franchisor’s trademark, standards for the quality and style of
operation associated with the mark, and perhaps from training and advice provided by the
5
Ibid.
6
See A.J. Trebilcock, “Introduction to Franchising” in Franchising 101, Ontario Bar Association
(2001), online: (date accessed May 3,
2007); J. Anthony Van Duzer, The Law of Partnerships and Corporations (2 nd ed., 2003) at 20.
7
Trebilcock, supra note 3; E.N. Levitt, Distribution Networks and Agreements, Gowling Lafleur
Henderson LLP, Toronto, Ontario (May 2002), online:
(date accessed: May 3, 2007).
8
W. Grimes, “Perspectives on Franchising: When Do Franchisors Have Market Power Anti-
Trust Remedies for Franchisor Opportunism” (1996), 65 Antitrust L.J. 105 at 107.

234 Underneath the Golden Boy
franchisor. Still, the capital and risk incentives for operation of individual outlets remain
much like those of independently owned businesses. The franchisee risks its capital to
own and operate an outlet. But, unlike in an independently owned business, a franchisee
generally relinquishes a great deal of control over the outlet and must share with the
franchisor the revenue generated by the outlet. Many franchisees pay an up-front
franchise fee, continuing royalties based upon sales, and subject themselves to the
franchisor’s monitoring. 9
B. History
The franchising concept dates back to the English Middle Ages, when the
Crown, wanting to avoid the costs and administrative burden of hiring, paying
and supervising tax collectors, granted to officials the right to collect and keep
the Crown’s taxes in return for a fee. Later, in North America, governments
granted private individuals and corporations the right to carry out activities that
would otherwise be restricted to the government, to facilitate the development
of infrastructure and services such as railroads, utilities, and banking. 10
Modern private sector franchising first appeared in the 1850s. The first
franchise model is often attributed to the Singer Sewing Machine Company,
which created an independent distributor network for its sewing machines.
Although the business model ultimately failed for Singer, the private sector
franchising concept began to take hold. 11
One of the first businesses to successfully employ the franchising concept
was Coca-Cola. As the company expanded across the U.S., it licensed regional
franchisee bottlers to produce and bottle soft drinks under its trademark. Coca-
Cola’s rapid expansion was funded by the franchisees, who in return received
exclusive distribution territories and support. 12
General Motors began distributing automobile inventory across the country
through individual dealers in 1898. Dealers could purchase vehicles at a
discounted price for resale and were granted regional franchise rights; in return
they were required to sell only the products of a single manufacturer. This
distribution method shifted to dealers some of the risks of market downturns,
and proved to be successful for the automobile industry. 13
In the 1930s, oil refiners licensed franchisee gasoline stations to distribute
their products. Oil companies that leased their service stations to their former
9
Ibid.
10
See D.F. So, Canadian Franchise Law Handbook (2005) at 9–17; Trebilcock, supra note 3; F.
Zaid, Franchise Law (2005) at 2.
11
So, supra note 7.
12
Ibid.; Trebilcock, supra note 3.
13
So, supra note 7.

Franchise Law Consultation Paper 2007 235
managers found that the owner-dealers had a more personal interest in the
success of their locations, resulting in larger profits through higher gas sales and
from the rent from the properties. In Canada, the Canadian Tire franchise was
also successfully established in the 1930s. 14
During the Depression, individual retail merchants grouped together in
order to cope more efficiently with the difficult economy and compete with large
business chains. 15 Following the Second World War, franchising expanded to a
number of new industries, including fast food restaurants, hardware, and drug
retailing (including Shoppers’ Drug Mart in Canada) and motel and hotel
services. There were high-profile failures associated with rapid expansion “as
growth continued unprincipled and unregulated,” 16 but by the 1970s, franchising
had become a popular method of doing business and an enduring part of the U.S.
and Canadian economies.
C. Franchise Economic Impact
Franchising represents a significant portion of the Canadian economy. The
Canadian Franchise Association has reported that franchising accounts for $90
billion per year in sales nationally. 17 With respect to Ontario, Hoffman and
Levitt have commented:
The importance and impact of franchising on Ontario’s economy today cannot be
overstated. Franchising’s share of the retail dollar is fast approaching 50%. It has moved
from a somewhat novel alternative distribution option to one of the first distribution
choices considered by a wide variety of businesses. 18
In the U.S., a study commissioned by the International Franchise
Association examining 2001 data found that there were more than 767 000
franchised businesses directly employing 9.8 million people, with a payroll of
$229 billion and an economic output of nearly $625 billion. When the indirect
impact of franchised businesses was measured, they generated more than 18
14
Ibid.
15
Trebilcock, supra note 3.
16
Zaid, supra note 7 at 2.
17
According to the Canadian Franchise Association, franchising crosses 42 sectors of the
economy: Ontario Legislative Assembly, Standing Committee on Regulations and Private Bills,
Hansard (March 8, 2000: Hearing on Bill 33: Franchise Disclosure Act, 1999) at 1340 (R.
Cunningham, Canadian Franchise Association), online:
(date accessed: May 8, 2007).
18
J.P Hoffman and E.N Levitt, Recent Developments of Importance in Franchise Law Gowling
Lafleur Henderson, Toronto, Ontario (December 17, 2005), online :
(date accessed: May 3, 2007).

236 Underneath the Golden Boy
million jobs, or nearly 14% of all private sector jobs, and accounted for 11% of
the private sector payroll and 9.5% of the private sector economic output, or
more than $1.53 trillion. According to the study, when both direct and indirect
forms of employment were combined, franchising generated one out of every
seven jobs in the private sector. 19
In Canada, it was reported in 2004 that there were 1 327 franchisors, 63 642
franchisees and annual franchising industry sales equivalent to approximately
$90 billion U.S., 20 or approximately 10% of Canada’s gross domestic product.
Franchising has been reported to account for one out of every five consumer
dollars spent in Canada on goods and services and to employ over one million
Canadians. 21
D. Types of Franchise Arrangements
There are two primary types of franchise arrangements: business format and
product distribution franchises. Some commentators also include business
opportunity franchises.
1. Business Format Franchise
The business format franchise is the modern type of franchising that emerged in
the 1960s and is most commonly recognized as a franchise today. The franchisee
exclusively identifies with the franchisor, and adopts its entire business system,
including its product, brand name, operating manual and marketing strategy.
There is “an almost complete merging of the business identity of franchisee and
franchisor, so that the public perceives each franchised outlet as part of a larger
chain of identical outlets, all offering the same high quality goods and services”. 22
Examples include hotels and fast food outlets such as Tim Hortons and
McDonalds.
The unit franchise is the simplest and most popular business format
franchise. In this model, the franchisor licenses the franchisee to operate a single
19
PriceWaterhouseCoopers, The Economic Impact of Franchised Businesses: A Study for the
International Franchise Association Education Foundation, Part II (March 2004), online:
(date accessed May 3, 2007); “Franchises
provide big boost to nation’s economy: study measures jobs, payroll, overall output” 38:5
Franchising World (May 2006), online: (date accessed May 3, 2007).
20
So, supra note 7 at 5.
21
D. Caldarone and D.J. Gray, “Advising the Start-up Franchisor” (Paper presented to The
Domino Effect: 6 th Annual Franchising Conference, Ontario Bar Association, November 16,
2006) at 2.
22
Trebilcock, supra note 3 at 2.

Franchise Law Consultation Paper 2007 237
franchise business in a specific location or territory. The franchisee usually pays
an initial franchise fee and ongoing royalties based on a percentage of gross sales.
The agreement usually requires the franchisee to contribute to an advertising
fund, and may contemplate multiple franchises, so that the franchisee has the
option to acquire additional franchises or rights of first refusal. 23 There are also
variations:
In an affiliation or conversion franchise, the franchisor absorbs an
independent business in the same field. The business agrees to conduct future
operations under the franchisor’s model. 24
A combination franchise joins “two or more distinct and complementary
franchise systems in physical or functional conjunction,” 25 usually involving the
installation of an outlet of one system into an outlet of the ‘host’ franchise
system.
There are also forms of territorial franchising, in which rights are granted for
an entire territory, such as a city, province, or all of Canada: 26
In an area representation franchise, the franchisor retains an independent
representative to seek prospective franchisees and carry out the franchisor’s
obligations within a defined area, in return for a share of the revenue. However,
the franchise agreement is between the franchisee and franchisor, and not the
representative. 27
In an area development franchise, the franchisor grants a franchisee the
right to set up multiple outlets within a geographical area. The area development
agreements generally deal with the terms of the franchise expansion and the
number of outlets to be established, while the details of the individual outlets are
governed by unit franchise agreements. 28
In a master franchising arrangement, the franchisor grants a master
franchisee the right to recruit others and sell and service sub-franchises within a
specified territory. The maintenance of exclusive rights to the territory depends
on a performance schedule being met. 29 A master franchise creates a three-tiered
relationship between the franchisor, master franchisee (or sub-franchisor) and
23
See L.H. Polsky, “Search continues for multiple unit franchisees,” 24:21 Lawyers Weekly
(October 8, 2004).
24
Trebilcock, supra note 3 at 3.
25
Ibid.
26
Polsky, supra note 20.
27
Trebilcock, supra note 3 at 3.
28
Ibid at 2.
29
Polsky, supra note 20.

238 Underneath the Golden Boy
sub-franchisee (or unit franchisee). There is a contract between the franchisor
and the master franchisee and between the master franchisee and sub
franchisees, but not between the sub-franchisee and the franchisor. 30 However,
the franchisor receives revenues earned from the operations of the franchises
and from sharing the franchise fees or royalty payments made to the master
franchisee.
Finally, in a joint venture franchise, a franchisor and franchisee enter into a
joint venture in which the franchisor grants a unit, area development, or master
franchise to the joint venture entity.
2. Product Distribution Franchise
In a product distribution franchise, the franchisee is identified with the
manufacturer or supplier to some degree, but also retains a distinct identity;
examples are soft drink bottlers and automobile dealerships. 31 The franchisee
obtains a license to market and sell products within an exclusive distribution
area, and may be encouraged or required to deal primarily with the franchisor’s
goods or services. Otherwise, the franchisor exercises less control than in a
business format franchise, and the franchisee is usually free to choose its business
style and distribution technique. 32
3. Business Opportunity Franchise
In a business opportunity franchise, the franchisor grants the franchisee the right
to sell goods and services provided by the franchisor. The franchisor may also
provide location assistance. Examples of business opportunity franchises are
vending machines and amusement games. 33
E. Franchise Advantages and Disadvantages
A significant attraction of the franchise arrangement for the franchisee,
particularly for the first time business owner, is the opportunity to enter the
marketplace without assuming the degree of risk usually associated with startup
enterprises. Business risks can be reduced where there is an established
franchisor that offers a solid image, a recognized product or service with a
developed market and a successful business system for the marketing and sale of
the product or service. The franchisor generally has a vested interest in the
success of the franchisee, and often provides detailed training, ongoing advice
30
Trebilcock, supra note 3 at 2.
31
Zaid, supra note 7 at 6; for example, an automotive group may operate a number of dealerships
and be associated with several manufacturers, but maintain a distinct identity.
32
Trebilcock, supra note 3 at 1-2.
33
Zaid, supra note 7 at 6.

Franchise Law Consultation Paper 2007 239
and mentoring and assistance in the event of a crisis. 34 The franchisee continues
to benefit from the franchisor’s ongoing product research and development and
often from volume discounts available with bulk purchasing through the
franchisor. Financial institutions are also often more willing to provide business
loans to franchised businesses. 35
For the franchisor, franchising allows business expansion with little capital
investment; expansion can be more rapid, as it is largely financed by
franchisees. 36 Franchising also provides an ongoing source of revenue from
franchise fees or royalties. Franchise unit owners may have a higher stake and
level of commitment to the success of the business than do employed managers,
and in the long term, the franchisor benefits from a competent franchisee’s
ability to attract future franchisees and increase the goodwill of the overall
system.
While there are many examples of successful and profitable franchise
relationships, the model also has disadvantages and risks. The franchisor gives up
some control and profit opportunity by not operating its own outlets, in the
expectation of greater profits through expansion. 37 The franchisor’s reputation is
at risk, as the general public will often not distinguish between individual
franchise outlets and the larger organization. Franchisee selection can be difficult
and time consuming, 38 and an incompetent or unsuccessful franchisee can
damage the established goodwill of the franchise by providing substandard
products or services.
To manage these risks, the franchisor will usually attempt to ensure that
each franchisee maintains minimum standards in relation to the appearance and
operation of its business. Franchisees are generally required to comply strictly
with the operational methods established by the franchisor, 39 and are frequently
34
For a useful discussion of the advantages and disadvantages of buying a franchise see Canada
Business Service Centre, Tips on Buying a Franchise, online:
.
35
So, supra note 7 at 7.
36
Ibid. at 5.
37
Caldarone and Gray, supra note 18 at 6-7.
38
Ibid. at 7.
39
Levitt, supra note 4. As a result franchise arrangements are frequently long and complex and
include a large number of secondary agreements, such as subleases and trademark, security and
confidentiality agreements.

240 Underneath the Golden Boy
required to purchase supplies and inventory directly from the franchisor or from
a designated supplier. 40
The requirements imposed by the franchisor increase its ability to exercise
quality control, limit the ability of franchisees to attempt “free-riding” (a
franchisee’s attempt to benefit from the franchisor’s reputation without doing its
part to maintain standards) 41 and often increase the buying power of the
franchisees. However, requirements for strict compliance may also stifle creative
initiative by franchisees that otherwise could enhance the overall business and
reputation of the franchise. 42 A franchisor may impose onerous obligations,
exercise an excessive degree of control, fail to carry out effective marketing and
promotion activities, or disproportionately shift business risks and impose
unreasonable product costs to the franchisee, making it difficult or impossible for
the franchisee to carry on the business effectively.
It has also been suggested that there is a “myth of high profitability”. 43
While there is a widespread perception of reduced risk, and mature and
established franchise businesses may present lower risk and higher return to the
investor than an independent start-up business (and as a result, command higher
fees), new franchise outlets tend to be in high-risk areas of business with
marginal return, and fail at a rate at or above the rate for other small
businesses. 44
In the end, both parties to the franchise relationship assume the ultimate
risk of costly litigation should the franchise relationship prove unsuccessful.
40
So, supra note 7 at 7. So notes that volume purchasing is frequently a contentious issue; while
the associated discounts may benefit franchisees, in some cases rebates are paid directly to the
franchisor and the franchisees do not directly benefit.
41
Grimes, supra note 5 at 109-110.
42
Ibid. at 110.
43
Ibid. at 130.
44
Ibid. at 123-124 and 130-131. See also T. Bates, “Survival Patterns Among Newcomers to
Franchising” (Paper prepared for the Center for Economic Studies, U.S. Bureau of the Census,
May 1997, CES-WP-97-5), online:
(date accessed May 7, 2007); the
study found that among ‘true newcomers’ (young franchisee units not owned by mature multiestablishment
franchisees), franchise survival rates were low and that the purchase of a
franchise was not likely to reduce the risks faced by a new business.

F. The Franchise Legal Relationship
Franchise Law Consultation Paper 2007 241
1. Potential for Conflict
The relationship between the parties to a franchise agreement is often compared
to a marriage: the parties depend on each other for their continued well being,
the relationship is intended to continue for a lengthy period of time, and the
arrangement is intended to be satisfactory to both parties. 45
While franchisors and franchisees generally share a common desire to
succeed, there is also considerable potential for conflict between them. The
parties frequently have dramatically unequal bargaining power: the franchisor is
often a large, sophisticated business organization with significant franchising
experience and control over the terms of the franchise agreement, while the
franchisee may have little business experience and, in any event, often must
‘take or leave’ the franchise agreement as offered. The franchisee must rely to
some extent on the franchisor’s representations with respect to the potential for
business success. In some cases, disreputable franchisors use high-pressure sales
tactics and provide inaccurate or misleading financial information. When
problems occur in the franchise, a franchisee suffering business difficulties will be
less likely than the franchisor to have the financial resources available to fund
litigation.
There can be a significant imbalance in the amount and quality of
information available to the parties during negotiations and at the time the
franchise agreement is signed. For a franchisor that is so inclined, the precontract
period can be viewed as one with substantial incentives for
opportunism.
In recruiting an investor to open up a new franchise outlet a franchisor is, to a large
degree, gambling with someone else’s money… [F]ranchisors gain financially when an
investor opens a new outlet, perhaps even if that outlet fails. Some franchisors may have
invested minimally in the franchise system, but even those who have a large stake in the
system may commit little or no resources to a new outlet. Indeed, the franchisor may
receive an up-front franchise fee and, thus, may reap immediate financial gain even if the
outlet fails quickly. In the event of failure the franchisor may be the only buyer for the
45
L. Weinberg, “The Franchise Relationship” in Franchising 101, Ontario Bar Association
(2001) at 1, online: (date accessed May 7,
2007); A 1995 review of the Canadian franchise industry noted “In some chains, especially
those that are doing well, the connections can be quite strong, and stable. In others – and not
necessarily just those franchises that are faring poorly – the relationship resembles a failing
marriage, complete with suspicion, poor communications, and the presence of lawyers.”: J.
Lorinc, Opportunity Knocks: The Truth About Canada’s Franchise Industry (1995).

242 Underneath the Golden Boy
franchisee’s capital equipment, and may do so at a deeply discounted price, perhaps
reselling it to a future franchisee at a substantial markup. 46
The franchisee continues to be at a disadvantage in relation to the
franchisor in terms of access to information and control of operations throughout
the franchise relationship. In many cases, franchisees are somewhat locked into
the relationship by high ‘sunk costs’, or invested funds that cannot be recovered
if the franchise relationship ends. These costs mean that these franchisees will be
disinclined to walk away from the franchise even in the case of reduced revenues
and a poor relationship with the franchisor. 47
Various reviews of franchisor-franchisee disputes in Canada, the U.S. and
Australia have identified a number of areas of dispute relating to the information
and power imbalance in the relationship. 48 The issues include:
• lack of pre-contract disclosure;
• deceptive practices, including misrepresentation of the nature of the
franchise, the range of supplies, equipment and training to be provided
in the franchise package, the value and profitability of the franchise and
the franchisor’s stability and prior experience;
• unfair contract terms arising from a refusal by franchisors to negotiate
the terms and conditions of contracts (the ‘take it or leave it’ contract);
• complexity of documentation;
• excessive prices charged for mandatory goods and equipment supplied
by franchisors or other providers to franchisees, even when items are
available more cheaply from alternative suppliers;
46
Grimes, supra note 5 at 124-125.
47
Grimes, supra note 5 at 125. Grimes presents a thorough discussion of the incentives that may
exist for a franchisor to act contrary to the interests of a franchisee. For example, a franchisor
may decide to open an additional outlet in a territory, even if it decreases the sales of existing
outlets, if the franchisor’s overall revenue will increase. On the other hand, while the
incentives of the franchisor may lean toward too much expansion, franchisees may have
incentives leading them to oppose expansion, even when it has a very favourable impact to the
overall franchise.
48
See for example Lorinc, supra note 42; Grimes, supra note 5; U.S. Federal Trade Commission,
“The Franchise Rule” (Statement before the U.S. House of Representatives Committee on
Energy and Commerce, Subcommittee on Commerce, Trade and Consumer Protection, June
25, 2002), online: (date
accessed: May 7, 2007); Parliament of Australia House of Representatives Standing Committee
on Industry, Science and Resources, Finding a Balance: Towards Fair Trading in Australia
(May 1997), online:
(date
accessed: May 7, 2007).

Franchise Law Consultation Paper 2007 243
• secret rebates and commissions received by franchisors from required
suppliers;
• encroachment by the franchisor on the franchisee’s geographic trading
area;
• franchisor-imposed system wide changes that bear significant cost;
• failure to provide adequate service and support to franchisees;
• substantial increases to renewal fees;
• use of advertising levies for non-advertising purposes;
• transfer and renewal restrictions and renewals on different and more
onerous terms; and
• unfair terminations. 49
On the other hand, franchisor representatives have noted that the
characterization of franchising issues can be one-sided and ignore the difficulties
that can be caused by franchisees.
[L]ittle mention is made in debate about potential franchisees wanting to ‘get into’ the
franchise system by misrepresentation of part or more of their small business history,
financial position, work experience, level of commitment, product or service knowledge
and other necessary criteria. In mature franchise systems, there appears to be an increase
in incidents of this. 50
One commentator eloquently summed up his views:
Good franchising is very good. It is undoubtedly the most efficient, effective distribution
system ever invented. It is the greatest invention of Western capitalism since the
invention of the corporation. Good franchising is so much better than independent small
business operation and bad franchising is so much worse. 51
2. Legal Aspects
In the absence of franchise-specific legislation, the relationship between the
franchisee and franchisor is governed by the terms of the franchise agreement
and the law of contract. The rights and duties of each party arise from the
49
Recent media reports of lawsuits filed by franchisees of the Quiznos food chain in the U.S.
vividly illustrate some of the problems alleged by franchisees: see J. Creswell, “When
Disillusion Sets In: Some Quiznos Franchisees Take Chain to Court” The New York Times
(February 24, 2007), online:
(date accessed: May 7, 2007).
50
Franchise Association of Australia and New Zealand, Submission No. 143 to the Parliament of
Australia House of Representatives Standing Committee on Industry, Science and Resources,
quoted in Standing Committee on Industry, Science and Resources, supra note 45 at 93 note
16.
51
A. Terry, Transcript of Evidence to the Parliament of Australia House of Representatives
Standing Committee on Industry, Science and Resources at 92, quoted in Standing Committee
on Industry, Science and Resources, supra note 45 at 83.

244 Underneath the Golden Boy
contract, and general contract law principles, such as caveat emptor (buyer
beware) and the right to act in one’s own interests, apply. A party may have a
right to rescission of the franchise agreement or to damages on grounds such as
breach of contract, misrepresentation, breach of warranty or error in
substantialibus (a fundamental error in the character or substance of a thing
sold). 52
Franchises have at times been asserted to create employment relationships
(for example, in cases where the franchisor exercises significant control over
daily operations), 53 and a study of Australian franchise failures found that
“despite the franchise agreement stating very clearly that the franchisee is not an
employee of the franchisor, it appears that some franchisees regard themselves as
employees”. 54 As well, in some circumstances the franchisor-franchisee
relationship has been argued to be fiduciary in nature, so that the franchisor
owes a special duty of care toward the franchisee. 55 The Supreme Court of
Canada addressed this issue in 1975, in Jirna v. Mister Donut, 56 affirming the
finding of the Ontario Court of Appeal that no fiduciary relationship existed in
the circumstances. Jirna’s representatives in the negotiations were experienced
businessmen under no serious disparity relative to the franchisor, and the
provisions in the agreement fell considerably short of the relationship of trust
and confidence that would be necessary to create a fiduciary obligation.
However, the Court did not rule out the possibility of a fiduciary relationship
existing in a different franchise situation.
In most circumstances, a franchise agreement is a commercial contract
between independent parties with no fiduciary or employment obligations.
However, there is no hard and fast rule; a commercial agreement is not immune
from the imposition of fiduciary duties, 57 and it is possible that fiduciary or
52
See for example Esso Petroleum v. Mardon, [1976] 2 All E.R. 5 (C.A.); Kim v. Shefield & Sons
– Tobacconists Inc. (1990), 30 C.P.R. (3d) 111 (B.C.C.A.); Hossain Nasirbegh v. Triple 3
Holdings Inc. (c.o.b. 3 for 1 Pizza & Wings), [2003] O.J. No 751 (Ont. S.C.J.).
53
Weinberg, supra note 42 at 3. Weinberg notes that claims of an employment relationship most
frequently arise where employment-type severance and other termination benefits are being
claimed by the franchisee, especially where the franchisee has little to no capital invested. In
some cases, involving restrictive franchise agreements, the arguments have been successful: see
Head v. Inter Tan Canada Ltd. (1991), 5 O.R. (3d) 192 (Gen. Div).
54
J. Buchan, When the Franchisor Fails (Report prepared for CPA Australia, January 2006) at 3,
online:
(date accessed: May 7, 2007).
55
Weinberg, supra note 42.
56
[1975] 1 S.C.R. 2, aff’g (1971), 22 D.L.R. (3d) 639 (Ont. C.A.).
57
530888 Ontario Ltd. v. Sobeys Inc., [2001] O.J. No. 318 (S.C.J.) at paragraph. 9.

Franchise Law Consultation Paper 2007 245
employment obligations might be found to exist in a franchise relationship in
exceptional circumstances.
The typical franchise relationship is distinct from other commercial
relationships in some respects, however. In Shelanu, 58 a leading 2003 case, the
Ontario Court of Appeal noted that, in accordance with Jirna, 59 the relationship
between a franchisor and franchisee would not normally be characterized as a
fiduciary one, but it does have unique characteristics that set it apart from an
ordinary commercial relationship. The characteristics are similar to those
outlined by the Supreme Court of Canada in Wallace v. United Grain Growers 60
that give rise to a good faith obligation in the context of an employment
contract. A franchisee does not usually have equal bargaining power to the
franchisor, the franchise contract is imposed on the franchisee, who is usually
unable to negotiate more favourable terms, and the relationship continues to be
affected by the power imbalance, in that the franchisee must submit to
inspections and audits and otherwise comply with the franchisor’s requirements.
In Shelanu, the Court held that, in the absence of franchise legislation, these
characteristics give rise to a common law duty upon the parties to a franchise
relationship to act in good faith. The franchisor must have regard to the
legitimate interests of the franchisee, but may act in its own interests so long as it
deals promptly, honestly, fairly and reasonably with the franchisee. The Court
found that the franchisor in Shelanu had breached its duty of good faith, but the
breaches did not amount to a fundamental breach of the franchise agreement,
and so the franchisee was not entitled to treat the agreement as at an end.
The distinctive nature of the franchise agreement also leads to certain
principles of interpretation. Under the principle of contra proferentem, a court
will construe an ambiguous clause in a contract against the person who prepared
it. 61 A franchise agreement is also often a ‘contract of adhesion’. This is, in
general, a written contract drafted by one party on a form regularly used by the
drafter and presented to the other party on a ‘take it or leave it’ basis; the other
party enters into relatively few such transactions in comparison with the drafter
and his or her principal obligation is the payment of money. Contra proferentem
58
Shelanu Inc. v. Print Three Franchising Corp. (2003), 226 D.L.R. (4 th ) 577 (Ont. C.A.).
Ontario’s Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3 requires parties to
a franchise agreement to act in good faith. However, the facts giving rise to the dispute
occurred before the Act came into force and the Court found that it was not necessary to
decide whether the Act applied in this case.
59
Supra note 53.
60
Wallace v. United Grain Growers Ltd. (c.o.b. Public Press), [1997] 3 S.C.R. 701.
61
Black’s Law Dictionary, 6 th ed., s.v. “contra proferentem.”

246 Underneath the Golden Boy
applies, but even in the absence of ambiguity a contract of adhesion is
interpreted strictly against the party presenting it. 62
As well, many other areas of law may affect a franchise, depending on the
circumstances and the nature of the business conducted; these may include
competition, consumer protection, privacy, tax, bankruptcy, intellectual
property, and personal property security law. 63
3. Manitoba Experience
There do not appear to be reliable data on the experience of franchisors and
franchisees in Manitoba. A review of court decisions does illustrate the nature of
some disputes that reached resolution through litigation. For example, the
recent case of Halligan v. Liberty Tax Service Inc. 64 provides a glaring example of
franchisor intimidation tactics. The franchisor had decided to change the name
of the franchise, and pressured the franchisee to change its business name. The
franchisee refused, as he was entitled to do under the franchise agreement. The
franchisor then withdrew its funding for tax discounting services without notice,
purported to terminate the franchise agreement, and established its own tax
services within the franchisee’s exclusive territories. The franchisor breached a
court injunction that restrained it from acting in a manner inconsistent with the
franchisee’s rights and harassed the franchisee in a manner that the court noted
“is indicative of the disdain Liberty has shown for Halligan and the court process
throughout.” 65 The court found that there was an attempt by the franchisor to
“bludgeon Halligan into submission,” 66 along with flagrant and repetitive
breaches of the injunction. Liberty’s actions were outrageous and high-handed
and the imbalance of power was stark. In light of this, in addition to
compensatory damages of nearly $85 000, the court granted punitive damages of
$200 000.
The case of Prairie Petroleum Products Ltd. v. Husky Oil Ltd. 67 dealt with a
unilateral change to business operations by an oil company. 68 A change in
62
See the discussion in Halligan v. Liberty Tax Service Inc., [2003] M.J. 289 (Man. QB) at
paragraphs. 15-16.
63
For a thorough discussion of these areas of law as they may impact on a franchise, see Zaid,
supra note 7, and Snell and Weinberg, eds., Fundamentals of Franchising – Canada (2005). See
also J. Rogers and A. Frith, “Piling On: Other Laws Affecting Franchising” (Paper presented to
The Domino Effect: 6 th Annual Franchising Conference, Ontario Bar Association, November
16, 2006).
64
Halligan v. Liberty Tax Service Inc., supra note 52 and supplementary judgment [2006] 8
W.W.R. 97 (Man. Q.B.).
65
Supra note 52 at paragraph. 11.
66
Supra note 52 at paragraph. 2.
67
[2006] 11 W.W.R. 606 (QB).

Franchise Law Consultation Paper 2007 247
Husky’s pricing formula for fuel meant that the distributor could not offer a
competitive price during the peak agricultural season, and the distributor lost
sales. The court held that the change was a fundamental breach of contract and
that the clauses in the contract that purported to exclude Husky’s liability were
not enforceable on the basis of unconscionability, unfairness and
unreasonableness; the clauses benefited the large and commercially sophisticated
company that had prepared the agreement, and enforcing them would lead to an
unfair and unreasonable result. The plaintiffs were entitled to treat the
agreement as terminated. In 2909333 Manitoba Ltd. v. 616768 Saskatchewan
Ltd., 69 the matter under consideration was a motion related to examinations for
discovery, but the allegations of the franchisees 70 included that the franchisor
received benefits from suppliers contrary to its representations, wrongfully
appropriated allowances for tenants’ improvements, did not provide the required
accounting and manuals and misrepresented sales and profits. In another case
dealing with preliminary matters regarding where and how multiple claims would
proceed, franchisee claims included “inaccurate forecast numbers,
misrepresentation of profit, unreasonable construction costs, misrepresentation
with respect to tenant inducements or improvements, payment of excess rent
over actual rental costs, overstocking and failure to obtain the best possible
prices from suppliers.” 71
A review of court decisions is unlikely to provide an accurate representation
of franchise disputes, however. Some franchise agreements require arbitration
and do not reach the courts. More importantly, litigation is costly, and the ability
of a party to an unsuccessful business relationship, particularly the franchisee, to
fund an action may be very limited.
Additional case examples were provided to the Commission during the
preparation for this Consultation Paper. Among the franchisee allegations were
statements that franchisors:
• used pressure tactics upon the signing of the agreement and failed to
provide contact information for other franchisees as requested;
• misrepresented that business assets were free of liens and trade accounts
were satisfied;
68
Although the agreement between the parties is not described as a franchise, many
distributorship agreements are included in the definition of “franchise” in franchise legislation.
69
(2006), 200 Man. R. (2d) 161(QB).
70
Note that the facts had not been determined by the court.
71
1279022 Ontario Ltd. v. Posen (2003), 179 Man. R. (2d) 108 (QB), rev’d (2004) 184 Man. R.
(2d) 308 (C.A.). See also Print Three Franchising Corp. v. McLennan Printing Inc. (2001),
153 Man. R. (2d) 32 (C.A.)

248 Underneath the Golden Boy
• did not provide promised business support and training;
• misrepresented establishment and operating costs;
• required the use of suppliers that provided substandard equipment and
that paid a rebate to the franchisor;
• did not supply promised equipment or supplied faulty equipment; and
• did not respond to requests for a meeting to discuss the problems.
The Commission is very interested in receiving the views of those with
franchise experience in Manitoba, whether from the point of view of franchisors
or franchisees.
CHAPTER 3: CANADIAN FRANCHISE REGULATION
A. Background
Governments in Canada, the U.S., and several other countries have taken
legislative measures to regulate franchising activity. The early U.S. and
Canadian statutes created registration schemes, modeled after U.S. securities
legislation. These statutes required a franchisor to register documents relating to
the sale and operation of a franchise with a governing body, and the governing
body carried out activities to regulate and oversee franchise activity.
More recent statutes have adopted the disclosure model, which requires
franchisors to disclose specific detailed information to prospective franchisees
before the sale of a franchise, but does not include government registration or
oversight. The legislation may also include provisions that govern to various
degrees the ongoing relationship between the parties, incorporating principles
such as the duty to deal fairly and the right of the franchisee to associate freely
with other franchisees.
B. Canadian Franchise Regulation
1. Alberta Franchises Act
Alberta was the first Canadian jurisdiction to enact franchise legislation, in
1971. The Alberta Act was modeled after the first U.S. franchise statute, in
California, which was in turn modeled on California securities legislation. 72 The
72
F. Zaid, Canadian Franchise Guide, loose-leaf (1993) at 2-101 and 113-114; Alberta Ministry
of Consumer and Corporate Affairs, Discussion Paper on the Alberta Securities Commission
(1987) in Zaid at 2-114 – the Alberta Discussion Paper identifies the California statute as
Alberta’s model. California was the first U.S. state to enact franchise-specific legislation in
1970, with the California Franchise Investment Law, California Corporations Code, Division 5,
Parts 1-6, §§31000-31516, online: (date accessed:
May 8, 2007).

Franchise Law Consultation Paper 2007 249
1971 Alberta Act was a registration statute that required prospective franchisors
to register with the Alberta Securities Commission and to file certain
documents, including a prospectus. The Act prohibited trading in a franchise
without registration. Franchise salespersons were also required to register with
the Commission. 73
Under the 1971 Act, the Alberta Securities Commission carried out
activities to oversee and regulate franchise activity, including reviewing
prospectuses to determine compliance, investigating complaints and imposing
sanctions for breaches of the Act. In addition, the Commission set policies that
governed franchisor-franchisee conduct, covering matters such as standards for
additional franchisor disclosure and for the termination of franchise
agreements. 74
By the late 1980s, concerns had arisen about the cost, administrative burden
and delay associated with the registration and disclosure requirements. 75 The
Alberta Securities Commission requested public comment on amendments to
the Act in 1991, which was followed by the introduction of a bill to replace the
Act in 1992. 76 However, the 1992 bill did not receive second reading. In 1995,
following further public consultation and advice from a committee including
representatives of the Canadian Franchise Association, the former Alberta
Franchisors’ Institute and the Franchisee Association of Alberta, 77 the Alberta
Government replaced its regulatory structure with a new Franchises Act and
regulations. 78
73
Franchises Act, R.S.A. 1980, c. F-17 (repealed).
74
Zaid, supra note 1 at 2-110 to 118M. Zaid argues, at 25, that with these policies, “the Agency’s
mandate [had], in some instances … been taken beyond the realm of administering and into
the realm of franchise relationship legislating”.
75
Alberta Ministry of Consumer and Corporate Affairs, Discussion Paper on the Alberta
Securities Commission (1987) in Zaid, supra note 1 at 2-114. Typical registration costs for
franchisors were reported to range between $10,000 and $20,000, and these costs, along with
the inconvenience of registration, were thought to discourage potential franchisors from
carrying on business in Alberta. The government also incurred costs in administering the Act.
76
F. Zaid, Franchise Law (2005) at 25-26; Bill 45, Franchises Act, 22 nd Legislature, 4 th Session,
Alberta, 1992-93.
77
Zaid, supra note 5 at 26.
78
Franchises Act, R.S.A. 2000, c. F-23 [Alberta Act]; Franchises Regulation, Alta. Reg. 240/95
[Alberta regulations]. Dillon notes that the 1995 Alberta Act closely resembles the Model
Franchise Investment Act developed by the North American Securities Administrators
Association [NASAA], a body that addresses the harmonization of securities laws in North
America: P. M. Dillon, Ontario's Franchise Regulatory Regime: Why Ontario Should Get
Active in NASAA, Siskind, Cromarty, Ivey and Dowler LLP, London, Ontario, online:
(date
accessed: May 8, 2007)

250 Underneath the Golden Boy
The 1995 Act represented a significant departure in approach, and
eliminated the oversight by the Alberta Securities Commission and the
relationship standards enforced by Commission policy. The Act is a disclosure
statute, and requires franchisors to provide a specified level of financial and
other material fact disclosure to prospective franchisees, but does not require
franchisor registration or document filing. The Act also includes provisions
governing the franchise relationship, imposing a duty of fair dealing and
protecting the freedom of franchisees to associate, and provides remedies for
breaches of the legislation. As well, the Act includes provisions for selfgovernment,
which had been strongly supported by the Canadian Franchise
Association 79 - the Lieutenant Governor in Council may designate one or more
bodies to govern franchising and to promote fair dealing among franchisors and
franchisees. However, a self-governing body has not been designated.
2. Ontario Arthur Wishart Act (Franchise Disclosure) 2000
Ontario became the second Canadian jurisdiction to enact franchise legislation,
the Arthur Wishart Act (Franchise Disclosure) 2000, 80 in 2000. The Act is
named for the former Ontario Minister of Financial and Commercial Affairs,
who established the first public inquiry into franchising in Canada in 1971. The
resulting Grange Report had called for franchise legislation along the lines of the
early Alberta Act, with a Franchise Bureau and Registrar. 81
Franchising disputes were brought to public attention in Ontario in the
early 1990s, when media reports highlighted the litigation between the Pizza
Pizza organization and a large number of its franchisees, who said that they were
subjected to an arbitrary cost structure and ‘feudal-style’ management. 82 In 1994,
the Ontario Government announced the formation of a Franchise Sector
Working Team, comprising representatives of franchisors, franchisees, and
government, to make recommendations on franchise regulation. The Team
recommended that the Ontario Government enact legislation generally similar
to the 1995 Alberta Act, although the franchisee representatives preferred to
include additional provisions governing the franchise relationship. The Team
79
Zaid, supra note 1 at 2-118II.
80
Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3 [Ontario Act].
81
S.G.M. Grange, Report of the Minister’s Committee on Referral Sales, Multi-Level Sales and
Franchises, Ontario Ministry of Financial and Commercial Affairs (1971).
82
887574 Ontario Inc. v. Pizza Pizza Ltd. (1995), 23 B.L.R (2d) 259 (Ont. Ct. Gen. Div.), leave
to appeal refused [1995] O.J. No. 1645 (Ont. C.A.); 887574 Ontario Inc. v. Pizza Pizza Ltd.
(1994), 23 B.L.R. (2d) 239 (Ont. Ct. Gen. Div.); 887574 Ontario Inc. v. Pizza Pizza Ltd.
(1995), 23 B.L.R. (2d) 250 (Ont. Ct. Gen. Div.); J. Lorinc, Opportunity Knocks: The Truth
About Canada’s Franchise Industry (1995) at 169-205; C. French, “Disputes hurt franchising’s
image”, The Globe and Mail (November 24, 1994) and Dillon, supra note 7 at 4.

Franchise Law Consultation Paper 2007 251
recommended that alternate forms of resolving franchise disputes to litigation be
explored and adopted, and that the Ontario Government carry out wide
consultations and explore how national harmonized regulatory standards might
be pursued. 83
In 1998, the Ontario Government released a Consultation Paper on
franchise legislation, 84 and in 1999, a bill was introduced, 85 along with a private
member’s bill dealing with franchising. 86 Several franchisees, franchisors and
commentators made submissions at the public hearings that followed. 87 Among
the heavily debated topics were the power imbalance between franchisors and
franchisees, the restrictions placed on franchisees for the sourcing of products
and services, the need for provisions for alternative dispute resolution, and the
issue of good faith and fair dealing. 88
The Ontario Act is a disclosure statute based largely on the 1995 Alberta
Act, and similarly provides for a duty of fair dealing and the right to associate. 89
The Act does not include an alternative dispute resolution mechanism.
3. Uniform Law Conference of Canada Uniform Franchises Act
The Uniform Law Conference of Canada (“the ULCC”) had considered the
issue of franchise regulation from time to time from the 1980s. 90 In June 2002,
the ULCC established a working committee formed of franchise lawyers and
industry and government representatives to develop uniform franchise
83
Franchise Sector Working Team Report (August 30, 1995) in Zaid, supra note 1 at 2-142J-
142Z.4.
84
Ontario Ministry of Consumer and Commercial Relations, Ontario Franchise Disclosure
Legislation – Vision (Consultation Paper, June 1998), online:
(date accessed: May 8, 2007).
85
Bill 33, Arthur Wishart Act (Franchise Disclosure), 2000, 37 th Legislature, 1 st Session,
Ontario,1999-2001, background material online:
http://www.ontla.on.ca/web/bills/bills_detail.dolocale=en&BillID=740&isCurrent=false&Pa
rlSessionID=37%3A1 (date accessed: May 8, 2007).
86
Bill 35, Franchises Act, 37 th Legislature, 1 st Session, Ontario, 1999-2001, online:
http://www.ontla.on.ca/web/bills/bills_detail.dolocale=en&BillID=749&isCurrent=false&Pa
rlSessionID=37%3A1> (date accessed: May 8, 2007).
87
Ontario Legislative Assembly, Standing Committee on Regulations and Private Bills, Hansard
(March 7-9, 2000: Hearing on Bill 33: Franchise Disclosure Act, 1999), online:
(date accessed: May 8, 2007).
88
Ibid.; see also D.F. So, Canadian Franchise Law Handbook (2005) at 24-26.
89
See also O.Reg. 581/00 [Ontario regulations].
90
Zaid, supra note 5 at 35.

252 Underneath the Golden Boy
legislation. The committee’s work was a component of the Commercial Law
Strategy, the aim of which was “to modernize and harmonize commercial law in
Canada, with a view to creating a comprehensive framework of commercial
statute law that will make it easier to do business in Canada, resulting in direct
benefits to Canadians and the economy as a whole.” 91
After examination of the Alberta and Ontario Acts, the Draft Model
Franchise Law adopted by the International Institute for the Unification of
Private Law (“UNIDROIT”) 92 (discussed below) and the United States Federal
Trade Commission Franchise Disclosure Rule 93 (discussed below), the committee
reported to the ULCC 94 with a draft Model Bill and regulations in August 2005.
The Model Bill and regulations are based primarily on Ontario’s Wishart
Act and regulations. Provisions from the Alberta model were also adopted, along
with a mediation process that is mandatory if a party to the franchise agreement
initiates it. The committee reported that:
many items currently contained in the Alberta or Ontario regulations have been
substantially enhanced with additional disclosure requirements, definitions, and more
clarity in wording. In addition new disclosure items have been included in the Regulations
where it was considered appropriate, reasonable, and necessary. In particular, the
mediation Regulation is considered by the Committee to represent a significant and
positive development in connection with the resolution of franchise disputes, in the
interests [of] all stakeholders. 95
In August 2005, the ULCC adopted the Uniform Franchises Act (the
Model Bill) 96 and uniform regulations 97 and recommended them to the provinces
and territories for enactment. 98
91
Ibid.
92
International Institute for the Unification of Private Law [UNIDROIT], Model Franchise
Disclosure Law (September, 2002), online:
(date
accessed: May 9, 2007).
93
U.S. Federal Trade Commission, Disclosure Requirements and Prohibitions Concerning
Franchising and Business Opportunity Ventures, Code of Federal Regulations, 16 CFR 436,
online: ( date accessed: May 9, 2007).
94
Uniform Law Conference of Canada [ULCC], Uniform Franchises Act Working Group,
Uniform Franchises Act Report of the Working Group (August 2005), online:
(date accessed: May
9, 2007); see also ULCC Proceedings of Annual Meetings, Civil Section (August 10-14, 2003),
online: (date accessed: May 9,
2007).
95
ULCC Uniform Franchises Act Working Group, supra note 23 at 10.
96
ULCC, Uniform Franchises Act [the Model Bill], online:
(date accessed: May 9, 2007).

Franchise Law Consultation Paper 2007 253
4. Prince Edward Island Franchises Act
A group of Prince Edward Island franchisees, the Islanders for Fair Franchise
Law, advocated for franchise legislation in PEI in the 1990s. The group prepared
a draft Bill, which was tabled in the Legislative Assembly in May 2001 and
referred to the Standing Committee on Community Affairs and Economic
Development. 99
The Standing Committee reported to the House in November 2001. 100 The
Committee recommended against the enactment of legislation based on the
tabled bill, but commented that “legitimate concerns were expressed to your
Committee during the conduct of hearings that are worthy of further
consideration”. 101 The Committee recommended that the Office of the Attorney
General prepare a draft Legislative Proposal using the Ontario and Alberta
statutes as reference documents, but not limited to those models. The
Committee suggested that the draft should require disclosure in sufficient detail
to ensure that franchisees have enough information to make business decisions,
and be “as consistent as possible with other Canadian jurisdictions to ensure that
Franchisors are not confronted with a different set of rules in each province in
which they wish to establish business.” 102
Prince Edward Island enacted the Franchises Act, 103 modeled primarily on
the ULCC Model Bill, in June 2005. The province also released a Discussion
Paper on draft franchise regulations in October 2005, 104 and made the Franchises
Act Regulations in April 2006. 105 Several substantive provisions of the Act (for
97
ULCC, Disclosure Documents Regulation, online:
(date accessed: May 9,
2007); ULCC, Mediation Regulation, online:
(date accessed: May 9, 2007).
98
ULCC, Report of the Commercial Law Strategy (August 21-25, 2005), online:
.
99
Prince Edward Island Legislative Assembly, Hansard (May 10, 2001) at 2044 and 2046, online:
(date
accessed: May 9, 2007).
100
Prince Edward Island Legislative Assembly, Hansard (November 29, 2001) at 328-329, online:
(date
accessed: May 9, 2007).
101
Ibid.
102
Ibid. at 329.
103
Franchises Act, R.S.P.E.I. 1988, F-14.1 [PEI Act].
104
P.E.I. Office of the Attorney General, Franchises Act Regulations Discussion Paper (October
19, 2005), online: (date
accessed: May 9, 2007).
105
P.E.I. Reg. EC232/06 [PEI regulations].

254 Underneath the Golden Boy
example, the duty to deal in good faith and the freedom of franchisees to
associate) and part of the regulations came into force 1 July 2006, while the
disclosure obligations and other provisions came into force on 1 January 2007. 106
The PEI Act and regulations closely follow the ULCC Model Bill, but the
regulations differ in areas dealing with specific franchisor disclosure document
requirements and exemptions. 107 According to the PEI Government, this is
because:
The ULCC model regulations were developed on the assumption that there would be
highly harmonized franchise law in place throughout the jurisdictions of Canada before
the law would come into force. This is very different from the situation in which Prince
Edward Island finds itself as it moves to bring into force its new legislation. In Canada,
franchise law is only in force in two of the largest provinces, Alberta and Ontario. The
draft PEI regulations take this into account. 108
As a result, PEI chose to follow the approach of the existing Alberta and
Ontario Acts in some respects, rather than the Model Bill.
5. New Brunswick Bill 32: Franchises Act
The New Brunswick Government introduced Bill 6, the Franchises Act, 109 in
December 2005, following the earlier introduction of a Private Member’s Bill in
June 2005. 110 Bill 6 died on the Order Paper when the Legislature dissolved in
2006.
In a press release on December 7, 2005, the Minister of Justice said:
106
Prince Edward Island Royal Gazette Vol. CXXXII – No. 18 (May 6, 2006) at 409 and Part II -
140, online: (date accessed: May 9,
2007); F. Zaid and D. Mochrie, P.E.I. and New Brunswick On Board With Franchise-Specific
Legislation, Osler, Hoskin & Harcourt LLP (July 7, 2006), online:
(date accessed: May 9, 2007).
107
For example, the PEI regulations allow a franchisor to use a disclosure document that meets the
requirements of another jurisdiction, if a ‘wrap-around’ document is attached to include any
additional material necessary in PEI. The regulations also exempt large franchisors from the
requirement to provide financial statements, provide that there is no right of rescission if a
disclosure document is substantially complete, allow disclosure documents to be delivered
electronically and limit the disclosure of current and former franchisee information to regional
franchises.
108
P.E.I. Office of the Attorney General, supra note 33 at 1.
109
Bill 6, Franchises Act, 55 th Legislature, 3 rd Session, New Brunswick, 2005-2006, online:
(date accessed: May 9, 2007).
110
Bill 81, Franchise Act, 55 th Legislature, 2 nd Session, New Brunswick, 2004-2005, online:
(date accessed: May 9, 2007).

Franchise Law Consultation Paper 2007 255
This bill will ensure fairness in the relationship between small business people in New
Brunswick and franchisors, while protecting our province’s competitive position in
attracting new business investment. 111
Bill 32, the Franchises Act, was introduced in the New Brunswick
Legislative Assembly on February 23, 2007. 112 The bill has not yet received
second reading. Like the former Bill 6, Bill 32 is a disclosure statute based closely
on the ULCC Model Bill, and similarly includes a mediation process that is
mandatory if initiated by one of the parties to a franchise agreement.
C. Agreement on Internal Trade
Canada’s Agreement on Internal Trade came into force on July 1, 1995. 113 The
Agreement was signed by all provinces and territories and the federal
government, with the purpose of reducing and eliminating, to the extent
possible, barriers to the free movement of persons, goods, services, and
investment within Canada and to establish an open, efficient, and stable
domestic market. 114
The parties agreed to six general rules, including ensuring that government
policies and practices do not create obstacles to trade, ensuring that non-trade
objectives that may cause some deviation from the guidelines have a minimal
adverse impact on interprovincial trade, and eliminating trade barriers caused by
differences in standards and regulations across Canada. As one measure,
governments are to focus on reconciling their consumer protection requirements
that act as non-tariff barriers to allow Canadian firms to capitalize on economies
of scale by servicing larger markets. 115
111
Hon. B. Green, New Brunswick Minister of Justice, Press Release (December 7, 2005), quoted
in J.S. MacKenzie and M.D. Wennberg, “Franchise Law: Prince Edward Island and New
Brunswick Updates”, 7:1 Atlantic Business Counsel, Stewart Mckelvey Stirling Scales (January,
2006), online:
(date accessed: May 9, 2007).
112
Bill 32, Franchises Act, 56 th Legislature, 1 st Session, New Brunswick [New Brunswick Bill],
online: (date accessed: May 9, 2007).
113
Agreement on Internal Trade (September 1994), online:
(date accessed: May 9, 2007).
114
Internal Trade Secretariat, Overview of the Agreement on Internal Trade, online:
(date accessed: May 9, 2007).
115
Ibid.

256 Underneath the Golden Boy
CHAPTER 4: ELEMENTS OF CANADIAN LEGISLATION
A. Overview
As noted, the Canadian Acts and the ULCC Model Bill are primarily disclosure
statutes, as is the legislation in several other countries. While the parties are free
to negotiate the terms of their agreements, the statutes require franchisors to
provide prospective franchisees with full disclosure of all material information
before the signing of an agreement. A franchisee has the right to rescind the
agreement and receive compensation if disclosure is not provided and a right of
action for damages if the franchisee suffers a loss as a result of a
misrepresentation or a failure to comply with disclosure. The statutes also
provide that the rights conferred by the Acts are in addition to and do not
derogate from any other right or remedy that a party to a franchise agreement
may have at common law.
The Acts include some elements governing the franchise relationship: they
impose a duty of fair dealing; protect the right of franchisees to form or join an
association of franchisees; and in some cases provide a process for the mediation
of disputes. Many of the details, such as the contents and form of financial
statements and other disclosure documents, are set out by regulation.
B. What Is A Franchise
The Acts 116 incorporate a broad definition of ‘franchise’. Under all Acts except
Alberta’s, a franchise is defined as:
[A] right to engage in a business where the franchisee is required to make a payment or
continuing payments to the franchisor in the course of operating the business or as a
condition of acquiring the franchise or commencing operations and
(i) in which the franchisor grants to the franchisee the right to sell goods or services
that are substantially associated with the franchisor’s trade-mark, trade name, logo
or advertising or other commercial symbol, and the franchisor exercises significant
control over, or offers significant assistance in the method of operation, or
(ii) in which the franchisor grants the franchisee representational or distribution
rights to sell goods or services supplied by the franchisor or the franchisor’s
designate and the franchisor provides location assistance to the franchisee.
The definition is similar to that of the U.S. Federal Trade Commission
Franchise Rule (discussed below). 117
116
In this discussion, references to ‘the Acts’ include New Brunswick Bill 32 and the ULCC
Model Bill.
117
U.S. Federal Trade Commission, Disclosure Requirements and Prohibitions Concerning
Franchising and Business Opportunity Ventures, Code of Federal Regulations, 16 CFR 436,
online: (date accessed: May 9, 2007).

Franchise Law Consultation Paper 2007 257
The Ontario Act differs slightly in that it refers to a ‘service mark’ as well as
a trade-mark, 118 and the Alberta Act is slightly narrower in scope. According to
the ULCC Uniform Franchises Act Working Group, “an inclusive definition of
franchise was chosen in order to capture a wide range of relationships subject to
requirements such as fair dealing but also to exempt certain others (i.e. business
opportunities or multilevel marketing) from the disclosure requirements.” 119
All Acts except Alberta’s exclude cooperative organizations from the
application of the Act; the Model Bill, the PEI Act, and the New Brunswick bill
also exclude arrangements for the purchase and sale of a reasonable amount of
goods and services at reasonable wholesale prices.
C. Pre-Sale Disclosure
Pre-sale disclosure is a key principle of the franchise statutes. Under each of the
Acts, franchisors are required to deliver a disclosure document to a prospective
franchisee at least 14 days before the franchisee enters into an agreement or pays
any money toward the franchise (in Alberta, franchisors may take a refundable
good faith deposit before providing disclosure). The franchisor must also provide
written statements of any material changes that occur before the agreement is
signed or any money paid.
The Acts set out the required contents of the disclosure documents, but
most of the details are to be set out regulation. The Acts require:
• the franchisor’s financial statements as prescribed by regulation,
• copies of all proposed agreements,
• statements as prescribed by regulation to assist the prospective
franchisee to make an informed investment decision, and
• other information and documents as prescribed by regulation.
118
It has been suggested that, since there is no concept of a ‘service mark’ in the Trade-marks Act,
R.S., 1985, c. T-13, the presence of this term “is an indicator of the degree [of] American
influence in the drafting of the Canadian statutes”, P.D. Jones and D.F. So, “Houdini’s
Franchise Law: Exclusions and Exemptions to Disclosure in Canada” (Paper presented to The
Domino Effect: 6 th Annual Franchising Conference, Ontario Bar Association, November 16,
2006) at 20.
119
ULCC Uniform Franchises Act Working Group, Uniform Franchises Act with Commentary at
2, online:
(date accessed: May 9, 2007). The definition may capture organizations that did not
previously identify themselves as a ‘franchise’: see P.M. Dillon, “Ontario Franchise
Developments in 2004: Has the Pendulum Finished Swinging Yet” Siskinds Collection of
Franchise Law Articles (FRAN/RP-016, June 15, 2005), QL and R. Glass, P. Dillon and M.
Robinson, “Accidental Franchises: If It Walks Like a Duck and Quacks Like a Duck…”
Siskinds Collection of Franchise Law Articles (FRAN/RP-014, December 15, 2004), QL.

258 Underneath the Golden Boy
The disclosure must be in a single document, delivered as one document at
one time, and include the information required under the regulations. The
document must contain all material facts 120 (in Ontario and PEI, including all
material facts ‘as prescribed’) and must be accurately, clearly and concisely set
out. ‘Material fact’ is defined to include any information about the business and
operations of the franchise that would reasonably be expected to have a
significant effect on the value or price of the franchise or the decision to acquire
the franchise.
The information required to be disclosed under the regulations made under
the various Acts includes, in part: 121
• the background of the franchisor (business name and details, length of
time in business and number of franchises sold in the preceding five
years);
• the background of the officers and directors of the franchisor (prior
relevant experience, length of time in business and principal occupation
during the preceding five years);
• the litigation history of the franchisor (convictions within the 10
preceding years for fraud, unfair or deceptive business practices or
violations or pending charges relating to franchise or business laws,
administrative orders or penalties or pending administrative actions,
findings of liability and pending civil actions relating to business
practices);
• the details of a bankruptcy or insolvency proceeding within the
preceding six years;
• the most recently completed financial statements audited or reviewed
in accordance with generally accepted standards that are at least
equivalent to those in the Canadian Institute of Chartered
Accountants Handbook (the accounting standards of other
jurisdictions are acceptable so long as they meet the standards);
• the costs of establishing the franchise and, if operating costs are
provided, the supporting assumptions and information;
120
In Alberta the requirement to disclose all material facts is set out by defining a
‘misrepresentation’ as an untrue statement of or an omission to state a material fact.
121
In some cases, the time periods for which information must be provided are fiscal years rather
than calendar years. See also R.D. Leblanc and P.M. Dillon, “Franchise Disclosure in Canada
in 2007 and Beyond” (Paper presented to The Domino Effect: 6 th Annual Franchising
Conference, Ontario Bar Association, November 16, 2006) for a comprehensive comparison of
the disclosure requirements.

Franchise Law Consultation Paper 2007 259
• if the franchisor includes earnings projections, supporting assumptions
and information for the projections (the PEI requirements are the most
extensive);
• contact information for current and former franchisees and a
description of all franchises that ceased to operate in the previous three
years;
• restrictions on suppliers, products or markets, a description of any
volume rebates received by the franchisor, policies and practices
respecting exclusive territories and restrictions in the franchise
agreement on renewal, termination or transfer of the franchise; and
• information about available financing, mandatory and optional training
and advertising fund requirements.
A number of categories of information that may be material to the
prospective franchisee are not specifically set out in regulation and as a result,
may not be disclosed by the franchisor in some cases. 122 These include
background and risk factors relating to the nature of the business, settled
litigation, and terms of settlements, information about ongoing or concluded
arbitration proceedings, the amounts of any volume rebates received by the
122
Leblanc and Dillon, supra note 6 at 19. Leblanc and Dillon note their view that “[t]he scope of
what might constitute a “material fact” pursuant to this definition is limitless and there exists
an ongoing debate between certain commentators as to the standard of disclosure
required…The Ontario Act introduces confusion by deeming as material facts the prescribed
disclosures required in the regulation, effectively requiring their disclosure whether actually
material or not. The reaction of franchisors and the franchise bar to this wording has been in
some cases to interpret the regulation as definitive of the standard of disclosure in similarity
with the rules-based UFOC Guidelines in the U.S. On this basis, many franchisors do not
purport to make disclosures of any information which is not specifically requested in the
regulation. At the other end of the spectrum exists the school of thought that all facts
howsoever vaguely material should be disclosed…,” at 11. On the other hand, Trebilcock
argues persuasively that the scope of disclosure required is broad: A. J. Trebilcock, “Disclosure
– The Advanced Course: Tricky Disclosure Issues and Some Drafting Tips” (Paper presented
to The Domino Effect: 6 th Annual Franchising Conference, Ontario Bar Association,
November 16, 2006). Levitt agrees, noting that “[t]he conservative advice is to disclose any
fact that could possibly be construed as material”: E. Levitt, “Annual Legislative Update”
(Paper presented to The Domino Effect: 6 th Annual Franchising Conference, Ontario Bar
Association, November 16, 2006) at 21. This could include trends in the industry, anticipated
new regulations, local market conditions and supply issues and more: E.N. Levitt, “The Arthur
Wishart Act (Franchise Disclosure), 2000: Critical Compliance Issues”,

260 Underneath the Golden Boy
franchisor, and methods and resources for franchise support. However, in
1518628 Ontario Inc. v. Tutor Time Learning Centres LLC, 123 it was held that
information about serious problems with the accounts, billings and financial
arrangements and the overall management of the franchise, although not
necessarily falling within the statutory definition, constituted “material facts”
that should have been disclosed. A task force of the Ontario Bar Association
Joint Subcommittee on Franchising has made recommendations for amendments
to the Ontario scheme to specifically require the disclosure of several of these
matters. 124
The PEI Office of the Attorney General commented on the difference in
approach in relation to material fact disclosure in its Discussion Paper addressing
the PEI regulations:
The ULCC regulations have been drafted to require extensive disclosure in all the listed
areas whether or not the matter would be “material” to the franchisee in making the
decision to sign the franchise agreement. The extensive list gives comfort to a franchisor
that if they complete the document fully and honestly they have almost certainly met the
material fact disclosure requirement even though much of the disclosed information
might not be material in a given situation. The PEI regulations have not fully adopted this
approach. The PEI regulations have been drafted with an eye to the minimum standards
which exist at present in the Canadian marketplace, i.e. the laws of Ontario and Alberta.
Generally, matters which are not required to be disclosed or not required to be disclosed
in the detail required by the ULCC regulations have not been included in the PEI
regulations. These matters would only need to be included if they are “material.” At the
same time, there is nothing in the PEI regulations which would restrict a franchisor from
providing the full disclosure in the form of the ULCC regulations if they choose to do
so.125
The Ontario, PEI and Model Bill regulations also require a form of risk
warning to be presented at the beginning of the document; this includes a
statement that prospective franchisees are encouraged to seek information on
the franchisor and independent legal and financial advice, and to contact
current and previous franchisees.
123
[2006] O.J. No. 3011 (S.C.J.) at paragraph. 63; leave to appeal granted [2006] O.J. No. 4992
(S.C.J. Div. Ct.). See J. Dolman and A. Frith, “Ontario’s Franchise Legislation – What Have
We Learned” 26:3 Franchise Law Journal (Winter 2007), online:

Franchise Law Consultation Paper 2007 261
There are several exemptions to the disclosure requirements; for example,
disclosure is not required when a franchise is granted to an officer or director of
the franchisor or an additional franchise is granted to an existing franchisee.
As well, all Acts except Ontario’s exempt confidentiality and site selection
agreements from the disclosure requirement. This means that franchisors may
enter into a location agreement or require prospective franchisees to sign a
confidentiality agreement before providing disclosure. The Alberta Act also
exempts fully refundable deposits, so that a franchisor may require a refundable
deposit before providing disclosure. In Ontario, these actions would violate the
Act; the site selection or confidentiality agreement would likely be an agreement
relating to the franchise (for which disclosure is required). 126 As a result,
In the absence of the ability to secure some form of initial financial commitment or
confidentiality covenant from prospective franchisees, the Ontario franchisor must be
more wary of “tire kickers” or potential competitors who wish to collect information and
documents without serious intentions to proceed. 127
The Alberta and PEI regulations provide that a disclosure document
complies with the Act if it is substantially complete, 128 and allow franchisors to
use disclosure documents that comply with the franchise laws of another
jurisdiction with a ‘wrap-around’ addendum to bring the documents into
compliance with the Act. 129 The PEI regulations also provide for electronic
delivery of disclosure documents.
D. Remedies
The remedies available to franchisees under the Acts are a right of rescission and
a right of action for damages. Remedies otherwise available to the parties are also
preserved; the rights under the Acts are in addition to any other right or remedy
a party to a franchise agreement may have at law.
All Acts provide that the franchisee may rescind the franchise agreement
within 60 days if the franchisor failed to provide the disclosure documents within
the time required, or, under all Acts except Alberta’s, if the contents of the
documents did not meet the statutory requirements. The time allowed for
rescission increases to two years if the franchisor provided no disclosure
126
Levitt, supra note 7 at 46.
127
Leblanc and Dillon, supra note 6 at 8.
128
Franchise lawyer Peter Dillon has criticized the Ontario Act’s failure to provide for substantial
compliance, among other points, arguing that Ontario is “the toughest jurisdiction in the world
in which to franchise”; Dillon, supra note 4 at paragraph 1.
129
A wrap around addendum sets out any additional material that is necessary for the disclosure
document of one province to comply with the disclosure requirements of another province.

262 Underneath the Golden Boy
document. Upon rescission, the franchisor must compensate the franchisee for
any net losses that the franchisee has incurred in acquiring, setting up and
operating the business. All Acts except Alberta’s also specifically require the
franchisor to refund money received from the franchisee and to buy back any
remaining supplies, equipment, and inventory sold to the franchisee at a price
equal to the purchase price paid by the franchisee.
The issue of incomplete disclosure has been considered by the courts. In
1490664 Ontario Ltd. v. Dig This Garden Retailers Ltd., 130 the franchisor had
provided 70% of the information required, in several documents presented at
different times. The Ontario Court of Appeal found that, rather than
constituting incomplete disclosure, information provided at multiple times in
multiple documents constituted “no disclosure” under the Act, and the
franchisee was entitled to a two year period in which to rescind the contract.
Similarly, the provision of a U.S. UFOC disclosure document (discussed below)
rather than the document required under the Act has been found to be “no
disclosure.” 131
The Acts also provides a right of action for damages, if a franchisee suffers a
loss because of a misrepresentation in the disclosure document or statement of
material change, or because of the franchisor’s failure to comply with the
disclosure requirements. In Alberta, the right of action is against the franchisor
and every person who signed the disclosure document or statement. The other
Acts add to this list the franchisor’s broker and the franchisor’s associate
(Ontario also adds the ‘franchisor’s agent’). 132
The franchisee is not required to show reliance on the information. The
franchisee is deemed to have relied on the misrepresentation, or, where the
franchisor has failed to provide a statement of material change, on the
information in the disclosure document.
A person will not be liable if he or she proves that the franchisee acquired
the franchise with knowledge of the misrepresentation or material change. As
130
(2005), 256 D.L.R. (4 th ) 451 (Ont. C.A.).
131
1518628 Ontario Inc. et. al. v. Tutor Time Learning Centres, LLC, supra note 8.
132
ULCC Uniform Franchises Act Working Group, supra note 4 at 18; see also ULCC, Uniform
Franchises Act Working Group, Uniform Franchises Act Report of the Working Committee
(August 11, 2003) at 34, online:
(date accessed: May 9,
2007). The term “franchisor's agent” in Ontario was originally not defined, which created some
interpretation problems and was thought to expose third party advisors to liability. Under
amendments to the Ontario regulations made in 2004, a franchisor’s agent is now defined as “a
sales agent of the franchisor who is engaged by the franchisor’s broker and who is directly
involved in the granting of a franchise”; O.Reg. 581/00, s.0.1 as amended by O.Reg. 69/04, s.1.

Franchise Law Consultation Paper 2007 263
well, a franchisor’s broker, associate or agent or a person other than the
franchisor who signed the document or statement has various other grounds of
defence; for example, that he or she did not know that the document was given
to the franchisee and gave written notice to the franchisee promptly on
becoming aware that it had been given.
The Ontario Court of Appeal has held that a franchisee’s right to rescind is
not conditional on his or her conduct as a franchisee, although a franchisor may
have a separate right to pursue an action under the common law principles
preserved by the Act. 133 A purchaser of a franchise in a transaction that has not
yet closed has also been held to be a ‘franchisee’, and entitled to rescission for
non-disclosure under the Ontario Act. 134 The Ontario Court of Appeal has also
held that a franchisee may receive both the remedy of rescission and an award of
damages. 135 As well, in Khachikian v. Williams, an award of punitive damages
was made, to reflect the “court’s denunciation of what the defendant did and
[to] serve as a deterrent to others who might also be inclined to use the concept
of franchising as a means of taking undue and improper advantage of another
person”. 136
E. Duty of Fair Dealing (Good Faith)
The Ontario and Alberta Acts deem that a franchise agreement imposes on each
party a duty of fair dealing in the performance and enforcement of the
agreement. The Model Bill, the PEI Act, and the New Brunswick Bill each have
a similar provision, but also provide that the duty applies to the exercise of a
right under the agreement. As a result, parties must consider the duty of good
faith even if exercising a discretionary right or an option provided for by the
agreement. 137 None of the Acts impose a duty of fair dealing in the negotiation
of an agreement.
133
Personal Service Coffee Corp. v. Beer (2005), 256 D.L.R. (4 th ) 466 (Ont. C.A.).
134
Bekah v. Three For One Pizza (2003), 67 O.R. (3d) 305 (S.C.J.); see also 1368741 Ontario
Inc. v. Triple Pizza (Holdings) Inc., [2004] A.C.W.S.J. 10256 (Ont. C.A.), aff’g [2003] O.J.
No. 2097 (S.C.J.).
135
1490664 Ontario Ltd. v. Dig This Garden Retailers Ltd. (2004), 256 D.L.R. (4 th ) 451 (Ont.
C.A.). This decision and other aspects of the Ontario Act have been criticized by the lawyer
who represented the franchisor in Dig This Garden: see N. Fraser, “Opinion split on act’s
protection of franchisees” Law Times (March 6, 2006) at 13, online:
(date accessed: May 11, 2007).
See also S. Graham, “Statutory Rescission: Where’s The Equity” Siskinds Collection of
Franchise Law Articles (FRAN/RP-022, May 15, 2006) QL.
136
[2003] O.J. No. 5876 (S.C.J.) at paragraph. 23.
137
F. Zaid and D. Mochrie, P.E.I. and New Brunswick On Board With Franchise-Specific
Legislation, Osler, Hoskin & Harcourt LLP (July 7, 2006), online:

264 Underneath the Golden Boy
All Acts except Alberta’s provide that a party has a right of action for
damages against another party who breaches the duty of fair dealing, and that
the duty of fair dealing includes the duty to act in good faith and in accordance
with reasonable commercial standards. All Acts also provide that the duty of fair
dealing applies retroactively to franchise agreements entered into before the
legislation came into force.
The good faith requirement in the Acts has been considered by the courts.
The Ontario Supreme Court of Justice has held that a franchisor was entitled to
favour one feuding co-franchisee in a buyout of the other co-franchisee in the
interests of the overall franchise, 138 and that the duty of good faith applies to the
franchisee as well as to the franchisor. 139 In Personal Service Coffee Corp., the
Ontario Court of Appeal held that the statutory duty of fair dealing does not
apply once the franchisee has rescinded the agreement, since the duty only
applies to the performance and enforcement of an agreement that is still in effect
(however, remedies may be available at common law). 140 In Sobeys, 141 the
Ontario Supreme Court of Justice held that the duty under the Ontario Act
extended only to the performance and enforcement of existing agreements; it did
not require the franchisor to renew an expiring agreement that it considered to
be commercially unreasonable. Instead the franchisor was entitled to secure the
lease for itself. On the other hand, another franchisor breached its duty of good
faith when it failed to award a new competing franchise location to an existing
franchisee who was in good standing and whose location was no longer viable,
although the franchisor’s action was not barred by the franchise agreement. 142
There appears to be no duty to inform the other party of its obligations; a
(date accessed: May 9, 2007). According
to the ULCC Uniform Franchises Act Working Group, the addition of the words ‘including in
the exercise of a right’ was necessary “because the duty of fair dealing incorporating the duty of
good faith and commercial reasonable standards in the Ontario Act does not extend to express
contractual provisions granting the franchisor discretionary authority over rights to be
exercised during the term of the contract that may be carried out without regard to fair
dealing”: ULCC Uniform Franchises Act Working Group, supra note 4 at 9.
138
Country Style Food Services Inc. v. Hotoyan, [2001] O.J. No. 2889 (S.C.J.); see also Mr.
Submarine Limited. v. Sowdaey, [2002] O.J. No. 4401 (S.C.J.) (the duty of good faith does not
require a franchisor to put the franchisee’s interests ahead of its own).
139
See Gerami v. Double Double Pizza Chicken Ltd., [2005] O.J. No. 5252 (S.C.J.).
140
Personal Service Coffee Corp., supra note 18.
141
530888 Ontario Ltd. v. Sobeys Inc. (2001), 12 B.L.R. (3d) 267 (Ont. S.C.J.).
142
Katotikidis v. Mr. Submarine Ltd. (2002), 26 B.L.R. (3d) 140 and 29 B.L.R. (3d) 258 (Ont.
S.C.J.) the Court found that the Ontario Act duty did not apply to events that occurred before
the Act came into force, but awarded damages, including punitive damages, based on the
common law duty of good faith.

Franchise Law Consultation Paper 2007 265
franchisee who was aware of the franchisor’s obligations to provide disclosure
and who failed to inform the franchisor was held not to have breached the duty
of good faith. 143
F. Right to Associate
Each Act provides that a franchisee may associate with other franchisees
and may form or join an organization of franchisees. A franchisor may not
prohibit, restrict, directly or indirectly penalize a franchisee from doing so (or,
except in Alberta, interfere with a franchisee). All statutes except Alberta’s
provide that a provision in an agreement purporting to restrict a franchisee from
exercising this right is void, and that a franchisee has a right of action for
damages against a franchisor that contravenes this provision.
All Acts provide that the right to associate applies retroactively to franchise
agreements entered into before the legislation came into force.
G. Waiver of Rights
All Acts provide that any waiver or release by a franchisee of a right or
requirement under the Act or regulations is void. The PEI Act, the Model Bill,
and the New Brunswick Bill extend this provision to specifically include
prospective franchisees. Under all Acts except Alberta’s, this applies
retroactively to franchise agreements entered into before the legislation came
into force.
H. Dispute Resolution
The Model Bill and the New Brunswick Bill provide for a confidential dispute
resolution process, which is mandatory once initiated by a party to a franchise
agreement. A party may deliver a notice of dispute to another party setting out
the nature of the dispute and the desired outcome. The parties must attempt to
resolve the dispute within 15 days after delivery of the notice. If they fail to
resolve it, a party may deliver a notice to mediate to all other parties to the
agreement. The parties must then follow the rules set out in the regulations
respecting mediation.
I. Exemptions
In Alberta, regulations may be made exempting persons, franchises, or sales of
franchises from any or all provisions of the Act or regulations. The New
143
Even assuming that the duty of good faith existed before the execution of the franchise
agreement: Payne Environmental Inc. v. Lord and Partners Ltd. (2006), 14 B.L.R. (4 th ) 117
(Ont. S.C.J.).

266 Underneath the Golden Boy
Brunswick Bill also provides broad authority for regulations to be made
respecting exemptions from any requirement or provision of the Act or
regulations. The Ontario and PEI Acts are more specific, authorizing regulations
to be made exempting certain franchisors from the requirement to include
financial statements in a disclosure document.
Alberta, Ontario, and PEI have made regulations to provide exemptions
from the requirement to include financial statements.
This financial disclosure is a very sensitive topic – most franchisors are wary to disclose
sensitive financial information in the form of financial statements required to be provided
as part of the disclosure document. To avoid disclosing the financial statements of their
operating companies, many franchisors incorporate sparsely detailed separate companies
solely to act as the “franchisor” in a franchise relationship. 144
The Alberta, Ontario, and PEI regulations exempt ‘mature’ franchisors,
which presumably have a solid business foundation, from the requirement to
include financial statements. In Alberta and Ontario, the exemptions apply if
the net worth of the franchisor is at least $5 million (or $1 million if controlled
by a corporation with a net worth of $5 million), it has at least 25 franchisees
operating for the preceding five years in Canada (or in Ontario, in another single
jurisdiction), and it has engaged in the franchise’s line of business continuously
for not less than the preceding five years. Ontario has added the requirement
that the franchisor, its associates, directors, general partners, or officers must not
have had a judgment against them in the preceding five years relating to fraud,
unfair or deceptive trade practices, or a law regulating franchises.
The PEI regulations set the same requirements as those in Ontario, except
that the $5 million net worth requirement has been lowered to $2 million. The
exemptions in all jurisdictions are made by self-assessment; an application to
government is not required. However, the PEI Act has an additional provision
allowing any franchisor to apply to the minister for an exemption from the
requirement to include financial statements in the disclosure document. The
minister may exempt the franchisor, subject to any terms and conditions, if
satisfied that to do so would not be prejudicial to the public interest.
J. Jurisdiction
All Acts provide that any provision in a franchise agreement that purports to
restrict the application of the law of the province or to restrict jurisdiction or
venue to a forum outside the province is void with respect to a claim otherwise
enforceable under the Act in the province.
144
Jones and So, supra note 3 at 34.

Franchise Law Consultation Paper 2007 267
CHAPTER 5: INTERNATIONAL FRANCHISE REGULATION
A. United States
1. FTC Franchise Disclosure Rule and UFOC Guidelines
Franchising in the United States is regulated by the federal government and by
several state governments. 145 Federally, the sale of franchises is regulated by the
Federal Trade Commission Franchise Disclosure Rule, made under the Federal
Trade Commission Act. 146 Under the FTC Rule:
[A] franchise exists in a commercial arrangement between a buyer and seller when the
following three elements are present: (i) a grant of the right to use the seller’s trademark
to offer, sell or distribute goods or services; (ii) the seller offers significant assistance to the
buyer in its operations or reserves the right to control its operations; and (iii) the payment
of a fee ($500 or more within the first six months of operations). The FTC Rule is
interpreted liberally to further its primary goal of investor protection. 147
The FTC Rule requires franchisors to make detailed disclosures to
prospective franchisees. The Rule deals only with franchisor disclosure; there is
no express duty of good faith or fair dealing and franchise relationship issues are
governed by state contract law. 148 There is no filing or registration requirement
145
As of 2002, fifteen state governments required pre-sale disclosure of franchise information: U.S.
Federal Trade Commission, “The Franchise Rule” (Statement before the U.S. House of
Representatives Committee on Energy and Commerce, Subcommittee on Commerce, Trade
and Consumer Protection, June 25, 2002), online:
(date accessed: May 7,
2007);
146
U.S. Federal Trade Commission, Disclosure Requirements and Prohibitions Concerning
Franchising and Business Opportunity Ventures, Code of Federal Regulations, 16 CFR 436
[FTC Rule], online: ( date accessed: May
9, 2007); Federal Trade Commission Act, 15 U.S.C. §§ 41-58 [FTC Act], online:
(date accessed: May 12, 2007). See also U.S. Federal
Trade Commission, Guide to the FTC Franchise Rule Table of Contents, online:
(date accessed: May 12, 2007).
147
L. S. Stadfeld, Basic Franchise Law Considerations in Supply Relationships, Weston, Patrick,
Willard & Redding, P.A., Boston, MA, online:
(date accessed: May 12, 2007); see 16 CFR 436. 2. State
law definitions are similar to the FTC definition, except that instead of the ‘assistance and
control’ element, they require a marketing plan prescribed substantially by the franchisor or a
community of interest between the parties with respect to the business.
148
U.S. Federal Trade Commission, supra note 1. The FTC stated that while franchisee advocates
have asserted that “the underlying relationship between franchisor and franchisee is often
unfair, with the franchisor dictating the terms under which the franchisee will conduct
business, often allegedly resulting in significant financial losses”, the FTC has not received a
large number of complaints about relationship issues and it was “unaware of any evidence that
relationship issues are prevalent throughout franchising”, at Part III. Although the FTC

268 Underneath the Golden Boy
and the FTC does not review disclosures . There is also no private right of action
to enforce the FTC Rule; only the FTC can enforce it. 149 The FTC has a broad
range of remedies that it may seek for violations, including injunctions, civil
penalties and orders for the refund of money to franchise purchasers.
The FTC Rule:
requires franchisors to make material disclosures in five categories: (1) the nature of the
franchisor and the franchise system; (2) the franchisor’s financial viability; (3) the costs
involved in purchasing and operating a franchised outlet; (4) the terms and conditions
that govern the franchise relationship; and (5) the names and addresses of current
franchisees who can share their experiences within the franchise system, thus helping the
prospective franchisee to verify independently the franchisor’s claims. In addition,
franchisors must have a reasonable basis and substantiation for any earnings claims made
to prospective franchisees, as well as disclose the basis and assumptions underlying any
such earnings claims. 150
Several states have franchisor registration requirements modeled after
securities legislation; franchisors must register with a state regulatory agency and
obtain approval before they can offer their franchises to prospective
franchisees. 151 Unlike the FTC Rule, some state laws provide a private right of
action to franchisees. 152 As well, several states have enacted franchise
relationship legislation to govern the relationship between the parties after the
franchise agreement is signed. All of these statutes have provisions governing
termination of the franchise agreement; other matters include contract renewal
and transfer, territory encroachment, the purchase of goods and services from
designated sources of supply, franchisees’ right to associate and forum selection.
153
Franchise Rule does not govern relationship issues, the FTC does enforce section 5 of the FTC
Act, which declares unlawful unfair or deceptive practices in or affecting commerce, when
specific criteria are met. However, the unfairness authority criteria generally do not apply to
franchise relationship issues. See also U.S. General Accounting Office, Federal Trade
Commission: Enforcement of the Franchise Rule (Report to Congressional Requesters, July
2001) at 7-9 and 40-45, online: (date accessed:
May 12, 2007).
149
U.S. Federal Trade Commission, supra note 1; U.S. Federal Trade Commission, Guide to the
FTC Franchise Rule Table of Contents, supra note 2.
150
U.S. Federal Trade Commission, supra note 1 at Part IA.
151
Stadfield, supra note 3. There are additional state laws that may apply; for example, state
‘business opportunity’ statutes designed to encompass distribution arrangements accompanied
by representations or promises, such as vending machine routes.
152
Stadfield, supra note 3.
153
U.S. General Accounting Office, supra note 4 at 9 and 43-45. The GAO identified 17 states
that have enacted franchise relationship legislation; Iowa’s is recognized as being the most
comprehensive.

Franchise Law Consultation Paper 2007 269
The FTC Rule and state laws require the franchisor to provide the
disclosure document at least ten business days before the franchisee pays any
consideration or signs a contract. A copy of the franchise agreement with all
terms completed and all related agreements must be delivered at least five
business days before signing.
Currently, most U.S. franchisors use a uniform disclosure format called the
Uniform Franchise Offering Circular (“UFOC”), produced by the North
American Securities Administrators Association (“NASAA”). 154 The UFOC has
been accepted by the FTC and by state regulators. 155 The UFOC and the FTC
Rule require similar disclosures, including a description of: (1) the franchisor and
its business; (2) prior litigation and bankruptcies relating to the franchisor; (3)
initial and ongoing fees; (4) obligations of the parties and other terms of the
contract; (5) restrictions on sales; and (6) rights to renew and terminate the
franchise. Both formats also require substantiation of any earnings claims,
statistics on existing franchisees, contact information for franchisees, and
audited financial statements. 156
The UFOC Guidelines also contain disclosure provisions in addition to
those required under the FTC Rule, including information about regulations
specific to the franchise industry, litigation or bankruptcy involving a franchisor’s
predecessor, computer system requirements and contact information for former
franchisees. 157 As well, under amendments made in 1993, the disclosure must be
154
North American Securities Administrators Association [NASAA], Uniform Franchise Offering
Circular Guidelines, online:
(date
accessed: May 12, 2007). According to Stadfeld, “the states refused to follow the FTC’s
disclosure format largely because they sought more comprehensive regulation… these states
promulgated a more rigorous disclosure format” – the UFOC: L.S. Stadfeld, Federal Franchise
Sales Law Updated for First Time Since 1978, Weston, Patrick, Willard & Redding, P.A.,
Boston, MA, online: (date
accessed: May 12, 2007)
155
The FTC authorized franchisors to use the UFOC Guidelines to comply with the FTC Rule’s
disclosure requirements because the Guidelines, in their entirety, provided consumer protection
equal to or greater than the Rule: U.S. Federal Trade Commission, 16 CFR Parts 436 and 437:
Disclosure Requirements and Prohibitions Concerning Franchising; Disclosure Requirements
and Prohibitions Concerning Business Opportunities (2007), online:
(date accessed: May
12, 2007).
156
U.S. Federal Trade Commission, supra note 1. The FTC Format is not accepted by state
regulators in states with registration requirements: Stadfield, supra note 3.
157
Ibid. at note 9.

270 Underneath the Golden Boy
written in ‘plain English’. In many states, the UFOC includes an addendum to
set out the specific requirements of that state. 158
Under the FTC Rule and the UFOC Guidelines, a franchisor must comply
with certain requirements if it makes an earnings claim. For example, under the
UFOC, the claim must have a ‘reasonable basis’ and include the factual basis for
the claim (such as economic and market conditions, costs of goods sold and
operating expenses), state the material assumptions underlying the claim and the
precise basis for it (for example, the percentage of franchisees that have achieved
it), include a conspicuous statement that a franchisee’s results are likely to differ
and offer to provide substantiation upon request.
2. FTC Rule Amendments
Beginning on 1 July 2008, the requirements of U.S. franchisors under the FTC
Rule will change significantly. Following a lengthy review and consultation
process, 159 the FTC has substantially revised and modernized the Franchise
Rule. 160 Compliance with the new Rule is voluntary as of 1 July2007 and
mandatory on 1 July 2008. Permission to use the UFOC Guidelines will be
withdrawn effective 1 July 2008, 161 and franchisors will be required to use the
new FTC Franchise Disclosure Document, which adopts the UFOC format (and
plain English requirement) but supplements it with additional disclosure
requirements. 162
New disclosure requirements under the revised FTC Rule include:
158
R.D. Leblanc and P.M. Dillon, “Franchise Disclosure in Canada in 2007 and Beyond” (Paper
presented to The Domino Effect: 6 th Annual Franchising Conference, Ontario Bar Association,
November 16, 2006).
159
See L. Fisher, “FTC Rule Change: The Question Of When” FranchiseLawNews.Com
(November 2005), online: (date
accessed: May 12, 2007).
160
The FTC has released the revised Rule and a Statement of Business and Purpose that provides
a rationale for and an explanation of the changes. The new Rule separates the requirements
relating to franchises from those relating to business opportunities, and the FTC has initiated a
separate review process for the business opportunity requirements: U.S. Federal Trade
Commission, supra note 11 at 3.
161
This is because the UFOC Guidelines will no longer provide equal or greater protection to
prospective franchisees: U.S. Federal Trade Commission, supra note 11 at 13, note 46.
162
D.J. Kaufmann, “It’s official: FTC revamps federal Franchise Rule” Franchise Times (March
2007), online: (date
accessed: May 12, 2007). The new Rule is narrower than the existing UFOC Guidelines in
some respects. For example, it eliminates some disclosures relating to brokers and to detailed
computer equipment requirements: U.S. Federal Trade Commission, supra note 11.

Franchise Law Consultation Paper 2007 271
• a summary of all material litigation commenced by franchisors against
their franchisees during the preceding year (currently only litigation by
franchisees must be disclosed);
• identification of the officers, directors or managers of a franchisor’s
corporate parent who will exercising management responsibility relating
to the franchise;
• all government litigation against a franchisor affiliate that sold
franchises within the previous ten years;
• a statement as to whether any officer of the franchisor has an interest in
any required supplier;
• information as to how the franchisor or an affiliate may compete with
franchisees through distribution channels such as the internet,
catalogue sales, telemarketing, co-branding or the establishment of
units at ‘nontraditional locations’;
• expanded disclosure with respect to franchisee territories, including the
conditions under which a franchisor will approve franchisee relocation
and the establishment of additional outlets, any present plans of the
franchisor to operate a competing franchise system, the limits on
franchisee solicitations outside assigned territories and a warning of
possible adverse consequences if the franchisee will not have exclusive
territorial rights;
• an explanation of the franchisor’s renewal policies, including any
obligation to sign a new franchise agreement on different terms at
renewal;
• a statement that franchisors are permitted to make financial
performance representations in the disclosure documents, and, if none
appear in the documents, franchisees should disregard other
representations and report them to government agencies;
• information as to whether a franchise unit has been the subject of
repeated sales to different franchisees;
• contact information for each affiliated trademark-specific franchisee
association; and
• information as to whether any current or former franchisees are
restricted from speaking freely due to a confidentiality agreement. 163
163
Ibid; Stadfeld, supra note 10; P. Reap, FTC Issues New Franchise, Business Opportunity Rules,
Wolters Kluwer Law & Business (2007), online: (date accessed: May 12, 2007); A. Marks and K. Klein, “FTC Franchise Rule 2.0”
14:1 Consumer Protection Update (Spring 2007), online:
(date accessed: May 12, 2007).

272 Underneath the Golden Boy
The Rule also allows franchisors to disclose exclusively in electronic form,
and franchisee receipts may also be executed and returned electronically. 164
Franchisors must continually monitor for material changes to financial
performance representations and amend the disclosure documents. 165
Franchisors will be able to provide stand-alone franchise cost or operating
expense information even if no financial performance representations are
included in the disclosure document, with a warning that this information does
not constitute a financial performance representation. Start-up franchisors may
phase in audited financial statements over a three year period. The Rule also
includes new ‘sophisticated investor’ exemptions from disclosure where
prospective franchisees meet certain net worth, investment or experience
criteria. 166
The new FTC Rule does not incorporate new provisions to govern the
franchise relationship. This was an area of significant concern raised with the
FTC during the review process:
[M]any franchisees and their advocates criticized the Rule for not going far enough. They
urged the Commission to address in this rulemaking a variety of post-sale franchise
contract or “relationship” issues, including prohibiting or limiting the use of post-contract
covenants not to compete, encroachment of franchisees’ market territory, and restrictions
on the sources of products or services. Indeed, some franchisees asserted that if the Rule
cannot address post-sale relationship issues, then the Commission should abolish the
Rule. 167
However, the FTC notes that its ability to address relationship issues is
restricted by the terms of its governing legislation.
The FTC Act defines an unfair act or practice as one that is “likely to cause substantial
injury to consumers which is not reasonably avoidable by consumers themselves and not
outweighed by countervailing benefits to consumers or to competition.” The Act also
requires that, to justify an industry-wide rule, such practice be prevalent. This proceeding
did not yield adequate evidence to support a finding of prevalent acts or practices that
meet each of the three prerequisites for unfairness as articulated in Section 45(n) of the
FTC Act. 168
164
Kaufmann, supra note 18.
165
Marks and Klein, supra note 19.
166
Stadfeld, supra note 10; Kaufmann, supra note 18; Marks and Klein, supra note 19; U.S.
Federal Trade Commission, supra note 11 at 219-240.
167
U.S. Federal Trade Commission, supra note 11 at 10. See S.P. Kezios, American Franchisee
Association, Correspondence to the Federal Trade Commission (April 30, 1997), online:
(date accessed: May 15, 2007).
168
U.S. Federal Trade Commission, supra note 11 at 10.

Franchise Law Consultation Paper 2007 273
According to the FTC, while it received evidence of injury to franchisees
that may be ascribable to acts of franchisors, it is an open question whether the
practices are prevalent and the injuries substantial when viewed from the
standpoint of the franchising industry as a whole, rather than of a single
franchise system. As well, since the purchase of a franchise is voluntary, the FTC
could not conclude that prospective franchisees who receive full disclosure could
not reasonably avoid the harm. Finally, advocates asserting injury to franchisees
did not provide evidence that the injury outweighs potential countervailing
benefits to the public at large or to competition. As a result, the FTC declined to
impose provisions governing the substantive terms of franchise contracts that
would apply to the entire franchise industry. 169 On the other hand, as noted
above, the FTC did include additional disclosure provisions, concluding that
more disclosure was “warranted to ensure that prospective franchisees are not
deceived about the quality of the franchise relationship” 170 before they commit to
a franchise.
B. Australia
Australia has a substantial franchising sector relative to its population, with a
total of 70 250 franchise units in 2006 and a growth rate from 2004 to 2006 of
approximately 15%. 171 The total sales turnover of all business format franchise
units in 2005 was estimated at $128 billion, or 14% of Australia’s gross domestic
product. 172
The Australian Government’s first intervention in the franchising field was
a voluntary Franchising Code of Practice, developed in 1993. 173 The Code set
169
Ibid. at 10-12. The FTC also noted that it has previously voiced concerns with respect to
government-mandated contractual terms, stating that terms that are driven by market forces
and private parties acting in their own self-interest are most likely to result in products reaching
market quickly and efficiently. FTC staff members have filed advocacy comments in relation to
state bills that would limit manufacturers’ ability to manage their distribution systems, by
requiring exclusive territories, burdening wholesaler terminations or limiting responses to
changing competitive conditions: ibid. at 12, note 45.
170
Ibid. at 12.
171
L. Frazer, S. Weaven and O. Wright, Franchising Australia 2006 (Report prepared for the
Franchise Council of Australia, 2006) at 9, online:
(date accessed: May 12,
2007). This figure includes 5,660 company owned units and 8,390 fuel and motor vehicle retail
outlets; the growth rate also includes company owned units.
172
Ibid.
173
Office of Small Business, Department of Employment, Workplace Relations and Small
Business, Commonwealth of Australia, Review of the Franchising Code of Conduct (Discussion
Paper, December 1999) at 4, online:

274 Underneath the Golden Boy
standards of franchisor disclosure, implemented franchisee cooling-off periods
and provided access to dispute resolution mechanisms. However, a 1995 review
found that only about 50% to 60% of franchisors had chosen to register. 174 The
Code was widely viewed to be ineffective, and was allowed to lapse in 1996. 175
In 1998, regulations implementing a mandatory Franchising Code of
Conduct 176 were made under the Trade Practices Act 1974. 177 The key features of
the Code are the requirement that franchisors provide the appropriate disclosure
document and a copy of the Code at least 14 days before an agreement is signed
or a non-refundable payment is made, a cooling-off period (a franchisee may
terminate an agreement within seven days of signing it or of making a payment),
mandatory mediation for dispute resolution and mandatory disclosure of
information by a vendor franchisee to a prospective purchaser of the franchisee’s
business. 178 A franchisor must provide a new disclosure document to franchisees
every year upon request. As well, a franchisor must not enter into, renew or
extend a franchise agreement or receive a non-refundable payment unless the
franchisee has provided a written statement that the franchisee has received,
read and had a reasonable opportunity to understand the disclosure document.
In the case of a new franchise agreement, the franchisor must also receive
signed statements from the franchisee that the franchisee has been given advice
by an independent legal or business advisor or an accountant or has been told
that that kind of advice should be sought but has decided not to seek it. A
franchisor may not induce a franchisee not to associate with other franchisees,
(date
accessed: May 12, 2007).
174
Ibid. Key franchising sectors, including the motor vehicle and real estate franchise industries,
chose not to be covered by the Code, and non-compliance with the Code was an issue even
among those franchisors who had registered.
175
Ibid.
176
Trade Practices (Industry Codes – Franchising) Regulations 1998, SR 1998 No. 162
[Franchising Regulations] online:
(date accessed: May 12, 2007).
177
Trade Practices Act 1974 , No. 51, 1974, amended to No. 92, 2006, online:
(date accessed: May 12,
2007).
178
Franchising Policy Council, Review of the Franchising Code of Conduct: Report of the
Franchising Policy Council (Report to the Minister of Employment, Workplace Relations and
Small Business, Australia, May 2000) at 16, online:
(date
accessed: May 12, 2007); Trade Practices (Industry Codes – Franchising) Regulations 1998,
supra note 32, s. 10.

Franchise Law Consultation Paper 2007 275
and franchise agreement must not contain a general release of the franchisor
from liability. A franchisor must give a franchisee a reasonable time to remedy a
breach before it can terminate an agreement, and franchise agreements must
provide for a dispute mediation procedure that complies with the Code. 179
Apart from the dispute resolution process, a party to a franchise agreement
must seek compensation for damages through litigation. However, the Code is a
mandatory industry code under the Trade Practices Act, 1974, and the
Australian Competition and Consumer Commission also carries out a role in
educating the public about the Code, and in investigating and bringing
proceedings against those suspected of breaching the Code. The Commission
can also apply for injunctions and for compensatory orders on behalf of
individuals who have suffered loss as a consequence of another person’s
breach. 180
The Franchising Policy Council conducted a review of the 1998 Code in
2000. The Council made a number of recommendations for amendments, 181 but
concluded that overall, the Code had been a successful initiative and that the
benefits to the industry outweigh the costs of compliance with the Code. 182
179
Trade Practices (Industry Codes – Franchising) Regulations 1998, supra note 32.
180
Franchising Code Review Committee, Review of the Disclosure Provisions of the Franchising
Code of Conduct (Report to the Minister for Small Business and Tourism, Australia, October
2006) at 26, online:
(date accessed: May 12, 2007); franchisees may
also have remedies at common law (at 29). See also J. Martin, Australian Competition and
Consumer Commission, “The Health Of Franchising From The Viewpoint Of Its Regulator”
(Paper for the Franchise Council of Australia Adelaide Conference, October 23, 2001), online:
.
181
Franchising Policy Council, supra note 34. These included a recommendation that a short form
disclosure document be used for franchises with an annual turnover of less than $50,000
annually, that international franchisors be exempt from the disclosure requirements where an
Australian master franchisor has been appointed to make the disclosures, and that the
Government consider expanding the functions of the ACCC to enable the Commission to
more closely monitor compliance with the Code. The Council noted options such as requiring
disclosure documents to be registered with the ACCC, at 56. The regulations were amended in
2001 to implement the short form disclosure document for small franchises, to clarify that both
a franchisor and master franchisee must disclose information to a sub franchisee (a joint form is
permitted) and to require franchisors to maintain current disclosure documents: Trade
Practices (Industry Codes – Franchising) Amendment Regulations 2001 (No. 1), SR 2001 No.
165, online:
(date accessed: May 12, 2007).
182
Franchising Policy Council, supra note 34 at 56.

276 Underneath the Golden Boy
In 2006, a survey of franchising in Australia found that the most common
causes of franchisor-franchisee disputes were related to system compliance,
communication problems, and claims of misrepresentation. Mediation was used
as a means of resolving disputes more than twice as often as litigation. 183
The Franchising Code of Conduct was again reviewed in 2006 by the
Franchising Code Review Committee, established by the Australian Government
following concerns raised about whether the disclosure provisions of the Code
were working effectively and about the enforcement of the Code by the
ACCC. 184 The Committee made a number of recommendations, including the
following:
• the franchisor should be required to provide all agreements, in the form
in which they are intended to be executed, at the same time as the
disclosure documents. The Committee had found that franchisees were
in some cases given complete contracts only at the time of signing, and
that the contracts presented for signing sometimes differed from earlier
drafts;
• financial disclosure requirements should be extended to any
consolidated entity to which the franchisor belongs;
• the franchisor should be required to provide a risk statement identifying
known significant risks that could have a material impact on the
franchise;
• marketing fund annual financial statements should be required to be
audited;
• the requirement to disclose financial benefits from the supply of goods
or services to franchisees should include the amount or method of
calculation of the rebate or benefit;
• the ACCC should collect information respecting the auditing of
financial statements and determine whether the lack of audited
statements is causing unsatisfactory outcomes;
• where consent is obtained, the contact details of past franchisees should
be included in the disclosure documents (along with the number of past
franchisees who declined to give consent);
• the business experience of all who may have management
responsibilities with the franchisor should be disclosed;
• franchisor directors should be included among those required to provide
disclosure, and the scope of disclosure should be extended to criminal
convictions for non-serious offences;
183
Frazer, Weaven and Wright, supra note 27 at 11.
184
Franchising Code Review Committee, supra note 36 at 22.

Franchise Law Consultation Paper 2007 277
• the exemption for international franchisors with only one franchise or
master franchise in Australia should be deleted;
• consideration should be given to prohibiting unilateral material changes
by franchisors and removing or modifying the right of a franchisor to
unilaterally terminate a franchise agreement. If the right is maintained,
adequate franchisee compensation should be required;
• franchisors should be prohibited from inducing prospective franchisees
not to associate or communicate with current or past franchisees (the
current prohibition applies to current franchisees associating with other
franchisees);
• franchisors should be required to register with and submit annual
disclosure documents to the ACCC and the ACCC should undertake
sample audits of disclosure documents;
• the Government should apprise the ACCC of franchisee concerns
respecting the level of enforcement action;
• the Code should include a requirement of good faith and fair dealing. 185
The Australian Government announced in February 2007 that it accepted
most of the recommendations of the Review Committee, and would consult with
the franchising industry on their implementation. The government declined to
implement the recommendations for inclusion of a duty of good faith, mandatory
risk statements, the mandatory registration of franchisors with the ACCC and
ACCC disclosure document audits. 186 The recommendation respecting the right
of franchisors to unilaterally change franchise agreements will be addressed
through amendments to the Trade Practices Act 1974. 187
185
Franchising Code Review Committee, supra note 36.
186
Hon. F. Bailey, Minister of Industry, Tourism and Resources, Reform of Franchising Code of
Conduct (Media Release, February 6, 2007), online:
(date accessed: May 12, 2007); Hon. F. Bailey, Minister
of Industry, Tourism and Resources, Consultation with the Franchising Industry Underway
(Media Release, February 21, 2007), online:
(date accessed: May 12, 2007); S. Giles, Franchising
code amendment announcement, Deacons (February 2007), online:
(date accessed: May 12, 2007); Australia:
Franchising Code Review, DLA Phillips Fox (February 26, 2007), online:
(date accessed: May
12, 2007).
187
Hon. F. Bailey, Minister of Industry, Tourism and Resources, Reform of Franchising Code of
Conduct, supra note 42.

278 Underneath the Golden Boy
C. Europe and Asia
The most important European Union law affecting franchising is Article 81 of
the European Community Treaty. 188 It prohibits agreements distorting
competition and a number of practices that may be found in franchising, such as
the sharing of markets or sources of supply, although there are exemptions where
competition is not eliminated. 189 Specific franchising laws vary among the
countries. Several countries, including the U.K., Ireland, Germany, Denmark,
the Netherlands and Portugal have no franchise-specific statute. 190 Legislation in
Spain requires franchisors to register in the Franchisors’ Registry and provide
disclosure to prospective franchisees 21 days before signing an agreement or
accepting a payment. 191 France and Italy have disclosure legislation requiring
franchisors to provide disclosure 30 days before the execution of an agreement. 192
Other countries that have adopted franchise regulatory legislation include
Sweden, 193 Mexico, Belgium, Belarus, Lithuania, and Estonia. 194
As well, the European Franchise Federation has adopted a European Code
of Ethics for Franchising. National franchise associations that are members of the
Federation must require their member franchisors to accept and comply with the
Code, and operate an accreditation scheme with checks to ensure that its voting
franchisor members are complying. The Code obliges parties to a franchise to
188
Treaty Establishing the European Community, Official Journal C 325, 24 December 2002,
Article 81, online:
(date accessed: May 12, 2007).
189
Ibid. See also J.M. LaPierre, European Union: A Survey of Franchising in the European Union,
U.S. Department of Commerce (December 12, 2005), online:
(date accessed: May 12, 2007).
190
Franchising in the EU Member States, Field Fisher Waterhouse LLP, London, England, online:
(date accessed: May 12,
2007).
191
Ibid. See also UNIDROIT, Legislation and Regulations Relevant to Franchising, online:
(date accessed: May 12,
2007).
192
Ibid.
193
See UNIDROIT, Legislation and Regulations Relevant to Franchising – Sweden (January
2007), online:
(date accessed: May 12, 2007).
194
For a brief explanation of developments in these countries, see E. Levitt, “Annual Legislative
Update” (Paper presented to The Domino Effect: 6 th Annual Franchising Conference, Ontario
Bar Association, November 16, 2006) at 7-16. See also F#: FFW’s International Franchise
Update, Field Fisher Waterhouse LLP, London, England, online:
(date accessed: May 12,
2007).

Franchise Law Consultation Paper 2007 279
exercise fairness in their dealings with each other and lists essential terms that a
franchise agreement must cover. 195
Work has also been underway on a model European Civil Code, which
would include measures to regulate franchising. The Study Group on a European
Civil Code, a network of academics from across the EU, aims to produce
principles for private law rules to apply across Europe. A draft chapter on
franchising contains pre-contractual disclosure provisions, as well as a number of
provisions to regulate the franchise relationship throughout the term of the
agreement. 196
D. UNIDROIT
The International Institute for the Unification of Private Law (“UNIDROIT”) is
an independent intergovernmental organization of 60 Member States instituted
to “study needs and methods for modernising, harmonising and co-ordinating
private and, in particular, commercial law as between States and groups of
States”. 197
In 1985, the Canadian member of the Governing Council of UNIDROIT
proposed that the organization consider the preparation of uniform rules on
franchising. 198 At that time, franchising was a new development in Europe and
was rare in other countries, with the exception of North America. However,
franchisors’ representatives opposed the concept of an international instrument,
195
See European Franchise Federation, European Code of Ethics for Franchising, online:
(date accessed: May 12, 2007).
196
“An Uncivil Code” F#: FFW’s International Franchise Update, supra note 50. Draft
relationship provisions include requirements imposed on the franchisor to provide ongoing
assistance necessary to operate the business without charge, make reasonable efforts to promote
and maintain the reputation of the franchise network and provide the franchisee ongoing
information about matters such as market conditions and advertising campaigns. Franchisee
obligations include the requirement to make reasonable efforts to operate the business
according to the franchisor’s business method, follow reasonable instructions, take reasonable
care not to harm the network and allow reasonable access to the franchisor for checks and
audits.
197
UNIDROIT, About Unidroit, online:
(date accessed: May 12, 2007). It
was first established in 1926 as an auxiliary of the League of Nations, and re-established in 1940
by multilateral agreement between 60 member States.
198
UNIDROIT, Model Franchise Disclosure Law, September 2002, online:
(date
accessed: May 12, 2007). The Explanatory Report notes that there had been “a number of
instances of sharp practices within Canada that it was feared might spread also to other
countries with the international expansion of franchising,” at 11.

280 Underneath the Golden Boy
and UNIDROIT agreed to monitor franchising developments. 199 Over time,
interest in the development of an international franchise instrument grew, and
in 1993 UNIDROIT established a Study Group on Franchising. 200 The new
interest “was largely due to the increased attention devoted to franchising by
legislators and the consequent proliferation of franchise laws, not all of which
had, in the view of the members of the Study Group, given sufficient
consideration to the specific nature and characteristics of franchising, thereby
unintentionally putting the future development of franchising in the country
concerned at risk”. 201
The Franchising Study Group prepared a Guide to International Master
Franchise Arrangements, 202 published in February 1998, and a Model Franchise
Disclosure Law, 203 submitted to the Governing Council in September 2002.
The UNIDROIT Model Law deals only with the disclosure obligations of
franchisors; it does not address the relationship between the parties. 204 The
Group considered approaches that included relationship provisions, such as “for
example, whether the franchisee has a statutory right to renew the agreement,
and whether the franchisee has a right to cure when he/she breaches the
contract”, 205 noting that the additional requirement for registration in some
jurisdictions “considerably increased the burden that was placed on the
franchisor”. 206 However, the Group concluded that the experience of States with
relationship legislation had been negative, and that while it was feasible to reach
agreement on disclosure provisions, and therefore to attain a degree of
uniformity, “it was far more problematic to devise common norms for
relationship issues in view of the great variety of relationships that existed within
the context of franchising”. 207 As a result, the Group concluded that regulation
at the international level should deal only with disclosure.
Under the Model Law, a franchisor must give a prospective franchisee a
disclosure document at least 14 days before the signing of any agreement or the
payment of a non-refundable deposit, other than a confidentiality agreement or a
199
Ibid. at 11-12.
200
Ibid. at 12.
201
Ibid. at 14.
202
UNIDROIT, Guide to International Master Franchise Arrangements (1998).
203
UNIDROIT, supra note 54.
204
Ibid.
205
Ibid, at 14. The relationship provisions identified by the Group are more far-reaching than
those included to date in Canadian franchise statutes.
206
Ibid.
207
Ibid. at 3-4.

Franchise Law Consultation Paper 2007 281
security deposit for a confidentiality agreement. The Model Law sets out a list of
information that must be included in the disclosure document, but any format
may be used. 208
If the disclosure document or notice of material changes is not delivered
within the 14 day period or contains a misrepresentation or omission of a
material fact, the franchisee may terminate the franchise agreement and/or claim
damages, unless the franchisee had the information through other means, did
not rely on the misrepresentation, or termination is a disproportionate remedy in
the circumstances. Any waiver by a franchisee of a right under the Act is void. 209
CHAPTER 6: ISSUES FOR CONSULTATION
Franchising has become prevalent in Canada and in other countries, and there is
a trend toward regulation through franchise legislation, primarily with the aim of
protecting franchisees. As noted, the Canadian laws are primarily disclosure
statutes; franchisors must provide prospective franchisees information about a
number of specific matters before the franchisee signs a franchise agreement or
pays any money to the franchisor. There are also some provisions governing the
franchise relationship, imposing a duty of fair dealing and protecting the right of
franchisees to associate with other franchisees.
The previous chapters have provided a brief explanation of franchising and
an overview of current regulatory schemes. Our preliminary review has identified
a number of issues for discussion. However, we invite the reader not only to
comment on the issues that we raise, but also to identify any additional issues of
interest.
The discussion in this paper should also not be interpreted as an indication
of our stance on these matters. Rather they are put forward as a starting point for
discussion.
A. Is Franchise Legislation Needed In Manitoba
The principal argument against legislating to regulate franchising is that it may
tend to have a chilling effect on the attractiveness of Manitoba as a business
location. Any increased regulation imposes an additional cost and administrative
burden on franchisors that becomes a disincentive to conducting business in the
province.
208
Ibid. at 4-8.
209
Ibid. at 8-9.

282 Underneath the Golden Boy
There is a contrasting argument that the requirements of Canadian
legislation to date are not particularly onerous in relation to responsible
franchisors, whose conduct would likely meet the minimum standards in the
absence of regulation. Franchisors that are based in Alberta or Ontario, where
legislation has been in place for some time, will already be familiar with the
requirements of those jurisdictions, and franchisors in other provinces with
aspirations to expand will need to meet those requirements if they wish to access
larger markets. Further, franchisors entering Canada from the U.S. do so from an
environment of regulatory restrictions. As a result, the argument that regulation
has a chilling effect in relation to prospective franchisors is growing less
persuasive.
In fact, the requirements of franchise legislation in other Canadian
jurisdictions may impose little more than good business practices, and some
commentators advise franchisors to use one of the disclosure models even when
operating in a non-regulated province, “in order to build the goodwill of their
brand in that jurisdiction and more importantly to embrace practices which will
reduce unnecessary exposure to litigation for misrepresentation”. 210
Finally, with its smaller population base, Manitoba may be more likely - for
the time being at least - to be a ‘franchisee’ rather than a ‘franchisor’ province,
and franchisees are typically at a disadvantage in the business relationship. A
choice not to regulate may risk the development of a reputation for Manitoba as
a haven for incompetent or disreputable franchisors.
The Franchising Policy Council of Australia has noted the Australian
experience:
Mandatory regulation of an industry can involve a compliance burden and a cost. The
consensus of the franchising industry was that such a burden and cost was worthwhile if
the benefit was an informed and responsible industry. The franchising industry was
prepared to seek protective statutory mechanisms to combat the small number of
unscrupulous operators who had the potential to tarnish the image of the whole industry.
211
210
R.D. Leblanc and P.M. Dillon, “Franchise Disclosure in Canada in 2007 and Beyond” (Paper
presented to The Domino Effect: 6 th Annual Franchising Conference, Ontario Bar Association,
November 16, 2006) at 7-8. The Canadian Franchise Association also requires its members to
provide a minimum level of disclosure: see Canadian Franchise Association, CFA Disclosure
Rules, online: (date
accessed: May 15, 2007).
211
Franchising Policy Council, Review of the Franchising Code of Conduct: Report of the
Franchising Policy Council (Report to the Minister of Employment, Workplace Relations and
Small Business, Australia, May 2000) at 14-15, online:
(date
accessed: May 12, 2007).

Franchise Law Consultation Paper 2007 283
The Council concluded that “the costs are worthwhile considering the
benefits that the … Code provides to the franchising industry.” 212
Another commentator suggests:
Although there are compliance costs, it is arguable that this creates an appropriate barrier
to entry. If franchisors cannot afford the relatively modest cost of preparation of a
franchise agreement and disclosure document, they ought not to be attempting to
franchise. 213
It should also be noted that Manitoba does currently regulate certain
ongoing commercial relationships; legislation amending The Farm Machinery
and Equipment Act to govern farm equipment dealerships was enacted in May
2000. 214 The amendments prohibit the practice of ‘dealer purity’, so that a farm
equipment manufacturer may not prevent a dealer from carrying competing
equipment lines and products. A manufacturer may also not discriminate among
similarly situated dealers or terminate a dealership agreement without cause. In
most cases a court order is also required. The Act also provides for the court to
appoint a mediator to mediate disputes on the request of one of the parties to
the dealership agreement and requires the parties to participate in good faith. 215
B. If Legislation Is Desirable, What Elements Should Be Included
If Manitoba legislates to regulate franchising, a degree of uniformity with the
franchise legislation of other provinces will no doubt be desired. The trend
toward harmonized franchising legislation in Canada is consistent with the
principles of the Agreement on Internal Trade and can be expected to
contribute clarity and certainty to the commercial franchise environment. If
regulatory requirements are consistent across provincial boundaries, barriers to
the movement of goods, services and investment may be reduced, and
franchisors will have little non-market incentive to choose to conduct business
in one province over another.
The existing Canadian statutes are relatively consistent in their approach to
regulation, and focus primarily on requiring pre-contractual disclosure. However,
212
Ibid. at 56.
213
FCA and the Franchising Code of Conduct (May 17, 2006), Franchisebusiness.com, online:
(date accessed: May 12,
2007).
214
The Farm Machinery and Equipment Act, C.C.S.M. c. F40.
215
Some dealership arrangements may fall within the definition of ‘franchise’ used in Canadian
franchise legislation. If franchise legislation is enacted in Manitoba, it will be necessary to
consider the effect of any inconsistency between the farm equipment dealership provisions and
the franchise provisions.

284 Underneath the Golden Boy
there are areas of difference among the Acts. As well, in the years since
Canadian franchise legislation was first enacted, various suggestions have been
made for improvements to the regulatory scheme. Some call for amendments to
address specific problems that have been encountered, 216 and others represent
more significant structural changes.
1. Disclosure Elements
As noted, there are areas of difference among the Canadian statutes; many of
these relate to specific franchisor disclosure requirements. The Commission is
interested in comments from the public with respect to disclosure matters,
including:
(a) Scope of disclosure of material facts
• Should the ULCC approach to disclosure of ‘material facts’ be followed
(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) The
provincial approach may be less likely to result in irrelevant material
being included, and there is still a general requirement to include
information about a matter that is not listed but meets the definition of
‘material fact’. It is also the current Canadian standard. However, there
is a risk that a franchisor may exclude relevant information.
• Whether the more comprehensive or less comprehensive approach is
chosen, are there categories of disclosure not currently included in
provincial legislation that should be specifically required For example,
information respecting:
• settled litigation and terms of settlement;
• arbitration and/or mediation proceedings;
• confidentiality agreements signed by current and former
franchisees;
• background, market conditions and risk factors relating to the
nature of the business;
• information as to how the franchisor may compete with
franchisees through alternate distribution channels, such as
the internet or catalogue sales;
216
In Ontario, for example, franchise lawyer Peter Dillon has criticized the Wishart Act, arguing
that Ontario is “the toughest jurisdiction in the world in which to franchise”; P. M. Dillon,
“Ontario Franchise Developments in 2004: Has the Pendulum Finished Swinging Yet”
Siskinds Collection of Franchise Law Articles (FRAN/RP-016, June 15, 2005), QL at
paragraph. 1; see also P.M. Dillon, “Will Franchising Survive As a Business Model Under
Canadian laws and Regulations” Franchise Law Journal (Summer 2006).

Franchise Law Consultation Paper 2007 285
• information respecting the parents, predecessors, affiliates and
associates of the franchisor;
• bankruptcy and insolvency proceedings relating to officers,
directors and partners with management responsibilities;
• franchisee support resources and methods;
• policies respecting security interests and guarantees;
• gross-up provisions to compensate foreign franchisors for the
cost of royalty withholding tax;
• repeated sales of the same franchised outlet;
• where the franchisor receives a rebate or benefit from a
required supplier, the source of the benefit and how the
benefit is calculated;
• whether the franchisor or any officer of the franchisor has an
interest in a required supplier.
(b) Wrap around disclosure document and substantial compliance. Alberta
and PEI allow franchisors to use disclosure documents that are acceptable in
other jurisdictions with ‘wrap around’ material to comply with the province’s
requirements. These jurisdictions also provide that a disclosure document
complies with the legislation if it is ‘substantially complete’.
(c) Exceptions for confidentiality, site selection or refundable deposit
agreements.
Disclosure documents must be delivered to a prospective franchisee 14 days
before the signing of an agreement relating to the franchise or the payment of
consideration relating to the franchise. All Acts except Ontario’s exempt
confidentiality and site selection agreements from the disclosure requirement;
the Alberta Act also exempts fully refundable deposits. Should franchisors be
able to require a refundable deposit or enter into a confidentiality or site
selection agreement with a franchisee before providing disclosure
2. Exemptions
In Alberta and under the New Brunswick Bill, regulations may be made to
provide for exemptions from any or all provisions of the Act or regulations. The
Ontario and PEI Acts authorize regulations to be made exempting certain
franchisors from the requirement to include financial statements in a disclosure
statement. As well, under the PEI Act, any franchisor may apply to the Minister
for an exemption from the requirement to disclose financial statements. The
Minister may exempt the franchisor, subject to any terms and conditions, if
satisfied that to do so would not be prejudicial to the public interest.
Regulations have been made in Alberta, Ontario, and PEI to exempt
‘mature franchisors’ from the requirement to include financial statements in a
disclosure statement. Mature franchisors may be expected to provide more stable

286 Underneath the Golden Boy
business opportunities, and to be reluctant to reveal sensitive information to
their competitors. On the other hand, long established businesses can encounter
financial difficulties, and it is arguable that all information relevant to the
purchase of a franchise should be fully disclosed to prospective franchisees.
Is the ability to exempt certain franchisors from the requirement to provide
financial statements or to implement for other exemptions from the
requirements of legislation or regulations appropriate
3. Franchise Relationship Regulation
In addition to the disclosure requirements and franchisee remedies for nondisclosure,
Canadian franchise legislation includes certain provisions that
regulate the relationship between the parties to a franchise agreement. The
provisions impose a duty of fair dealing on the parties to a franchise agreement
and restrict the enforceability of certain terms that a franchisor might otherwise
include in the agreement (for example, a franchisor cannot restrict the
franchisee’s freedom to associate, and cannot enforce a clause under which a
franchisee purports to waive his or her rights under the Act).
Given the power imbalance between the parties to the franchise contract,
the ‘take it or leave it’ nature of most agreements, and the ability of a franchisor
under many agreements to unilaterally make fundamental changes to the
operation of the franchise during the term of the contract and at its renewal,
some jurisdictions place additional restrictions on the terms that a franchisor
may include in an agreement or the changes that it may impose. 217 In the U.S.,
bills have been introduced in Congress, but not enacted, proposing additional
regulation; for example:
[T]he Small Business Franchise Act of 1999 (H.R. 3308), proposed, among other things,
a comprehensive scheme for regulating the franchise relationship and included provisions
on contract terminations, and transfers; encroachment; the purchase of goods or services
from designated sources of supply; and franchisee’s rights to associate with other
franchisees. 218
217
An Australian review of the efficacy of disclosure provisions in franchise regulation concluded
that the long term nature of the franchise contract is inconsistent with the use of disclosure as
the primary regulatory tool. Franchise contracts were analyzed in relation to goals such as
balance of power, certainty and fairness of contract terms, and did not appear to be consistent
with those goals: E.C. Spencer, “The Efficacy of Disclosure in the Regulation of the Franchise
Sector in Australia” (Paper presented to the Third Meeting of the European Network on the
Economics of the Firm (ENEF), September 7-9, 2006), online:
(date
accessed: May 12, 2007).
218
U.S. General Accounting Office, Federal Trade Commission: Enforcement of the Franchise
Rule (Report to Congressional Requesters, July 2001) at 40, online:

Franchise Law Consultation Paper 2007 287
As well, several U.S. states have enacted laws addressing matters such as the
termination, renewal and transfer of the franchise, territory encroachment, and
requirements for the purchase of goods and services from designated sources. 219
Iowa’s legislation is recognized as being the most comprehensive, and among
other things, prohibits franchisors from terminating or refusing to renew a
franchise without good cause (or, in the case of renewal, unless certain
circumstances exist, such as the franchisor’s withdrawal from that market). It
also prohibits franchisors from requiring franchisees to purchase goods or services
exclusively from the franchisor or designated sources when comparable goods
and supplies are available from other sources. Franchisees also have a cause of
action for damages if a franchisor allows encroachment that adversely affects the
franchisee’s sales. 220 In Australia, the Franchising Code Review Committee
recently recommended that consideration be given to prohibiting unilateral
changes by franchisors and removing or modifying the right of a franchisor to
unilaterally terminate a franchise agreement. The Committee added that if the
right is maintained, adequate franchisee compensation should be required. 221
The ability of the franchisor to impose unilateral changes to business
operations was also identified as a concern by the American Franchisee
Association, which has advocated for federal franchise relationship provisions. 222
[A] prospective franchisee may do his or her due diligence, investigate the system, talk to
franchisees, and be comfortable in signing the current franchise agreement. ...[but] some
of the unilateral changes to franchise relationships involve issues that no franchisee could
have anticipated upon the initial signing of the contract. In other words… a franchisee
may be bound by changes to the relationship that, had they known, they never would
have signed the agreement in the first place. 223
(date accessed: May 12, 2007).
219
Ibid. at 43-44.
220
Ibid. at 44; Iowa Code §§ 523H.1-523H.17.
221
The Australian Government has indicated that this recommendation will be addressed in the
context of amendments to the Trade Practices Act, 1974: Hon. F. Bailey, Minister of Industry,
Tourism and Resources, Reform of Franchising Code of Conduct (Media Release, February 6,
2007), online:
(date accessed: May 12, 2007).
222
The American Franchisee Association proposed a Model Responsible Franchise Practices Act
in 1996; see The American Franchisee Association, Who Are We, online:
(date accessed: May 12, 2007). As well, the
American Association of Franchisees and Dealers developed voluntary standards for fair
franchising, which would enable franchisors to display a “Fair Franchising Seal”: see The
American Association of Franchisees and Dealers, Fair Franchising Standards (revised August
2002), online: (date accessed: May 12, 2007).
223
U.S. General Accounting Office, supra note 9 at 70-71.

288 Underneath the Golden Boy
One specific suggestion made to the Commission relates to the sale of a
franchise by a franchisee. Typically, if a franchisee sells his or her franchise and
assigns the agreement and/or sub-lease to the purchaser, the original franchisee
remains liable for all obligations contained in the agreements. This is a typical
provision of commercial leases. However, some franchise agreements also
provide that if the purchaser subsequently renews the agreements for a further
term, the original franchisee continues to be liable for all obligations of the
purchaser under the renewed agreements, despite having had no input into their
terms. It was suggested that Manitoba franchise legislation provide that, in this
situation, the obligations of the franchisee do not extend beyond the term of his
or her original agreements and any renewals signed by that franchisee. 224
A contrary view to suggestions for additional restrictive provisions is that
disclosure legislation reflects the right balance in the franchise relationship, and
the freedom of the franchisor to exercise control over the operation of the
business on an ongoing basis is necessary for the creation and maintenance of
the business brand. Franchisor control and flexibility creates and adds value to
the franchise identity, which is why franchisees invest in the franchise in the first
place, and there is no ‘one size fits all’ solution for disputes involving companies
operating in a wide range of industries. As well, many obligations contained in
franchise relationship regulatory proposals are ambiguous, creating uncertainty
and potentially leading to increased litigation and increased costs.
Comprehensive pre-sale disclosure and the ability to contact present and former
franchisees ensure that the prospective franchisee is able to obtain the
information necessary to determine the likelihood of disputes occurring within a
specific franchise relationship. 225
As well, unlike federal regulation in the U.S. and Australia, Canadian
jurisdictions have incorporated a standard of conduct—the duty of fair dealing—
in their legislation. 226 In fact, it has been suggested that existing Canadian
224
Correspondence from A.L. Weinberg, Q.C. (January 2, 2007).
225
See U.S. General Accounting Office, supra note 9 at 72-74, outlining the views of the U.S.
International Franchise Association, which has opposed federal franchise relationship
legislation. The IFA also opposed proposed ‘minimum standards of fair conduct’, which
included a duty of good faith, a duty of due care (or competency) and a fiduciary duty for
franchisors in relation to accounting and advertising programs.
226
There is also no private right of action for franchisees under the U.S. FTC Franchise Disclosure
Rule, and the American Franchisee Association has advocated for franchisee access to the
courts: see J. Chun, “Separate but equal Two associations seek franchise reform through
different means – American Franchisee Association, AFA, and the American Association of
Franchisees & Dealers - AAFD” Entrepreneur (September 1996), online:
(date accessed: May
15, 2007).

Franchise Law Consultation Paper 2007 289
legislation already goes too far, and that Canada should have adopted the
UNIDROIT ‘less is more’ approach to franchise regulation:
Because of the strong presence of lawyers with extensive experience on behalf of
franchisors operating internationally, the frequent and well-intentioned efforts to inject
more and more protections on behalf of the franchisee were tempered by the larger
consideration that in the final analysis legislators could end up protecting the franchisees
right out of a livelihood by introducing overly burdensome laws. Even worse, legislation
might protect the economy right out of the jobs and wealth that franchising produces.
Although the debate among franchisor and franchisee counsel and lobbyists continues
about the legitimacy of the claim, Alberta’s 1971 act and Iowa’s present relationship law
are cited as examples of the macroeconomic harm that over-burdensome regulation
produces. In business, fear – no matter how irrational – is a deterrent. 227
4. Franchise Regulatory Body
In Ontario, it has been suggested that new legislation is needed to create a
franchising regulatory body. The regulator’s functions might include reviewing
the quality of disclosure given to franchisees, providing a less expensive system
for resolving disputes in comparison to litigation, and imposing penalties for
contraventions of franchise legislation and regulations. 228 The regulatory concept
could also require some franchisors to post a bond, so that franchisees who suffer
damage will be compensated. 229
It is argued that the existing Canadian legislation does not provide adequate
protection for franchisees:
Some franchisors are not giving adequate disclosure, and franchisees who have already
invested a life’s savings at the age of 40 or 50 are having to spend $50,000 to $100,000 to
enforce their rights under franchise law to rescind their contracts and recover payments…
“When a franchisee files a notice of rescission, the franchisor says: ‘Sue me’…If the
franchisor is bad enough not to give you a disclosure document to begin with, most likely
he will not refund the money…People should not be forced to locate a franchise lawyer
and litigate this, but should have the benefit of a regulatory body, given that franchising
plays such an important role in our economy and more and more people are choosing to
buy a franchise instead of set up their own business”. 230
The concept of a governing body with the power to impose substantial
penalties, including cease trade orders, had been supported by franchisee
227
P.M. Dillon, “Will Franchising Survive As a Business Model Under Canadian laws and
Regulations” supra note 7: the author served as the Canadian consultant on the project (at
note 5).
228
J. Daw, “Government regulator could help both sides in a franchise: Province awaiting report
from committee” Toronto Star (March 16, 2006).
229
Ibid.
230
Ibid. quoting B. Hanuka, Chair, Ontario Bar Association Joint Subcommittee on Franchising.

290 Underneath the Golden Boy
representatives on the Franchise Sector Working Team that made
recommendations for franchise legislation in Ontario in 1995. 231
Others have objected to this suggestion, arguing that it would add an
unnecessary layer of administration that would “dissuade honest franchisors from
conducting business [in Ontario] and increase the cost of doing business for
franchisors and franchisees, thereby hurting us all”. 232 The Canadian Franchise
Association does not support the proposal, noting that it used to be a function of
Alberta’s securities commission to review franchise disclosure documents, but
the scheme was repealed. 233
A regulatory office could be structured in a number of ways. In the U.S. for
example, the Federal Trade Commission conducts investigations of violations of
the FTC Franchise Rule, and may seek a variety of remedies to enforce the Rule,
including injunctions, monetary penalties, and orders for refunds to franchisees.
The FTC may initiate an investigation as a result of a complaint or on its own
initiative (for example, following media reports). 234 Unlike the scheme
established by the early franchise legislation in Alberta, however, franchisors are
not required to register with the FTC and the FTC does not review or approve
initial disclosure documents. Similarly, in Australia, the Australian Competition
and Consumer Commission investigates and brings proceedings against
franchisors suspected of breaching the Code of Conduct. The Commission can
also apply for injunctions and for compensatory orders on behalf of individuals
who have suffered loss as a consequence of another person’s breach. 235
Franchisors are not required to register with the ACCC. 236
231
Franchise Sector Working Team Report (August 30, 1995) in F. Zaid, Canadian Franchise
Guide, loose-leaf (1993) at 2-142J-142Z.4.
232
Daw, supra note 19, quoting lawyer J. Adler.
233
Ibid. quoting R. Cunningham, President of the Canadian Franchise Association.
234
U.S. General Accounting Office, supra note 9 at 46-48; however, due to limited resources, the
FTC focuses on complaints that exhibit a pattern or practice of violations nationwide.
235
Franchising Code Review Committee, Review of the Disclosure Provisions of the Franchising
Code of Conduct (Report to the Minister for Small Business and Tourism, Australia, October
2006) at 26-17, online:
(date accessed: May 12, 2007). See also J.
Martin, Australian Competition and Consumer Commission, The Health of Franchising from
the Viewpoint of its Regulator (Paper for the Franchise Council of Australia Adelaide
Conference, October 23, 2001), online:
(date accessed: May 12
,2007)..
236
While franchisor registration was recently recommended by the Franchising Code Review
Committee, the Australian Government has declined to implement this recommendation: S.
Giles, Franchising code amendment announcement, Deacons (February 2007), online:

Franchise Law Consultation Paper 2007 291
5. Alternative Dispute Resolution
The use of alternative dispute resolution mechanisms is growing in popularity in
the franchise industry; in part, it is said, because of the legislated requirements
for franchisors to disclose to franchisees the details of concluded or pending
litigation. Some franchisors have inserted mandatory binding arbitration or other
alternative dispute resolution provisions in their franchise agreements. 237
Alternatively, franchisors and franchisees may agree to voluntary mediation or
other alternative dispute resolution processes.
Alternative dispute resolution methods have benefits over litigation in that
they generally are cheaper and can be more private and less combative than the
court process. ADR is often considered to be particularly appropriate in the
context of ongoing business relationships, often enabling the business
relationship to be preserved. 238 The Ontario Franchise Sector Working Team
recommended that alternative dispute resolution methods be explored and
adopted, 239 and the concept was raised at the public hearings on the Ontario
Act. On the other hand, the American Franchisee Association has noted that
mandatory arbitration provisions can be a disadvantage to franchisees, in that
arbitration is private and does not result in useful precedents. 240 As well, in the
most flagrant fact situations, a contract providing for mandatory arbitration may
prohibit any award of punitive damages that might otherwise be available.
In the U.S., a national franchising mediation program was developed in
1993 by a steering committee of franchisor companies who were growing
increasingly concerned about media reports of unfair treatment of franchisees by
some franchisors. 241 The program operates through the Center for Public
(date accessed: May 12, 2007); Australia:
Franchising Code Review, DLA Phillips Fox (February 26, 2007), online:
(date accessed: May
12, 2007).
237
D.F. So, Canadian Franchise Law Handbook (2005) at 266.
238
Ibid. at 264.
239
Franchise Sector Working Team Report supra note 22 at 2-142J-142Z.4.
240
The Twelve Worst Franchise Agreement Provisions, American Franchisee Association, online:
(date accessed: May 12, 2007).
241
M. Aronson, “National Franchise Mediation Program: Where Do We Go From Here” 29:3
Franchising World (May/June 1997); P. Philipps, “The National Franchise Mediation Program:
A Business-like Alternative to Suing Your Business Partner” 33:1 Franchising World (Jan/Feb
2001).

292 Underneath the Golden Boy
Resources Institute for Dispute Resolution 242 and is non-binding and voluntary,
although franchisors are asked to join for a minimum two year period.
The Ontario and PEI regulations require a franchisor’s disclosure document
to describe any alternative dispute process used or imposed by the franchisor. In
Ontario, the document must also include a statement that any party may
propose an alternative dispute resolution process, which may be used if agreed to
by all parties. The ULCC Model Bill and the New Brunswick Bill contain
provisions allowing one party to a franchise agreement to deliver a notice to the
other party requiring the mediation of a dispute. According to the ULCC
Working Group,
The Committee considered at great length whether franchise disputes would be resolved
more advantageously through a form of alternative dispute resolution. Recognizing that in
certain provinces the rules of practice in civil proceedings mandate a form of pre-trial
mediation, and recognizing that the Ontario Act contains a mandatory disclosure
statement that mediation is a form of dispute resolution, the Committee determined that
it would be beneficial to provide for mediation to be invoked by any party to a franchise
agreement.
The Committee believes based on its own experiences and those brought to the attention
of the Committee that party initiated mediation will be of significant benefit to resolve
franchise disputes prior to the commencement of, as well as after the commencement of,
litigation proceedings.
The mediation rules are to be set out by regulation. The mediation
procedure does not preclude subsequent proceedings in relation to the dispute
before a court, tribunal, or arbitrator.
CONCLUSION
Franchising is an important and growing component of the Canadian economy,
and Manitoba is no exception. The franchise concept is appealing to many
prospective business owners, offering a model for business success accompanied
by ongoing support. However, franchising is not risk-free, and there is a trend in
other jurisdictions toward regulating franchising, to require franchisors to
provide significant disclosure to prospective franchisees, and in some cases, to
regulate more extensively the ongoing relationship.
This paper has provided an overview of franchising regulation, and the
Manitoba Law Reform Commission invites your comments on the issues and
242
See the Center for Public Resources website at
(date accessed: May 12,
2007). The CPR reports a success rate of approximately 80% in cases in which the franchisee
agreed to participate, and in which a mediator was needed. Additional disputes were resolved
before requiring a mediator.

Franchise Law Consultation Paper 2007 293
questions raised, together with any additional suggestions or ideas for addressing
franchise law reform.

294 Underneath the Golden Boy

Response to Consultation Paper
on Franchise Law
BRYAN SCHWARTZ ∗ , JOHN POZIOS ∗ ∗ ,
AND LEANDRO ZYLBERMAN ∗ ∗ ∗
I. INTRODUCTION
T
he following is a response to the Manitoba Law Reform Commission’s
Franchise Law Consultation Paper published in May, 2007. The Paper
addresses the question of whether Manitoba needs franchise legislation and
provides a review of the state of franchise law in Canada, Australia, and the
United States. Finally, the Paper poses a series of questions with regard to what
should be done in Manitoba. 1
This response discusses the need for franchise law in Manitoba, drawing
from the experience of other provinces. Having done so, a discussion of the
issues raised in the Law Reform Commission’s Paper will ensue.
II. IS FRANCHISE LAW NEEDED IN MANITOBA
A. The Need for Franchise Law in Manitoba
The Legislative Assembly of Manitoba has already had the opportunity of
discussing the question of whether franchise law is needed in the province. Mr.
Jim Maloway, MLA for Elmwood, introduced Bill 18, The Franchises Act, at the
∗
∗∗
∗∗∗
Asper Professor of International Business and Trade Law, University of Manitoba
Director, Marcel A. Desautels Centre for Private Enterprise and the Law, University of
Manitoba
Year III Student, University of Manitoba Law School
Professors Schwartz and Pozios wish to express their great appreciation to their co-author, Mr.
Zylberman, who provided us not only with his research assistance, but his skilled and original
contributions to the drafting of this paper and the formulation of our shared policy advice.
1
The Reform Commission’s report may be found online at
.

296 Underneath the Golden Boy
3rd session of the 35th Legislature in 1992. The bill followed the Alberta
Franchises Act 2 very closely, providing for the delivery by a franchisor to a
franchisee of a statement of material facts containing prescribed information,
and further providing that no person shall trade in a franchise in the Province of
Manitoba until an application for registration in prescribed form, and a
prospectus in respect of the offer of the franchise, is filed with the Manitoba
Securities Commission and a receipt is issued for such prospectus. However, the
bill did not receive second reading and did not pass into legislation. 3
For the purposes of this paper, Mr. Maloway’s 1992 attempt is useful as it
produced a series of discussions in the Legislative Assembly dealing with the
need for franchise legislation in the province. Mr. Maloway introduced Bill 18 on
3 March 1992, arguing that franchise legislation is needed in the province
because, up until then,Manitobans had lost large amounts of money buying
franchises ranging from $5 000 to $100 000. Overall, he described the issue as a
“growing problem.” 4 Mr. Steve Ashton,
MLA for Thompson, addressed the Assembly in support of the bill, stating
that its introduction is not only warranted due to the “hard times we are faced
with” but also as a major public service. The “hard times” which he mentions are
in reference to the activities bordering on fraud, at the hand of franchisors, that
franchisees have had to face because of a lack of protection of their rights. 5 He
further stated:
I ask the question why the government is not doing anything to prevent people from
being ripped off as they are on an almost daily basis by those, Mr. Speaker, who are
misleading them about their abilities to deliver the kinds of promises we have seen in
terms of franchises. 6
Agreeing with Mr. Ashton and Mr. Maloway, Ms. Becky Barrett, MLA for
Wellington, delivered a comprehensive speech in favor of Bill 18. Ms. Barrett
emphasized the emergence of franchises over the past 20 to 30 years and their
popularity with many individuals and families in Manitoba who wish to invest in
2
R.S.A. 1980, c. F-17 (repealed)
3
Frank Zaid, Canadian Franchise Law, (Thomson-Carswell: Toronto, 2006), p. 2-142Z.45.
4
Manitoba, Legislative Assembly, House Debates (Hansard), Vol. 21, (3 March 1992), (Hon.
Denis Rocan); Legislative Assembly of Manitoba, “House Debates,” 3rd Session of 35 th
Legislature (3 March 1992), online: Hansard .
5
Manitoba, Legislative Assembly, House Debates (Hansard), Vol. 56 (30 April 1992), (Hon.
Denis Rocan); Legislative Assembly of Manitoba, “House Debates,” 3rd Session of 35 th
Legislature (30 April 1992) online: Hansard .
6
Ibid.

Response to Consultation Paper on Franchise Law 297
franchises. Moreover, she pointed out a series of factors in support of franchise
legislation. First, franchisees usually have virtually no experience with
franchising, so that legislative protection is needed. Second, there are no laws in
Manitoba to guarantee the safety and security of franchisees’ funds against fraud
and illegal actions on the part of the franchiser. Third, if Alberta, possessing a
government that is not known for its progressive legislation that supports and
protects individuals, already has an Act in place, it is evidence that Manitoba is
far behind. 7 She concluded her speech with the following remark:
I…urge government members to join us in supporting Bill 18, which is a very fine,
necessary, important and certainly overdue piece of legislation. 8
Regardless of the fate endured by Bill 18, it is important to note that these
three MLAs recognized the need for franchise legislation in 1992 and, 15 years
later, nothing has been done to fix the problem. The situation in Manitoba has
not improved since 1992, as evidenced in the following cases.
In John Deere Ltd. v. G.A.E.L. Inc., 9 the manufacturer, John Deere Ltd.
(“Deere”), improperly terminated a dealership agreement. Although the
Manitoba Court of Queen’s Bench found that Deere had every right to
terminate the agreement, the court found that Deere had done so with undue
haste and unreasonably. Changing the locks on the dealership to prevent the
dealer from re-entering the premises was not “reasonable termination.” Had
franchise legislation been in place, G.A.E.L. could have had protection against
Deere under a good faith and fair dealing provision.
A recent example of a franchisor abusing his power to subdue a franchisee is
Halligan v. Liberty Tax Service Inc. 10 The franchisor in this case unilaterally
withdrew funding from the franchisee’s store without notice and caused an
immediate drop in the franchisee’s revenue after the franchisee refused to use a
particular name. In one instance, Liberty did not provide software that would
work. Following Halligan’s complaints, a replacement was mailed to him, even
though his franchise location was in the same building as Liberty’s head office.
The court further describes Liberty as harassing Halligan even in the face of an
injunction granted in 2001. The Manitoba Court of Queen’s Bench provides a
more detailed description of Liberty’s action in its 2006 judgment of the same
case. The Court described Liberty’s conduct as malicious, high handed, and
7
Manitoba, Legislative Assembly, House Debates (Hansard), Vol. 82 (9 June 1992), (Hon.
Denis Rocan); Legislative Assembly of Manitoba, 3rd Session of 35th Legislature: Tuesday June
9, 1992, online: Hansard .
8
Ibid.
9
[1994] CarswellMan 323, 96 Man. R. (2d) 106.
10
[2003] MBQB 174, 36 B.L.R. (3d) 75, 176 Man. R. (2d) 57.

298 Underneath the Golden Boy
reprehensible. This is following a depiction of Liberty forcing Halligan out of
business by withdrawing services during the tax season, setting up competing
stores and referring clients away from Halligan. 11
Both the Winnipeg Free Press and Winnipeg Sun reported on the most
recent franchise scandal in the province. Mr. Hisham Alard arrived to Winnipeg
from Syria in 2004 and was looking for business prospects. He found an
advertisement about a Pizza One franchise in the newspaper. The franchise cost
$50 000. Mr. Alard’s store never opened and he received nothing in return for
his deposit. 12 Although this is the only Pizza One case that has been reported in
Manitoba, there are several examples in Ontario. 13
It is important to note in this context that a review of court decisions is
unlikely to provide an accurate representation of franchise disputes because
some franchise agreements require arbitration and do not reach the courts. 14
Nonetheless, the fact that some cases are still getting to court is somewhat
indicative of what Mr. Maloway alluded to in 1992. In other words, Manitoba is
facing a problem with franchisors abusing franchisees and legislation must be
introduced to address the situation.
B. The Ontario Example
When considering Manitoba’s need for franchise legislation, there are two
primary reasons why Ontario’s experience should be taken into account. First, it
is one of the three provinces in Canada to have franchise legislation, known as
the most franchisee friendly version. This is important in Manitoba because,
according to the Law Commission’s report, it is a franchisee rather than a
franchisor province. 15 Second, when drafting model legislation, the Uniform Law
Conference of Canada followed Ontario’s legislation as its base. However, rather
than looking at Ontario’s Arthur Wishart Act (Franchise Disclosure), 2000, 16
11
Halligan v. Liberty Tax Services Inc., [2006] 8 WWR 97, 202 Man. R. (2d) 268.
12
Alexandra Paul, “City Man Burned by Pizza Franchise Scam,” Winnipeg Free Press, (12
February 2007), online: Winnipeg Free Press Live
; Paul Turenne,
“Avoid Being the Victim,” Winnipeg SUN (12 February 2007), online: Winnipeg SUN Media
.
13
Some of the most recent Pizza One cases from Ontario include Ramjit v. 3 of 1 Pizza & Wings
(Canada) Inc., [2004] CarswellOnt 6402; Scott v. 3 for 1 Pizza & Wings (Canada) Inc., [2003]
CarswellOnt 3790; MAA Diners Inc. v. 3 for 1 Pizza and Wings (Canada) Inc. (2003), 30
B.L.R. (3d) 279; Ali v. Triple 3 Holdings Inc., [2001] O.J. No. 5755.
14
Manitoba Law Reform Commission, “Consultation Paper on Franchise Legislation,” online:
Current Projects at 15.
15
Ibid. at 47.
16
S.O. 2000, c. 3.

Response to Consultation Paper on Franchise Law 299
the following will consider articles and Legislative Assembly discussions to
determine what factors influenced the province to introduce such legislation.
Ontario first addressed the idea of introducing franchise legislation with the
Grange Report recommendations of 1971. 17 However, no act would come to
fruition until the much-publicized Pizza Pizza case, 887574 Ontario Inc. v. Pizza
Pizza Ltd. (1995), 18 demonstrated that franchisees were in dire need of
protection. A new committee was formed and given the name Franchise Sector
Working Team (“FSWT”). The FSWT delivered its report in 1995. Although
the report was not conclusive on several issues, the members of the FSWT
agreed that disclosure from franchisors to potential franchisees before a franchise
was purchased was necessary. Three years after this report, the Ontario
government published a consultation paper on proposed franchise disclosure
legislation. This led to the introduction of Bill 93, which died on the order paper
and was subsequently reintroduced as Bill 33. The latter passed its first reading
in 1999 and received royal assent 8 June 2000. 19 This process sparked much
legislative debate in support of franchise legislation.
The need for franchise legislation was directly addressed during Ontario’s
Legislative Assembly meeting of 17 May 2000, while Bill 33 received its second
reading. 20 In describing the nature of the franchisor-franchisee relationship, Mr.
Tony Martin, MPP for Sault Ste. Marie, spoke of the fear that is generated when
franchisees deal with franchisors. This fear may be created when franchisees are
forced to sign contracts of adhesion, restricting their ability to manage their
business. Mr. Martin proceeded to tell a number of stories where franchisees had
been abused by franchisors.
The most shocking story Mr. Martin told was about Mary Carlucci, a
grocery store owner. In the ten years as owner, she was able to turn her store into
a very successful business, a vast improvement from what it used to be. One day,
she received a phone call from the parent company to say that there was going to
be a marketing meeting at the local hotel. While she was gone at the supposed
marketing meeting, the parent company moved in and changed the locks, took
17
S.G.M. Grange, Report of the Minister’s Committee on Referral Sales, Multi-Level Sales and
Franchises, Ontario Ministry of Financial and Commercial Affairs (1971).
18
23 B.L.R. (2d) 59, [1995] O.J. No. 936 (Ont. Ct. Gen. Div.).
19
Edward N. Levitt, “Ontario Franchise Legislation,” online: Gowlings Resource Centre
.
20
Ontario, Legislative Assembly, Debates (Hansard), No. 60A (17 May 2000), at 3087 (Hon.
Gary Carr); Legislative Assembly of Ontario, “Official Records for May 17, 2000,” online:
Debates (Hansard) .

300 Underneath the Golden Boy
over the cash registers and told family members who were there to go home. Ms.
Carlucci no longer owns the store. 21
Mrs. Claudette Boyer, MPP for Ottawa-Vanier, speaking in support of Bill
33, stated that the bill should only be seen as the first step in regulating
franchises. She further stated:
We really cannot deny the fact that legislation in this field is desperately needed. After
hearing testimonials of people who lost their life savings and went through many
hardships, it became clear to other members of the committee and myself that something
had to be done. 22
Mr. Jean-Marc Lalonde, MPP for Glengarry-Prescott-Russell, also spoke in
support of Bill 33. In doing so, he stated:
Bill 33 is an Act concerning fair dealings between franchisees and franchisors. The only
thing I can say is that this legislation is about five years too late for many franchisees in
Ontario. 23
The testimonials described in the Legislative Assembly of Ontario make it
clear that franchise legislation is necessary to prevent franchisors from abusing
franchisees.
Protection was effected in Ontario by composing a franchises act that
focused on pre-sale disclosure of material facts, the duty of good faith and fair
dealing and the freedom to associate with other franchisees.
Although Manitoba does not have to adopt every provision from the Arthur
Wishart Act (Franchise Disclosure), 2000, it is useful to have as an example of
current franchise legislation. Ontario spent over 30 years conducting research,
releasing reports, interviewing people and holding many House debates to
introduce such legislation. Manitoba can now look at Ontario’s experience and
learn from it by not only taking advantage of the latter’s research but also
consider current issues with the franchise legislation and draft an improved
version.
C. Uniform Law Conference of Canada (“ULCC”)
The ULCC has done much work in relation to the introduction of franchise
legislation across Canada. John Sotos and Frank Zaid delivered a report
discussing franchise legislation at the ULCC’s 2002 Annual Meeting. 24 The
21
Ibid.
22
Ibid.
23
Ibid.
24
Frank Zaid and John Sotos, “Status Report on National Franchise Law Project,” (Paper
Presented to the Uniform Law Conference of Canada Annual Meeting, August 2002) online:
ULCC, Proceedings of Annual Meetings

Response to Consultation Paper on Franchise Law 301
report supports the introduction of such legislation on the grounds that a lack of
pre-sale disclosure means that franchisees are often entering into long-term
agreements and complex contracts without an adequate opportunity of receiving
relevant background information.
Furthermore, franchise legislation will help to protect small business owners,
hopefully prevent unnecessary disputes, and provide consumer confidence in the
stability of franchisee units. 25
Of particular concern for Manitoba, a “franchisee province,” is the fact that,
according to the report, franchisees in many cases are unsophisticated business
investors who may be entering business for the first time. Their family savings or
assets are often at risk through the granting of personal guarantees or security to
the franchisor or lending institutions financing a transaction. 26
Although the ULCC advocates for uniformity across Canada, even if it is
not achieved, its message is clear: franchise legislation is needed. Regardless of
the differences that may exist between the Ontario, Prince Edward Island and
Alberta Acts and the ULLC Uniform Franchises Act [UFA], 27 the bottom line is
that the four advocate for franchise legislation as a means of protecting
franchisees from the abuse of franchisors and, consequently, generating more
confidence in the system. In addition to leveling the playing field between
franchisors and franchisees, a further consequence of uniform legislation may be
the eventual standardization of fair business practices.
D. Canadian Franchise Association (“CFA”)
The Canadian Franchise Association (“CFA”) represents over 400 franchise
companies and the professionals who support this way of doing business.
Members must abide by the CFA’s Code of Ethics 28 as well as the Association’s
rules of disclosure. 29
The CFA’s Disclosure Document Guide, revised in 2002, sets similar
disclosure requirements as those seen in Alberta and Ontario’s franchise
legislation. It covers issues ranging from the disclosure of business experience of
the franchisor, franchise experience of the franchisor, information regarding
.
25
Ibid. at 23.
26
Ibid. at 23-24.
27
Uniform Law Conference of Canada, Uniform Franchises Act [UFA], online: Selected Uniform
Statutes .
28
Found in full on its website at .
29
Canadian Franchise Association, “Welcome to the Canadian Franchise Association, ” online:
About Us .

302 Underneath the Golden Boy
other existing franchisees, bankruptcy and insolvency to existing litigation. The
CFA recommends the inclusion of a certificate of disclosure where: the
franchisor asserts that the information provided is in accordance with the CFA’s
disclosure policy, warns the franchisee to examine the franchise investment
carefully and recommends the consultation of legal advisors prior to executing
the agreement. 30
The advantage that the CFA presents to franchisees residing in Manitoba is
that it provides them with similar protection to other provinces where franchises
are statutorily regulated. In other words, franchisees in Manitoba are protected
in a similar way as a franchisee in Alberta, Ontario or Prince Edward Island,
where franchise legislation has been introduced enforcing disclosure.
The primary shortcoming of the CFA’s Code of Ethics and Disclosure
Requirements is that it is only binding on members of the CFA. This means that
a franchisee will only be protected if the franchisor is a member of the
Association.
Furthermore, whereas Ontario and Alberta have introduced penalties for
breach of their respective Acts, the CFA can only revoke a non-compliant
member’s membership from the Association. This is hardly a sufficient deterrent
to an unscrupulous franchisor, who is likely not going to register with the
Association to begin with. 31 As stated in the Uniform Law Conference of
Canada’s “Status Report on National Franchise Law Project,” in 2002:
Voluntary codes by trade associations have inherent drawbacks in that they are not
subject to governmental or statutory delegation of authority. Therefore, the most
common remedy available to an industry association is expulsion of a non-compliant
member. […] non members of the association are unaffected by the policies or codes of
conduct of the association in question. 32
Regardless of this drawback, it is important to note that the existence of the
CFA’s Code of Ethics and Disclosure Requirements means that there are already
several franchisors who are abiding by disclosure rules and having to provide
disclosure documents to potential franchisees in Manitoba. These include such
large companies as A&W Food Services of Canada Inc., Orange Julius of
Canada Ltd., Boston Pizza International Inc., Canadian Tire Corporation
30
Canadian Franchise Association, “CFA Disclosure Rules,” online: Already in Franchising
.
31
Frank Zaid and John Sotos, supra note 23 at 25.
32
Ibid.

Response to Consultation Paper on Franchise Law 303
Limited, Pizza Hut, Play it Again Sports, Second Cup Ltd., and Dairy Queen
Canada, to name a few. 33
The CFA recognizes and supports the requirement of disclosure and ethical
behavior in franchise relationships. This is evident in the fact that the
Association requires all of its members to abide by its rules and regulations where
no such laws are already in existence. This is more proof that franchise
legislation is necessary in Manitoba.
E. Securities Regulation
Discussing the need for franchise legislation that mandates disclosure invariably
necessitates a contrast with securities regulation. This is primarily because in
several instances, franchise agreements can be analogous to securities. Currently,
the question of whether a franchise agreement is a security must be addressed on
a case-by-case basis, with the amount of control the franchisee has over its
investment as the determinative factor. 34 Much like franchise legislation in
Canada, securities legislation requires that a prospectus be issued. The
prospectus is a lengthy document that sets out details of the company, business
management, finances, existing securities, and the securities being qualified. The
prospectus must provide full, true and plain disclosure of all material facts.
Certain facts are mandatory, such as the background of the issuer, its officers and
directors. These requirements are vital for policy reasons. 35
Traditionally, securities regulation aimed to protect its investors by barring
unscrupulous, fraudulent or incompetent issuers from taking advantage of naïve,
unsophisticated investors. Currently, objectives of securities regulation include
the protection of investors, ensuring that markets are fair, efficient and
transparent, and the reduction of systemic risk. Investor protection is achieved
in Canada, in part, through disclosure. Issuers, promoters and dealers must
disclose certain amounts and types of information, both at the time of issue and
on a continuous basis. Full, true and plain disclosure is a cornerstone of investor
protection, allowing investors to assess properly the risks of certain investments. 36
After drawing a parallel between franchise legislation and securities
regulation, one quickly realizes that the same policy reasons for requiring
33
For a full list of CFA members, please refer to the CFA’s official webpage under the heading
“Canadian Franchise Association Members,” online: Search Franchise Opportunities
.
34
David Johnston and Kathleen D. Rockwell, Canadian Securities Regulation, 3rd ed.
(Markham: LexisNexis Canada, 2003) at 37-38.
35
Ibid. at 83-84.
36
Ibid. at 3-4.

304 Underneath the Golden Boy
disclosure apply to franchise law. Forcing franchisors to disclose franchise
information to potential franchisees, as in securities, will be conducive to
informed decision-making. In other words, demanding disclosure will allow
franchisees to more properly assess their investment, thereby achieving the goal
of franchise legislation. Therefore, Manitoba should adopt franchise legislation
dictating adequate disclosure to make informed investment decisions.
F. Conclusion
Having considered the experience of franchisees in Manitoba and Ontario, it has
become clear that there is often a power imbalance between franchisors and
franchisees. Since many franchisees in Manitoba will be more inexperienced
than the franchisors they intend to franchise with, there needs to be an
instrument to level the playing field. This instrument is a franchises act. By
providing disclosure of information pertaining to the franchise, as well as
requiring that all parties act in good faith, a franchisee will receive some comfort
that all parties are required to employ fair dealing, hopefully evening-out the
aforementioned power imbalance. In addition, because franchisees will be better
informed after receiving a disclosure document, as required by franchise
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.
It is not always the case that franchise legislation favors 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.

Response to Consultation Paper on Franchise Law 305
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 matter 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, as per
section 6(1), a franchisee may rescind the franchise agreement no later than 60
days after receiving the disclosure document if it does not contain “all material
facts.”
To understand the requirements set by the ULCC, it is imperative to
understand the meaning of the phrase “material facts.” The Uniform Franchises
Act, supra, defines “material facts” as follows:
“Material facts” means any information, about the business, operations, capital or control
of the franchisor or franchisor’s associate or about the franchise or the franchise system
that would reasonably be expected to have a significant effect on the value or price of the
franchise to be granted or the decision to acquire the franchise.
Complementing the disclosure requirement of “material facts” is an
extensive list of required information that must be disclosed found in the
Disclosure Document Regulations. 39 To say that the list is extensive is certainly
an understatement. The ULCC places a heavy burden on the franchisor to
disclose a long list of information pertaining to the franchise. As a result, the
franchisee will have a significant amount of information about the franchise they
are looking into acquiring.
Some of the disclosure requirements set out in the Regulations include
information about the franchisor, such as business background, the name of
37
Manitoba Law Reform Commission, supra note 13 at 49.
38
Uniform Law Conference of Canada, supra note 26.
39
Uniform Law Conference of Canada, Disclosure Documents Regulation, online: Selected
Uniform Statutes .

306 Underneath the Golden Boy
every associate, the name under which the franchisor intends to do business, the
length of time the franchisor has offered the franchise to prospective franchisees
and the number of franchises granted in the five years immediately before the
date of the disclosure document. Furthermore, the franchisee must be informed
as to whether, during the ten years immediately preceding the date of the
disclosure document, the franchisor, the franchisor’s associate or a director,
general partner or officer of the franchisor has been convicted of fraud, unfair or
deceptive business practices or is in violation of a law that regulates franchises or
business, or if there is a charge pending against the person involving such a
matter, and the details of any such conviction or charge. 40 Other topics in the
Regulations include required information about the franchise, a schedule of
current franchisees, a schedule of current businesses, a schedule of franchise and
business closure information and financial statements. Without a doubt,
requiring a franchisor to comply with such an extensive list of requirements will
lead to the production of a very large disclosure document.
In contrast to the ULCC, the three regulated Canadian provinces, Ontario,
Alberta and Prince Edward Island, place a less onerous disclosure obligation
upon the franchisor. This is because neither province has such an extensive list
of disclosure requirements. Let us begin by considering Ontario’s legislation.
Section 5(1) of the Arthur Wishart Act (Franchise Disclosure), 2000,
requires a franchisor to provide a prospective franchisee with a disclosure
document and s. 5(4) sets its contents. According to the latter section, the
disclosure document shall contain “all material facts.” Since the Ontario Act
employs the same definition of “material facts” as the ULCC, the primary
difference between the two is the disclosure required by the regulations of each.
As a side note, since Ontario and the ULCC have adopted the same definition of
“material facts,” it would be prudent that Manitoba consider including it in its
own legislation.
The Regulation Made Under the Arthur Wishart Act (Franchise
Disclosure) 2000, Part II, sets out a list of elements, divided into seven sections,
that must be included in a disclosure document. The Ontario Act and the
ULCC’s UFA are very similar, with the latter requiring disclosure in greater
detail. This is because the ULCC’s approach in drafting its UFA was to consider
the Ontario legislation as a working model, inserting changes and modifications
considered appropriate for both clarity, inclusionary and consistency purposes. 41
40
Ibid. at s. 3(c).
41
Uniform Law Conference of Canada, Uniform Franchises Act Report – August 2004, online:
Proceedings of Annual Meetings, Report of the Uniform Franchise Act Working Group
at 1.

Response to Consultation Paper on Franchise Law 307
Therefore, if Manitoba were to adopt the ULCC disclosure requirements, it
would implement a more detailed version than Ontario’s.
A clear example of the difference in drafting between the two is the
disclosure requirement with regard to training. Whereas s. 6(5) of the Ontario
regulations requires “a description of any training or other assistance offered to
the franchisee by the franchisor or the franchisor’s associate, including whether
the training is mandatory or optional, and if the training is mandatory, a
statement specifying who bears the cost of training,” s. 4(1)(h) of the UFA adds
that the franchisor must also disclose where the training or other assistance will
take place. This is just one of many examples showing how the ULCC has
drafted more detailed legislation than Ontario while using the latter as a model.
This is an important point to consider.
Peter Macrae Dillon, a prolific author and head of Siskinds’ Franchise,
Licensing and Distribution Team in London, Ontario, states, “Unfortunately,
the ULCC chose to uphold and reinforce the Ontario Act as the gold standard
of franchise legislation.” 42 Mr. Dillon refers to the ULCC’s choice as
“unfortunate” on the grounds that Ontario has the world’s toughest disclosure
standard. What makes the Ontario Act, and consequently the UFA, so tough is
that it has a purely open-ended disclosure model. As a result, the failure of a
franchisor to include any fact that might be found to be material in the
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:
42
Peter Macrae Dillon, “Will Franchising Survive as a Business Model Under Canadian Laws and
Regulations” (Summer 2006) Vol. 26, No. 1 Franchise Law Journal 32 at 32.
43
Ibid.
44
Edward N. Levitt, supra note 18.

308 Underneath the Golden Boy
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 PEI 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 in Emerald is in accordance with the purpose of establishing
franchise legislation. Peter M. Dillon suggests that to fix the problem of having
such onerous provisions, Ontario and the ULCC could adopt the substantial
compliance standard of the Alberta Act. Doing so, Mr. Dillon argues, would
remove franchising from the category of absolute liability. 48
In conclusion, since the primary purpose of establishing franchise legislation
is to protect franchisees and help in making the decision to purchase a franchise,
the ULCC provisions should be adopted. In doing so, the franchisee will not only
be provided with all material facts but also with an extensive list of standard
information as required by the regulations. Making such onerous provisions more
manageable for franchisors should be a “substantial compliance” provision,
45
Ibid.
46
Alberta Franchises Act: Franchise Regulations, A.R. 240/95, s. 2(4); Prince Edward Island,
Franchises Act: Regulations, PEI Reg. EC232/06, s. 3.
47
[2001] A.B.Q.B. 143.
48
Peter Macrae Dillon, supra note 40 at 34.

Response to Consultation Paper on Franchise Law 309
allowing a franchisor to err in providing disclosure documents while still
providing the franchisee with all necessary information.
2. Additional Disclosure Categories
The Manitoba Law Reform Commission is considering further expanding the
disclosure requirements by adding new provisions. The following are provisions
that could be added to Manitoba’s regulations if and when they are adopted.
When Prince Edward Island introduced franchise legislation in 2006, it did
not adopt the UFA “as is.” Instead, a few points were modified. For instance, PEI
is the only jurisdiction that allows for disclosure documents to be delivered
electronically.
Incidentally, Manitoba should adopt a similar provision, since so much
business is done electronically today. Similarly, Manitoba should consider other
effects that the Internet may have on franchises. For instance, a franchisee
should be aware as to if and how a franchisor may compete with them through
the use of a website. This provision may be added to the regulations under a
section pertaining to the franchisor’s policies and practices regarding territory.
Clearly setting this out in the regulations will prevent any litigation arising out of
encroachment issues. Furthermore, the franchisee will know exactly what the
franchisor may and may not do through the Internet.
Another addition to Manitoba’s legislation should be the inclusion of a
franchisor’s arbitration or mediation results with former franchisees. As stated in
the Reform Commission’s Report, “A review of court decisions is unlikely to
provide an accurate representation of franchise disputes, however. Some
franchise agreements require arbitration and do not reach the courts.” 49 If the
current ULCC Regulation made under the Uniform Franchises Act requires that
a franchisor disclose the results of previous litigation under s. 3(c) and (d), and
following the Commission’s statement, it may be useful to also disclose the result
of mediation/arbitration for the franchisee to get a clear picture of the
franchisor’s legal history. However, since mediation/arbitration is often
conducted and decided in confidence, a franchisor should only be obliged to
disclose the number of cases that were addressed, for the past ten years, through
mediation/arbitration. In addition, terms of settlement should not be disclosed as
it would constitute a breach of the confidential nature of mediation/arbitration,
and may dissuade franchisors from being cooperative in future disputes.
The Reform Commission also recommends disclosing settled litigation and
terms of settlement. Settled litigation should be treated the same as
mediation/arbitration results. Consequently, Manitoba should require franchisors
49
Manitoba Law Reform Commission, supra note 13 at 15.

310 Underneath the Golden Boy
to disclose the result and not terms of settled litigation. Doing so will not only
allow the franchisee to determine if the franchisor is reasonable and will settle,
rather than being litigious, but also clearly portray the franchise’s legal history.
Manitoba’s legislation should also include a provision whereby the
franchisor must disclose franchise support resource and methods. This will not
only allow a franchisee to choose a franchise that provides them with the desired
support but will also benefit the franchisor that has such a system in that they
will be preferred by several franchisees. This provision will be beneficial to both
parties.
Manitoba would not be the first jurisdiction to adopt such a provision. For
instance, Australia’s Trade Practices Act 1974 requires that a franchisor provide
its potential franchisees with a summary of the conditions of the franchise
agreement that deal with obligations of the franchisor, including an obligation to
provide training both before and after the franchised business starts. 50
Furthermore, Article 142 Bis of Mexico’s Law to Develop and Protect Industrial
Property requires that a franchisor disclose to the franchisee all the necessary
training required by the franchisee’s employees, including the manner in which
the franchisor will provide technical assistance. 51
Last, repeated sales of the same franchised outlet should be added to the
disclosure requirements. A franchisee needs to know if the same franchise
location has been sold repeatedly. This will in turn prevent a franchisor from
constantly re-selling the same location, knowing that it will shut down soon,
while blaming the franchisee for the store’s failure and keeping the franchisee’s
deposit and other fees. In other words, this will alert a franchisee to either not
get involved with a franchisor offering a location that has closed several times in
a short period of time or adjust the price to reflect the poor location.
3. Wrap-Around Disclosure Document
Regulations under the PEI and Alberta Acts contain “wrap-around” provisions.
These permit a franchisor to use as its disclosure document a foreign document
that has been authorized by the franchise laws of another jurisdiction, if
supplementary information is included which discloses any additional
information needed to make the foreign document comply with domestic
50
Australia, Trade Practices (Industry Codes – Franchising) Regulations 1998, SR 1998 No. 162
[Franchising Regulations] online: FCA – Franchising Code of Conduct
at s. 15.1(a).
51
Camara de Diputados del H. Congreso de La Union (Centro de Documentacion, Informacion y
Analisis), Ley de la Propiedad Industrial, online:
.

Response to Consultation Paper on Franchise Law 311
disclosure requirements. 52 For example, subsection 3(2) of the regulations under
the PEI Act states that a franchisor may use a document that is prepared and
used to comply with the disclosure requirements under the franchise law or
jurisdiction outside Prince Edward Island as its disclosure document to be given
to a prospective franchisee in PEI, if the franchisor includes supplementary
information with that document to bring it into compliance with the disclosure
requirements under the PEI Act. 53 The question facing Manitoba is whether a
wraparound provision should be included in its franchising legislation.
Prior to answering the question, it is helpful to consider the statutory
requirement of “clarity of disclosure.” Section 5(6) of the Arthur Wishart Act
(Franchise Disclosure) 2000, demands that all information in a disclosure
document must be accurately, clearly and concisely set out. Since one of the
purposes of the Act is to rectify a perceived information imbalance between the
franchisor and a prospective franchisee, any disclosure that is confusingly worded
or formatted frustrates that purpose. 54 The requirement of “clear and concise”
disclosure caters to parties unfamiliar with franchising. Mr. Trebilcock states:
Try to see the disclosure through the mind of a reader who has no experience in
franchising, and no familiarity with the business being franchised. […] So if you draft a
disclosure document, take the time to provide a clear, concise description of the required
contract provisions. 55
Since this is quite a sensible requirement, it is important to maintain
disclosure documents both clear and concise even with the addition of a “wrap.”
As stated earlier, Manitoba is a franchisee province. Thus, for the most part,
franchisors are coming into Manitoba to sell their product and services, and not
the other way around. It is imperative to take this into consideration when
thinking about adding a “wrap-around” provision to Manitoba’s franchise
legislation because of the origin of the foreign document that a franchisee would
be receiving. When one looks at the list of CFA members, it is clear that the vast
majority of franchisors coming into Canada hail from the United States. 56
52
Arthur J. Trebilcock, “Disclosure – The Advanced Course: Tricky Disclosure Issues and Some
Drafting Tips,” (Paper presented to the Ontario Bar Association’s 6th Annual Franchising
Conference: The Domino Effect, November 2006) [OBA Continuing Legal Education:
Toronto, 2006] at 12.
53
Edward N. Levitt, “Annual Legislative Update,” (Paper presented to the Ontario Bar
Association’s 6th Annual Franchising Conference: The Domino Effect, November 2006)
[OBA Continuing Legal Education: Toronto, 2006] at 45.
54
Edward N. Levitt, supra note 18.
55
Ibid.
56
Canadian Franchise Association, supra note 31.

312 Underneath the Golden Boy
Therefore, those franchisors coming into Manitoba will either be from the
United States or other Canadian jurisdictions.
According to Edward N. Levitt, if a franchisor comes to Manitoba from a
Canadian jurisdiction with a Canadian disclosure document, a “wrap-around”
document for Manitoba makes good business sense. 57 The requirements vary
slightly from province to province, so that adding a “wrap-around” clause will
not be too costly for the franchisor or confusing to the franchisee reading it.
Conversely, there would be a concern that a large and complex disclosure
document from a foreign jurisdiction, containing a great deal of inapplicable
information for prospective franchisees would not be clear and concise. 58 This,
however, may not be the case with a disclosure document from the United
States.
Currently, most U.S. franchisors use a uniform disclosure format called the
Uniform Franchise Offering Circular or UFOC, which will become mandatory in
2008. 59 Thus, in a few years, all franchisors coming from the U.S. will have a
UFOC at their disposition. A typical UFOC contains considerably more
information than any of its Canadian counterparts. Therefore, a Canadian
franchisee will have more information at their disposal when making the
decision to purchase. The requirement that “plain English” be used and its
standardized format with clear headings will ensure that the document will be
clear and concise. 60 Therefore, if Manitoba were to adopt a “wraparound”
provision, franchisees would still get a comprehensible disclosure document and
franchisors will not have to go through the extra time and expense of composing
a new one.
In the alternative, although adding a “wrap” will make a document comply
with domestic law, the province’s extensive disclosure requirements (whether
they emulate Ontario or the ULCC) may require that a franchisor change such a
considerable portion of the body of text of the UFOC that it may be easier to
create a new one to comply with Manitoba law. 61 The Ontario Superior Court of
Justice commented on the use of a UFOC in 1518628 Ontario Inc. v. Tutor
57
Edward N. Levitt, supra note 18.
58
Ibid.
59
Manitoba Law Reform Commission, supra note 13 at 36-37.
60
Peter Macrae Dillon, “The Case for the Use of Wrap-Around Disclosure Documents in
Canada,” (Fall 2004) Vol. 24, No. 2 Franchise Law Journal 73 at 76; or online: Siskinds
Resources, Articles of Interest
at 5.
61
Debi M. Sutin and Arthur J. Trebilcock, “The Case Against the Use of Wrap-Around
Disclosure Documents in Canada,” (Fall 2004) Vol. 24, No. 2 Franchise Law Journal 83 at 83.

Response to Consultation Paper on Franchise Law 313
Time Learning Centres LLC. 62 The court noted that the 200-page UFOC did not
meet Ontario’s requirements because it did not have to be updated to reflect all
material facts as they exist on the date that it is delivered to the prospective
franchisee. Not only is it significant that the Superior Court rejected the UFOC
as proper disclosure, but also, and primarily in this instance, that the UFOC was
a 200-page document. If a wrap-around clause is added to such an extensive
document, it is quite possible that it will cease to be as clear and concise as
required by law, creating more difficulties for the franchisee.
Assuming that the majority of franchisors enter Canada through Ontario,
rather than Alberta, they will have to create a “new” disclosure document in
compliance with the Arthur Wishart Act (Franchise Disclosure), 2000. 63
Consequently, when that same franchisor comes to Manitoba from Ontario, it
will already have in its possession a Canadian disclosure document that will be
easily adaptable to meet Manitoba’s requirements. Therefore, compliance by
means of a wrap will be accomplished easily, clearly and concisely.
To accomplish the clarity requirement while using a wrap, Manitoba’s
legislation should demand that franchisors provide both an index and summary
of provisions. Doing so will allow franchisees reading the document to not only
navigate through it with great ease but also to read the addenda and body
together as one. Thus, when a franchisor decides to use a wrap, he will also have
to include an index and summary to meet the clarity requirement. The layout of
disclosure documents will be discussed later on under the heading “Additional
Suggestions.”
In conclusion, Manitoba should only adopt a wrap provision if it also adopts
the requirement that disclosure documents be clear and concise. This will ensure
that franchisees will receive documents that meet the purpose of the Act, that is,
to help them make well informed decisions. Moreover, if a franchisor foresees
that adding a wrap will not produce a clear document, they will have the option
of producing one specific for Manitoba. 64 In addition, Manitoba legislation
should enforce the application of indexes and summaries when a wrap is used,
allowing the reader to navigate through them with greater ease. At the same
time, including a wrap will allow franchisors to enter the province with their
62
[2006] CarswellOnt 4593.
63
Debi M. Sutin and Arthur J. Trebilcock, supra note 59.
64
Edward N. Levitt, “The Prince Edward Island Franchises Act: Canada’s Newest Franchise
Statute,” online: Mondaq, Canada: Franchise & Distribution @ Gowlings – November 2006
(to view article, you must become a
member of “mondaq” at no cost).

314 Underneath the Golden Boy
foreign disclosure documents while still having to inform themselves of the
domestic disclosure requirements in order to deliver an adequate wrap.
4. Exceptions for Confidentiality, Site Selection, or Refundable Deposit
Agreements
Disclosure documents must be delivered to a prospective franchisee 14 days
before the signing of an agreement relating to the franchise or the payment of
consideration relating to the franchise. All Acts except Ontario’s exempt
confidentiality and site selection agreements from the disclosure requirement;
the Alberta Act also exempts fully refundable deposits. 65 Should franchisors in
Manitoba be able to require a refundable deposit or enter into a confidentiality
or site selection agreement with a franchisee before providing disclosure 66
i. Refundable Deposits
Refundable deposits work in such a way that if the negotiations result in a
franchise being granted by the execution of an agreement, the deposit will be
credited towards the franchise fee. Otherwise, the deposit will be returned to the
applicant, usually minus an administrative fee. 67 It is likely that the purpose of
such a payment is for the franchisee to demonstrate that they are serious about
purchasing a franchise and are not simply conducting a market investigation
hoping to steal trade secrets from a franchisor. Initially this appears to be a good
idea. However, such an arrangement exposes the franchisee to unscrupulous
franchisors claiming to refund the deposit but who, in reality, will refuse to do so
given the opportunity.
The Ontario Superior Court of Justice heard such cases on two separate
occasions. First, in Ali v. Triple 3 Holdings Inc., 68 and second in Scott v. 3 for 1
Pizza & Wings (Canada) Inc. 69 In Ali, the plaintiff franchisee paid a deposit
before signing the Franchise Agreement. When the franchisor declined to alter
the agreement to suit Mr. Ali’s needs, Mr. Ali requested his deposit back and
65
Section 4(7) of the Alberta Franchises Act, R.S.A. 2000, c. F-23 states that for the purposes of
subsections 2(a) and 5(a), an agreement that contains only terms and conditions relating to
any one or more of the following is not a franchise agreement: (a) a fully refundable deposit; (b)
the keeping confidential or prohibiting the use of any information or material that may be
provided to the prospective franchisee; (c) the designation of a location or territory of the
prospective franchised business.
66
Manitoba Law Reform Commission, supra note 13 at 50.
67
Frank Zaid, Franchise Law, (Toronto: Irwin Law, 2005) at 16.
68
[2001] O.J. No. 5575.
69
[2003] CarswellOnt 3790.

Response to Consultation Paper on Franchise Law 315
Triple 3 refused. In Scott, the plaintiff franchisee had to go to court in order to
obtain a refund of his deposit, having received nothing in return.
Although these two cases are examples of a franchisee requesting the
deposit back after receiving a disclosure document, they serve to demonstrate
how easily a franchisor can abuse the franchisee by refusing to refund the
deposit. The defendant in Scott went as far as to argue that Scott had contracted
with another party and that, consequently, 3 for 1 did not have the deposit. If
Manitoba’s franchise legislation was to require a refundable deposit before a
disclosure document is issued, not only will a franchisee be exposing himself to
potential abuse but he also will be paying money into an enterprise he knows
very little about. Considering that the purpose of such legislation is to protect
franchisees and help them make an informed decision, this provision would
seriously endanger that goal. Therefore, Manitoba should not allow franchisors
to claim refundable deposits before issuing disclosure documents.
However, since franchisors may still be desirous of proof of a franchisee’s
legitimate interest, an alternative is required. After all, preparing disclosure
documents and providing franchisees with other informational materials comes
at a cost to franchisors. Thus, Manitoba legislation should allow franchisors to
request that franchisees make a deposit, in trust, with their own lawyers as a
show of faith. This deposit should not exceed 5% of the total franchise fee, up to
a maximum of $5 000, since doing otherwise would be too onerous on
franchisees. In including this requirement, franchise legislation would ensure
franchisors still receive assurance of a franchisee’s legitimate interest while at the
same time protecting the franchisee’s money from unscrupulous franchisors. This
deposit could then be used towards the franchise fee or as a retainer for the
franchisee’s legal costs.
ii. Confidentiality Agreements
The purpose behind Confidentiality Agreements is to protect franchisors.
Developing a successful franchise system can only come about as a result of the
expenditure of considerable time and money by the franchisor. Each element of
the system, from the development of the products and services to the advertising
fund and marketing program, contains valuable information proprietary to the
franchisor. With so much invested in the business system, the franchisor may
require that the franchisee keep the franchise system strictly confidential. 70 A
typical confidentiality clause may look as follows:
The franchisee acknowledges that its knowledge of the operation of the Franchised
Business will be derived from the information disclosed to the directors, officers,
70
Frank Zaid, supra note 65 at 20.

316 Underneath the Golden Boy
employees and agents of the Franchisee by the Franchisor pursuant to this agreement and
that certain of such information, including, without limitation the contents of the
Manual, is proprietary, confidential and a trade secret of the franchisor. The Franchisee
agrees that it shall maintain absolute confidentiality of such information during and after
the term of this agreement and that it shall ensure that such persons will not use any such
information in any other business or in any manner. 71
It should be noted that protecting franchise trade secrets and confidential
information benefits franchisees as well as the franchisor. Franchisees would lose
much of the economic value of their business if the information they rely upon to
operate their franchise became publicly available such that others could easily
duplicate the franchise business and then compete with actual franchisees. 72
From a franchisor’s perspective, requesting a franchisee to sign a
confidentiality agreement before providing any disclosure is rather sensible. This
is because a franchisor will want to be sure that a franchisee will not steal any
secrets from the franchise, refuse to sign the franchise agreement, and then open
a competing store. From a franchisee’s perspective, signing a confidentiality
agreement prior to receiving a disclosure document makes no difference
whatsoever. There is nothing at risk. The ULCC recommends that
confidentiality agreements should be able to be entered into prior to disclosure
and states that a prospective franchisee would not be prejudiced in this regard. 73
Therefore, to protect franchisors from unscrupulous franchisees that want to
steal trade secrets, Manitoba’s legislation should allow franchisors to issue
confidentiality agreements before providing disclosure.
If Manitoba chooses to follow a format similar to Ontario’s legislation, a
franchisor would be in violation of the Act by having the prospective franchisee
sign a confidentiality agreement before they receive a proper disclosure
document. Section 5(1)(a) of the Ontario Act requires that a disclosure
document must be provided 14 days prior to the signing of any agreement.
Consequently, Manitoba would have to follow Alberta, PEI and the ULCC and
specifically permit such pre-disclosure confidentiality agreements by excluding
confidentiality agreements from the definition of a franchise agreement. 74
71
Daniel F. So, Canadian Franchise Law Handbook, (Markham: LexisNexis Canada Inc., 2005)
at 143.
72
Mark S. VanderBroek and Christian B. Turner, “Protecting and Enforcing Franchise Trade
Secrets,” (Spring 2006) Vol. 25, No. 4, Franchise Law Journal 191 at 192.
73
Uniform Law Conference of Canada, Uniform Franchise Act with Commentary, online:
Proceedings of Annual Meetings, 2004 Regina, Commercial Law Documents
at 15.
74
Edward N. Levitt, supra note 51 at 20.

Response to Consultation Paper on Franchise Law 317
iii. Site Selection Agreements
Unlike the Arthur Wishart Act (Franchise Disclosure), 2000, the PEI and
Alberta Acts as well as the UFA exclude site selection agreements from the
definition of “franchise agreement.” Accordingly, and unlike Ontario, these
agreements may be entered into in advance of a disclosure document being
given. 75 If the franchise is a turnkey operation, where the franchisor is in charge
of development and selection of premises and the franchisee simply has to
unlock the door to begin operating its business, no site selection agreement is
needed. However, when the franchisee is partially or completely responsible for
choosing and developing the location, a site selection agreement will be
needed. 76
A site selection agreement is a breed of commitment agreement. Under a
commitment letter, the supposed franchisee’s pre-opening obligation is to
procure premises for the franchised business. The site selection agreement may
impose certain site and lease criteria and approvals with which the franchisee
must comply in order to move forward with the development of the franchise.
Often, the site selection agreement requires the franchisor to review promptly
and approve or reject the site. 77
The ULCC recommends that an agreement which is restricted to
designation of a location should be able to be entered into prior to disclosure and
should therefore be exempt from disclosure. A prospective franchisee would not
be prejudiced in this regard. 78 Consequently, section 10 of the UFA states that
an agreement is not a franchise agreement or any other agreement relating to the
franchise if the agreement only contains terms in respect of designating a
location, site, or territory for a prospective franchisee.
In theory, receiving the site selection agreement before the disclosure
document could be beneficial for the franchisee. This is because rather than
having to become familiar with a very large document prior to signing the
Franchise Agreement, the franchisee will have more time to consider each
document separately. Consequently, allowing a franchisor to issue a site selection
document prior to the disclosure document will result in a franchisee being able
75
Larry Weinberg, “Franchise Law e-LERT – Canadian Franchise Law – Legislative Updates,”
online: Cassels Brock Resources .
76
Frank Zaid, supra note 65 at 14.
77
Kevin M. Shelley and Jonathan J. Toronto, “Preliminary Agreements: How to Avoid
Unintended Contractual Obligations,” (Fall 2005) Vol. 25, No. 2, Franchise Law Journal 47 at
53; or online: Franchise Law Journal
.
78
Edward N. Levitt, supra note 62.

318 Underneath the Golden Boy
to make a well-informed decision. In other words, having become well
acquainted with both documents due to the added reading time, a franchisee will
be more informed when making the decision to purchase. Thus, Manitoba’s
legislation should follow Alberta, PEI and the ULCC and exclude site selection
documents from the definition of franchise agreements, allowing a franchisor to
issue the former prior to the latter.
B. Exemptions
The general policy behind the disclosure requirement is to provide prospective
franchisees with information relating to the franchise, the franchise system, and
the costs of operating and establishing a franchised business. There are a number
of provisions in place in all regulated Canadian jurisdictions whereby franchisors
may be exempt from delivering a disclosure document to a prospective
franchisee or financial statements in conjunction with the production of a
disclosure document. 79 The question facing Manitoba at the moment is whether
the ability to exempt certain franchisors from the requirement to provide
financial statements or to implement for other exemptions from the
requirements of legislation or regulations is appropriate. 80
1. General Exemptions from Legislation or Regulations
Broadly speaking, general exemptions from franchise legislation and regulations
exempt a party selling or renewing a franchise in certain circumstances from
having to provide disclosure documents. The question facing Manitoba under
this heading is whether the ability to implement exemptions from the
requirements of legislation or regulations is appropriate.
Every regulated jurisdiction in Canada has implemented general
exemptions. Section 5 of the Alberta Franchises Act, 81 section 5(7) of Ontario’s
Arthur Wishart Act (Franchise Disclosure), 2000, and section 5(7) of PEI’s
Franchises Act cover the authorized exemptions in each province. Since every
regulated jurisdiction in Canada contains exemptions, Manitoba should not be
the exception. The fact that each Act contains exemptions does not mean that a
potential franchisee will be forced to purchase a franchise without sufficient
information about the business. For example, section 5(7)(c) of the Arthur
Wishart Act (Franchise Disclosure), 2000 states that disclosure requirements
79
Paul D. Jones and Daniel F. So, “Houdini’s Franchise Law: Exclusions and Exemptions to
Disclosure in Canada,” (Paper presented to the Ontario Bar Association’s 6th Annual
Franchising Conference: The Domino Effect, November 2006) [OBA Continuing Legal
Education: Toronto, 2006] at 25.
80
Manitoba Law Reform Commission, supra note 13 at 51.
81
R.S.A. 2000, c. F-23, s. 5.

Response to Consultation Paper on Franchise Law 319
will not be enforced in the grant of an additional franchise to an existing
franchisee if that additional franchise is substantially the same as the existing
franchise that the franchisee is operating and if there has been no material
change since the existing franchise agreement or latest renewal or extension of
the existing franchise agreement. In such a case, the franchisee would already
posses all the required information to make the purchase, hence the exemption.
When drafting an exemptions section for Manitoba, the differences between
Alberta and Ontario should be noted. For instance, Ontario does not have an
equivalent of Alberta’s section 5(1)(g). The section creates an exemption from
disclosure when the sale of a right to a person to sell goods or services within or
adjacent to a retail establishment as a department or division of the
establishment, if the person is not required to purchase goods or services from
the operator of the retail establishment is effected. More importantly, Alberta
has incorporated one further exemption by allowing the Minister to exempt any
class of persons or person, any sale of a franchise, or any class of sale of a
franchise, or any franchise or class of franchise from any or all provisions of the
Act or regulations upon becoming satisfied that to do so would not be prejudicial
to the public interest. 82 This is an important difference because it allows the
Minister to create further exemptions upon application where the occasion so
warrants.
Manitoba should follow Alberta’s example and adopt its exemptions section.
Not only is the section more extensive but also it contains the further exemption
that allows a Minister to grant an exemption where to do so would not be
prejudicial to the public interest. In keeping with the act’s purpose of aiding the
franchisee to make an informed decision, an exemption will still allow the
franchisee to do so while fostering expediency.
2. Exemption from Franchisor’s Obligation to Provide Financial Statements
Financial disclosure is a very sensitive topic. Consequently, most franchisors are
wary to disclose sensitive financial information in the form of financial
statements required to be provided as part of a disclosure document. The general
requirement to disclose financial information about the franchisor is to inform
the prospective franchisee of the financial health and success of their prospective
franchisor. The provisions in Alberta, PEI and Ontario providing franchisors
with an exemption from disclosing financial statements were intended to provide
mature, established and financial viable franchisors that have a consistent record
of good relations with franchisees and who comply with the law from having to
disclose financial information to prospective franchisees, or where to so exempt
82
S.A. 1995 c. F-17.1, s. 6.

320 Underneath the Golden Boy
would not prejudice the public interest. 83 In order to better understand the
financial document disclosure exemption, it is necessary to consider the actual
provisions.
Section 11 of the Regulations Made Under the Arthur Wishart Act
(Franchise Disclosure), 2000, 84 contains the tripartite test for the financial
exemption. It is important to note that this is a self-declaratory process, and the
onus to satisfy the tests rests on the applicant. A franchisor must thus establish
that: (1) the franchisor has a net worth on a consolidated basis based on its most
recent audited or review engagement financial statement of not less than $5
million or $1 million if it is controlled by a corporation that has a net worth of
not less than $5 million; (2) the franchisor has had at least 25 franchisees
operating in Canada or in a single country other than Canada during the five
year period prior to the disclosure document, or it is controlled by a corporation
that satisfies this requirement; and (3) the franchisor, its associates, officers,
directors, or general partners have not had any judgment, order or award made
in Canada against them relating to fraud, unfair or deceptive business practices,
or a law regulating franchises, including the Arthur Wishart Act (Franchise
Disclosure), 2000 in the five years prior to the date of the disclosure document. 85
In contrast, Alberta has incorporated a two-pronged test that does not
contain the third step from Ontario’s regulations. According to section 1 of the
Franchises Act Exemption Regulation, 86 a franchisor will not be required to
include financial statements in a disclosure document given to a prospective
franchisee if:
(a) the franchisor has a net worth on a consolidated basis according to its most recent
financial statements, which have been audited or for which a review engagement report
has been prepared, of not less than $5 million or of not less than $1 million of the
franchisor is controlled by a corporation that has a net worth of no less than $5 million;
and
(b) the franchisor has had at least 25 franchisees conducting business at all times in
Canada during the 5-year period immediately preceding the date of the disclosure
document, has conducted business that is the subject of the franchise continuously for no
less than 5 years immediately preceding the date of the disclosure document, or is
controlled by a corporation that meet the two previous requirements.
It may be argued that Alberta has not included the third requirement from
Ontario’s test in an attempt to restrict it to purely financial matters. In other
words, as the fact that a franchisor, its associates, officers, directors or general
83
Frank Zaid, supra note 65 at 34-35.
84
O. Reg. 581/00.
85
Daniel F. So, supra note 69 at 112.
86
Alta. Reg. 312/2000, s. 1.

Response to Consultation Paper on Franchise Law 321
partners have not had any judgments made against them relating to fraud, unfair
or deceptive business practices or a law regulating franchises, has no relation to
the franchise’s past and current financial status, it should have no influence on
whether an exemption with regards to financial statement should apply. After
all, a franchisee will come to learn of the franchisor’s previous convictions or
pending charges through Schedule 1 of the Regulations. 87
Regardless of the specific requirements behind Alberta and Ontario’s
exemptions, incorporating them into Manitoba’s legislation is a sensible idea.
Taking only the first two steps in each test in consideration, it is clear that only
those franchisors who are so large and well established that very little doubt may
exist as to their financial status will be exempt from delivering financial
statements. This means that a franchisee will still be able to make an informed
decision, knowing that no disclosure document was provided because of the
franchisor’s size. However, if Manitoba were to incorporate this exemption, a
provision should be added allowing a franchisee to still demand financial
statements. If the franchisee is required to invest a very large sum in order to
acquire the franchise, s/he should be able to consider the company’s financial
situation by looking at a statement. Assuming that this is a very sensitive topic
for the franchisor, the franchisee may be required to sign a confidentiality
agreement that the financial statements will not be disclosed to anyone outside
the franchise, thus successfully protecting such sensitive information. Ideally,
Manitoba should introduce a liquidity test, since a franchise may have a
seemingly good net-worth but be illiquid. However, doing so would make
Manitoba too strict, possibly deterring incoming franchisors.
What of the third step in Ontario’s test The requirement that the
franchisor, its associates, officers, directors or general partners have not had any
judgments made against them relating to fraud, unfair or deceptive business
practices or a law regulating franchises should be included in Manitoba’s
franchise legislation. Although it may not be specifically related to financial
issues, legislation should require a franchisor to be as transparent as possible,
especially where they have been charged or convicted of such offences.
In conclusion, Manitoba should adopt the exemption in question to allow
large franchisors to refrain from disclosing sensitive financial information.
Furthermore, Ontario’s provision should be adopted with an addendum allowing
a franchisee to request disclosure of financial documents where the franchisor
has applied for an exemption. If the request is granted, the franchisor should be
allowed to require the franchisee to sign a confidentiality agreement protecting
all financial information.
87
A.R. 240/95 Sched. 1; 317/2000, s. 2.

322 Underneath the Golden Boy
C. Franchise Relationship Regulation
The relationship between a franchisor and his franchisees has often been likened
to a partnership or marriage. These analogies are valid because of the
interdependence of the parties, the division of responsibilities, the collective
effort for the common good, and the sharing of the fruits of that effort. But like a
partnership or marriage, a franchise relationship can turn sour and become a
bitter experience for all concerned. 88 Consequently, legislative provisions are
necessary to ensure the preservation of this delicate relationship.
Until the year 2000, when Ontario introduced the Arthur Wishart Act
(Franchise Disclosure), 2000, Alberta was the only Canadian jurisdiction to have
regulated the franchise relationship. However, because the population in Alberta
represents less than 10 percent of the total Canadian population, the franchise
relationship throughout Canada was governed primarily by common law. 89 Since
the year 2000, the introduction of franchise legislation in Ontario, PEI and
possibly New Brunswick has increased the statutory protection of the franchise
relationship.
D. Current Legislation, Bill 32, and the UFA
1. Alberta
Alberta first introduced franchise relationship provisions in 1995, when it
replaced the old Franchises Act. 90 The new Act adopted two relationship
provisions, addressing the duty of fair dealing and the franchisee’s right to
associate. Section 7 of the Act states that every franchise agreement imposes on
each party a duty of fair dealing in its performance and enforcement. Section
8(1) of the Act states that a franchisor or its associate must not prohibit or
restrict a franchisee from forming an organization of franchisees or from
associating with other franchisees in any organization of franchisees.
Furthermore, a franchisor or its associate must not directly or indirectly
penalize a franchisee for associating with others.
The common law continues to play an important role in presiding over
franchise relationships. In Thompson v. Cinnaroll Bakeries Ltd., 91 the defendant,
who held an exclusive franchise for Cinnabon bakeries in Western Canada,
88
Edward N. Levitt, “The Franchisor/Franchisee Relationship,” online: Gowlings Resource
Centre .
89
Allan D.J. Dick and Markus Cohen, “The Duty of Good Faith and Fair Dealing in Canada,”
(Fall 2004) Vol. 24, No. 2 Franchise Law Journal 89 at 89.
90
R.S.A. 1980, Ch. F-17 (repealed).
91
[2002] A.B.Q.B. 1112.

Response to Consultation Paper on Franchise Law 323
allowed the agreement to expire and opened up a new store at its own cost. The
plaintiff franchisor claimed breach of contract by the defendant for failing to
renew the agreement. The Alberta Court of Queen’s Bench decided that,
according to the franchise agreement, the defendant would be bound to renew
should the renewal be offered on the same terms as before. Where reasonable
changes are proposed, it would be unreasonable for the defendant to refuse to
renew the agreement. However, since the defendant was not acting
unreasonably by refusing to renew due to significant changes introduced by the
franchisor, there was no breach of contract.
2. Ontario
Ontario was the second Canadian jurisdiction to regulate franchise relationships,
doing so in 2000. Section 3(1) of the Arthur Wishart Act (Franchise
Disclosure), 2000, emulates Alberta’s duty of fair dealing. However, the Ontario
Act is more extensive than the Alberta Act since it provides that:
A party to a franchise agreement has a right of action for damages against another party
to the franchise agreement who breaches the duty of fair dealing in the performance or
enforcement of the franchise agreement. 92
The Ontario Act also establishes that, for the purposes of the fair dealing
section, the duty of fair dealing includes the duty to act in good faith in
accordance with reasonable commercial standards. 93 The commercial
reasonableness standard of good faith has received a fair amount of criticism.
Some suggest that enforcement of a contract should be about enforcement of the
objective intention of the parties and not a wholesale enforcement of norms and
concepts external to the contract. However, including reasonable commercial
standards in the definition of fair dealing provides the concept of fair dealing
with the contextual clarification it requires and is consistent with the standard of
good faith already applied in the Canadian common law. 94
The right to associate is also addressed by the Ontario Act, once again,
emulating Alberta. However, Ontario has two additional sections. First, section
4(4) states that any provision in a franchise agreement or other agreement
relating to a franchise which purports to interfere with, prohibit or restrict a
franchisee from exercising their right of association is void. Second, section 4(5)
grants the franchisee a right of action for damages if a franchisor or franchisor’s
associate contravenes the association section. The common law has potentially
92
Arthur Wishart Act (Franchise Disclosure) 2000, 2000, c. 3, s. 3(2).
93
Ibid. at s. 3(3).
94
Edward N. Levitt and Deborah E. Palter, “Ontario Passes Franchise Disclosure Act,” online:
Canadian Franchise Association, Government Relations
.

324 Underneath the Golden Boy
expanded the scope of the duty of good faith and fair dealing. In 530888 Ontario
Ltd. v. Sobeys Inc., 95 the Ontario Superior Court of Justice stated that parties to
a contract are expected to fulfill their contractual obligations honestly and in
good faith. Furthermore, the court asserted that commercial relationships are
not immune from the imposition of fiduciary duties. Justice Lax stated:
The concept of power dependency is fact driven. Fiduciary duties will be imposed in
appropriate circumstances to govern the manner in which discretion is exercised.
This decision is of particular importance in that it distinguishes Jirna Ltd. v.
Mister Donut of Canada Ltd., 96 a landmark Supreme Court of Canada ruling
stating that the franchise relationship does not give rise to fiduciary duties. The
current state of the common law is that a franchisor may be a fiduciary but only
where the facts so warrant.
3. PEI
Prince Edward Island boasts the newest franchise legislation in Canada, with the
Franchises Act 97 coming into force on 1 July 2006. Like the Ontario Act and
Alberta Act, the PEI Act has enacted relationship provisions enforcing the duty
of fair dealing and the right of franchisees to associate and organize. 98 PEI has
followed Ontario’s fair dealing provisions closely. However, section 3(1) of the
PEI Act extends the duty of fair dealing by adding “including the exercise of a
right under the agreement.” Regardless of any differences, for all provinces, the
duty of fair dealing is a mutual obligation between franchisors and franchisees,
whereas the right to associate is designated to protect the interests of
franchisees. 99 Furthermore, PEI struck the phrase “in the performance or
enforcement of the franchise agreement” from Ontario’s right of action section
under fair dealing, so that the section reads:
A party to the franchise agreement has a right of action for damages against another party
to the franchise agreement who breaches the duty of fair dealing. 100
In contrast to the procedure followed in enacting fair dealing provisions, PEI
adopted Ontario’s association provision verbatim.
95
[2001] CarswellOnt 240.
96
[1975] 1 S.C.R. 2.
97
R.S.P.E.I. 1988, Cap. F14.1.
98
Lawrence Weinberg and Jayne Westlake, “Canada’s East Coast Provinces Pursue Interest in
Franchise Law,” online: Franchise UPDATE Archive, Past Articles
.
99
Ibid.
100
R.S.P.E.I. 1988, Cap. F-14.1, s. 3(2).

Response to Consultation Paper on Franchise Law 325
4. New Brunswick
The Provincial Legislature of New Brunswick proposed Bill 32, entitled
Franchises Act, at a first reading on 23 February 2007. If passed, the bill will
impose on franchisors and franchisees a duty of good faith and fair dealing. The
legislation will also protect the right of franchisees to associate. 101 Although New
Brunswick altered the order, it followed PEI’s fair dealing provision, extending
the performance and enforcement of the franchise agreement to include the
exercises of a right under the agreement. Once again, Ontario’s association
provisions were adopted verbatim.
5. ULCC
The Uniform Franchises Act contains the same fair dealing provision as PEI.
The expansion of the section from its Ontario counterpart means that the duty
of fair dealing will not only apply during the performance and enforcement of the
agreement but also in the exercise of a right under it. The ULCC argues that the
addition of the words “in the exercise of a right” is necessary because the duty of
fair dealing incorporating the duty of good faith and commercial reasonableness
standards in the Ontario Act does not extend to express contractual provisions
granting the franchisor discretionary authority over rights to be exercised during
the term of the contract that may be carried out without regard to fair dealing. 102
When drafting its model act, the ULCC chose to follow Ontario’s association
provisions rather than Alberta’s. The reason for this decision is that the Alberta
Act has been drafted in the negative, that is, that a franchisor or its associate
may not prohibit or restrict a franchise from forming an organization while the
Ontario Act has been drafted in the affirmative, where a “franchisee may
associate with other franchisees.” 103
E. Recommendation for Manitoba
The question at hand is what relationship provisions Manitoba ought to adopt.
The options range from Alberta’s narrower provisions to PEI, New Brunswick
and the ULCC’s wider provisions; Ontario stands in the middle of the spectrum.
All relationship provisions pertain to the duty of good faith and the right of
franchisees to associate.
101
Richard Leblanc, “New Brunswick Reintroduces Franchise Legislation,” FranNews (Spring
2007), online: Miller Thomson LLP, Publications, Newsletters
at 1.
102
Uniform Law Conference of Canada, supra note 71 at 9.
103
Ibid.

326 Underneath the Golden Boy
With regard to the duty of fair dealing, Manitoba ought to adopt the widest
provisions. Since these extend the duty from a pre-contractual obligation to
apply to the exercise of a right under the agreement, franchisees will be
protected throughout their entire relationship with the franchisor. Conversely,
franchisors will be protected from franchisees since the duty is reciprocal. It is
necessary to note that the common law assumes that parties to a contract are
equal and capable of looking out for their respective interests. Since this is not
the reality in a franchise relationship, due in part to the power imbalance
between a franchisor and franchisee, legislation is needed to compensate for this
shortcoming. 104 Thus, the duty of good faith and fair dealing must be included in
Manitoba’s franchise legislation.
A right of action should also be granted to ensure that parties abide by the
requirements or risk facing legal action. Lastly, the expansion of the duty of fair
dealing to include reasonable commercial standards ought to be adopted as well.
As stated earlier, including reasonable commercial standards in the definition of
fair dealing provides the concept of fair dealing with the contextual clarification
it requires and is consistent with the standard of good faith already applied in the
Canadian common law. 105
Manitoba’s franchise legislation should also grant franchisees the right to
associate, emulating the Ontario and PEI Act as well as the New Brunswick Bill.
Since associations may be beneficial to both franchisors and franchisees, a
franchisee’s right to associate or join an organization should be protected. As
Edward N. Levitt stated:
The association can assist in dispute resolutions between the franchisor and franchisees,
provide a useful feedback mechanism for all sorts of issues affecting the system, assist the
franchisor in dealing with franchisees who operate poorly or contrary to the interest of
everyone in the system, raise the level of commitment of all franchisees and assist in the
introduction of new products and services into the system. 106
F. Additional Franchise Relationship Issues
Current franchise relationship legislation in Canada only addresses a small
portion of relationship issues. Although extending the duty of fair dealing to
include the performance of the contract may provide more protection to
franchise parties, several areas remain where no protection is issued. These
include contract termination, renewal of contract, transfers and sale of a
franchise by a franchisee.
104
Daniel F. So, supra note 69 at 212.
105
Edward N. Levitt and Deborah E. Palter, supra note 92.
106
Edward N. Levitt, “Franchisee Associations,” online: Gowlings Resource Centre,
.

Response to Consultation Paper on Franchise Law 327
1. Contract Termination
The issue under this heading is whether Manitoba ought to introduce
termination provisions limiting a franchisor’s right to terminate a contract only
to instances where there is good cause. However, prior to discussing whether
some form of legislation should be adopted, it is necessary to consider whether
Manitoba is in need of statutory termination provisions or if the common law has
addressed the issue sufficiently so that no legislation is needed.
Manitoba’s Court of Queen’s Bench has already addressed the issue of
termination in two instances. In John Deere Ltd. v. G.A.E.L. Inc. (1994), 107 the
Court stated that reasonable notice is required to terminate an agreement and
that termination rights must not be exercised on the basis of questionable and
flimsy grounds. Furthermore, Monnin J. found that the termination clause in the
dealer agreement must have “reasonableness” read into it. In Halligan v. Liberty
Tax Service Inc., 108 the Court found that the franchisor’s attempt to terminate
the contract was malicious and, thus, a breach of the duty of good faith. Overall,
Manitoba’s common law forces a franchisor to give reasonable notice upon
termination, to have reasonable grounds to do so and to act in good faith.
Although Manitoba’s Court of Queen’s Bench has established certain
requirements upon termination, several questions that arise upon termination
remain unanswered. First, there is no explanation as to what reasonable grounds
for termination may be and, second, there is nothing specific with regard to
providing notice. Should a franchisor allow the franchisee to cure the default
How much time should the franchisee be allotted to cure the default Should
there be exemptions to providing a franchisee with the right to cure Since
Manitoba’s common law does not address the issue of franchise termination, a
statutory provision should be introduced.
Iowa’s legislation should be considered as a model since it is recognized as
being the most comprehensive. 109 Iowa’s termination provisions begin by stating:
Except as otherwise provided by this chapter, a franchisor shall not terminate a franchise
prior to the expiration of its terms except for good cause. For the purposes of this section,
“good cause” is cause based upon a legitimate business reason. 110
The Iowa Act further states that “good cause” includes the failure of a
franchisee to comply with any material lawful requirement of the franchise
agreement, provided that the termination by the franchisor is not arbitrary or
107
96 Man. R. (2d) 295.
108
[2006] 8 W.W.R. 97, 202 Man. R. (2d) 268.
109
Manitoba Law Reform Commission, supra note 13 at 52.
110
1992 Franchises Act, Iowa Code § 523H.7.1.

328 Underneath the Golden Boy
capricious when compared to the actions of the franchisor in other similar
circumstances. 111 The Act provides the franchisee with the opportunity to cure
the alleged default after receiving written notice stating the basis for the
proposed termination. The Act also includes an exemption for termination
without providing the franchisee the opportunity to cure, such as when the
franchisee or the business to which the franchise relates is declared bankrupt. 112
The length of time a franchisor will grant a franchisee to cure an alleged
default is an essential matter pertaining to termination of a franchise agreement.
Iowa’s legislation states that after service of notice, the franchisee shall have a
reasonable period of time to cure the default, which in no event shall be less
than 30 days and no more than 90 days. 113 In contrast, Australia’s Trade
Practices Act 1974 states that the franchisor must allow the franchisee a
reasonable time to remedy the breach. A “reasonable time” is however limited by
the subsequent section to no more than 30 days. 114 Similarly, the California
Franchise Relations Act requires that a franchisee’s reasonable opportunity to
cure the failure should not exceed 30 days. 115
Manitoba should follow Australia and California’s example in setting a 30-
day limit. Iowa’s limit of 90 days appears to be an excessive time in which to
require a franchisor to endure a defaulting franchisee. Adopting a shorter limit
will induce a franchisee to cure the default faster, to the franchise’s benefit, and
shall have no detrimental effect on the franchisee. In addition, Manitoba could
introduce an exception to this limit when the parties initially agree to a longer,
but never shorter, period through the franchise agreement. To provide a further
incentive for a franchisee to comply, the termination clause in a franchise
agreement should be statutorily required to include a liquidated damages section,
whereby a franchisor establishes what a franchisee will have to pay in
compensation in case of failure to remedy the default. Non-compliance with the
request to cure the default should render the contract void, allowing the
franchisor to sell the franchise to other potential franchisees.
It is important to note that Iowa’s legislation covers the termination by a
franchisor in instances where the franchisee is in default. What happens when
the franchisor simply wants to terminate the contract for no particular reason
Manitoba should introduce a section addressing this issue as well. In doing so,
111
Ibid.
112
Ibid. at §523H.7.2 and §523H.7.3.
113
Ibid. at §523H.7.2.
114
Australia, Trade Practices (Industry Codes – Franchising) Regulations 1998, supra note 48 at
ss. 21(2)(c) and 21(3).
115
Cal. Bus. & Prof. Code §20020.

Response to Consultation Paper on Franchise Law 329
Manitoba’s franchise legislation should allow a franchisor wishing to terminate
the franchise agreement without good cause to do so, only after paying a penalty.
Upon termination, a franchisor would have to pay the pro rata value of the
franchise plus a portion of the cost of the business as assessed by an independent
business advisor. For instance, if the franchisee had originally paid a $250 000
franchise fee for a five year period and the contract is cancelled on year four,
then the franchisor should pay the franchisee $50 000, which is the amount the
franchisee had paid per year under the agreement. Introducing such a clause
would not only ensure that franchisors exercise caution in terminating
agreements, but also ensure that franchisees who had counted on the franchise’s
income still manage to receive it.
By adopting such legislation, Manitoba would become the first Canadian
jurisdiction to protect franchisees from contract termination while providing
franchisors with a guideline as to what steps to take in order to terminate a
franchise contract adequately.
2. Renewal of Contract
The franchise agreement may include a right of renewal for the franchisee,
which right is exercisable only if the franchisee has complied with certain
conditions. Typical conditions precedent to the exercise of a renewal option are
that the franchisee (i) is in good standing under the franchise agreement and all
other agreements with the franchisor; (ii) provides to the franchisor written
notice of its intent to renew; (iii) agrees to execute the then current standard
franchise agreement used by the franchisor for the grant of new franchises; and
(iv) agrees to pay the franchisor a renewal fee. 116 In the absence of renewal, the
franchisor will be free to retain, re-license, close, or re-organize the business for
its own account. 117
Since Manitoba courts have yet to hear a franchise renewal case, it is
necessary to look to other jurisdictions to determine if the common law already
provides sufficient protection upon renewal. In Sultani v. Blenz The Canadian
Coffee Co., 118 the British Columbia Supreme Court held that a duty of fair
dealing imposed on a franchisor does not go so far as to compel a party to renew
an expiring relationship when it is not commercially reasonable to do so, and
where there is no express right of renewal contained in the agreement. In
116
Frank Zaid, supra note 65 at 14.
117
Paul J. Bates and R. David House, “Canadian Franchise Disputes,” (Paper presented to the 6 th
Annual Franchise Conference: The Domino Effect, November 2006) [Toronto: Ontario Bar
Association Continuing Legal Education] at 10.
118
[2005] B.C.J. No. 846.

330 Underneath the Golden Boy
Thompson v. Cinnaroll Bakeries Ltd., 119 the Alberta Court of Queen’s Bench
held that, according to the franchise agreement, the franchisee was bound to
renew the contract unless significant changes had been made to the original
contract, such as an increase in royalty payments and loss of exclusivity in a
specific market.
The precedent established by renewal cases fails to adequately address the
renewal of franchise agreements. It fails to deal with situations where oral
promises to renew are not upheld as well as instances where the franchise
agreement does not mention the option of renewal, where franchise parties are
not bound to exercise good faith and fair dealing. It is clear that legislation is
necessary to complement the common law, forcing parties to exercise their best
business behaviour when dealing with each other upon renewal.
Having established that Manitoba is in need of renewal provisions, one
should consider how other jurisdictions with franchise legislation address the
matter. Since none of the Canadian provinces with franchise regulation include
renewal clauses, one must look abroad. The United States, having implemented
different renewal provisions in several of its states, provides the most complete
example.
California boasts the most extensive non-renewal clause, found in the
California Franchise Relations Act. Article 4, Section 20025 of the Act states
that no franchisor may fail to renew a franchise agreement unless he provides the
franchisee at least 180 days prior to written notice of its intention not to renew.
Furthermore, the franchisor must allow the franchisee during the 180-day period
to sell his business to a purchaser meeting the franchisor’s requirements for
granting a new franchise. A franchisor may refuse renewal where he withdraws
from distributing his products or services through franchises in the geographic
market served by the franchisee. 120 The following provisions, however, restrict
this section:
(1) Upon expiration of the franchise, the franchisor agrees not to seek to enforce any
covenant of the non-renewed franchisee not to compete with the franchisor or
franchisees of the franchisor; and
(2) The failure to renew is not for the purpose of converting the business conducted by
the franchisee pursuant to the franchise agreement to operation by employees or agents of
the franchisor for such franchisor’s own account; and
(3) Where the franchisor determines to sell, transfer or assign its interests in a marketing
premises occupied by a franchisee whose franchise agreement is not renewed pursuant to
this paragraph:
119
[2002] ABQB 1112.
120
Cal. Bus. & Prof. Code §20025

Response to Consultation Paper on Franchise Law 331
(a) The franchisor, during the 180-day period after giving notice offers such
franchisee a right of first refusal of at least 30 days’ duration of a bona fide
offer, made by another to purchase such franchisor’s interest in such premises; or
(b) In the case of the sale, transfer, or assignment to another person of the
franchisor’s interest in one or more other controlled marketing premises, such other
person in good faith offers the franchisee a franchise on substantially the same terms
and conditions currently being offered by such other person to other franchisees. 121
Lastly, in addition to the 180-day notice, the Act allows for non-renewal
when the franchisor and franchisee fail to agree to changes or additions to the
terms and conditions of the franchise agreement, if such changes or additions
would result in renewal of the franchise agreement on substantially the same
terms and conditions on which the franchisor is then customarily granting
original franchises. In such instances, the franchisor may give the franchisee
written notice of a date which is at least 30 days from the date of such notice, on
or before which a proposed written agreement of the terms and conditions of the
renewal franchise shall be accepted in writing by the franchisee. Such notice,
which given no less than 180 days before the end of the franchise term, may
state that in the event of failure of such acceptance by the franchisee, the notice
shall be deemed a notice of intention not to renew at the end of the franchise
term. 122
Under the Illinois Franchise Disclosure Act of 1987, it is deemed a violation
of the Act for a franchisor to refuse to renew a franchise of a franchised business
without compensating the franchisee either by repurchase or by other means for
the diminution in the value of the franchised business caused by the expiration
of the franchise. This shall be so where (a) the franchisee is barred by the
franchise agreement (or by the refusal of the franchisor at least six months prior
to the expiration date of the franchise to waive any portion of the franchise
agreement which prohibits the franchisee) from continuing to conduct
substantially the same business under another trademark, servicemark, trade
name or commercial symbol in the same area subsequent to the expiration of the
franchise; or (b) the franchisee has not been sent notice of the franchisor’s
intent not to renew the franchise at least six months prior to the expiration date
or any extension thereof of the franchise. 123
Iowa’s 1992 Franchises Act establishes that a franchisor shall not refuse to
renew a franchise unless both of the following apply: (a) the franchisee has been
notified of the franchisor’s intent not to renew at least six months prior to the
121
Ibid. at §20025(e).
122
Ibid. at §20025(f).
123
Ill. Comp. Stat. §705/20.

332 Underneath the Golden Boy
expiration date or any extension of the franchise agreement; or (b) any of the
following circumstances exist:
(1) Good cause exists, provided that the refusal of the franchisor to renew is not arbitrary
or capricious [good cause means based on legitimate business reasons];
(2) The franchisor and franchisee agree not to renew the franchise;
(3) The franchisor completely withdraws from directly or indirectly distributing its
products or services in the geographic market served by the franchisee, provided that
upon the expiration of the franchise, the franchisor agrees not to seek to enforce any
covenant of the non-renewed franchisee not to compete with the franchisor or
franchisees of the franchisor. 124
Moreover, as a condition of renewal of the franchise, a franchise agreement
may require that the franchisee meet the then current requirements for
franchises and that the franchisee execute a new agreement incorporating the
then current terms and fees for new franchises. 125
In deciding what renewal provisions Manitoba should adopt, it is important
to remember that California contains the most complete renewal regulation. In
doing so, it provides sufficient protection to franchisees facing the prospect of
renewing a franchise agreement. However, if Manitoba were to adopt this
provision, a few additions should be made. Manitoba’s legislation should mimic
Iowa and demand non-renewal only where good cause exists. This will ensure
that franchisors will not capriciously refuse to renew franchise agreements.
Moreover, the provision allowing a franchisor the right of non-renewal upon
withdrawing from distributing its products in a certain area should be qualified
by a provision forbidding the franchisor from re-entering the same area for a
reasonable time. This time may range from six months to one year.
Neither the common law nor current legislation deal with situations where a
franchisee wishes to renew the agreement but at a different location. This may
occur in situations where the franchisee believes in the franchise, but the
location has proven unfavorable. Manitoba legislation should address such
situations by allowing franchisees the right to renew the agreement in such
instances. However, this right should be limited to a certain distance from the
original location. Doing so will allow the franchisor to expand the franchise
while still allowing current franchisees to run successful operations.
In conclusion, Manitoba should include a renewal section for the following
reasons. First, granting the franchisee a six-month notice period allows him/her
the opportunity to make post-franchise arrangements. Second, if the parties
agree not to renew, the franchise agreement should be allowed to expire. Third,
if the franchisor is withdrawing operations from a particular area, he should not
124
Iowa Code §523H.8.1.
125
Ibid. at §523.H.8.2.

Response to Consultation Paper on Franchise Law 333
be forced to stay by a franchisee, when the former has no desire to do so.
However, the franchisor should be required to compensate the franchisee for the
loss suffered through the denial to renew. Thus, Manitoba should include a
renewal provision demanding six months notice of non-renewal, as well as
allowing for non-renewal when it is mutually agreed upon and when the
franchisor is withdrawing from the particular service area.
3. Transfers
The franchisee will typically be restricted in its ability to transfer its rights and
obligations because the franchisor’s grant of rights is based on factors that are
personal to the franchisee. The franchisee’s ability to secure a mortgage or
encumber, transfer or assign its rights and obligations under the franchise
agreement will usually be subject to having obtained the franchisor’s prior
consent. 126 The issue at hand concerns whether Manitoba should adopt transfers
provisions regulating the transfer of a franchise by the franchisee to a transferee.
Introducing legislation may be useful to prevent franchisors from refusing
franchisees the ability to transfer the franchise by rejecting all possible
candidates. However, since terms of transfer are often included in franchise
agreements, the duty of fair dealing will require the franchisor to act in good
faith and in accordance with reasonable commercial standards when considering
the possibility of a transfer. Therefore, a franchisee will be protected if the
franchisor unreasonably rejects all potential transferees. As such, there is no
reason to include a provision requiring that a franchisor not act capriciously in
assessing a transfer when the duty of fair dealing already imposes such a duty.
Although Iowa boasts an extensive transfer provision, detailing the process
in full, it lacks the extensive duty of good faith demanding such a duty in the
exercise of rights under the agreement. Thus, whereas Iowa needs transfer
provisions because of the limited duty of good faith, once it adopts the more
extensive duty, Manitoba will not.
Consequently, Manitoba should not adopt transfer provisions.
4. Sale of Franchise by Franchisee
The issue under this heading arises out of the following series of events.
Typically, if a franchisee sells his franchise and assigns that agreement and/or
sublease to the purchaser, the original franchisee remains liable for all obligations
contained in the agreements. This is a typical provision of commercial leases.
However, some agreements contain further obligations by providing that if the
purchaser subsequently renews the agreements for another term, the original
126
Frank Zaid, supra note 65 at 19.

334 Underneath the Golden Boy
franchisee continues to be liable for all obligations of the purchaser under the
renewed agreements, despite having had no input into their terms. It was
suggested to the Manitoba Law Reform Commission that franchise legislation
provide that, in this situation, the obligations of the franchisee do not extend
beyond the terms of the original agreements and any renewals signed by that
franchisee. 127
In order to understand this issue better, it is necessary to consider the steps
involved in a transfer of a franchise or sublease. Usually, if a franchisee sells his
franchise, the franchisor will make the final decision with regard to the new
party’s suitability. If the franchisor does not approve of a potential franchisee, it
will not be sold. Once sold, the new franchisee will often be required to complete
training and pay a transfer fee. 128
Forcing a former franchisee to remain liable under a contract they are not a
party to is counterintuitive. Since the franchisor has approved of the new
franchisee, and the former franchisee has had no part in drafting the new
agreement, there is no reason why the former franchisee should remain attached
to a subsequent contract. Thus, Manitoba should correct this unfair practice. In
doing so, the following requirements ought to be included in a provision: (1) the
franchisor must approve of the incoming franchisee, only rejecting potential
franchisees with good cause; (2) upon transfer of a franchise, the incoming
franchisee should receive all adequate disclosure documents and training; (3)
the section in a subsequent contract that aims to attach liability to a former
franchisee shall be deemed null and void.
Including such a section in Manitoba’s franchise legislation would achieve
several goals. First, the franchisor will be able to ensure that the proposed
transferee meets the standards of the franchisor for new franchisees to preserve
the goodwill and image of the entire franchise system. 129 Second, the incoming
party will be in the same position and possess the same knowledge as the
outgoing party. Last, the former franchisee will not be held liable under the new
contract, upon approval of the new franchisee by the franchisor.
G. Franchise Regulatory Body
The latest possible development to franchise legislation in Ontario has emerged
in the same context as did the idea to incorporate franchise legislation. As was
the case in the 1990s, where media attention to 887574 Ontario Inc. v. Pizza
127
Manitoba Law Reform Commission, supra note 13 at 53.
128
Frank Zaid, supra note 65 at 19.
129
Ibid. at 190.

Response to Consultation Paper on Franchise Law 335
Pizza Ltd. 130 drew the public’s focus to the need for franchise legislation, a new
series of cases is currently directing Ontario’s franchise community to consider
introducing franchise regulators.
The Toronto Star has recently focused on the 3 for 1 Pizza & Wings
litigation as the basis for proposing the appointment of some kind of franchise
regulator for the province. 131 The question facing Manitoba is the same. In
introducing franchise legislation, should Manitoba implement a franchise
regulatory body
Although a regulatory office could be structured in a number of ways, 132 its
functions would not vary. A regulator would review the quality of disclosure
given to franchisees, provide an inexpensive system to resolve disputes, rules to
govern contractual relationships and penalties for breaking franchise law. 133 Ben
Hanuka, chairman of the joint subcommittee on franchising for the Ontario Bar
Association, supports the introduction of a regulatory body. He argues that some
franchisors do not give out proper disclosure, and franchisees who have already
invested a life’s savings are having to spend much money to enforce their rights
under franchise law. He further states:
[W]e should upgrade the teeth of the statute, and bring in a regulatory body to deal with
the situation where there is an utter breach of providing a disclosure 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, and require
them to post a bond to compensate potential victims, and ensure access to
justice, but 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.
130
23 B.L.R. (2d) 239, 23 C.P.C. (3d) 323.
131
Peter Macrae Dillon, “Ontario Franchise Developments in 2005: Welcome to the ‘Tween
Years,” (Paper Presented to The Six Minute Business Lawyer, The Law Society of Upper
Canada June 2006) online: Siskinds Resources, Articles of Interest
at 1.
132
Manitoba Law Reform Commission, supra note 13 at 54.
133
James Daw, “Regulator Could Help Franchise Feuds: Province Awaiting Report form
Committee,” The Toronto Star, (March 16, 2006), online: Toronto Star Online
.
134
Ibid.
135
Ibid.
136
Ibid.

336 Underneath the Golden Boy
The United States Federal Trade Commission (“FTC”), 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 the 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 can commence a lawsuit against the
franchisor for their breach or non-compliance, in a court of law. Penalties for
noncompliance 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 an independent
cause of action in state law. 139 If Manitoba chooses to instate a regulatory body,
the FTC model would certainly by 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.
Although implementing a regulatory body would give more “teeth” to any
franchise legislation, several lawyers, primarily those representing franchisors,
oppose such a change. Mr. Joseph Adler, an Ontario based lawyer, argues that
such cumbersome laws will only dissuade honest franchisors from conducting
business in that province and increase the cost of doing business for franchisors
and franchises. 141 Mr. Dillon, who also opposes such a body, blames the amount
of media attention the 3 for 1 Pizza cases have received. He states:
When one considers the number of franchises operating in the province [of Ontario] at
any time, it should not come as a surprise that a certain number of systems will operate
137
Daniel F. So, supra note 69 at 86.
138
Ibid. at 94.
139
Ibid.
140
Manitoba Law Reform Commission, supra note 13 at 55.
141
James Daw, supra note 131.

Response to Consultation Paper on Franchise Law 337
below the accepted community standard in the enforcement and performance of their
franchise rights and obligations. 142
Mr. Dillon argues that instead of introducing a regulator, it should be
franchisees’ responsibility to inform themselves and become acquainted with all
disclosure documents prior to purchasing a franchise, in order to avoid being
abused. 143 A franchisee may become informed by using the large variety of
resources made available by the CFA 144 , the Ministry of Government Services
web site 145 < or a number of franchise magazines and publications that would
empower a franchise prospect to avoid many of the situations in which these
people find themselves. After all, an individual must be expected to take some
responsibility for his own welfare. Mr. Dillon then adds that the direct costs of
administering such a regime, and the indirect cost to the industry sector as a
whole of being subject to further regulation are incalculable. He closes by
pointing out that Alberta abandoned its regulatory system after 24 years in
favour of a presale disclosure regime. 146 At this point it is important to note that
in 1992 Manitoba’s Legislature refused to adopt franchise legislation based on
Alberta’s old model.
Last, Richard Cunningham, president of the CFA in 2006, opposes the
establishment of such a body on the grounds that there is no need for regulators.
Instead, he suggests that franchisees should inform themselves properly or
consult specialists in franchise law before entering into a deal. 147 Consequently,
the CFA offers workshops to its members, such as the “Franchise Excellence
Series: Franchisee Training Program,” hoping to educate franchisees entering or
already in the business. 148
The first matter to be decided is not what type of a regulatory body
Manitoba needs, but if it needs one. First, Manitoba cannot follow Ontario’s
argument for adopting such a body because the same problems have not arisen in
the former due to its smaller size. Whereas in Ontario several franchisees have
suffered at the hands of 3 for 1 Pizza & Wings, there has only been one such case
142
Peter M. Dillon, supra note 129.
143
Ibid. at 2.
144
See .
145
See .
146
Ibid.
147
James Daw, supra note 131.
148
Canadian Franchise Association, “Upcoming Events by Region,” online: Already in
Franchising, Events Education .

338 Underneath the Golden Boy
in Manitoba. 149 Therefore, if there is a need for a regulator in Manitoba, it is
certainly not as imminent as in Ontario.
Second, Manitoba has not had the chance to determine what effect
franchise legislation will have on the franchise community. Given its unique size,
perhaps the issue of improper disclosure will also be in a relatively small scale
and thus be solved more easily than in Ontario. It may be wise to wait until after
franchise legislation is introduced to assess the true need of a regulator in
Manitoba. Thus, the necessity for a regulator has yet to arise in Manitoba.
Although Manitoba may not need a regulator, it does not mean that the
situation should be ignored until so much abuse takes place that one is needed.
To avoid such a situation, the provincial government may want to prepare an
instructional pamphlet directing franchisees to different resources they can
employ to become better informed prior to purchasing a franchise. This would be
very similar to the CFA’s approach of providing its members with the
opportunity to educate themselves. It would then become a franchisor’s
responsibility to attach the pamphlet to the disclosure documents. In doing so,
Manitoba would be following the advice of those who oppose the introduction of
a regulatory body while still leaving the possibility of introducing one if need be.
Overall, it is too premature for Manitoba to adopt a regulatory body to
overlook franchise disclosure. Instead, it should be the Province’s aim to educate
franchisees to make well-informed decisions, allowing them to detect franchisors
whose intentions may be ill-conceived.
H. Alternative Dispute Resolution
In the franchise industry in particular, the use of ADR is growing in marked
popularity. From a franchisor’s perspective, this is due to the disclosure
requirements of franchise legislation, which requires franchisors to provide
details concerning litigation commenced against them, or pending litigation
against them. A disclosure document that contains numerous lawsuits
commenced against the franchisor may dissuade prospective franchisees from
acquiring the franchise. Consequently, franchisors have commenced to utilize
mandatory arbitration or ADR clauses in their franchise agreements, mandating
that disputes must first be resolved through ADR instead of through litigation,
with the goal of having a smaller number of disputes to disclose. 150 In doing so,
the franchise may appear more appealing to a prospective franchisee.
149
Please refer to the following articles: Alexandra Paul, supra note 11; Paul Turenne, supra note
11.
150
Daniel F. So, supra note 69 at 266.

Response to Consultation Paper on Franchise Law 339
From a franchisee’s perspective, ADR offers a less expensive means of
dispute resolution than litigation, removing barriers associated to justice such as
cost, location and duration. 151 For instance, although the length of a mediation
varies with the complexity of the dispute, mediation of a typical franchise dispute
may take 10-15 hours and involve two or three sessions. 152 ADR will also allow a
franchisee to avoid the combative nature of litigation, fostering the preservation
of commercial relationships while parties attempt to resolve a dispute. 153
Furthermore, the franchise relationship presents some particular aspects which
make it critical that the courts have special tools to deal effectively with their
disputes. 154 Some of the concerns that franchisors and franchisees have to
address when a dispute arises between them include:
• It is very difficult for all parties to continue working together on a daily
basis while pursuing a court case between them;
• In many cases, a franchisee who decides to sue his franchisor is not, at
that time, in a good financial position;
• Where the amounts paid to franchisors by the franchisee are the only,
or main, source of income, franchisors have found themselves in
problematic positions toward their franchisees by reason of the slowness
of the court system; and
• Another problem encountered by franchisors and franchisees when
disputes arise is the uncertainty in regard of their contractual
relationship during the time when litigation has taken place, most
specifically in the event where the franchisor has terminated the
agreement by reason of one or several defaults committed by the
franchisee while the franchisee pleads that these defaults are nonexistent,
are not sufficient to justify the termination of the franchise
agreement or that the franchisor has improperly terminated same.
These examples demonstrate the need to provide for particular mechanisms
and means in order to deal with issues encountered in franchisors/franchisees
151
Ibid. at 261.
152
International Institute for Conflict Prevention and Resolution (CPR), “National Franchise
Mediation Program: A dispute Resolution Process for Franchising,” online:
at 4.
153
Daniel F. So, supra note 69 at 264.
154
Jean H. Gagnon, “Some Considerations Regarding the Judicial and Non-Judicial Resolution of
Franchisors/Franchisees Disputes,” (April 1, 2003), online: Jean H. Gagnon Consulting
Services
at 7.

340 Underneath the Golden Boy
disputes. 155 Due to the importance of ADR to both franchisors and franchisees, it
is necessary to determine how Manitoba will address the subject in its franchise
legislation. The questions facing Manitoba with regard to ADR are twofold.
First, what should be disclosed to the franchisee in pre-contract documents
Second, should ADR be mandatory Prior to addressing either issue, it may be
helpful to consider how the various legislated Canadian jurisdictions and the
UFA deal with ADR.
1. Dispute Resolution Provisions in Canada and the ULCC
i. Ontario
Ontario addresses the issue of ADR in section 5 of the Regulations Made Under
the Arthur Wishart Act (Franchise Disclosure), 2000. 156 The section requires
that where a franchisor will use an internal or external alternative dispute
resolution process, a disclosure document shall include a description of the
mediation or other ADR process and the circumstances when the process may
be invoked. Furthermore, as per s. 5(2), every disclosure document shall state:
Mediation is a voluntary process to resolve disputes with the assistance of an independent
third party. Any party may propose mediation or other dispute resolution process in
regard to a dispute under the franchise agreement, and the process may be used to resolve
the dispute if agreed by all parties.
In other words, Ontario requires that a franchisor who chooses to use ADR
disclose all elements to the franchisee in the disclosure document. Franchise
legislation in Manitoba should adopt a similar provision to ensure that
franchisees are aware of what action a franchisor may or may not pursue.
In Toronto Truck Centre Ltd. v. Volvo Trucks Canada Inc., 157 an agreement
included a dispute resolution process that provided for binding mediation of any
dispute, including a dispute for termination of the agreement. The manufacturer
purported to terminate the agreement without notice, and the dealer applied for
an interlocutory order compelling the manufacturer to submit to mediation and
to continue the dealership until completion of the mediation. The court held
that the order should be granted, since the clear intent of the agreement was
that disputes should be submitted to the dispute resolution process. 158 This is a
clear example of the necessity to disclose what, if any, ADR methods will be
pursued.
155
Ibid. at 7-12.
156
O.REG 581/00.
157
(1998), 163 D.L.R. (4th) 740 (Ont. Ct. Gen. Div).
158
Frank Zaid, supra note 65 at 339.

Response to Consultation Paper on Franchise Law 341
In Ellis v. Subway Franchise Systems of Canada Ltd. (2000), 159 the franchise
agreement contained a clause stating that any claim arising out of the agreement
would be settled by arbitration in accordance with rules of the American
Arbitration Association at a hearing in Connecticut. After the franchisee failed
to cure alleged defaults, the franchisor filed a demand for arbitration. The
franchisee brought an application for stay of proceedings on the grounds that the
arbitration clause in the Franchise Agreement was unenforceable on the basis
that it was unconscionable. The court, finding no evidence of fraud, duress or
inequality of bargaining power upheld the clause and arbitration proceeded. Had
the franchisee not been difficult, the dispute could have been resolved promptly
and economically.
ii. New Brunswick
A unique feature of New Brunswick’s proposed Franchises Act, Bill 32 is the
ability of one party to a franchise agreement to deliver a notice to the other party
requiring that a dispute be mediated. Although the proposed legislation permits
one party to a franchise agreement to require that the other party mediate a
dispute, the proposed legislation confirms that this procedure does not preclude
either party from taking other steps in relation to the dispute. 160
Bill 32 thus requires that any party to a franchise agreement who has a
dispute with the other party may deliver a notice of dispute setting out the
nature of the dispute and its desired outcome. The parties must then attempt to
resolve the dispute within 15 days after delivery of the notice of dispute. If the
parties fail to resolve the issue, any party to the dispute may then deliver a notice
to mediate within 30 days after delivery of the notice of dispute but not before
the expiry of the 15 days for resolving the dispute.
Section 8(6) of the Bill addresses the issue of confidentiality by stating that
no person shall disclose or be compelled to disclose in any proceeding before a
court, tribunal or arbitrator any information acquired, any opinion disclosed or
any document, offer or admission made in anticipation of, during or in
connection with the mediation of a dispute under this section. Section 8(7)
restricts 8(6) by stating that no confidentiality will apply to anything that the
parties agree in writing may be disclosed, an agreement to mediate, a document
respecting the cost of mediation, a settlement agreement made in resolution of
159
B.L.R. (3d) 55.
160
Blaire Rebane, Karen Carteri and James M. Bond, “Recent Developments in Franchise Law,”
(Paper presented to the Western Franchise Summit, 2007) online: Lang Michener LLP
Publications, Articles
at 4.

342 Underneath the Golden Boy
all or some of the issues in dispute or any information that does not directly or
indirectly identify the parties or the dispute and that is disclosed for research or
statistical purposes.
iii. Prince Edward Island & Alberta
Schedule I, Part III, section 16 of PEI’s Franchises Act Regulations 161 requires
that a franchisor disclose a description of any restrictions or requirements
imposed by the franchise agreement with respect to arbitration, mediation, or
other alternative dispute resolution process, including any requirements relating
to the location or venue of such a process.
In contrast to all other legislated jurisdictions in Canada, Alberta has yet to
incorporate an ADR provision.
iv. ULCC
In contrast to all existing Canadian franchise legislation, Section 8 of the UFA
contains the most extensive description of a dispute resolution process to be
adopted by parties to a franchise agreement. It is important to note, however,
that, when passed, New Brunswick’s Franchises Act will closely resemble the
UFA, with the only difference being that the UFA does not contain a provision
stating that the delivery of a notice of dispute or notice to mediate does not
preclude a party to a franchise agreement from taking any other measure in
relation to the subject matter of the dispute. 162
In composing such provisions, the ULCC considered at great length
whether franchise disputes would be resolved more advantageously through a
form of alternative dispute resolution. Recognizing that in certain provinces the
rules of practice in civil proceedings mandate a form of pre-trial mediation, the
Committee determined that it would be beneficial to provide for mediation to be
invoked by any party to a franchise agreement. 163 In support of mediation, the
ULCC states:
The Committee believes based on its own experiences and those brought to the attention
of the Committee that party initiated mediation will be of significant benefit to resolve
franchise disputes prior to the commencement of, as well as after the commencement of,
litigation proceedings. 164
161
R.S.P.E.I. 1988, Chapter F-14.1.
162
Bill 32, Franchises Act, 1st Sess., 56th Legislature, New Brunswick, 2007, s. 8(10) (Received
First Reading on 23 February 2007).
163
Uniform Law Conference of Canada, supra note 71 at 22.
164
Ibid.

Response to Consultation Paper on Franchise Law 343
Where the UFA differs even from New Brunswick’s Bill 32 is in its
regulations. In dealing with the issue of mediation, rather than including further
provisions in the regulations, the ULCC created mediation specific regulation. 165
These Regulations establish general rules for appointment of a mediator and for
mediation as well as specific rules for pre-litigation mediation and post-litigation
mediation. Some of the topics covered include:
• Pre-mediation conference;
• Exchange of information;
• Costs of mediation;
• Timing of mediation;
• Time limits on mediation; and
• Defaults.
These Regulations apply to the mediation of a dispute that is initiated by
notice to mediate delivered before or after a legal proceeding or arbitration in
respect of the dispute has been commenced. In essence the proposed mediation
process is mandatory. It is elective on the part of either party that wishes to
mediate, so long as the parties have attempted to resolve the dispute. Once the
election to mediate has been made by one party, it becomes mandatory on the
other. 166
It is clear that the ULCC has created the most complete provisions with
regard to mediation. If a province were to adopt the UFA’s Mediation
Regulations, all parties to a franchise would know what to expect if mediation is
chosen as a dispute resolution method. It is important to note, however, that the
UFA regulations only apply to mediation. This is key because, although
mediation may be quite effective in the context of franchising, the parties must
share a genuine desire to resolve the dispute promptly in an equitable manner. 167
Otherwise, any attempts at mediation will be futile.
2. What Should Manitoba Do
The first question under this heading is whether Manitoba should address the
prospect of mediation or ADR in its franchise legislation. An ADR provision
165
Uniform Law Conference of Canada, Regulation Made under the Uniform Franchises Act –
Mediation, online: Selected Uniform Statutes
.
166
Larry Weinberg and Peter Henein, “Annual Franchise Law: Legislative Update,” (Paper
presented to the 5th Annual Franchise Law Conference, 2005) [OBA Continuing Legal
Education: Toronto, 2005] at 6; online: Publications by Cassels Brock Lawyers – Lawrence M.
Weinberg at
7.
167
CPR, supra note 148 at 2.

344 Underneath the Golden Boy
would require a franchisor to disclose to the franchisee if there are any ADR
methods that will be employed to resolve a dispute and, if so, to provide further
details. Since it might be important for a prospective franchisee to be properly
informed of the ways by which the franchisor resolves its agreements and
disputes with franchisees, 168 franchise legislation in Manitoba should incorporate
a dispute resolution provision.
In doing so, Manitoba should adopt a different approach than the ULCC
and focus on both mediation and arbitration. Although the former is a useful
tool for franchise dispute resolution, franchise legislation should also address an
ADR method that does not rely on a party’s willingness to participate for
success. Franchisors may have more resources to pursue litigation than
franchisees and may thus not cooperate throughout the mediation process.
Therefore, a binding method of resolving disputes, such as arbitration, will be
necessary.
Ontario and PEI have adopted dispute resolution provisions that focus on
what must be disclosed, whereas New Brunswick, by following the UFA, has
adopted dispute resolution provisions that outline the process to be followed.
Manitoba should adopt a provision similar to Ontario and PEI and not New
Brunswick, as the latter forces the parties to mediate, even when they may not
have mutually agreed to do so. Therefore, Manitoba’s provision will not dictate
what process ought to be followed, only stating what must be disclosed.
Attempting to preserve clarity, Manitoba’s provision should require more
detail than both Ontario and PEI’s. Whereas section 5(1) of Ontario’s franchise
regulations only requires a description of the mediation or alternative dispute
resolution process, Part III, section 16 of PEI’s regulations adds the disclosure of
any requirements relating to the location or venue of such a process. Although
PEI was on the right track by requiring more detailed disclosure, it still maintains
Ontario’s vagueness. Thus, Manitoba should adopt more detailed provisions,
allowing a franchisee to know exactly what will take place in case of a dispute.
If a franchisor chooses to resolve matters through mediation or arbitration,
Manitoba franchise legislation should require that the disclosure document
outline all elements. For example, an arbitration provision should explain the
methods for selecting an arbitrator, governing rules for arbitration, special
characteristics or experience of the arbitrator, costs of arbitration, governing law
of arbitration, venue of arbitration, and confidentiality. 169
168
Jean H. Gagnon, supra note 150 at 13.
169
Joseph Adler and Frank Zaid, “Drafting Franchise Agreements in the 21st Century,” (Paper
Presented to the Ontario Bar Association’s Third Annual Franchise Law Conference:

Response to Consultation Paper on Franchise Law 345
In contrast, a mediation provision must cover elements such as the matters
accepted for mediation, that mediation is to proceed prior to the matter being
brought before a court, other tribunal or arbitrator, the mechanics for appointing
the mediator, place of mediation, special experience factors for the mediator,
confidentiality, costs and expenses of mediation, inability to resolve the matter,
and procedures for mediation. 170 Manitoba’s provision should still adopt the
open-ended requirement that a general description be provided, while also
enforcing a non-exhaustive list of requirements, to encourage a franchisor to
disclose certain details that the franchisee should know and are not required by
the provision.
Overall, Manitoba should incorporate dispute resolution provisions that
require franchisors to disclose what method of ADR they will employ in case of a
dispute, together with two lists of what must be disclosed in the case where
mediation or arbitration are the ADR methods of choice.
3. Should Manitoba Adopt a Mandatory ADR Process
While primarily a voluntary process, the use of ADR can be mandatory in
certain instances. As a result, even parties that want to litigate, who do not wish
to mediate, or arbitrate a dispute, may be required by law to use alternative
dispute resolution methods prior to having their cases heard in a court of law. 171
To date, two Canadian provinces,
British Columbia and Ontario, have introduced some form of mandatory
pre-trial mediation into the civil court process, meaning that mediation is or can
be required after an action has been commenced, but before it reaches trial. 172
Adopting a mandatory mediation process for franchise disputes would have
both positive and negative aspects. One of the advantages of mediation is that it
is less adversarial than arbitration, and therefore, less disruptive of business
relationships. Furthermore, since there are other options available if mediation
should fail, entering into a mediation process is essentially without risk. 173 The
International Institute for Conflict Prevention and Resolution (CPR) supports
the use of mediation to resolve franchise disputes:
Franchising in a New World of Disclosure, 2003), [OBA Continuing Legal Education:
Toronto, 2003] at 26.
170
Ibid. at 25.
171
Daniel F. So, supra note 69 at 263.
172
Peter Snell and Larry Weinberg, ed., “Fundamentals of Franchising – Canada,” (Forum on
Franchising, American Bar Association, 2005) at 327.
173
CPR, supra note 148 at 2.

346 Underneath the Golden Boy
In fact, failure is the exception. […] with the assistance of a skillful mediator, parties to a
great variety of business disputes have succeeded in bridging wide gaps in their positions
and often in developing creative, mutually advantageous business solutions.
However, CPR clearly states that the principal pre-condition to mediation is
that the parties share a genuine desire to resolve the dispute promptly in an
equitable manner. 174 Mediation will fail if the parties are not willing to partake in
the process and resolve the dispute. Consequently, forcing parties to mediate
through a mandatory mediation program may very well be a waste of time and
money in such instances. A mandatory mediation program should therefore not
be adopted in Manitoba.
A mandatory arbitration scheme lacks many of the disadvantages of
mandatory mediation. Since arbitration is a binding method of solving disputes,
it means that, once agreed upon, it will resolve the dispute between the parties,
and absent some specific circumstance, the parties will have no further recourse
or appeal rights after a decision is reached. 175 However, even many supporters of
ADR fear the ramifications of mandatory arbitration. Mr. Jean H. Gagnon, Vice-
President of the Alternative Dispute Resolution Section of the Quebec Division
of the Canadian Bar Association and member of the Mediation and ADR
Committee of the Quebec Bar, argues that it is too delicate and dangerous to, by
law, force the parties to a franchise dispute to resort to arbitration or any other
ADR process. 176
When considering arbitration as a mandatory means of conflict resolution, it
is necessary to realize that a dispute resolved through arbitration can be as costly
in terms of fees and costs as a case going before a court. Furthermore, if one of
the parties is litigious in nature or is drawn to arbitration against its will,
arbitration can also be a slow process which may take months and, sometimes,
years before a final decision is reached and enforced. 177 Therefore, a mandatory
arbitration scheme would also fail to provide a desired alternative method to
litigation.
In conclusion, Manitoba should adopt neither mandatory mediation nor
mandatory arbitration and should only introduce provisions dealing with a
franchisor’s disclosure requirements with regard to what ADR means it will
adopt when a dispute arises.
174
Ibid.
175
Daniel F. So, supra note 69 at 261
176
Jean H. Gagnon, supra note 150 at 13
177
Jean H. Gagnon, “There Must be a Better Way to Resolve Franchise Disputes!” (2006), online:
Jean H. Gagnon Consulting Services
at 2.

Response to Consultation Paper on Franchise Law 347
This concludes the list of issues for consultation suggested by the Manitoba
Law Reform Commission in the Consultation Paper on Franchise Legislation.
I. Additional Suggestions
1. Exclusions on Oral Representations During the Franchise Sale Process
In order to prevent a franchisor abusing a franchisee by making oral
representations that will not be enforced, Manitoba should follow the UFA,
PEI’s Act and New Brunswick’s Bill and incorporate an exclusion for oral
arrangements. Section 2(3) of the UFA, the Arthur Wishart Act (Franchise
Disclosure), 2000, PEI’s Franchises Act, and section 2(4) of New Brunswick’s
Bill 32 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 say so 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 with 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 ten 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
178
An Act to Repeal The Statute of Frauds, C.C.S.M. c. F158, Enacted as: R.S.M. 1987, c. F158.
179
Frank Zaid, “Franchising and The Law,” online: Online Publications,
.

348 Underneath the Golden Boy
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 section 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
franchisor’s reasonable expenses if the expenses or their method of calculation
have been set out in the agreement. 180
As an alternative, Manitoba could follow section 8 of The Condominium
Act. 181 The Act allows a prospective purchaser who has signed an agreement to
purchase to cancel the agreement within 48 hours. The prospective franchisee
would be able to cancel the agreement by personally giving a written notice of
cancellation to the franchisor or franchisor’s agent or by sending a written notice
of cancellation by registered mail, fax or any other method, except e-mail, that
provides proof that it was sent, to the address or fax number given by the
franchisor or the franchisor’s agent for this purpose.
3. Independent Legal Advice (“ILA”)
The power and information imbalance separating franchisees from franchisors
could be reduced, in addition to providing disclosure documents, by introducing
an independent legal advice clause in Manitoba’s franchise legislation. Ideally,
all franchisees should be forced to consult a lawyer to achieve an insight into the
franchise agreement that they may not be able to attain on their own due to the
document’s complexity and length. Furthermore, such a clause would reduce
litigation between parties to a franchise, as the franchisee will be well aware of all
that the franchise agreement entails. Thus, Manitoba should seriously consider
addressing the matter through legislation.
Currently, there is no legislation in existence in Manitoba that enforces
seeking independent legal advice. However, the Reverse Mortgage Regulation
180
Australia, Trade Practices (Industry Codes – Franchising) Regulations 1998, supra note 48 at s.
13.
181
R.S.M. 1987, c. C170.

Response to Consultation Paper on Franchise Law 349
encourages doing so. 182 The disclosure form provided under the Regulation’s
schedule in section L pertains to seeking advice. It states:
It is strongly recommended that you talk to your lawyer about this reverse mortgage
before you sign the mortgage or any other document that requires you to sign the
mortgage. 183
Because reverse mortgages are complicated, and many borrowers lack the
background and expertise to evaluate both the suitability of the mortgage for
them and the terms of the mortgage offered to them, independent advice and
counseling should be sought by most prospective borrowers. 184 This argument
could also be applied to franchising.
In contrast to all Canadian franchise legislation, Australia’s legislation
requires that a franchisee attain independent legal advice prior to entering into a
franchise agreement. Under section 11(2) of the Trade Practices Act 1974, a
franchisor must receive from the prospective franchisee prior to entering into the
franchise agreement the following:
(a) Signed statements, that the prospective franchisee has been given
advice about the proposed franchise agreement or franchise business, by
any of:
(i) an independent legal adviser;
(ii) an independent business adviser; (iii) an independent
accountant; or
For each kind of statement not received under paragraph (a), a signed
statement by the prospective franchisee that the prospective franchisee:
(i) has been given that kind of advice about the proposed franchise
agreement or franchised business; or (ii) has been told that that kind of
advice should be sought but has decided not to seek it.185The
subsequent section qualifies subsection 2 by stating that its does not
apply to the renewal or extension of a franchise agreement and that it
does not prevent that franchisor from requiring any or all of the
statements mentioned in paragraph 2(a). 186
182
Man. Reg. 65/2002.
183
Ibid.
184
(2006) “Manitoba Law Reform Commission Review of the Garnishment Act,” Commonwealth
Law Bulletin, 32:1 103-139 online: at 137.
185
Australia, Trade Practices (Industry Codes – Franchising) Regulations 1998, supra note 48 at s.
11(2).
186
Ibid. at s. 11(3).

350 Underneath the Golden Boy
In formulating its own independent legal advice provision, Manitoba should
follow Australia’s example. A similar provision to the Reverse Mortgage
Regulation would not go far enough to ensure that franchisees seek legal advice.
In contrast, Australia’s Act, by forcing franchisees to either seek advice or waive
it, ensures that franchisees seriously consider the possibility of consulting an
expert. In adopting the Australian clause, Manitoba should limit the qualified
experts for consultation to lawyers and accountants, since these are the two
parties who are better suited to provide the necessary advice.
In addition, Manitoba should introduce a cooling-off period (in case the
general cooling-off period is not adopted) that applies only to those franchisees
that waived attaining professional consultation. Doing so will allow more time
for franchisees left with the task of understanding the franchise agreement on
their own to actually do so.
Overall, Manitoba should introduce a provision forcing franchisees to seek
independent legal advice prior to signing the franchise agreement to ensure that
they make a well-informed decision. This will counter the power imbalance
between franchisors and franchisees as well as reduce litigation arising out of
misunderstandings. This requirement will however be limited by a waiver, with
which franchisees will be able to forego attaining independent legal advice.
Furthermore, a cooling-off period should be granted to those franchisees who
waive the independent legal advice clause, granting them an extended period of
time to become acquainted with the agreement.
4. Layout of Disclosure Document
The main goal of adopting franchise legislation in Manitoba should be to help
franchisees make well-informed decisions when purchasing a franchise.
Requiring franchisors to provide clear and accurate disclosure documents is a
necessity to accomplish this worthy goal. To ensure greater ease in reading a
disclosure document, Manitoba’s franchise legislation should require franchisors
to provide a table of contents, indicating all headings and subheadings, together
with page numbers.
Australia’s Trade Practices Act 1974 incorporates very thorough layout
requirements. For instance, under s. 7, the Act requires franchisors to include a
table of contents, as well as indicating the page number on which each item
begins. 187 In addition, Annexures 1 and 2 describe the specific manner in which
the disclosure document must be laid out. For instance, Annexure 1 sets out
what the first page of every disclosure document must include: the franchisor’s
187
Australia, Trade Practices (Industry Codes – Franchising) Regulations 1998, supra note 48 at s.
7.

Response to Consultation Paper on Franchise Law 351
name, signature of the franchisor, officer, or authorized agent of the franchisor
and the preparation date of the disclosure document. 188
Manitoba should only follow Australia’s requirement to include a table of
contents. Requiring franchisors to adopt a specific template may be too onerous
for some franchisors coming from foreign jurisdictions and employing a wraparound.
Furthermore, including a table of contents will suffice to make the
disclosure document clear to navigate, accomplishing the goal of franchise
legislation. Thus, Manitoba’s franchise legislation should incorporate the
requirement that disclosure documents include a table of contents with page
numbers.
IV. CONCLUSION
Following a failed attempt to introduce franchise legislation in 1992, Manitoba
once again faces the opportunity to adopt a franchise act. Unlike then, franchise
legislation has become widely accepted in Canada and is currently in force in
Alberta, Ontario, and PEI; New Brunswick has recently completed the first
reading of its own franchise bill. The need for franchise legislation in Manitoba is
clear. With a business population comprised predominantly of franchisees rather
than franchisors, the former must be protected from abuse at the hands of the
latter without unduly impending fair commercial practices. In adopting franchise
legislation, Manitoba ought to consider other Acts in force in Canada together
with the Uniform Law Conference of Canada’s UFA, moulding them into one to
form the most progressive version. This is an opportunity Manitoba cannot
afford to pass.
188
Ibid. at Annexure 1, s. 1.1.

352 Underneath the Golden Boy

Franchise Legislation and Associations
Around the World
BRYAN SCHWARTZ, * JOHN POZIOS, * *
AND LEANDRO ZYLBERMAN * * *
1. INTERNATIONAL ASSOCIATIONS
A. European Franchise Federation
European Franchise Federation (“EFF”) was founded in 1972. 1 Today,
Tthe
Association has seventeen national members, including Austria,
Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Greece,
Hungary, Italy, Netherlands, Portugal, Slovenia, Sweden, Switzerland, and the
United Kingdom. 2 The Federation’s goal is to promote and defend ethical and
commercial franchising, as well as to explain the meaning of “ethical franchising”
and its implications to all concerned audiences – such as European institutions,
national authorities and the general public and consumers. 3 To achieve its
mission the Federation introduced a Code of Ethics in 1972, requiring that every
national member and each member of the national franchise association
*
Asper Professor of International Business and Trade Law
**
Director, Marcel A. Desautels Centre for Private Enterprise and the Law
***
University of Manitoba Law School, Year III
Professors Schwartz and Pozios wish to express their great appreciation to their co-author, Mr.
Zylberman, who provided us not only with his research assistance, but his skilled and original
contributions to the drafting of this paper and the formulation of our shared policy advice.
1
European Franchise Federation, “A Word of Introduction,” online: European Franchise
Federation - Self Regulation [EFF, “Self-
Regulation”].
2
European Franchise Federation, “Our Membership,” online: European Franchise Federation -
Our Membership [EFF, “Membership”].
3 European Franchise Federation, “Mission Statement of the Federation,” online: European
Franchise Federation - EFF’s Mission [EFF,
“Mission”].

354 Underneath the Golden Boy
commits itself, through its membership, to the principles established in the
Code. 4
The Code contains conditions of membership to the EFF – including
acceptance without reservation of the Articles of the Federation and the rules
and regulations drawn up in accordance with the Articles – as well as demanding
that member Associations or Federations must require their member franchisors
to accept and comply with the European Code of Ethics on Franchising. 5 Part II
of the Code, last amended on 5 December 2003, contains the Code’s text. The
text contains a definition of franchising, guiding principles, clauses regarding
recruitment, advertising, disclosure, the selection of individual franchisees, the
franchise agreement, and the Code’s applicability to master franchise systems. 6
Among other things, the Code requires: (i) franchisors to provide franchisees
with initial training and continuing commercial and/or technical assistance
during the entire life of the agreement; 7 (ii) franchisees not to disclose to third
parties the know-how provided by the franchisor, neither during nor after
termination of the agreement; 8 (iii) that all parties exercise fairness in their
dealings with each other; 9 and (iv) that franchisees be given a copy of the Code
of Ethics as well as full and accurate written disclosure of all information
material to the franchise relationship, within a reasonable time prior to the
execution any binding documents. 10
Franchises are further regulated at the European Union level under
Commission Regulation (EC) No. 2790/1999 of 22 December 1999 on the
application of Article 81(2) of the Treaty to categories of vertical agreements
and concerted practices. The details on franchising appear in the Regulation’s
Guidelines on Vertical Restraints. 11 According to the Guidelines, Article 81
applies to vertical agreements that affect trade between member states and those
4 EFF, “Self-Regulation,” supra note 1.
5
European Franchise Federation, Code of Ethics, online:
[EFF, “Code of Ethics”] at Part I – III(b).
6
Ibid. at Part II.
7
Ibid. at Part II, s. 2.2.
8
Ibid. at Part II, s. 2.3.
9
Ibid. at Part II, s. 2.4.
10
Ibid. at Part II, s. 3.3.
11
European Franchise Federation, “Regulation at the European Union Level: exists in the
context of EU Competition Law only,” online: European Franchise Federation - Self Regulation
and Regulation [EFF, “Regulation at
the European Level”].

Franchise Legislation and Associations Around the World 355
that prevent, restrict or distort competition. 12 Vertical agreements include those
agreements or concerted practices entered into between two or more
undertakings; each of which operates, for the purposes of the agreement, at a
different level of the production or distribution chain and, relating to the
conditions under which the parties may purchase, sell or resell certain goods or
services. 13 The Guidelines apply to franchises in the areas of vertical agreements
containing provisions on intellectual property rights (“IPR”) and know-how.
In dealing with IPR, the Guidelines state that the Block Exemption applies
to vertical agreements containing IPR provisions when the following conditions
are met: (i) the IPR provisions must be part of a vertical agreement; (ii) the IPR
provisions must be assigned to or for use by the buyer; (iii) the IPR provisions
must not constitute the primary object of the agreement; and (iv) the IPR
provisions must be directly related to the use, sale or resale of goods or services
by the buyer or its customers. In the case of franchising, where marketing forms
the object of the exploitation of the IPRs, the goods or services are distributed by
the master franchisee or the franchisees. This is, for instance, the case in a
franchise agreement where the franchisor sells to the franchisee goods for resale
and in addition licenses the franchisee to use its trade-mark and know-how to
market its goods. 14
Moreover, licensing contained in franchise agreements is covered by the
Block Exemption in so far as the license agreement or clauses contained therein
do not constitute the primary object of the agreement and are directly related to
the use, sale or resale of goods or services by the master franchisee or the
franchisee. 15 Some of the IPR related obligations considered necessary to protect
the franchisor’s intellectual property rights are:
• An obligation on the franchisee not to engage, directly or indirectly, in
any similar business;
• An obligation on the franchisee not to acquire financial interests in the
capital of a competing undertaking, which would give the franchisee
the power to influence the economic conduct of such undertaking;
• An obligation on the franchisee not to disclose to third parties the
know-how provided by the franchisor as long as this know-how has not
fallen into public domain;
12
European Franchise Federation, Guidelines on Vertical Restraints, online:
at Part I-2 [EFF,
“Guidelines on Vertical Restraints”].
13
Ibid. at Part III-2.
14
Ibid. at Part III-2(iv).
15
Ibid.

356 Underneath the Golden Boy
• An obligation on the franchisee to communicate to the franchisor any
experience gained in exploiting the franchise and to grant it, and other
franchisees, a non-exclusive license for the know-how resulting from
that experience; and
• An obligation on the franchisee not to use know-how licensed by the
franchisor for purposes other than the exploitation of the franchise. 16
B. Spanish-American Franchise Federation (“FIAF”)
The FIAF was created in 2006 with the goal of legitimizing the exchange of
commercial and strategic information in Latin America. It is comprised of
franchise associations from Argentina, Mexico, Peru, Brazil, Ecuador, Venezuela
and Spain. The FIAF’s objectives include: (i) to promote and encourage the
development of franchising in each of the member nations and those in Latin
America; (ii) to promote and conduct studies and research in the area of
franchising and its characteristics in Latin America; (iii) to promote and provide
aid in the creation of franchise associations in Latin American countries that
lack them; (iv) defend ethical principles in franchising; and (v) encourage the
education, research and development on franchise systems. 17 Although the
FIAF’s official languages are Spanish and Portuguese, all statutes and subsequent
amendments must be written in Spanish. 18 At the moment, the FIAF has yet to
incorporate a Code of Ethics or any regulations pertaining to franchiseefranchisor
relationships.
C. World Franchise Council
The World Franchise Council (“WFC”) was formed in 1994 with the following
founding National Franchise Associations: Argentina, Australia, Austria,
Belgium, Brazil, Canada, Czech Republic, Denmark, France, Germany, Great
Britain, Hong Kong, Hungary, Italy, Japan, Malaysia, Mexico, Netherlands, New
Zealand, Portugal, Singapore, South Africa, Spain, Sweden, U.S.A. and the
European Franchise Federation. 19 Full membership of the WFC is open to all
National Franchise Associations whose Constitution requires a subscribing
membership and a governing body which is in the majority composed of
16
Ibid.
17
Latin American Franchise Federation (FIAF), “Quienes Somos,” online: Quienes Somos
at Article 1 and 2.
18
Ibid. at Article 31.
19
World Franchise Council, “WFC History and Profile,” online: About WFC - History
.

Franchise Legislation and Associations Around the World 357
franchising companies. However, the WFC will only recognize one national
franchise association per member nation, with the exception of Hong Kong. 20
The purpose of the WFC is the encouragement of international
understanding and co-operation in the protection and promotion of franchising
worldwide. Its objectives are fourfold: (i) to provide a forum within which each
properly constituted National Franchise Association in the world can take an
equal seat in the confidence that its views and its sovereignty will be respected
and in the expectation that their common interests and needs will be supported
internationally; (ii) to determine those aspects of information on, and experience
of, franchising which can be usually shared internationally and to provide
mechanisms for the efficient communication of that “know-how;” (iii) to
represent international information on franchising and the common views of
National Franchise Associations to international bodies; and (iv) to encourage
the development of properly constituted National Franchise Associations in all
countries around the world, as recognized by the United Nations. 21
The WFC adheres to a series of principles of ethics that apply to the
relationship between franchisor and franchisee, as well as to the relationship
between master-franchisee and sub-franchisee. The WFC requires that its
franchisor members disclose to prospective franchisees all the information
necessary for the franchisee to engage himself in the franchise relationship in full
knowledge of his commitments and responsibilities. This information must be
disclosed within a reasonable delay before signing the contract, delay which
cannot be less than seven days. Furthermore, during the negotiation phase, a
franchisor may ask the prospective franchisee to sign a legally binding statement
of confidentiality. 22 The WFC also regulates duties of the franchisee and
franchisor.
A franchisee cannot compete with the network, in particular by
appropriating or diverting the know-how transmitted by the franchisor.
Furthermore, the franchisee has a duty of confidentiality during and after the
franchise contract. A franchisor must develop and maintain the commercial and
technical know-how that supports the franchise network and favours a
permanent and structured dialogue with the franchisees to aid the protection
20
Ibid.
21
World Franchise Council, “World Franchise Council Constitution,” online: About WFC –
Constitution
.
22
World Franchise Council, “The World Franchise Council’s Principle of Ethics,” online: about
WFC – Internal Rules
.

358 Underneath the Golden Boy
and development of the franchisor’s know-how. In case of non-respect of the
concept by the franchisee, the franchisor must allow the franchisee, when
appropriate and following due notification, a reasonable delay to conform to his
obligations. Moreover, the franchisor must ensure that each franchisee respects
their obligations and commitments for the general interest of the network. The
WFC also imposes obligations pertaining to the franchise contract itself,
including termination, and outlines obligations that are common to the
franchisor and franchisee. 23
2. COUNTRIES
A. North & South America
1. Argentina
The Argentinean Franchise Association (“AAF”) was founded with the goal of
educating franchisees in order to facilitate their involvement in the world of
franchising. 24 The Association offers courses to its members and the community
at large on topics addressing the advantages of franchising, how to expand a
business, customer service, advertising, and trademarks and patents.
Furthermore, it demands that all of its members adhere to a Code of Ethics.
Among other things, the Code requires pre-contract disclosure of material facts
pertaining to the franchise. 25 More importantly, the AAF presented a bill titled
“Franchises Act” to the Senate in 2004 that is currently being considered. 26
The bill’s main goal is to protect franchisees by requiring pre-contract
disclosure and good faith in the performance of the agreement. Once passed, the
bill will oblige a franchisor to disclose its prior history, its business plan
(proposal), all investments required from the franchisee and a summary of the
operations manual ten days prior to the signing of the franchise agreement. A
clause shall be included nullifying any contract that violates these requirements.
23
Ibid.
24
Asociacion Argentina de Franquicias, “Nuestro Objectivo,” online: Quienes Somos
.
25
Asociacion Argentina de Franquicias, “Codigo de Etica,” online: Asociacion
.
26
Asociacion Argentina de Franquicias, “Que es y que hace la Asociacion Argentina de
Franchising,” online: Articulos
.

Franchise Legislation and Associations Around the World 359
The bill has been drafted to emulate franchise legislation in France, Italy, Spain
and Canada (Alberta). 27
2. Brazil
On 15 December 1994 a law relating to franchising contracts was adopted. The
law applies to franchises operated on Brazilian national territory and to master
franchises. 28 Under Brazilian Law No. 8955/94 (“Brazilian Law”), a disclosure
document must be provided to a prospective franchisee at least ten days prior to
the execution of the franchise agreement or “preliminary franchising
agreement,” or the payment of any fee by the prospective franchisee to the
franchisor or any company or individual related to the franchisor. A “preliminary
franchising agreement” includes a letter of intent or option to purchase franchise
rights in Brazil, or the payment of any fee in connection with such a letter or
intent or option. 29
Under Brazilian Law No. 9279, the franchise agreement must be registered
with the Brazilian Institute of Industrial Property to be enforceable as to third
parties. Such filing must include a certified translation of the franchise
agreement in Portuguese, a list of trademarks the franchisee is authorized to use
under the franchise agreement, and a copy of the franchise agreement. 30
The Brazilian Franchise Association (“ABF”) was created in 1987 with the
goal of promoting and defending the technical development of franchising as a
business model. The ABF offers support services to allow franchisees to correctly
investigate franchises and advises franchisors about all necessary steps involved
27
Asociacion Argentina de Franquicias, “El Contrato de Franquicia Comercial y el Proyecto de
Ley a Consideracion del Congreso de la Nacion,” online: Articulos
.
28
Frank Zaid and John Sotos, “Status Report on National Franchise Law Project,” (Paper
Presented to the Uniform Law Conference of Canada Annual Meeting, August 2002) online:
ULCC, Proceedings of Annual Meetings
.
29
Frank Zaid and Kendal Tyre, “A World Tour of the Basics of International Franchising,”
(Paper Presented at the International Franchise Association’s 38 th Annual Legal Symposium,
May 2005) [online: Frank Zaid, Publications
at A-2.
30
Ibid.

360 Underneath the Golden Boy
in expanding their business. 31 The ABF has incorporated a Code of Ethics that,
unfortunately, is only available in Portuguese. 32
3. Chile
Franchising is still in its early stages in Chile. Although the first franchise opened
in 1985, franchises did not popularize until the 1990s, when the economy began
a period of continuous growth. In 2006, out of the 113 registered franchises in
Chile, 48% hailed from the United States of America, 29% from other nations
and only 23% were of Chilean origin. 33
Although Chile has yet to adopt franchise legislation, franchising has
emerged as a popular business model. Consequently, the Franchise Chamber of
Chile (“CFC”) was created in April 2005 with the goal of developing and
encouraging franchising by, inter alia, providing informational tools to potential
franchisees. 34 The CFC has composed a Franchise Offer Circular (“COF”)
comprised of a series of questions franchisees should consider asking prior to
acquiring a franchise. 35
4. Mexico
Franchising became regulated in Mexico in 1991 36 with the introduction of the
Law to Develop and Protect Industrial Property. 37 Article 20(vii) of the Law
states as its goal “to establish conditions of legal protection between parties to a
franchise, such as guaranteeing a non-discriminatory treaty for all franchisees of
the same franchisor.” Article 142 of the Law focuses solely on franchising and
begins by defining a franchise. Under the Article, a franchisor must provide a
31
Brazilian Franchise Association, “Acerca ABF,” online: Sobre ABF
.
32
Brazilian Franchise Association, Code of Ethics, online:
33
Tormo, “Chile Abre Sus Puertas a la Franquicia,” online: Actualidad – Articulos
.
34
Camara de Franquicias de Chile, “Nace la CFC,” online: Quienes Somos
.
35
Camara de Franquicias de Chile, “Circular de Oferta de Franquicia,” online: Certificacion de
Franquicias .
36
IMPI, “La Propiedad Industrial en Mexico,” online: Buscar, Franquicias
.
37
Camara de Diputados del H. Congreso de La Union (Centro de Documentacion, Informacion y
Analisis), Ley de la Propiedad Industrial, online:
.

Franchise Legislation and Associations Around the World 361
potential franchisee with information about the franchise as dictated by the
Regulations 30 days prior to signing the Franchise Agreement. Failing to provide
accurate information will grant the franchisee both the right to declare the
contract null and void and the ability to sue for damages. A franchisee may claim
damages within one year after signing the contract, while there is no limit on
demanding that the contract be declared null and void. 38
Article 142 Bis requires that the franchise agreement must include the
following information:
• The area in which the franchisee will conduct business;
• The size of the minimum investment required to set up the store;
• The policy with regards to inventory, suppliers and advertising fees;
• The necessary training required by the franchisee’s employees, such as
the way in which the franchisor will provide technical assistance;
• Acceptable causes of termination of franchise agreement;
• The instances under which the franchise agreement may be altered;
• The franchisee shall not be under the obligation to sell corporate
property to the franchisor unless it is specifically agreed; and
• At no moment shall the franchisee be obliged to sell or transfer business
shares to the franchisor, or make him partner, unless specifically
agreed. 39
Article 142, Bis 2 establishes that both during and after the duration of the
franchise relationship, the franchisee must maintain all information about the
franchise confidential. Lastly, neither the franchisor nor franchisee may
unilaterally terminate the franchise agreement unless the agreement is of
indefinite duration or there is just cause to do so. 40
The Mexican Institute of Industrial Property (“IMPI”) is the regulatory
authority responsible for administering franchise law. 41 Following its conception
in 1993, IMPI’s administrative powers were extended through the Industrial
Property Law. 42 In addition, Mexico’s franchise industry enjoys the support of the
Mexican Association of Franchises (“AMF”). Founded in 1989, the AMF’s
mission is to look after the interests of the franchise sector in Mexico, offering
38
Ibid. at Article 142.
39
Ibid. at Article 142 Bis.
40
Ibid. at Article 142, Bis 2.
41
Frank Zaid and Kendal Tyre, supra note 29 at A-9.
42
Mexican Institute of Industrial Property (IMPI), “¿Que es el IMPI,” online: Organizacion del
IMPI
.

362 Underneath the Golden Boy
services and benefits to its members that elevate their standards of quality and
reduce costs, by means of participation in diverse governmental and private
forums, as well as the organization and development of events of interest for the
sector. 43 The Association’s objectives include the establishment of norms that
promote the professionalism of Franchisor Companies as well as developing a
franchise sector statistics bank. 44 The AMF has yet to adopt a Code of Ethics.
5. United States of America
On 21 October 1979, the Federal Trade Commission (“FTC”) Trade Regulation
Rule entitled Disclosure Requirements and Prohibitions Concerning Franchising
and Business Opportunity Ventures (the FTC Rule) came into effect. The Rule
applies to all commercial relationships that meet the definition of a “Franchise,”
unless an enumerated exclusion or exemption is available. 45 The main
requirement of the FTC Rule – also a requirement in several states – is the
production of a disclosure document to prospective franchisees. The document is
intended to provide prospective franchisees with all the necessary information to
make fully informed decisions about purchasing a franchise. Consequently, the
FTC Rule provides basic regulations for the franchising industry throughout all
50 states. In addition, many states have increased the disclosure onus by adding
their own requirements. 46
The Uniform Franchise Offering Circular (“UFOC”), a new disclosure
document, was introduced in 1986, providing franchisors an alternative means of
disclosure to that established by the FTC. 47 The Commission has always
permitted franchisors to comply with disclosure requirements either by following
the provisions in the Franchise Rule itself, or by following the UFOC
guidelines. 48 This is in part due to the UFOC and the FTC requiring similar
disclosure items, including a description of (1) the franchisor and its business;
(2) prior litigation and bankruptcies relating to the franchisor; (3) initial and
ongoing fees; (4) obligations of the parties and other terms of the contract; (5)
43
Mexican Association of Franchises, “Objectives,” online: Association
.
44
Ibid.
45
Frank Zaid and John Sotos, supra note 28.
46
Daniel F. So, Canadian Franchise Law Handbook, (Markham: LexisNexis Canada Inc., 2005)
at 92.
47
Ibid. at 95.
48
Federal Trade Commission, “Frequently Asked Questions, Amended Franchise Rule” online:
.

Franchise Legislation and Associations Around the World 363
restrictions on sales; and (6) rights to renew and terminate the franchise. 49
However, following an amendment to the FTC Rule, franchisors will eventually
no longer be permitted to use the UFOC. As of 1 July 2007, franchisors may
follow the amended Rule, or they may continue their current practice of
complying with the original Rule or individual state franchise disclosure laws
that require a UFOC; but by 1 July 2008, they will be required to follow the
amended Rule only. 50
The new franchise Rule requires franchisors to provide all potential
franchisees with a disclosure document containing 23 specific items of
information about the offered franchise, its officers, and other franchisees.
Required disclosure topics include: the franchise’s litigation history, past and
current franchisees and their contact information, any exclusive territory that
comes with the franchise, assistance the franchisor provides franchisees, and the
cost of purchasing and starting up a franchise. If a franchisor makes
representations about the financial performance of the franchise, this topic also
must be covered, as well as the material basis backing up those representations. 51
Although the amended Rule closely tracks the UFOC guidelines, in some
instances it requires more extensive disclosures, such as with regards to
franchisee-franchisor relationships. For instance, the amended Rule requires
more extensive disclosure on lawsuits the franchisor has filed against the
franchisees; the franchisor’s use of so called “confidentiality clauses” in lawsuit
settlements; a warning when there is no exclusive territory; an explanation of
what the term “renewal” means for each franchise system; and trademarkspecific
franchisee associations. In a few instances, the amended Rule requires
less than the UFOC guidelines. For instance, it does not require disclosure of so
called “risk factors,” franchise broker information, or extensive information
about every component of any computer system that a franchisee must
purchase. 52
The International Franchise Association (“IFA”), founded in 1960, was
established to build and maintain a favorable economic and regulatory climate
49
Manitoba Law Reform Commission, “Consultation Paper on Franchise Legislation,” online:
Current Projects at 36.
50
Federal Trade Commission, “FTC Issues Update Franchise Rule,” online:
.
51
Ibid.
52
Ibid.

364 Underneath the Golden Boy
for franchising. 53 It is important to note that although its name alludes to an
international nature, 95% of its members are US companies. 54 Therefore, it may
be regarded as an association similar to Mexico’s AMF while keeping in mind
that, since many US companies have spread internationally, the association does
indeed have an international scope. The IFA’s mission is to enhance and to
safeguard the business environment for franchising worldwide. 55
The IFA upholds its mission through its Code of Ethics. The Code is
intended to provide a set of core values that are the basis for the resolution of
the challenges that may arise in franchise relationships. The IFA promotes the
Code in hopes that its application will result in healthy, productive, and
mutually beneficial franchise relationships. Through the Code, the IFA
encourages members to act sincerely in word and character, exercising mutual
respect as well as open and frequent communication between all parties to a
franchise. 56
6. Venezuela
Venezuela boasts a flourishing chain of franchises, making franchising the
second fastest growing market in the country. In 2004, approximately 270
franchisors had established themselves in Venezuela, increasing the number of
franchised locations to 1500. Venezuela has thus reached a level of importance
in the world of Latin American franchising, becoming comparable to Brazil,
Argentina, and Mexico and surpassing Chile. What distinguishes Venezuela
from other Latin American countries is that the majority of its franchises are
local, with only 40% deriving from the United States and other countries. 57
Moreover, due to the recent growth of franchising in Venezuela, two franchise
bodies were created, the Venezuelan Franchise Chamber and the Venezuelan
Franchise Association. 58
The Venezuelan Franchise Chamber, created in 1998, now boasts
approximately 140 members. The Chamber’s goal is to assist all parties to a
53
International Franchise Association, “Frequently Asked Questions about Franchising,” online:
About IFA – Franchise FAQ [IFA, “Frequently Asked
Questions”].
54
E-mail from Marcel Portmann (31 July 2007) on behalf of the International Franchise
Association.
55
IFA, “Frequently Asked Questions,” supra note 53.
56
International Franchise Association, Code of Ethics, online: About IFA – Mission Statement
and Values [IFA, “Code of Ethics”].
57
Tormo, “El Mercado de la Franquicia en Venezuela,” online: Actualidad – Articulos
.
58
Ibid.

Franchise Legislation and Associations Around the World 365
franchise by providing informational resources and supporting the Venezuelan
franchise community to foster its growth. 59 Every member of the Chamber must
follow its Code of Ethics, incorporated in 1999. The Code establishes, inter alia,
that upon a dispute, parties to a franchise must exhaust all means of dispute
resolution in good faith. Furthermore, a franchisor must provide all franchisees
with a Uniform Franchise Offer Circular prior to signing any contract related to
the franchise containing information pertaining to the franchise and its
operation. 60
On 7 January 2000, Guidelines for the Evaluation of Franchise Agreements
were published in Special Official Gazette No. 5,431, under Resolution No.
SPPLC-038-99, which establishes the criteria for evaluating the appropriateness
of authorizing franchise agreements. 61 The Guidelines contain important points
to be considered when entering into franchise agreements. They establish
restrictions to free competition and obligations on the franchisee for the
protection of industrial or intellectual property rights of the franchisor, or to
maintain the common identity and the reputation of the franchised network. 62
B. Europe
1. Belgium
Belgium adopted franchise legislation, titled Law Relative to pre-contractual
information in the framework of agreements of commercial partnership, on 19
December 2005, modified on 27 December 2005 and coming into force as of 1
February 2006. The Law applies to agreements of commercial partnership
concluded between two parties, whereby one of the parties concedes to the other
party the right, in return for a fee of any nature, to use in view of the sale of
products or the providing of services, a commercial formula which includes
59
Camara Venezolana de Franquicias, “Quienes Somos,” online: Quienes Somos
.
60
Camara Venezolana de Franquicias, Codigo de Etica, online: Quienes Somos
.
61
SICE – Foreign Trade Information System, “Venezuela Trade Policy Review,” online:
at 77, 203.
62
Maria Isabel Ponce (BPMA & W Attorneys at Law), “Franchising in Venezuela,” online:
Reports – Franchises .

366 Underneath the Golden Boy
either a common brand, a common commercial name, the transfer of know-how,
or the providing of commercial or technical assistance. 63
The franchisor must issue disclosure documents at least one month prior to
the conclusion of the agreement of commercial partnership. The document must
contain information falling under two categories: (1) important contractual
provisions, in so far as they are foreseen in the agreement of commercial
partnerships, and (2) facts contributing to the correct appreciation of the
agreement of commercial partnership. Under the former, the franchisor must
mention all obligations; the manner of calculating the fee owed by the receiving
party, and its mode of revision during the course of the contract and at its
renewal; the non-compete clauses with their term and conditions; the term of
the agreement of commercial partnership and the conditions of its renewal; and
the conditions of notice and of termination of the agreement, notably in relation
to the expenses and investments. Under the latter, the franchisor must disclose
the name or denomination of the party conceding the right as well as its contact
references; in case the right is being conceded by a moral person, the identity
and the status of the physical person acting in its name; the nature of the
activities of the party conceding the right; the intellectual property rights whose
use is being conceded; and for each of the last three years, as the case may be,
the number of partners belonging to the Belgian and international network, as
well as the expansion of perspective networks. 64
The Law also requires that parties keep confidential all information that
they obtain upon the conclusion of the agreement of commercial partnership,
and may not use this information, directly or indirectly, outside of the agreement
of commercial partnership to be concluded. 65 Moreover, the clauses of the
agreement of commercial partnership and the elements provided in the
disclosure document must be written in a clear and comprehensible manner. In
case of doubt on the meaning of a clause or an element to be disclosed, the
interpretation that will prevail is that which is in favor of the receiving party. 66
63
European Franchise Federation, Law relative to pre-contractual information in the framework
of agreements of commercial partnership, online: Self Regulation and Regulation – Regulation
at National Level at Article 2 [EEF, “Regulation at the National
Level”].
64
Ibid. at Article 3 and 4.
65
Ibid. at Article 6.
66
Ibid. at Article 7.

Franchise Legislation and Associations Around the World 367
2. Estonia
In Estonia, franchising agreements are very briefly regulated through Chapter 19
of the Law of Obligations Act, which came into force on 1 July 2002. The
Chapter is comprised of four sections: defining a franchise contract, establishing
the obligations of both franchisors and franchisees, and establishing a
franchisor’s right to check. Under Estonian law, a franchisor is required to
provide the franchisee with instructions for the exercise of the rights thereof and
to provide permanent assistance related thereto to the franchise. 67 No mention
of pre-contractual disclosure is made. Moreover, a franchisor has the right to
check the quality of the goods manufactured or services provided on the basis of
a franchise contract by the franchisee. 68
In contrast to other franchise legislation, the Law defines a franchisee’s duty
more thoroughly. A franchisee is required to, in the exercise of the franchise
contract, use the commercial identifications of the franchisor; to ensure that the
quality of the goods manufactured or services provided by the franchisee
pursuant to the contract is the same as those manufactured or provided by the
franchisor; to follow instructions of the franchisor which are directed at the
exercise of rights on the same bases and in the same manner as the franchisor;
and to provide with all additional services which they could expect upon
acquiring goods or contracting for services from the franchisor. 69
In addition to Estonia’s legislation, the Baltic Franchising Association
(“BFA”) requires that all of its members abide by the Association’s Code of
Ethics. The Code emulates the European Franchise Federation’s Code, although
Estonia itself is not listed as a member on the Federation’s official site.
3. France
France adopted the “Loi Doubin” (Law No. 89-1008) relating to the
development of commercial enterprises and the improvement of their economic,
legal and social environment on 31 December 1989. The first article is relevant
to franchising. It is a disclosure law which covers franchising but is not franchisespecific.
It applies to all franchise, trademark, distribution and license
agreements. The details of the law are laid out in government decree No. 91-337
of 4 April 1991. 70 The Law requires that disclosure of necessary information must
be provided at least twenty days before the execution of the franchise agreement
67
Estonia, Law of Obligations Act, online: at
Chapter 19, §376.
68
Ibid. at Chapter 19, §378.
69
Ibid. at Chapter 19, §377.
70
Frank Zaid and John Sotos, supra note 28.

368 Underneath the Golden Boy
or the payment of any money. A disclosure document must also be furnished to a
prospective franchisee or master franchisee prior to their signing a letter of intent
or option for franchise rights in France. Under the Loi Doubin, there are no
exemptions, exclusions or exceptions with respect to franchises and other
relationships that come within the scope of the law. 71
The disclosure document must disclose the length of time the licensor has
been in existence, the licensor’s history, the current condition of the licensor
and its prospects for developing the relevant market, the size of the network of
franchisees, the field and scope of the agreement’s exclusivity, the duration of
the agreement and the conditions for termination, renewal, and assignment of
the agreement. 72
4. Germany
Franchising in Germany is not explicitly regulated. Instead, the franchise
contract is regulated under various areas of law, such as legal protection of trade,
trade law, debt law, and competition and cartel law. The most important rules
and laws which are applicable for franchise relationships are the following: (i)
limits against other types of marketing; (ii) pre-contractual briefing; (iii) general
business terms; (iv) commercial legal protection; (v) know-how; (vi) duties
performed by the franchisor; (vii) restriction of competition; (viii) prohibition of
post contractual competition; and (ix) right of withdrawal of the franchisee. 73
Customary law (culpa in contrahendo) is applied to matters of precontractual
disclosure. Already at the opening of contract negotiations, a precontractual
relation of mutual trust occurs. In this context, both parties are in
particular obliged to lay open all information relevant to the future cooperation.
Since the franchiser and the franchisee are tying themselves for years by
contract, all facts which are relevant to decision making have to be explained in
a timely, truthful, unmistakable and complete manner. 74 It is important to note
that the duty of disclosure under customary law starts at the point where the
franchisor and the potential franchisee meet for the first time and the franchisor
presents his franchise system in detail. 75
71
Frank Zaid and Kendal Tyre, supra note 29 at A-6.
72
Ibid.
73
German Franchise Association, “Framework and Limits for Franchise Contracts,” online:
Download [DFV, “Frameworks and Limits”].
74
Ibid. at 2.
75
German Franchise Association, “DFV – Disclosure Guidelines,” online: Downloads
[DFV, “Disclosure Guidelines”].

Franchise Legislation and Associations Around the World 369
The German Franchise Association (“DFV”), founded in 1978, aims to,
among other things, increase the popularity and improve the image of
franchising in Germany. To do so, the DFV adheres to the European Franchise
Federation’s Code of Ethics. 76 Moreover, the DFV encourages its members to
follow its Guiding Principles of Disclosure to ensure the protection of
franchisees. 77 The Principles require, inter alia, that franchisors disclose the
following information regarding the franchise concept: (i) company name and
location of the franchisor; (ii) business occupation of the franchisor; (iii) date of
foundation of the franchisor; (iv) excerpt from the commercial register or trade
commission; (v) number of company-owned businesses; (vi) date of the
beginning of franchising; (vii) number of franchise partners; (viii) the names,
business addresses and business telephone numbers of the franchisor’s
franchisees in Germany; (ix) number of newly won franchise partners within the
last year; (x) information on whether in the last five years another franchisee in
the franchisee candidate’s region has or has been terminated prior to the end of
the contract; and (xi) international experience. 78
5. Ireland
During 2003, Ireland experienced a low growth rate in franchise systems of only
2%, and counted only 201 franchise brands in the country. In 2004, only 11% of
franchises originated in Ireland, while 39% hailed from the United States. 79 The
last franchise sector survey, conducted in 2006, reveals that there are now more
than 270 different franchises in operation employing in excess of 25 000 people
in the sector. Moreover, indigenous Irish franchises now account for 14% of the
franchise market. 80
Ireland has yet to incorporate franchise-specific legislation. Instead, the
general law of contract and the Competition Authority’s Declaration in Respect
of Vertical Agreement or Concerted Practices preside over franchise agreements.
The Declaration prohibits, inter alia, provisions restricting the franchisee from
setting its own resale prices, provisions absolutely preventing a franchisee from
supplying customers outside an exclusive territory granted to the franchisee, and
76
German Franchise Association, “DFV – Devoted to Successful Franchising,” online: Home
[DFV, “Devoted to Successful Franchising”].
77
DFV, “Disclosure Guidelines,” supra note 75.
78
Ibid.
79
Bank of Ireland, “Franchising in Ireland Survey 2004,” online: Franchising
at 5.
80
Franchise Direct, “Franchising in Ireland Survey 2006: The Definitive Guide to the Irish
Franchise Industry,” online: Franchising in Ireland
.

370 Underneath the Golden Boy
any non-compete obligation imposed which extends beyond one year after
termination of the Franchise Agreement. 81
The Irish Franchise Association promotes the development of franchising in
Ireland through exhibitions, seminars, newsletters, awards and networking. All
members of the Association must abide by a Code of Ethics that emulates the
Advertising Standards Authority for Ireland’s Code of Ethics. 82 The Code’s
purpose, as stated by the Association, is:
[T]o protect and further the interests of properly constructed franchising companies and
by these means to establish and maintain a clear definition of ethical franchising
standards to assist members of the public, press, potential investors and government
bodies in differentiating between sound business opportunities and any suspect
investment. 83
Among other things, the Code establishes that the franchise agreement shall
clearly set forth the respective obligations and responsibilities of the parties and
all other terms of the relationship and be free from ambiguity; fairness shall
characterize all dealings between a franchisor and its franchisees; and a
franchisor shall make every effort to resolve complaints, grievances and disputes
with its franchisees with good faith and goodwill through fair and reasonable
direct communication and negotiation. 84
6. Italy
Italy first adopted franchise legislation on 21 April 2004, with the introduction
of the Law on Commercial Affiliation. It is important to note that the European
Franchise Federation translates “commercial affiliation” as the equivalent of
“franchises.” 85 The Law requires that a franchise contract must be in writing or it
shall be declared null and void. Furthermore, to set up a franchise network, the
franchisor must have tested its commercial formula on the market. 86
81
AIB Bank, “A Guide to Franchising,” online:
at 6.
82
Irish Franchise Association, Code of Ethics, online: About
.
83
Ibid.
84
Ibid.
85
European Franchise Federation, “Italy: Law on Commercial Affiliation,” online: Self Regulation
and Regulation – Self Regulation at National Level
[EFF, “Italy: Law on Commercial Affiliation”].
86
European Franchise Federation, Law on Commercial Affiliation, online: Self Regulation and
Regulation – Self Regulation at National Level at Article 3 [EFF, “Commercial Affiliation”].

Franchise Legislation and Associations Around the World 371
Article 4 of the Law establishes a franchisor’s obligations, which focus
primarily on disclosure. Under the Article, a franchisor must provide a
prospective franchisee with a complete copy of the contract to be signed at least
30 days before the signing of the commercial affiliation contract. Together with
this document, a franchisor must include a series of annexes, some of which
include: main information concerning the franchisor, including corporate name
and corporate assets; indication of the trademarks used in the system, including
details relating to their registration or filing; a synthetic description of the
elements characterizing the activity of the commercial affiliation; a list of the
franchisees currently operating in the network as well as a list of the franchisor’s
direct outlets; indication of the variation, year by year, of the number of
franchisees, including their location during the last three years or from the date
of the setting up the franchisor’s business, if it is less than three years old; and a
short description of any eventual judicial or arbitral proceeding raised in relation
to the commercial affiliation system against the franchisor and concluded during
the last three years, initiated both by franchisees and private parties or public
authorities in compliance with privacy law in force. For the last three annexes, a
franchisor may limit his information to his activities on the Italian market only. 87
A franchisee cannot transfer its registered office without the franchisor’s
prior consent. Furthermore, a franchisee undertakes to respect and have
respected by its own collaborators and personnel, even after termination of the
contract, the maximum confidentiality on the content of the activity which is
the object of the commercial affiliation contract. 88 The Law also requires both
parties to a commercial affiliation agreement to behave towards the other party
with loyalty, fairness and good faith. In case of a dispute, the parties can agree
that before addressing the case to the courts or to arbitration, they must try to
conciliate through the Chamber of Commerce and Industry where the
franchisee’s registered office is located. 89
The Italian Association of Franchising, or “Assofranchising,” was founded in
Milan in 1971. Assofranchising represents, defends and promotes the economic,
social and professional interests of the associated Franchising networks through
their Franchisors, in a context of strict respect of the principles contained in the
Ethical Code of the Association itself. 90 In addition, the Association abides by
the European Franchise Association’s Code of Ethics.
87
Ibid. at Article 4.
88
Ibid. at Article 5.
89
Ibid. at Article 6 and 7.
90
Italian Association of Franchising, “About Franchising,” online: About Assofranchising
.

372 Underneath the Golden Boy
7. Lithuania
The main legal acts regulating commercial activities in Lithuania are the Civil
Code of Lithuania (enacted since 1 July 2001) and laws regulating different types
of enterprises in Lithuania. In Section XXXVII of the Civil Code, there is Article
XXXVII, which provides for and regulates the franchising agreement and subfranchising
agreement, as well as duties and rights of the franchisor and the
franchisee. 91 The Civil Code requires that a franchise contract be concluded in
written form, or it shall be declared null and void. 92 Furthermore, in dealing with
a contract of sub-franchise, the Code establishes that the conditions of the
contract shall have to be indicated in advance in the contract of franchise or
agreed later with the franchisor. 93
The Code also establishes a series of duties for franchisors and franchisees.
A franchisor’s duties include the obligation to (i) transfer to the franchisee
technical and commercial documentation and submit other information
necessary to the franchisee in order to implement the rights granted to him
under the contract of franchise, likewise train the franchisee and his employees
with regard to the questions related with the implementation of the transferred
rights, and (ii) issue to the franchisee licenses provided for by the contract and
ensure their formalization in accordance with the established procedure. In
addition, unless otherwise provided for by the franchise contract, the franchisor
shall be obliged to (i) ensure the registration of the contract of franchise; (ii)
render to the franchisee permanent technical and consultative assistance and
assistance in training of the franchisee’s employees; and (iii) execute control of
the quality of goods produced by the franchisee, work performed or services
rendered by him under the contract of franchise. 94
A franchisee’s duties demand that he (i) use in his activity the franchisor’s
firm name, trade and service mark in the manner specified in the contract; (ii)
ensure the quality of goods produced, work performed or services rendered under
the contract of franchise; (iii) comply with the directions and instructions of the
franchiser in respect of the use of the rights, external and internal designing of
the business premises of the franchise, as well as to any other conditions of the
activity specified in the contract; (iv) render to purchasers any additional
91
Baltic Franchise Association, “Legal Framework of Franchising Development in Lithuania,”
online: Franchising Legislation – Lithuania
.
92
Lithuania, Civil Code, number VIII-1864, online: Legal Acts – Document Search
at c. XXXVII, Article
6.767.
93
Ibid. at c. XXXVII, Article 6.768.
94
Ibid. at c. XXXVII, Article 6.770.

Franchise Legislation and Associations Around the World 373
services which they could reasonably expect in acquiring goods directly from the
franchiser; (v) do not divulge to other persons any commercial secrets or any
other confidential information received from the franchiser; (vi) conclude a
contract of sub-franchise in the event of such duty thereof being provided for in
the contract of franchise; and (vii) inform purchasers by the most obvious means
for them that the franchisee is acting under a contract of franchise and is using
the firm name, trade and service mark of the franchisor or any other symbols of
individualization thereof. 95
The Code also allows parties to a contract to include certain limitations to
their rights under the contract, so long as these are not in contravention of
Lithuanian competition law. Thus, the franchise contract may limit a
franchisor’s rights by incorporating an obligation not to grant to other persons
franchise locations encroaching upon the franchisee’s exclusive territory, or
refrain from own analogous activity on the same territory. Furthermore, a
franchisee may be contractually obliged not to compete with the franchisor in a
certain territory as well as being banned from simultaneously entering into
franchise contracts with competitors or potential competitors of the franchise
system. 96
A unique feature of Lithuanian franchise legislation is that, under Article
6.773, a franchisor shall be subject to subsidiary liability for claims brought to the
franchisee concerning the failure of the goods sold by the franchisee under the
contract of franchise to conform to quality. Furthermore, the Code enforces a
franchisee’s right to renew the contract on the same conditions so long as the
franchisee has duly performed his duties under the original contract. Conversely,
a franchisor shall have the right to refuse formation of a new contract on the
condition that, within three years from the date of expiry of the contract, he
shall not conclude a similar contract with other persons which would extend
over the same territory on which the terminated contract operated. If the
franchisor wishes to grant the same rights to other franchisees prior to the expiry
of the three-year time limit, he shall be obliged to propose formation of a new
contract to the franchisee or compensate the damages incurred by him. Lastly,
when concluding a new contract, its conditions may not be more onerous for the
franchisee than before. 97
Another unique feature of Lithuania’s franchise law pertains to the transfer
of franchises. Article 6.777 establishes that in the event of death of the
franchisor or franchisee, their rights and duties shall pass to the heir on
95
Ibid. at c. XXXVII, Article 6.771.
96
Ibid. at c. XXXVII, Article 6.772.
97
Ibid. at c. XXXVII, Article 6.774.

374 Underneath the Golden Boy
condition that he is an entrepreneur and continues the business or starts the
business within six months from the date of opening the inheritance. Otherwise,
the contract shall be terminated. 98 Other provisions in the Code address the
effects of change of the firm name and trademark of the franchisor and the
effects of the termination of the exclusive right. 99
The only national franchise association in Lithuanian is the Baltic
Franchising Association (“BFA”), founded in 2004 with the aim of protecting,
enhancing, and promoting franchising in the territory of the Baltic States and
Baltic States bordering regions. 100 The BFA adheres to the European Franchise
Federation’s Code of Ethics, although it is not an official member of the EFF. 101
8. Romania
On 28 August 1997 the Romanian Government issued Ordinance 52/1997
pertaining to franchising. This Ordinance was both approved and modified by a
Law enacted by the Romanian Parliament on 9 April 1998. Article 1 of the
Ordinance provides a number of definitions, while Article 2 establishes a general
disclosure obligation on the part of the franchisor. 102 Under the Ordinance, a
franchisor is required to disclose relevant information with respect to the
franchised business prior to entering into a contract with a franchisee. A
disclosure document must be furnished to a prospective franchisee or master
franchisee prior to its signing of a letter of intent or option, or paying money
under a letter of intent or option, for franchise rights in Romania. 103
The disclosure document must contain information regarding:
• The franchisor’s experience that can be transferred to the franchisee;
• The financial conditions of the arrangement (initial fees, royalties,
advertising and service fees);
• Information allowing the prospective franchisee to calculate the
financial viability of the franchisor;
• The exclusive area provided the to franchisee; and
98
Ibid. at c. XXXVII, Article 6.777.
99
Ibid. at c. XXXVII, Articles 6.778 and 6.779.
100
Baltic Franchising Association, “Baltic Franchising Association,” online: Franchising in the
Baltic .
101
Baltic Franchising Association, “BFA Documents,” online: Franchising in the Baltic
.
102
Romanian Franchise Association, “Legislation and Regulations Relevant to Franchising,
Romania,”
online:
.
103
Frank Zaid and Kendal Tyre, supra note 29 at A-10.

Franchise Legislation and Associations Around the World 375
• The duration of the agreement and the conditions of renewal,
termination, or transfer of the franchise agreement. 104
Romanian law also demands that certain elements be included in a
Franchise Agreement. These can be summarized as follows:
• Object of the agreement;
• Parties’ rights and obligations;
• Financial requirements;
• Duration of the agreement; and
• Conditions governing the amendment, extension and termination. 105
Although there are no governmental remedies available in Romania for a
franchisor’s failure to comply with disclosure requirements, a franchisee may seek
remedies, including damages resulting from any infringement or failure to comply
with any of the legal requirements for the pre-contractual phase. 106
Romania saw the inception of the Romanian Franchise Association
(“ARF”) in 2006. Its aim is to educate parties to a franchise by organizing various
courses and to attract foreign franchisors. More importantly, the ARF adopted a
Code of Ethics with hopes of promoting ethical franchising in Romania.
Consequently, every member of the Association, upon becoming a member or
renewing its membership, agrees to abide by the Code. Among other things, the
Code establishes that all matters material to the franchise relationship should be
contained in one or more written agreements, which should clearly set forth the
terms of the relationship and the respective rights and obligations of the parties.
Furthermore, the Code requires that fairness characterize all dealings between a
franchisor and its franchisees. 107
9. Russia
Chapter 54 (Commercial Concession) of the Civil Code of the Russian
Federation, which came into effect in 1996, regulates the relationship between
the parties but does not regulate disclosure. The Code refers to “commercial
concessions” but clearly makes reference to franchising in describing aspects of
the relationship. 108 According to Article 1208, unless the contract is in written
form, it will be declared null and void. Furthermore, the Chapter enforces a
104
Ibid.
105
Romanian Franchise Association, “Legislation and Regulations,” supra note 102.
106
Frank Zaid and Kendal Tyre, supra note 29 at A-11.
107
Romanian Franchise Association, Code of Ethics, online:
at ss. 3
& 7.
108
Frank Zaid and John Sotos, supra note 28.

376 Underneath the Golden Boy
registration scheme by requiring that all commercial concession contracts be
registered by the agency to have performed the registration of the legal entity or
individual entrepreneur acting under the contract as right-holder (franchisor).
The contract of commercial concession for the use of an object protected in
accordance with the patent legislation shall be also registered with the patent
agency of the Russian Federation. 109
Under Article 1031, the franchisor is obligated to transfer to the user
(franchisee) technical and commercial documentation, and provide other
information necessary for the franchisee to exercise his rights under the contract;
issue to the user licenses stipulated in the contract, having formalized them in
accordance with the established procedure; render continuous technical and
consulting assistance to the user; and supervise the quality of goods
manufactured by the user in compliance with the contract of commercial
concession. Under Article 1032, the franchisee is obligated to use the rightholder’s
firm name and/or trademark as provided by the contract; ensure quality
conformance with the manufactured goods, services rendered, work performed
under the contract with the quality of similar goods, services and work,
manufactured, rendered or performed directly by the right-holder; observe all the
right-holder’s instructions and directions aimed at ensuring the conformance of
the nature, ways and terms of the use of the complex of exclusive rights with the
use thereof by the right-holder; not to disclose right-holder’s know-how or any
other confidential commercial information received from him; to issue a
specified number of subconcessions, should the contract stipulate this obligation;
and to inform buyers in a way most obvious for them that he is using the firm
name, commercial mark, trade mark, service mark or any other individualization
mark by virtue of the contract of commercial concession. The Chapter also
contains provisions dealing with a franchisee’s right of renewal as well as the
amendment and termination of the contract of commercial concession. 110 Either
party has the right to recede from the contract at any time by notifying the other
party six months in advance, unless the contract specifies an earlier date. 111
The Russian Franchise Association was formed in 1997 for support and
protection of the interests of its members and to create a more favorable legal
109
Russian Franchise Association, Chapter 54, Commercial Concession, online: The Legislation
.
110
Ibid.
111
Frank Zaid and John Sotos, supra note 28.

Franchise Legislation and Associations Around the World 377
and business environment for the expansion of franchising in Russia. 112 The
Association has incorporated a Code of Ethics that applies to the relationship
between franchisor and franchisee as well as between master franchisee and
franchisees. However, it does not apply to the relationship between the
franchisor and its master franchisee. 113
10. Spain
Franchising in Spain has experienced a steady incline in recent years. A study
conducted by the Spanish Franchise Association (“AEF”) reveals that, by the
end of 2005, there were 712 franchise brands in Spain, an increase of 63 brands
from 2004. Furthermore, out of the 712 brands registered in 2005, 80 percent are
Spanish, and the rest hail from other countries, including France, the United
States and Italy. 114 Franchise is governed in Spain by Article 62 of Spanish Act
7/1996 on the Regulation of Retail Trading (Article 62) and the Royal Decree
2485/1998 of 13 November which contain accompanying rules and regulations.
The Ministry of Economy and Finance is the Spanish regulatory authority
responsible for administering portions of, and enforcing, Spanish Franchise
Law. 115
Article 62 defines the franchise system. It states the principle that
franchisors in Spain or wishing to enter the Spanish market must register in
special franchise registers (federal register for foreigners, regional national
franchisors). 116 The Article also establishes that a franchisor must disclose to a
potential franchisee, in writing, at least 20 days prior to the signing of any
franchise agreement or pre-agreement or prior to any payments related to the
franchise, all necessary information to facilitate making a well-informed
decision. 117 The Royal Decree 2485/1998 complements Act 7/1996 by
112
Russian Franchise Association, “About the RFA,” online: About the RFA
.
113
Russian Franchise Association, Code of Ethics, online: Code of Ethics
.
114
Spanish Franchise Association (“AEF”), “El Sistema de La Franquicia Facturo 17.909 Millones
de Euros en 2005, un 12% Mas,” online: Datos del Sector
.
115
Frank Zaid and Kendal Tyre, supra note 29 at A-11.
116
European Franchise Federation, “Spain – Legislation Specific to Franchising,” online: Self
Regulation and Regulation – Regulation at National Level
[EFF, “Spain Legislation”].
117
Spain, Act 7/1996, online:
at Article 62 [Spain, Act 7/1996].

378 Underneath the Golden Boy
establishing, in greater detail, the conditions for establishing a franchise
contract, and defining the National Register of Franchisors. The principle of the
Register is vital because it establishes the rule that in order to function in Spain,
a brand name has been recognized and validated on the Spanish market. It is
impossible to allow a franchise system on the market on the basis of brands
submitted to the Patents and Brands Office if the brand name has not been
registered in the National or regional franchise register. 118
Article 3 of the Royal Decree expands the disclosure requirements
established in Act 7/1996. Under the Decree, upon issuing written disclosure, a
franchisor must promise that all information is accurate and truthful. A
franchisor or master franchisee must disclose information about the franchisor,
such as the registration address under the Franchise Registry. Moreover, proof
that the franchisor has all proprietary titles and licenses for the use of all of the
franchise’s trademarks and signs in Spain must be disclosed together with a
general description of the market in which the franchise operates. The franchisor
or master franchisee must also disclose all details pertaining to the development
of the franchise, all technical and commercial assistance that the franchisee will
receive, the characteristics of the know-how required, and an estimate of all
expenses necessary to render the franchise operational. A franchisee must also
be informed as to the size of the franchise system in Spain, including the number
of locations operating in Spain, distinguishing between those directly operated by
the franchisor and those ran by franchisees, indicating the population size in
which each franchise is located and the number of franchisees that have ceased
to belong to the franchise system in the previous two years, explaining whether
the contract was terminated upon completion of the agreement or for other
causes. Lastly, a franchisor or master franchisee must disclose all material facts
about the franchise agreement, including, inter alia, its duration and renewal. 119
Articles 5 and 6 of the Decree address the establishment of the Registry and
its functions. Article 5 requires franchisors intending to sell franchises within the
country to register with the Autonomous Government in the territory where
they are headquartered. Moreover, franchisors intending to do business in more
than one Autonomous Region must be included in the federal Register under
the Directorate General for Domestic Trade of the Ministry of Economy and
Finance. 120 Article 6 states that the Franchise Registry shall have the following
functions, among others: register all franchisors with the Autonomous
118
EFF, “Spain Legislation,” supra note 116.
119
Spain, Royal Decree 2485/1998, online: at Article 3 [Spain, Royal Decree 2485/1998].
120
Frank Zaid and Kendal Tyre, supra note 29 at A-12.

Franchise Legislation and Associations Around the World 379
Government where the franchisor has its head office; register franchise
cancellations as agreed upon by the Autonomous Government; administer
information about the different franchises to those interested; and register
franchisors without a head office in Spain, making all necessary changes to their
application. 121
The Decree was amended in 2006 by the Royal Decree 419/2006 of 7 April
in hopes of improving the registration system to allow potential franchisees to
obtain reasonable information and help them make an informed decision to
invest or not to invest. Furthermore, the amendments will allow the Registry to
better foster transparency in franchising and act more efficiently as an
informative body. 122 The new Decree introduces a more extensive definition of
“franchise,” and has included more detailed provisions for Articles 6, 7, 8, 9, 10
and 12. Thus, a franchisor coming to Spain ought to consider both the Royal
Decree of 1998 and of 2006, as the latter complements the former.
11. Sweden
Franchise legislation in Sweden was introduced in 2006, when Parliament passed
the Law on the Duty of a Franchisor to Provide Information (Law No.
2006:484). 123 As indicated by its title, the Law focuses on disclosure, addressing
issues pertaining to pre-contractual disclosure. The Law states that well before a
franchise agreement is entered into, a franchisor shall in writing give the
franchisee the information that is needed in consideration of the circumstances
with respect to the implications of the agreement and other conditions.
Moreover, the information shall be clear and understandable. It is important to
note that the Law does not give any indication of how long before the
conclusion of the contract disclosure must be made. 124
The disclosure document shall at least contain a description of the franchise
activity that the franchise is to run; information on other franchisees with which
the franchisor has concluded an agreement within the same franchise system and
the volume of their activity; information on the compensation that the
franchisee shall pay the franchisor and other economic conditions of the
franchise activity; information on the intellectual property rights that will be
121
See Spain, Royal Decree 2485/1998, supra note 119 at Article 6.
122
Spanish Franchise Association, “La Legislacion Española,” online: Legislacion Nacional y
Extranjera .
123
CCH (Legal Information and Workflow Solutions), “Antitrust and Trade Regulation Update,
October 2006,” online:
124
Government Offices of Sweden, “Legislation and Regulations Relevant to Franchising,” online:
Swedish Statutes in Translation – Business and Finance

380 Underneath the Golden Boy
granted to the franchisee, information on the goods or services that the
franchisee is obliged to buy or rent; information on the prohibition to compete
that will apply during or after the time for which the franchise agreement will
last; information about the term of the agreement, conditions for modification,
prolongation and termination of the franchise agreement, as well as the
economic consequences of termination; and, finally, information on how a
dispute as to the agreement shall be tried and what shall apply as to liability for
the cost of such trial. 125 The Law does not regulate franchise relationship, by
omitting to establish duties, other than disclosure related, upon franchisors and
franchisees.
The franchise industry in Sweden counts with the support of the Swedish
Franchise Association (“SFF”). Founded in 1972, the association provides
support to its members and conducts research on this area of business. Moreover,
the SFF adheres to the European Franchise Federation’s Code of Ethics. 126
C. Pan-Asia
1. Australia
Australia’s franchising sector has experienced tremendous growth and
popularity, so much so that many often argue the number of franchise systems
per capita in Australia is too high. 127 The total number of franchisors in Australia
has increased from 693 in 1998 to 960 in 2006, out of which 93 percent are
Australian-based franchise systems. Furthermore, it is estimated that there are
56,200 business format franchised business units operating together with some
5,660 company-owned units, producing a total of 61,860 units in business format
franchise systems. 128
The Franchising Code of Conduct (“The Code”) became law on 1 July 1998
and was fully operational on 1 October 1998. The Code is promulgated as the
Trade Practices (Industry Codes – Franchising) Regulations 1998, made under
125
Swedish Franchise Association, Law on the Duty of a Franchisor to Provide Information (24
May 2006, Law No. 2006:484), online: New Franchise Law in Sweden
at §3.
126
Swedish Franchise Association, “Franchising in Sweden,” online: English
.
127
Lorelle Frazer, Scott Weaven & Owen Wright (Service Industry Research Centre, Griffith
University), “Franchising Australia 2006 Survey,” online: FCA Franchise Survey 2006
at 9.
128
Ibid. at 8-9.

Franchise Legislation and Associations Around the World 381
the Commonwealth’s Trade Practices Act 1974. 129 The Code applies to a
franchise agreement entered into, renewed or extended on or after 1 October
1998. 130 Part II of Australia’s Code enforces rather onerous disclosure
requirements, commencing with a franchisor’s obligation to create a new
disclosure document before entering into a franchise agreement and within three
months after the end of each financial year after entering into a franchise
agreement. 131 Moreover, the Code states that the purpose of a disclosure
document is twofold: first, to give to a prospective franchisee, or a franchisee
proposing to enter into, renew or extend a franchise agreement, information
from the franchisor to help the franchisee to make a reasonably informed
decision about the franchise; and, second, to give a franchisee current
information from the franchisor that is material to the running of the franchised
business. 132
Franchisors in Australia must adopt a prescribed layout for their disclosure
document, following the form and order, and under the numbering, set out in
Annexure 1 or 2 of the Code as the case requires; and under titles used in the
relevant Annexure. In addition, a disclosure document must have a table of
contents based on the items in the relevant Annexure, indicating the page
number on which each item begins. 133 The franchisor must then give a copy of
the disclosure document together with the Code in two instances. First, to a
prospective franchisee at least 14 days before the prospective franchisee enters
into a franchise agreement or an agreement to enter into a franchise agreement
or makes a non-refundable payment to the franchisor or an associate of the
franchisor in connection with the proposed franchise agreement. Second, he
must give a copy to a franchisee at least 14 days before renewal or extension of
the franchise agreement. 134 In addition, a franchisee is entitled to request a
current disclosure document be issued by the franchisor once every 12 months.
The franchisor must then deliver the document within 14 days. 135
129
Report of the Franchising Policy Council, “Review of the Franchising Code of Conduct” (May
2000) online:
at 4.
130
Trade Practices (Industry Codes – Franchising) Regulations 1998, SR 1998 No. 162
[Franchising Regulations] online: FCA - Franchising Code of Conduct
at s. 5(1).
131
Ibid. at s. 6(1).
132
Ibid. at ss. 6(A)(a) and (b).
133
Ibid. at ss. 7(1) and (2).
134
Ibid. at s. 10.
135
Ibid. at s. 19.

382 Underneath the Golden Boy
As per Annexure 1, a franchisor must include the following information in a
disclosure document: (i) the franchisor’s name, address of registered office and
principal place of business in Australia; (ii) a summary of the relevant business
experience in the last 10 years of each director, secretary or partner of the
franchisor who is likely to have management responsibilities for the franchisor’s
business operations in relation to the franchise, excluding the executive officer;
(iii) details of litigation or arbitration relevant to the franchise alleging breach of
a franchise agreement, contravention of trade practices law, contravention of
Corporations Law, unconscionable conduct, misconduct, or and offence of
dishonesty; (iv) number of existing franchises; (v) whether the franchise is for an
exclusive or non-exclusive territory or limited to a particular site; (vi) details
pertaining to the supply of goods or services to a franchisee; (vii) policy of the
franchisor, or an associate of the franchisor, for the selection of sites or
territories; (viii) summaries of the franchisor and franchisee’s obligations under
the agreement; and (ix) other relevant disclosure information. 136
Two very unique features of Australia’s Code are established in sections 11
and 13. Section 11 establishes that a franchisor must not enter into, renew, or
extend a franchise agreement; or enter into an agreement to enter into, renew or
extend an agreement; or receive a non-refundable payment under a franchise
agreement or an agreement to enter into a franchise agreement unless the
franchisor has received from the franchisee or prospective franchisee a written
statement that the franchisee has received, read and had a reasonable
opportunity to understand the disclosure document and the Code. To fulfill this
requirement, the franchisor must have received, prior to entering into a
franchise agreement, the following materials from a franchisee: (i) signed
statements that the prospective franchisee has been given advice about the
proposed franchise agreement or franchised business by an independent legal
adviser, an independent legal adviser, or an independent legal accountant. For
each kind of statement not received, the franchisee should have a signed
statement that he has been given that kind of advice about the proposed
franchise agreement or franchised business, or has been told that that kind of
advice should be sought but has decided not to seek it. 137
Part 3, Section 12 of the Code introduces a cooling-off period. Under the
section, a franchisee may terminate an agreement, including both a franchise
agreement and an agreement to enter into a franchise agreement, within 7 days
after the earlier of entering into the agreement or making any payment under
the agreement. This does not apply to the renewal, extension or transfer of an
136
Ibid. at Annexure 1.
137
Ibid. at s. 11.

Franchise Legislation and Associations Around the World 383
existing franchise agreement. Upon termination, a franchisor must, within 14
days, return all payments made by the franchisee to the franchisor under the
agreement. However, the franchisor may deduct from the amount reimbursed to
the franchisee the franchisor’s reasonable expenses if the expenses or their
method of calculation have been set out in the agreement. 138
The Code also contains a specific part that deals with resolving disputes
between franchisors and franchisees by way of mandatory mediation. The aim of
such a provision is to offer a prompt and less costly option to litigation in the
courts. 139 The procedure the complainant must follow commences with an
obligation to tell the respondent, in writing, the nature of the dispute, what
outcome the complainant wants and what action the complainant thinks will
settle the dispute. The parties should then try to agree about how to resolve the
dispute. 140 If the parties fail to come to an agreement within three weeks, either
party may refer the matter to a mediator. In addition, if the parties cannot agree
about who should be the mediator, either party may ask the mediator adviser to
appoint a mediator. 141 Foreign franchisors must note that all mediation under
The Code must be conducted in Australia. 142
If parties fail to come to an agreement, mediation efforts will be terminated
if at least 30 days have elapsed after the start of mediation. Moreover, if either
party asks the mediator to terminate the mediation, the mediator must do so.
However, a mediator may refuse to terminate the process if he is satisfied that a
resolution of the dispute is imminent. 143 Parties will be held equally liable for the
costs of mediation under the Code, unless they agree otherwise, and they must
pay for their own costs of attending mediation. 144
The Franchise Council of Australia (“FCA”), created in 1983, represents
franchisees, franchisors and services provides in the franchise industry. The
FCA’s goals include establishing standards of international best practice in
business format franchising for Australian franchise systems; providing
information and education about franchising to existing and potential
franchisees and franchisors; lobbying state and federal governments on issues
relevant to the sector; developing a vital, strong and financially viable
138
Ibid. at s. 13.
139
Report of the Franchising Policy Council, supra note 129 at 43.
140
Trade Practices (Industry Codes – Franchising) Regulations 1998, supra note 130 at ss. 29(1)
and (2).
141
Ibid. at s. 29(3).
142
Ibid. at s. 29(5A).
143
Ibid. at s. 30A.
144
Ibid. at s. 31.

384 Underneath the Golden Boy
franchising sector; advancing the interests of members in Australia and in special
interest markets such as the international franchise community, Franchisor
Advisory Councils, Small Business Forums and property leasing organizations;
continually fostering among customers, governments and the business
community, a broad-based understanding of the economic importance of having
a strong franchising sector in Australia; and designing efficient, identified, valueadded
services to members and assist them to be more effective in franchising. 145
The FCA has incorporated member standards to promote excellence in
franchising. Under these, all FCA members are expected to conduct their
franchising activities professionally and in compliance with Australian law. In
addition, they are expected to comply with agreed minimum standards of
conduct, which include: (i) no member shall imitate a trade mark, trade name,
corporate name, slogan, or other mark of identification of another member of
business in any matter or form that would have the tendency or capacity to
mislead or deceive; (ii) members will become familiar with the content of these
Member Standards and draw them to the attention of clients as appropriate from
time to time; (iii) a member, be they franchisor, vendor franchisee, franchise
broker, or representative of a franchise system should not sell a franchise if at the
time the franchisor or vendor franchisee knew or ought to have known that a
reasonably competent franchisee would be unlikely to be able to successfully
operate the franchise; and (iv) members are to behave professionally and refrain
from illegal, unethical or improper dealings or otherwise act contrary to the
image of franchising or the FCA. 146 The Member Standards also incorporate
provisions pertaining to a franchisor and franchisee as well as to a supplier
member. With regards to franchisees and franchisors, the Standards state the
following:
• A franchisor shall as part of its franchisee recruitment process make
reasonable investigation to assess whether a prospective franchisee
appears to possess the basic skills and resources to adequately perform
and fulfill the needs and requirements of the franchise;
• The franchisor shall have training and support processes as applicable
to the franchise system to help franchisees improve their abilities to
conduct their franchises. Franchisees will endeavor to apply and adapt
all learning to their operation; and
145
Franchise Council of Australia, “The FCA Overview,” online:
.
146
Franchise Council of Australia, “Member Standards,” online:
.

Franchise Legislation and Associations Around the World 385
• Franchisors and franchisees should in their dealings with one another
avoid the following conduct where such conduct would cause
significant detriment to either party’s business:
• Substantial and unreasonable overvaluation of fees and prices; and
• Unnecessary and unreasonable conduct beyond that desirable for
the protection of legitimate business interests of the franchisor,
franchisee or franchise system. 147
2. China
The Ministry of Commerce promulgated the Measures for the Regulation of
Commercial Franchise (“Franchise Measures”) on 31 December 2004. The
Measures, which came into force on 1 February 2005, replace the 1997 Measures
of the Administration of Commercial Franchise Operations, which only
governed franchising involving domestic operators. 148 The Measures apply only if
the franchise operations are conducted within the People’s Republic of China
(“PRC”). Thus, Hong Kong and Macao are excluded from coverage. 149 In
addition, the Measures apply only to “commercial franchises” engaged in China.
Commercial franchises are defined as business activities governed by a franchise
agreement, where the franchisor licenses use of its trademarks to a franchisee
that pays royalties and conducts those activities under the franchisor’s uniform
system. 150
One of the Measures’ most controversial sections requires that franchisors
operate two-company owned units in China for more than one year before
offering franchises for sale. This places an onerous burden on franchisors,
especially from foreign markets, due to the high cost of compliance. 151
Franchisors must also have the capacity to provide to the franchisee long term
operational guidance and training services. Moreover, if the franchising requires
the franchisor to supply goods, the franchisor must have a goods supply system,
which is stable and capable of guaranteeing quality, and be capable of providing
related services. Conversely, a franchisee must satisfy fewer conditions, such as:
(i) that it has a lawfully established enterprise or other economic organization;
and (ii) that it has financial resources, fixed premises and personnel. 152
147
Ibid.
148
HG Org., Worldwide Legal Directories, “China: FIE Franchising Regulations,” online:
.
149
Erik B. Wulff and Tao Xu, “Franchise Regulation in China,” Franchise Law Journal Vol. 25,
No. 1 (Summer 2005)19 at 20.
150
Frank Zaid and Kendal Tyre, supra note 29 at A-5.
151
Erick Wulff and Tao Xu, supra note 149 at 20 and 22.
152
HG Org., supra note 148.

386 Underneath the Golden Boy
The Measures establish that franchisors must disclose to the prospective
franchisee true, accurate, and basic information about the franchise, and provide
a copy of the franchise agreement twenty days prior to signing a franchise
agreement. A franchisor must also disclose any information that the franchisee
requests. This may prove quite onerous, as there is no limit on the type or
quantity of information the franchisee can demand. 153 In addition, a franchisor
must disclose:
• The amount of the initial investment by a franchisee;
• Details about all franchise fees, including the return of the deposit, if
one was paid by the franchisee;
• Information about the trademarks, including registration, usage and
litigation, or any other litigation the franchisor was involved in during
the past five years must be provided;
• A list of the goods or services it can supply, as well as the restrictions on
conditions of that supply;
• The franchisor’s capabilities to provide training and guidance;
• What training and guidance the existing franchisees receive; and
• The franchisor’s principal officers, their criminal history, and whether
they have ever been personally liable for a company’s bankruptcy. 154
Although the Measures are primarily concerned with disclosure, they also
address certain relationship issues. For instance, franchisees must not transfer
their business without a franchisor’s approval and the term of the franchise
cannot be less than three years. Furthermore, a franchisor must guarantee the
quality of the products sold by its designated suppliers. Finally, the Measures
impose an obligation that franchise operations be conducted in accordance with
the principles of fair dealing, honesty and trustworthiness. 155
The China Chain Store and Franchise Association (“CCFA”), founded in
1997, is the leading advocate, representative and resource for entrepreneurs with
regular chain, franchise chain, voluntary chain and licensing formats in China.
CCFA is dedicated in leading a healthy and harmonious development of modern
distribution models in China. 156 The CCFA, as a quasi-government organization,
153
Frank Zaid and Kendal Tyre, supra note 29 at A-5.
154
Ibid.
155
Erick Wulff and Tao Xu, supra note 149 at 21.
156
China Chain Store and Franchise Association, “About Us,” online:
.

Franchise Legislation and Associations Around the World 387
is responsible for mandating rules and codes of conduct for franchise operations
and promoting franchise development. 157
3. Indonesia
On 18 June 1997, the Indonesian Government issued Government Regulation
No. 16/1997, which relates specifically to franchising. This Regulation requires
disclosure and the registration of both the franchise agreement and the disclosed
information within the Ministry of Industry and Trade. The Decree of the
Minister of Industry and Trade No. 259/MPP/Kep/7/1997, implementing
franchise regulations, was adopted in July that same year. 158
Under Articles 2(1) and (2) of the Decree, Franchise Agreements must be
in writing and in Indonesian. In addition, franchisors and franchisees must give
priority to the use of local products or raw materials and the franchisor must
provide guidance and training to the franchisee. The Decree also establishes the
procedure for the franchisee’s registration of the franchise agreement and the
issuing on the past of the Government of a trade license under Articles 11 to
16. 159 The franchisee must file, within thirty business days after the execution of
the Franchise Agreement, the disclosure document with the Indonesian Ministry
of Industry and Trade in the Indonesian province where the franchised business
will be operated, along with the translated Franchise Agreement and certain
other application materials, to obtain the franchised business registration
certificate. 160
The disclosure document must include: information about the franchisor,
including (i) the name and place of business, and the franchisor’s financial
condition; (ii) information about intellectual property rights and special
characteristics of the franchised business; (iii) terms and conditions to be fulfilled
by the franchisee; (iv) assistance or facility offered by the franchisor to the
franchisee; (v) rights and obligations of the franchisor and the franchisee; and
(vi) conditions for the expiration, termination, and extension of the Franchise
Agreement and other matters necessary for the performance of the Franchise
Agreement. 161
157
Franchisebusiness.com (The Official Directory of the Franchise Council of Australia), “China –
The New Franchise Frontier,” online: .
158
UNIDROIT, “Legislation and Regulations Relevant to Franchising - Indonesia,” online:
.
159
Ibid.
160
Frank Zaid and Kendal Tyre, supra note 29 at A-7
161
Ibid.

388 Underneath the Golden Boy
4. Japan
Franchise is regulated in Japan by the Medium-Small Business Promotion Act
(“The Act”) and the Act Concerning Prohibition of Private Monopoly and
Maintenance of Fair Trade (“The Guidelines”). The Act requires a general duty
of disclosure, having been designed to protect “mom and pop” businesses. The
Guidelines require that a franchisor make full disclosure of information regarding
the franchise system prior to execution of a franchise agreement. 162 Such
information should include:
• The supply of goods to the franchisee;
• The details of the assistance to be offered to the franchisee;
• The nature, amount and conditions of repayment, if any, of the fee to
be paid at the time of entering into a franchise agreement;
• The amount, method of calculation, as well as the timing and manner
of payment of royalties;
• The description of any settlement arrangement between the franchisor
and the franchisee, as well as the interest rate offered by the franchisor;
• Whether the franchisor is prepared to indemnify the franchisee for its
deficit or to render assistance to the operation of a franchised unit that
is not doing well; and
• Whether the franchisor in the franchise agreement reserves the right to
operate a unit on its own or to grant another franchise close to the
franchisee and whether the franchisor plans to do so. 163
Under the Act, disclosure must be provided to a prospective franchisee prior
to signing of a franchise agreement. The Act does not explicitly state a specified
time period within which the disclosure document must be delivered. Although
the Act does not explicitly state that it applies to non-Japanese franchisors, the
purpose of the Act is to protect Japanese medium and small-sized businesses and
thus would apply to non-Japanese franchisors. 164
Japan’s Ministry of International Trade and Industry (now the Ministry of
Economy, Trade and Industry) authorized the creation of the Japan Franchise
Association (JFA) in 1972. The Association was created with the purpose of
nurturing the Franchising Industry to ensure its healthy development. 165 All
members of the JFA must abide by its Code of Ethics. The Code was introduced,
inter alia, to maintain sound, mutually beneficial business relationships between
162
Ibid. at A-8.
163
Ibid.
164
Ibid.
165
Japan Franchise Association, “About JFA,” online: .

Franchise Legislation and Associations Around the World 389
parties to a franchise, and to improve credibility and business performance.
Among other things, the Code includes the following requirements: (i) the
franchisor shall provide accurate information and shall avoid excessive
advertising or misleading information; (ii) the franchise agreement shall clearly
stipulate in writing detailed rights and obligations of the franchisor and the
franchisee, and shall be executed on the basis of comprehensive understanding
of and substantive agreement on the contractual contents by both parties; (iii)
the franchisor shall commit to comply with relevant laws and regulations, shall
not infringe the logos of others or perform an act which constitutes unfair
competition, and shall endeavor to prevent the franchisee from engaging in such
unlawful activities; and (iv) the franchisor shall endeavor to provide the
franchisee with necessary guidance that facilitates the franchisee’s performance
of contractual obligations and to maintain enough communication that prevent
occurrence of conflict with the franchisee. Should the franchisee breach the
contract, the franchisor shall not terminate the contract before making an effort
to remedy the breach by way of sufficient notice to the franchisee. 166
5. Republic of the Philippines
Before the turn of the century, there were approximately 500 franchises already
in operation in the Republic of the Philippines. Of these, 40% were homegrown,
while the remaining 60% were foreign owned. 167 Currently, franchising in the
Philippines is thriving, with over 900 franchisers in the country. 168 Overall,
franchising in the Philippines has helped improve productivity of small and
medium enterprises through the use of standards, modern technology and better
management systems. 169 Franchise industry sales have increased from PhP 20
billion in 1997 to PhP 105 billion in 2001. 170 Regardless of enjoying such a surge
in the franchise market, the Philippines has yet to enact franchise-specific
legislation.
166
Japan Franchise Association, “JFA’s Code of Ethics,” online: .
167
Philippine Franchise Association, “A Guide to Franchising in the Philippines,” online: Guide to
Franchising Handbook
[Philippine Franchise Association, “Franchising Guide”].
168
Gov.Ph News, “PGMA Presents Awards to Outstanding Achievers in the Franchising Sector,”
(6 March 2007) online: News .
169
Gov.Ph News, “PGMA Cites Franchising Industry for Helping Boost the Economy,” (11 July
2007) online: News .
170
Philippine Franchise Association, “Association Profile: History,” online:
[“Philippine Franchise
Association, “Association Profile”].

390 Underneath the Golden Boy
Instead, the Philippine Franchise Association (“PFA”) imposes a series of
rules upon its members. Formed in February 1995, the PFA’s aim is to promote
and sustain the growth of franchising as a tool for national development. It is the
PFA’s goal to professionalize and bring the franchising sector in the Republic of
the Philippines to a world-class level, and provide a forum for Filipino
franchisors, franchisees and suppliers to network, exchange ideas and explore
areas of growth and expansion. 171
The PFA regulates the franchise industry through its Fair Franchising
Standards, introduced on 21 March 2003 and adopted on 24 February 2005. 172
The Standards require that before any Franchise Agreement is signed, the
Franchisor must give the franchise applicant at least thirty days to review the
disclosure document (Franchise Offering Circular, the FOC). The FOC must
shall include the following information: (i) history of the franchise system being
offered, including the number of outlets opened, in operation, company owned
and franchisee-operated, and franchised outlets closed over the last five years;
(ii) a description of the business concept and how it differentiates itself form the
competition; (iii) the key terms of the franchise agreement; (iv) full disclosure of
the financial requirements of the franchise business; (v) a listing of the
franchisor’s key officials and a brief description of their qualifications and
background; (vi) a summary of past and present litigation involving the franchise
system being offered over the last five years; and (vii) a provision that requires
the franchise applicant to seek adequate legal and financial counsel before
signing the Franchise Agreement. 173 In addition, a franchisor must give the
franchise applicant at least fourteen days to review the proposed Franchise
Agreement. 174
The Standards impose several obligations franchisors must fulfill, in addition
to providing disclosure, once the Franchise Agreement is signed. For instance, a
franchisor must provide the franchisee with the operating manual before the
opening of the franchised outlet as well as adequate start-up and ongoing
training to the franchise and its personnel to ensure that the franchisee operates
the business according to the operating standards of the franchisor. 175 The
Standards also address the issue of dispute resolution by encouraging franchisors
171
Philippine Franchise Association, “Franchising Guide,” supra note 167.
172
Philippine Franchise Association, “The Fair Franchising Standards of the Philippine Franchise
Association,” online: About the PFA – Milestones
[Philippine Franchise Association, “Fair Franchising Standards”].
173
Ibid. at s. V(1).
174
Ibid. at s. V(2).
175
Ibid. at ss. VII(2) and (3).

Franchise Legislation and Associations Around the World 391
to exhaust all measures of resolving disputes with its franchisee. As far as
practicable, the franchisor shall endeavor to resort to non-judicial remedies as a
way of settling disputes with its franchisee and provide for such mechanism in its
Franchise Agreement. 176
In addition to the Standards, franchisors in the Republic of the Philippines
must abide by the Intellectual Property Code, which prohibits provisions that
adversely affect competition. 177
6. South Korea
Korea introduced franchise legislation in 2002, when the Act on Fairness in
Franchise Transactions, together with the Presidential Decree to Implement the
Act on Fairness in Franchise Transactions (collectively, “The Act”) became
effective on 1 November. The Act requires that a disclosure document be
provided at the earlier of five days before the date that the prospect (a) pays any
type of fee; or (b) signs a franchise agreement. 178
The disclosure document must be a single document in book form and may
be provided in any one of three ways: (i) the prospective franchisee may inspect
it at the franchisor’s offices; (ii) the franchisor may give it directly to the
prospective franchisee; or (iii) the franchisor may make it available for the
applicant to download from the Internet. Since an applicant must apply in
writing to receive a disclosure document, the disclosure document should not be
placed on the franchisor’s website for access by the general public. 179
The disclosure document must contain information on: (i) details on the
franchisor’s financial information and ownership; (ii) the franchisor’s records of
criminal or administrative sanctions; (iii) franchisee costs in startup and
operation of the business; (iv) conditions or limitations on the franchisee’s
business; (v) numbers of franchisees and franchisor-owned businesses in
operation; (vi) the procedures and timetable for matters necessary to start a
business; and (vii) the franchisee training and education requirements. In
addition, the regulations implemented under the Presidential Decree to
Implement the Act on Fairness in Franchise Transactions require that
franchisors (i) provide necessary information about the franchise business to
prospective franchisees, (ii) not unreasonably require franchisees to purchase
equipment or commodities from the franchisor or an approved source, (iii) not
176
Ibid. at s. VIII.
177
Joseph Adler, “A Summary of International Franchise Specific Laws – January 2004,” online:
.
178
Frank Zaid and Kendal Tyre, supra note 29 at A-11.
179
Ibid.

392 Underneath the Golden Boy
unfairly restrict a franchisee’s dealings in commodities, services, or business
activities, (iv) provide commodities, services, or assistance, unless they have
rightful cause not to do so, and (v) to obtain the franchisee’s prior consent prior
to imposing monetary burdens on the franchisee. 180
Currently, the Korea Fair Trade Commission (“KFTC”) is seeking to amend
fair franchise transactions law to protect franchisees by making provisions of an
Information Disclosure Statement mandatory and limiting unfair denial of
franchise contracts renewals. 181
180
Ibid.
181
Korea.net, “Enhancing Fairness in Franchise Transactions and Distribution Market,” online:
News - Government Press Releases
.

Franchise Legislation and Associations Around the World 393
Chart A: Franchise Associations Around the World
Country Association Name Home Page Code of Ethics
International Associations
European
Franchise
Federation (EFF)
Federacion
IberoAmericana
de Franquicias
(FIAF)
http://www.fiaffra
nquiciadores.com/
home.htm
http://www.efffranchise.com/
http://www.efffranchise.com/EFF%20Code%20of
%20Ethics%20for%20Franchising.p
df
N/A
World Franchise
Council (WFC)
http://www.worldf
ranchisecouncil.or
g/control/cpviewc
ontentId=WFC_
HOME
http://www.worldfranchisecouncil.o
rg/control/cpviewcontentId=WFC
_RULES
North America
1. Canada Canadian
Franchise
Association
(CFA)
http://www.cfa.ca/
CFA_HTM/Hom
e.html
http://www.cfa.ca/page.aspxurl=C
odeOfEthics.html
2. Mexico Asociacion
Mexicana de
Franquicias
(AMF)
http://www.franqu
iciasdemexico.org/
index-htm.htm
N/A
3. United
States of
America
International
Franchise
Association (IFA)
http://www.franch
ise.org/aboutifa.as
px
http://www.franchise.org/code.aspx

394 Underneath the Golden Boy
Country
Chart A: Franchise Associations Around the World
Association
Name
Home Page
Code of Ethics
Latin America
1. Argentina Argentine
Association of
Franchising
(AAF)
www.aafranchisi
ng.com.arwww.fr
anquiciasarg.com
http://www.aafranchising.com.ar/1_4.php
2. Brazil Associação
Brasileira de
Franchising
(ABF)
http://www.porta
ldofranchising.co
m.br/
http://www.portaldofranchising.com.br/are
a.aspA040_cod_area=12&A041_cod_co
nteudo=11
3. Chile Camara de
Franquicias de
Chile
4. Venezuela Camara
Venezolana de
Franquicias
(AVF)
http://www.cama
radefranquicias.c
l/web.cgiid=1
http://www.profr
anquicias.com/
N/A
http://www.profranquicias.com/index.php
page=quienes&sec=codigo
1. Belgium Belgian
Franchise
Association
(FBF)
Europe
http://www.fbfbff.be/index.php
lang=fr
The FBF adheres to the EFF’s Code of
Ethics
3. France Federation
Francaise de la
Franchise (FFF)
http://www.franc
hise-fff.com/
The FFF adheres to the EFF’s Code of
Ethics.

Franchise Legislation and Associations Around the World 395
Country
Chart A: Franchise Associations Around the World
Association
Name
Home Page
Code of Ethics
Europe
4. Germany German
Franchise
Association
(DFV)
5. Greece The
Franchise
Association
of Greece
5. Ireland Irish
Franchise
Association
6. Italy Italian
Association
of
Franchising
(Assofranchising)
http://www.dfvfranchise.de/index_
e.htm
http://www.franchisi
ng.gr/
http://www.irishfran
chiseassociation.co
m/index.html
http://www.assofran
chising.it/english/in
dexeng.htm
DFV follows a revised version of the EFF’s
Code of Ethics: http://www.dfvfranchise.com/wcms/Clients/13820032012
1715/Documents/146/Code%20of%20ethi
cs%202004.pdf
The Association followed the EFF’s Code
of Ethics, using it as a foundation:
http://www.franchising.gr/en/franchise_co
de_en.pdf
http://www.irishfranchiseassociation.com/
codeofethics.html
http://www.assofranchising.it/english/paco
deof_ethicalconduct.htm
7. Lithuania
Latvia &
Estonia
Baltic
Franchise
Association
(BFA)
www.franchising.lv/
new_site/en/legislati
on_lithuania.shtml
The FBA has adopted the EFF’s Code of
Ethics:www.franchising.lv/new_site/en/bfa
_dok.shtml
8. Romania Romanian
Franchise
Association(
ARF)
http://www.francizo
r.ro/
http://www.francizor.ro/ROMANIAN%20
FRANCHISE%20ASSOCIATION.html

396 Underneath the Golden Boy
Chart A: Franchise Associations Around the World
Country Association Name Home Page Code of Ethics
Europe
9. Russia Russian Franchise
Association
(RFA)
10. Spain Asociacion
Española de
Franquiciadores
(AEF)
11. Sweden Swedish Franchise
Association (SFF)
http://www.rarf.
ru/eng/
http://www.fran
quiciadores.com
/
http://www.fran
chiseforeningen.
se
http://www.rarf.ru/Eng/content/document_r
_3B6658F4-C97F-40E7-9E29-
81F97ED6FF68.html
The AEF follows the EFF’s Code of Ethics.
The SFF adheres to the EFF’s Code of
Ethics.
Pan-Asia
1. Australia Franchise
Council of
Australia (FCA)
http://www.fran
chise.org.au/
http://www.franchise.org.au/content/id=21
2. China China Chain
Store and
Franchise
Association
(CCFA)
http://www.ccfa.
org.cn/english/i
ndex.jsp
http://www.ccfa.org.cn/english/reg.jsp
3. Indonesia Franchise
Association of
Indonesia (AFI)
N/A
N/A
4. Japan Japan Franchise
Association
(JFA)
http://jfa.jfafc.or.jp/about_jf
a_English.html
http://jfa.jfafc.or.jp/jfas_Code_of_Ethics_English.html

Franchise Legislation and Associations Around the World 397
Chart A: Franchise Associations Around the World
Country Association Name Home Page Code of Ethics
Pan-Asia
5. Republic
of the
Philippines
Philippine
Franchise
Association (PFA)
http://www.phili
ppinefranchisea
ssociation.com/c
ontent/view/1/2/
http://www.philippinefranchiseassociatio
n.com/images/stories/booklet_pfa_revised
_090406.pdf
6. South
Korea
N/A N/A N/A
Franchise
Association of
West Africa
(FAWA)
Africa
http://www.fran
chisewestafrica.
org/home.html
N/A
1. Morocco Moroccan
Franchise
Association
http://www.fmf.
ma
http://www.fmf.ma/code.pdf
2. Nigeria Nigeria
International
Franchise
Association
(NIFA)
http://nigerianfr
anchise.org/
N/A
3. South
Africa
South Africa
Franchise
Association
(FASA)
http://www.fasa.
co.za/
http://www.fasa.co.za/aboutus/Code.pdf

398 Underneath the Golden Boy
Country
Chart B: Summary of Franchise Legislation Around the World
Franchise
Legislation
Coming into
Force
North America
Description
1. Canada Alberta:
Franchises Act
Ontario: Arthur
Wishart Act
(Franchise
Disclosure),
2000
PEI: Franchises
Act
Alberta: 1975
(revised in
1995)
Ontario: 2000
PEI: 2006
Disclosure and Relationship
2. Mexico The Law to
Develop and
Protect
Industrial
Property, Article
142
1991 Disclosure
3. United
States of
America
Disclosure
Requirements
and Prohibitions
Concerning
Franchising and
Business
Opportunity
Ventures
1979 Disclosure (note that by 1 July 2008, all
franchisors must follow FTC disclosure
guidelines)
South America
1. Argentina N/A
2. Brazil Law No.
8955/94 and
Law No. 9279
1994 Disclosure & Registration
3. Chile N/A

Franchise Legislation and Associations Around the World 399
Chart B: Summary of Franchise Legislation Around the World
Country Franchise Legislation Coming into
Force
South America
Description
4. Venezuela Guidelines for the
Evaluation of
Franchise Agreements
2000 Restrict Competition and impose
obligations on franchisee for the
protection of industrial or
intellectual property rights of the
franchisor (The Guidelines are
published in Special Official
Gazette No. 5431, under
Resolution No. SPPLC-038-99).
Europe
1. Belgium Law Relative to precontractual
information in the
framework of
agreements of
commercial
partnership
2. Estonia Law of Obligations
Act, Chapter 19
2006 Disclosure & Relationship
2002 Relationship
3. France Loi Doubin (Law No.
89-1008), the details
of which are in decree
No. 91-337
1989 and
1991
Disclosure
4. Germany N/A

400 Underneath the Golden Boy
Country
Chart B: Summary of Franchise Legislation Around the World
5. Ireland N/A
Franchise
Legislation
Coming into Force
Europe
Description
6. Italy Law on
Commercial
Affiliation
2004 Disclosure and Relationship
7.Lithuania
Civil Code,
Chapter XXXVII
2001 Relationship
8. Romania Ordinance
52/1997
9. Russia Civil Code,
Chapter 54
(Commercial
Concessions)
1998 Disclosure
1996 Relationship & Registration
10. Spain Act 7/1996,
Article 62 and the
Royal Decree
2485/1998. The
Decree has been
amended by the
Royal Decree
419/2006
1996
1998
2006
Disclosure and Registration
11. Sweden Law on the Duty
of a Franchisor to
Provide
Information (Law
No. 2006:484)
2006 Disclosure

Franchise Legislation and Associations Around the World 401
Chart B: Summary of Franchise Legislation Around the World
Country Franchise Legislation Coming Into
Force
Pan-Asia
Description
1. Australia Trade Practices (Industry
Codes – Franchising)
Regulations 1998
2. China Measures for the
Administration of
Commercial Franchise
(Franchise Measures)
3. Indonesia Government Regulation
No. 16/1997
1998 Disclosure and Relationship. The
Code contains mandatory
mediation provisions and a
cooling off period for franchisees.
2005 The Measures focus primarily on
disclosure requirements, while
including a few relationship
provisions. The Measures replace
the 1997 Measures of the
Administration of Commercial
Franchise Operations, which only
governed franchising involving
domestic operators.
1997 Disclosure and Registration.
4. Japan Medium-Small Business
Promotion Act and the
Act Concerning
Prohibition of Private
Monopoly and
Maintenance of Fair
Trade
1983
(amended in
2002)
Disclosure
5. Republic of
the
Philippines
N/A
6. South
Korea
Act on Fairness in
Franchise Transactions
and the Presidential
Decree to Implement the
Act on Fairness in
Franchise Transactions
2002 Disclosure

402 Underneath the Golden Boy

Something Old, Something New: A Comparison
of Canada's Newest Franchise Legislation Against
Existing Franchise Laws
DOMINIC MOCHRIE • AND FRANK
ZAID • •
P
rince Edward Island and New Brunswick have become the latest provinces in
Canada to introduce franchise-specific legislation. While the new legislation
in both provinces is substantially similar to the country's other franchise-specific
legislation (Ontario's Arthur Wishart Act (Franchise Disclosure), 2000 and
Alberta's Franchises Act), legislation with which most franchisors in Canada are
already familiar, there are some noteworthy exceptions.
I. INTRODUCTION
Alberta was Canada's first province to introduce franchise-specific legislation
with the enactment of its Franchises Act in 1972, which was later overhauled in
1995 1 (the "Alberta Act"). Despite substantial public interest in franchising
practices that arose from several high profile lawsuits during the 1980s, it
became clear that any other province would not soon follow Alberta’s initiative.
Indeed, over twenty-five years passed before Ontario joined Alberta by
introducing the Arthur Wishart Act (Franchise Disclosure), (the "Ontario Act")
in 2000. 2
•
Dominic Mochrie is a senior associate in the Toronto, Ontario office of Osler, Hoskin &
Harcourt LLP and works with franchisors from across Canada and the United States with the
establishment and operation of their franchise systems, including the registration, management
and protection of their intellectual property.
••
Frank Zaid is a senior partner in the Toronto, Ontario office of Osler, Hoskin & Harcourt LLP
and is co-chair of the firm's National Franchise and Distribution Law Group. He is Past General
Counsel to the Canadian Franchise Association and Past Chair of the Supplier Forum of the
International Franchise Association.
1
Franchises Act, R.S.A. 2000, c. F-23.
2
Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c.3.

404 Underneath the Golden Boy
Had this breakneck pace continued, Canadians would have been
celebrating seeing franchise legislation enacted across Canada sometime in the
fall of the year 2210. However, public interest in franchise legislation remained
high, and the Uniform Law Conference of Canada ("ULCC") was charged with
drafting template franchise legislation and associated regulations as a proposed
model for franchise legislation in all provinces and territories other than Ontario
and Alberta. The ULCC approved an interim draft of the legislation in principle
at its annual meeting in August 2004, which was largely reflected in Prince
Edward Island's Bill 43 – legislation that received first reading in the province's
legislative assembly on 12 May 2005. The province became Canada's third
province to enact franchise-specific legislation when the bill—now known as the
Franchises Act 3 —received Royal Assent on 7 June 2005 (the "PEI Act").
Certain provisions of the PEI Act came into force on 1 July 2006, while the
obligation to distribute a disclosure document came into effect six months later,
on 1 January 2007.
By the time the PEI Act received royal assent, the ULCC had adopted its
final version of the Franchises Act (the "ULCC Act") at its annual meeting in
August 2005. 4 On 7 December 2005, exactly six months after Prince Edward
Island's enactment of the PEI Act, New Brunswick's Bill 6—the Franchises
Act 5 —received first reading. The bill died on the Order paper when the
legislature dissolved for a provincial election. The bill was then reintroduced as
Bill 32 (the Franchises Act) on 23 February 2007 when it received first reading
in New Brunswick's fifty-sixth legislative assembly. The Franchises Act 6 (the
"New Brunswick Act") received Royal Assent on 26 June 2007 and is expected
to be proclaimed into force upon the promulgation of disclosure regulations.
This actually may be the beginning of a cross-country initiative that will see
franchise legislation enacted in most, if not all, provinces. Of course, if this is the
case, franchisors will hope to see legislation that is substantially the same across
the country to avoid having to deal with different statutory regimes in each
province.
The New Brunswick Act, the PEI Act, and the ULCC Act are all
substantially similar to the format and content of the Ontario Act. However,
there are a few significant changes that will have definite impact on how
franchisors conduct business in those provinces. This paper compares the ULCC
3
Franchises Act, S.P.E.I. 2005, c. 36.
4
The act and associated regulations are available online at: http://www.ulcc.ca/en/us/
5
Bi11 6, Franchises Act, 3d Sess., 55th Leg., New Brunswick, 2006.
6
Franchises Act, S.N.B. 2007, c. F-23.5 (not in force).

Something Old, Something New 405
Act, the PEI Act and the New Brunswick Act against the Ontario Act. The
Alberta Act contains largely similar concepts to the Ontario Act, but the format
of the Alberta Act is significantly different. Accordingly, this paper compares the
Alberta Act to the Ontario Act only where differences arise between the
Ontario Act and the other legislation. In addition, an analysis of the differences
in disclosure requirements in the regulations made under each act is beyond the
scope of this paper.
A. Definitions
The definition sections in each of the New Brunswick Act and the PEI Act
(collectively, the "Atlantic Legislation") and the ULCC Act are substantially
similar to the definition section found in the Ontario Act. Of the differences,
many are minor. For example, the definitions of a "franchise" in the Atlantic
Legislation and the ULCC Act omit reference to the licensing of a "service
mark", but this term appears in the Ontario Act and the Alberta Act. However,
as there is no concept of a service mark in Canada's federal Trade-marks Act,
this difference is unlikely to result in any practical difference with respect to how
the definition is applied to a particular business relationship in each respective
jurisdiction.
Other changes are significant. Specifically, consider the changes to the
following excerpted definitions of a "material change" and a "material fact":
Ontario Act
ULCC Act
PEI Act
Table 1
Material Change
Means a change in the business, operations, capital or control of the
franchisor or franchisor's associate, a change in the franchise system
or a prescribed change, that would... [emphasis added.]
Means a change, in the business, operations, capital or control of the
franchisor or franchisor's associate or in the franchise or the franchise
system that would.... [emphasis added.]
Means a change, in the business, operations, capital or control of the
franchisor or franchisor's associate or in the franchise or the franchise
system that would.... [emphasis added.]

406 Underneath the Golden Boy
New
Brunswick
Act
Alberta Act
Means a change, in the business, operations, capital or control of the
franchisor or franchisor's associate or in the franchise or the franchise
system that would.... [emphasis added.]
Means (i) a change in the business, operations, capital or control of
the franchisor or its associate, or (ii) a change in the franchise system,
that would...
Note the addition of the term "or in the franchise" in the ULCC Act and
the Atlantic legislation. This term is not included in the definition of a "material
change" in either the Ontario Act or the Alberta Act.
It is anticipated that the impact of this change will be significant. Note that
the definition of a "franchise" begins with "a right to engage in a business... .” A
narrow interpretation of the addition of the term "or in the franchise" to the
definition of a material change would suggest that a franchisor must disclose any
material change to the right to engage in a business. However, a more
conservative and prudent interpretation of the addition would obligate a
franchisor to disclose a material change to any element of what constitutes a
"franchise". This interpretation casts the net extremely broadly, and a franchisor
would have to consider all of the elements that are included in the definition of
a franchise, such as a change to the business itself, the nature of the payment or
continuing payments, the right to sell, offer for sale or distribute goods or
services, etc. The breadth of what constitutes a "material change", combined
with the number of factors which comprises a "franchise", means that the
inclusion of "or in the franchise" to the definition of a material change
significantly expands the scope of what must be disclosed between the time that
the original disclosure document is delivered to the franchisee and the signing of
any franchise agreement or payment of any consideration.
Note that the Ontario Act is the only legislation that includes the possibility
that the definition could be expanded by a prescribed change in the regulation.
This currently results in no practical difference as no changes are prescribed in
the Ontario Act. However, it may result in a divergence between the Ontario
Act and other legislation if any such changes are prescribed in Ontario in the
future.

Something Old, Something New 407
Ontario Act
ULCC Act
PEI Act
New
Brunswick
Act
Alberta Act
Table 2
Material Fact
Includes any information about the business, operations,
capital or control of the franchisor or franchisor's associate, or
about the franchise system, that would...
Means any information, about the business, operations,
capital or control of the franchisor or franchisor's associate or
about the franchise or the franchise system, that would....
[emphasis added.]
Means any information, about the business, operations,
capital or control of the franchisor or franchisor's
associate or about the franchise or the franchise system,
that would.... [emphasis added.]
Means any information, about the business, operations,
capital or control of the franchisor or franchisor's
associate or about the franchise or the franchise system,
that would....[emphasis added.]
Means any information about the business, operations,
capital or control of the franchisor or its associate, or
about the franchise system, that would...
Note that the Ontario Act is the only legislation that starts the definition of
a "material fact" with: "material fact includes... .” The ULCC Act, Alberta Act
and the Atlantic Legislation limit a material fact to only those items covered by
the definition. This means that while a franchisor in Ontario may over-disclose
for fear of falling short of covering all possible material facts, franchisors in other
provinces have some comfort that there is no possibility that a franchisee can
argue that some information that was not specifically included within the four
comers of the definition is still a material fact that should have been disclosed.
In addition, the definition of "material fact" in the ULCC Act and the
Atlantic Legislation includes information "about the franchise". As noted above

408 Underneath the Golden Boy
with respect to the definition of a material change, this addition significantly
expands the scope of what could be included in the definition.
B. Application of the Legislation
1. The Crown
Whether the Crown is bound by franchise legislation varies by province, as
noted below:
Table 3
Application to the Crown
Ontario Act The Ontario Act does not apply to a service contract or
franchise-like arrangement with the Crown or an agent of the
Crown.
ULCC Act The Act binds the Crown (but the Crown is not required to
provide financial statements in a disclosure document).
PEI Act The Act does not bind the Crown.
New Brunswick
Act
Alberta Act
The Act binds the Crown (but the Crown is not required to
provide financial statements in a disclosure document).
No exemption for the Crown.
In provinces in which the Crown is bound, this will mean that provincial
agencies, for example which outsource their operations on a franchised basis
(e.g., liquor stores, lotteries, motor vehicle license outlets) will be subject to
franchise legislation.
2. Retroactive Application
Each of the Ontario Act, the Alberta Act, the Atlantic Legislation, and the
ULCC Act includes a provision stating that certain sections of the legislation
will apply to all franchise agreements, and businesses operated under such
agreements, even if the parties entered into the agreements prior to the
legislation coming into force. This retroactive application of certain sections of
the legislation has the very real possibility of catching unwary franchisors off
guard, who may be unaware of the additional obligations imposed on them.
The chart below is a summary of the provisions in each piece of legislation
that have retroactive effect.

Something Old, Something New 409
Duty of Fair
Dealing
Ontario
Section 3
Table 4
Retroactive Provisions
New
Brunswick
Section 3
PEI ULCC Alberta
Section 3
Section 3
Section 7
Right to
associate
Section 4
Section 4
Section 4
Section 4
Section 8
Right of
action for
contravening
right to
associate
Disclosure
exemption re:
renewal or
extension of a
franchise
Disclosure
exemption re:
grant by an
executor
Exemption by
the Minister
Section
5(7)(d)
Section
5(8)(d)
Section
5(7)(d)
Section
5(8)(d)
Section
11
Section
5(1)(d)
Section
5(1)(f)
Section 6
Exemption by
the Minister
for financial
statements
Dispute
Resolution
Section 8
Section 8
Section 8

410 Underneath the Golden Boy
No
derogation of
other rights
Section 9
Section 10
Section
10
Section
10
Section
15
Governing
Law
No Waiver
Burden of
Proof
Regulation
making
authority
Self
government
Section
11
Section
12
Section 11
Section 12
Section 13
Section
11
Section
12
Section
13
Section
11
Section
12
Section
13
Section
20
Section
21
i. Ontario
The following provisions in the Ontario Act have retroactive application:
(i) Section 3 – Duty of fair dealing: Each franchise agreement imposes
on each party the duty of fair dealing.
(ii) Section 4 – Right to associate: A franchisee may associate with
other franchisees, and may form an organization of franchisees, and
the franchisor may not interfere with such association.
(iii) Section 5(7)(d) – Disclosure exemption for administrators: An
executor, administrator, trustee or similar person is not required to
provide a disclosure document in connection with a grant of a
franchise by that person.
(iv) Section 9 – No derogation of rights: All rights granted by the
Ontario Act are in addition to, and do not derogate from, any
other right or remedy available to the franchisee or the franchisor.
(v) Section 11 – No waiver: Any purported waiver by the franchisee of
any of its rights under the act is void.
(vi) Section 12 – Burden of proof: The burden of proving an exemption
or an exclusion from a requirement or provision is on the person
claiming it.

Something Old, Something New 411
ii. New Brunswick/ULCC
Most of the sections are the same as those listed in the equivalent section of the
Ontario Act. Two significant differences are:
(i) Section 8 – Dispute Resolution: Any party to a franchise agreement
may require the other party to engage in the dispute resolution
procedure set out in the legislation. The procedure will be imposed
on franchisors with existing franchise agreements even if such
franchisors had made a conscious decision to exclude any such
procedure from their franchise agreements.
(ii) Section 11 – Governing Law and Venue: Any provision in a
franchise agreement purporting to restrict the application of the law
of New Brunswick, or the venue to a location outside New
Brunswick, is void with respect to a claim enforceable under the act.
In essence, this means that the law of the province of New
Brunswick will apply to most claims made under any franchise
agreement in the province, regardless of when such agreements were
entered into. This effectively re-writes the governing law section of
franchise agreements already in existence. The only exception is that
this section will not apply to a claim if an action based on the claim
was commenced before the legislation came into effect.
iii. Prince Edward Island
The retroactive sections of the PEI Act are also substantially similar to those in
the Ontario Act. The differences from the Ontario Act are:
(i) Section 8 – Minister's Exemption: The minister may order
exemptions for a particular franchisor from providing financial
statements in a disclosure document. The significance of the
retroactive application of Section 8 to agreements entered into prior
to the coming into force of the PEI Act is not clear, and is possibly
an error in the legislation. As Section 5(1) (the obligation to
disclose) does not apply to such agreements, it is not clear when
Section 8 would even be applicable.
(ii) Section 11 – Governing Law and Venue: The significance of the
retroactive application of Section 11 is the same as is noted above
with respect to the same provision in the New Brunswick Act.
However, the PEI Act does not include a similar exception for
existing claims as is included in the New Brunswick Act. This means
a franchisee could attempt to take the position that the law of Prince
Edward Island applies to pending actions with the franchisor. This
may force the franchisor to abandon existing proceedings in
jurisdictions outside Prince Edward Island, and resume or restart

412 Underneath the Golden Boy
such proceedings in Prince Edward Island.
iv. Alberta
Of all the franchise-specific legislation, the Alberta Act has the most sections
which apply retroactively to franchise agreements entered into prior to the act
coming into effect. However, as the Alberta Act has been in effect for
approximately twelve years, Section 3(2), which provides for retroactive
application of other provisions of the act, is likely used with decreasing frequency
with the increasing the proportion of franchise agreements entered into after the
legislation coming into effect (in which case all the provisions of the act will
apply without the need for Section 3(2)).
3. Continuing Commercial Relationships
i. Ontario
Section 2(3) of the Ontario Act exempts the following continuing commercial
relationships from the application of the legislation:
1. Employer-employee relationship.
2. Partnership.
3. Membership in a co-operative association, as prescribed.
4. An arrangement arising from an agreement to use a trade-mark, service
mark, trade name, logo or advertising or other commercial symbol
designating a person who offers on a general basis, for consideration, a
service for the evaluation, testing or certification of goods, commodities
or services.
5. An arrangement arising from an agreement between a licensor and a
single licensee to license a specific trade-mark, service mark, trade
name, logo or advertising or other commercial symbol where such
licence is the only one of its general nature and type to be granted by
the licensor with respect to that trademark, service mark, trade name,
logo or advertising or other commercial symbol.
6. An arrangement arising out of a lease, licence or similar agreement
whereby the franchisee leases space in the premises of another retailer
and is not required or advised to buy the goods or services it sells from
the retailer or an affiliate of the retailer.
7. A relationship or arrangement arising out of an oral agreement where
there is no writing which evidences any material term or aspect of the
relationship or arrangement.
8. A service contract or franchise-like arrangement with the Crown or an
agent of the Crown.

Something Old, Something New 413
ii. New Brunswick/Prince Edward Island/ULCC
Section 2(4) of the New Brunswick Act, Section 2(3) of the PEI Act, and
Section 2(3) of the ULCC Act also exclude certain ongoing commercial
relationships from the application of the respective legislation. The exemptions
are substantially similar to the corresponding section in the Ontario Act, but for
the following changes:
Exemption for a Lease Arrangement: The New Brunswick Act, the PEI Act and the
ULCC Act omit the exemption in Section 2(3)(6) above relating to "an arrangement
arising out of a lease, licence or similar agreement whereby the franchisee leases space in
the premises of another retailer and is not required or advised to buy the goods or services
it sells from the retailer or an affiliate of the retailer."
However, this omission may have little practical impact on whether a
business relationship was considered a franchise. If the franchisee were simply
leasing space from a lessor, then such a relationship would not normally come
within the definition of a "franchise" in any event. If there are other elements to
the relationship (i.e. the grant of representational or distribution rights), then
the relationship could be subject to the act in either province.
Addition of the Wholesale Purchaser Exemption: Section 2(4)(g) of the New Brunswick
Act, Section 2(3)(g) of the PEI Act, and Section 2(3)(g) of the ULCC Act exempts from
the application of the act "an arrangement arising out of an agreement (i) for the
purchase and sale of a reasonable amount of goods at a reasonable wholesale price, or (ii)
for the purchase of a reasonable amount of services at a reasonable price."
This exemption will likely come as some relief to businesses operating a
straight distribution system. As this exemption has no equivalent in the Ontario
Act, it has been an open issue whether payments made for goods, even at
wholesale prices, would be considered to be "a payment or continuing payments"
that would be captured by the first part of the definition of a "franchise".
Under a plain language interpretation of the term, product purchases by a
franchisee/distributor would appear to be "a payment" to a manufacturer. This
means that the Ontario Act will likely capture many distribution systems not
normally considered to be a franchise. Some commentators have taken the
position that this result is clear and unavoidable, and we note that the white
paper published by the Ontario government prior to the introduction of the
legislation noted that the government's intention was that certain distribution
systems be captured by the legislation.
Most states in the United States have franchise legislation that requires the
payment of a "franchise fee" for a business to be considered a franchise. It is
noteworthy that almost all of these states specifically exempt from the definition
of a "franchise fee" any payment made for inventory in reasonable quantities at
bona fide wholesale prices. The Ontario Act does not include any such
exemption, and instead of referring to a "franchise fee," refers to the lower

414 Underneath the Golden Boy
threshold of "a payment made in the course of operating the business." Indeed,
the Alberta Act specifically excludes bona fide payment for inventory from the
definition of a "franchise fee."
However, the exemption must be read in context of the definition of a
"franchise", as to see it as a separate test would create two competing standards
of the applicability of the legislation. Of course, a strict manufacturer/distributor
relationship (without any other elements of a franchise) would not satisfy the
definition of a franchise due to the lack of operational control over the purchaser
by the vendor.
Binding the Crown: The New Brunswick Act and the ULCC Act omit the exemption
regarding the non-application of the legislation to the Crown.
Cooperative Associations: The definitions of co-operative associations that are set out in
the Atlantic Legislation are essentially identical to the definition set out in the Ontario
regulation. 7 This will likely not result in any difference in how the term is applied in the
respective jurisdictions. 8
iii. Alberta
There is no equivalent section in the Alberta Act to Section 2(3) of the Ontario
Act. However, as noted above, the purchase of a reasonable amount of goods at
wholesale prices is specifically excluded from the definition of a "franchise fee".
4. Franchisor's Broker
The Atlantic Legislation and the ULCC Act includes a definition of a
"franchisor's broker" that is similar to the definition in Section 7(1)(c) of the
Ontario Act, but omits any use or definition of a "franchisor's agent". The
definition of a franchisor's agent in the regulation made under the Ontario Act is
"a sales agent of the franchisor who is engaged by the franchisor's broker and
who is directly involved in the granting of a franchise." As a practical matter, it is
unlikely that the omission of a definition of a "franchisor's agent" will result in
any difference in the way the legislation is applied in each respective province: A
person who would be captured by the definition of a "franchisor's agent" in the
Ontario Act would also likely be considered to be a "franchisor's broker" under
the Atlantic Legislation.
7
O. Reg. 581/00.
8
As each of the New Brunswick Act and the PEI Act refer to the respective provincial cooperative
associations acts in each province, the uniformity of the application of co-operative
association exemption will depend on the differences in the definition of a "co-operative
association" in each act.

Something Old, Something New 415
5. Fair Dealing
The Ontario Act and the Alberta Act both deem that each franchise agreement
imposes on each party a duty of fair dealing in the performance and enforcement
of the agreement. Since the legislation was enacted, there has been an open and
hotly debated issue of whether a party exercising a right is required to do so in
accordance with the duty of fair dealing. Arguably, depending on the
circumstances, the exercise of a right is not an enforcement action, nor is it
something that the party is required to do (i.e. an obligation of performance),
and accordingly is not subject to fair dealing.
The New Brunswick Act, PEI Act and ULCC Act all address this issue by
stating that the performance and enforcement of an agreement includes the
exercise of a right under the agreement. Accordingly, franchisors must consider
their obligations under the duty of good faith even if exercising a right or an
option granted by the franchise agreement.
This addition, combined with the retroactive application of the duty of fair
dealing in all legislation and the right of action for a breach of the duty, could
give rise to problems for some franchisors. A franchisor that has, in the past,
been relying on the position that an exercise of a right is not subject to the duty
of fair dealing may be faced with any number of actions from its franchisees.
6. Exemptions from Disclosure
The Ontario Act sets out the following exemptions from the requirement to
provide a disclosure document to a prospective franchisee:
Section 5:
(7) This section does not apply to,
(a) the grant of a franchise by a franchisee if,
(i) the franchisee is not the franchisor, an associate of the franchisor or a
director, officer or employee of the franchisor or of the franchisor's
associate,
(ii) the grant of the franchise is for the franchisee's own account,
(iii) in the case of a master franchise, the entire franchise is granted, and
(iv) the grant of the franchise is not effected by or through the
franchisor;
(b) the grant of a franchise to a person who has been an officer or director of the
franchisor or of the franchisor's associate for at least six months, for that person's
own account;
(c) the grant of an additional franchise to an existing franchisee if that additional
franchise is substantially the same as the existing franchise that the franchisee is
operating and if there has been no material change since the existing franchise
agreement or latest renewal or extension of the existing franchise agreement was
entered into;
(d) the grant of a franchise by an executor, administrator, sheriff, receiver, trustee,
trustee in bankruptcy or guardian on behalf of a person other than the franchisor or
the estate of the franchisor;
(e) the grant of a franchise to a person to sell goods or services within a business in
which that person has an interest if the sales arising from those goods or services, as

416 Underneath the Golden Boy
anticipated by the parties or that should be anticipated by the parties at the time the
franchise agreement is entered into do not exceed 20 % of the total sales of the
business;
(f) the renewal or extension of a franchise agreement where there has been no
interruption in the operation of the business operated by the franchisee under the
franchise agreement and there has been no material change since the franchise
agreement or latest renewal or extension of the franchise agreement was entered
into;
(g) the grant of a franchise if,
(i) the prospective franchisee is required to make a total annual
investment to acquire and operate the franchise in an amount that does
not exceed $5,000,
(ii) the franchise agreement is not valid for longer than one year and
does not involve the payment of a non-refundable franchise fee, or
(iii) the franchisor is governed by section 55 of the Competition Act
(Canada);
(h) the grant of a franchise where the prospective franchisee is investing over
$5,000,000 in one year in the acquisition and operation of the franchise.
The Atlantic Legislation and the ULCC Act sets out certain exemptions
from the requirement to provide a disclosure document to a prospective
franchisee which are mostly similar to those set out in the Ontario Act.
However, there are a few significant changes:
i. A "Fractional Franchise"
The Atlantic Legislation and the ULCC exempt a franchisor from providing a
disclosure document to a franchisee incorporating the franchise business in an
existing business if the sales arising from the franchise business will not exceed
twenty percent of the total business in the first year of operation. The
corresponding exemption in the Ontario Act and Alberta Act (known as the
fractional franchise exemption) omits any mention of the time period in which
the calculation must be made. The clarification in the Atlantic Legislation and
the ULCC provides the franchisor with some certainty that a franchisee who,
subsequent to the first year of operation, was more successful with the franchise
business than either party anticipated at the time of entering into the franchise
agreement, will not retroactively claim that disclosure should have been made.
ii. Short-Term Franchisee
The Ontario Act provides an exemption for a short-term franchise (i.e. if the
franchise agreement is not valid for longer than a year) provided there is no
payment of a non-refundable franchise fee. The Atlantic Legislation significantly
changes this exemption by adding the further proviso that the exemption is only
applicable if "the franchisor or franchisor's associate provides location assistance
to the franchisee, including securing retail outlets or accounts for the goods or
services to be sold, offered for sale or distributed or securing locations or sites for
vending machines, display racks or other product sales displays used by the

Something Old, Something New 417
franchisee." Clearly, this is meant to echo part (b)(ii) of the definition of a
"franchise", and significantly limits the application of the exemption to those
franchises which come within that part of the definition and are for terms less
than one year and do not provide for payment of a non-refundable franchise fee.
The Alberta Act does not contain an equivalent section.
iii. Renewing Franchisees
The Alberta Act provides and exemption from disclosure for "the renewal or
extension of an existing franchise agreement." The Ontario Act, ULCC Act and
Atlantic Legislation all add the additional requirements that there be (i) no
interruption of the operation of the franchised business and (ii) no material
change since the last franchise agreement was signed.
iv. Sophisticated Franchisee
Lastly, the Ontario Act provides that a franchisor does not have to provide
disclosure to a franchisee who will invest $5 000 000 in the franchise in a oneyear
period (known as the "sophisticated franchisee exemption"). This
exemption is not included in the Atlantic Legislation, the ULCC Act or the
Alberta Act, meaning that even well-funded, sophisticated franchisees must
receive disclosure in those jurisdictions. However, the exemption under the
Ontario Act has proven to be problematic as it is uncertain how the term
"invest" is to be interpreted.
7. Use of a Wraparound or Addendum
A question commonly asked by franchisors that are considering expanding their
franchise systems into Canada is whether the obligation to provide a disclosure
document can be satisfied by the provision of a UFOC (or a similar disclosure
document in another jurisdiction) with a province-specific addendum, or
wraparound.
i. Alberta
Section 2(2) of the regulation 9 made under the Alberta Act specifies that a
franchisor may use a document authorized under the franchise law of a
jurisdiction outside Alberta as its disclosure document provided that the
franchisor prepares a supplemental addendum with the additional information
required by the Alberta regulation.
9
Alta. Reg. 240/1995.

418 Underneath the Golden Boy
ii. PEI
Section 3(2) of the regulation 10 made under the PEI Act also expressly authorizes
a franchisor to use a document prepared under the franchise law of another
jurisdiction as its disclosure document if the franchisor provides supplemental
information as necessary to comply with the PEI disclosure requirements.
iii. Ontario
Ontario has no equivalent section to the foregoing. Given that the Ontario Act
was introduced subsequent to the Alberta Act and the legislators elected to
forgo any "wraparound" provision similar to that found in the Alberta Act and
the PEI Act, a court could interpret this as the legislature's intention to exclude
the use of a UFOC or disclosure document from another jurisdiction with a
wraparound or addendum in Ontario. Accordingly, to avoid doubt, franchisors
should prepare a specific Ontario disclosure document for use in that province,
and prepare an Alberta and PEI wraparound or addendum based on the Ontario
document.
iv. New Brunswick
No regulations have been issued under the New Brunswick Act, although it is
expected that use of a wraparound or addendum will be authorized in the
province.
v. ULCC
Similar to Ontario, neither the ULCC Act nor the regulations contain an
express provision for the use of a wraparound or addendum. Interestingly, when
PEI issued its discussion paper soliciting comments on its draft regulations, the
discussion paper noted that the PEI Act was modeled after the ULCC Act, but
specifically notes that it didn't follow the example of the ULCC regarding the
omission of the express permission to use a wraparound. This suggests that the
province didn't want the franchise legislation to create a disincentive to
franchisors doing business in the small province, and it will be interesting to see
which, if any, other provinces follow the ULCC's model on this point.
8. Financial Statements
The regulations made under the Ontario Act, the Alberta Act, the PEI Act and
the ULCC Act all require that a franchisor include in its disclosure document a
set of recent financial statements. The requirement is fairly consistent across the
country.
10
P.E.I. Reg. EC2006-232.

Something Old, Something New 419
i. Ontario
The requirement under the Ontario regulation to include financial statements in
a disclosure document is as follows:
Section 3:
(l) Every disclosure document shall include,
(a) an audited financial statement for the most recently completed fiscal year of the
franchisor's operations, prepared in accordance with generally accepted auditing
standards that are at least equivalent to those set out in the Canadian Institute of
Chartered Accountants Handbook;
(b) a financial statement for the most recently completed fiscal year of the
franchisor's operations, prepared in accordance with generally accepted accounting
principles that are at least equivalent to the review and reporting standards
applicable to review engagements set out in the Canadian Institute of Chartered
Accountants Handbook; or
(c) if a regulation has been made under subsection 13 (2) of the Act in respect of
the franchisor, a declaration that the franchisor is exempt from the requirement to
provide the financial statement described in clause (a) or (b), and that the
franchisor meets the criteria prescribed for the purpose of that exemption.
(2) Despite subsection (1), if 180 days have not yet passed since the end of the most
recently completed fiscal year and a financial statement has not been prepared and
reported for that year, the disclosure document shall include a financial statement for the
previous fiscal year that is prepared in accordance with the requirements in clause (1) (a)
or (b).
(3) Despite subsection (1), if a franchisor has operated for less than one fiscal year or if
180 days have not yet passed since the end of the first fiscal year of operations and a
financial statement for that year has not been prepared in accordance with the
requirements in clause (1) (a) or (b), the disclosure document shall include the opening
balance sheet for the franchisor.
ii. Alberta
The requirement under the Alberta regulation to include financial statements in
a disclosure document is as follows:
Section 3:
(1) Financial statements of the franchisor must be prepared in accordance with generally
accepted accounting principles for the jurisdiction in which the franchisor is based.
(2) Financial statements must be either
(a) audited in accordance with the generally accepted auditing standards set out in
the Canadian Institute of Chartered Accountants Handbook, or
(b) reviewed in accordance with the review standards and reporting standards
applicable to review engagements set out in the Canadian Institute of Chartered
Accountants Handbook.
(3) The auditing standards and the review standards and reporting standards of other
jurisdictions that are at least equivalent to subsection (2) are acceptable.
(4) The financial statements must be for the most recently completed fiscal year.
(5) If 180 days have not yet passed since the end of the most recently completed fiscal
year and financial statements have not been prepared and reported on for that fiscal year,
the financial statements for the previous fiscal year may be included.
(6) If
(a) the franchisor has not completed one fiscal year of operation,

420 Underneath the Golden Boy
or
(b) 180 days has not yet passed since the end of the first fiscal year of operation and
financial statements have not been prepared and reported on for that fiscal year,
the disclosure document must include the franchisor's opening balance sheet.
iii. PEI
The requirement under the PEI regulation to include financial statements in a
disclosure document is as follows:
Section 5:
(1) Subject to section 6 and to an exemption order made under subsection 8(1) of the
Act, every disclosure document shall contain financial statements of the franchisor that
are prepared in accordance with the generally accepted accounting principles of the
jurisdiction in which the franchisor is based.
(2) The financial statements must be either
(a) audited in accordance with the generally accepted auditing standards set out in
the Canadian Institute of Chartered Accountants Handbook; or
(b) reviewed in accordance with the review and reporting standards applicable to
review engagements set out in the Canadian Institute of Chartered Accountants
Handbook.
(3) The auditing standards and the review and reporting standards of other jurisdictions
that are at least equivalent to those referred to in subsection (2) are acceptable.
(4) The financial statements must be for the most recently completed fiscal year.
(5) Despite subsection (4), if 180 days have not yet passed since the end of the most
recently completed fiscal year and financial statements have not been prepared and
reported on for that fiscal year, the disclosure document shall contain the financial
statements for the last completed fiscal year.
(6) Despite subsection (4), if a franchisor has operated for less than one fiscal year or if
180 days have not yet passed since the end of the first fiscal year of operations and
financial statements for that year have not been prepared and reported on for that fiscal
year, the disclosure document shall contain the opening balance sheet for the franchisor.
iv. ULCC
The requirement under the ULCC regulation to include financial statements in
a disclosure document is as follows:
Section 9:
(1) Every disclosure document shall contain,
(a) an audited financial statement for the most recently completed fiscal year of the
franchisor's operations, prepared in accordance with the generally accepted auditing
standards set out in the Canadian Institute of Chartered Accountants Handbook; or
(b) a financial statement for the most recently completed fiscal year of the
franchisor's operations, prepared in accordance with generally accepted accounting
principles and which complies with the review and reporting standards applicable to
review engagements set out in the Canadian Institute of Chartered Accountants
Handbook.
(2) Despite subsection (1), if 180 days have not yet passed since the end of the most
recently completed fiscal year and a financial statement has not been prepared for that
year, the disclosure document shall contain a financial statement for the last completed
fiscal year that is prepared in accordance with the requirements of clause (1) (a) or (b).

Something Old, Something New 421
(3) Despite subsection (1), if a franchisor has operated for less than one fiscal year or if
180 days have not yet passed since the end of the first fiscal year of operations and a
financial statement for that year has not been prepared in accordance with the
requirements of clause (1) (a) or (b), the disclosure document shall contain the opening
balance sheet for the franchisor.
(4) Despite subsection (1), if the franchisor is based in a jurisdiction other than [insert
jurisdiction], the disclosure document shall contain financial statements prepared in
accordance with generally accepted accounting principles for the jurisdiction in which the
franchisor is based if,
(a) the auditing standards or the review and reporting standards of that jurisdiction
are at least equivalent to those standards described in clause (1) (a) or (b); or
(b) the auditing standards or the review and reporting standards of that jurisdiction
are not at least equivalent to those standards described in clause (1) (a) or (b), but
the disclosure document contains supplementary information that sets out any
changes necessary to make the presentation and content of such financial
statements equivalent to those of clause (1) (a) or (b).
(5) In a circumstance described in clause (4) (a) or (b), the disclosure document shall
contain a statement that the financial statements contained in the disclosure document
are prepared in accordance with generally accepted accounting principles for the
jurisdiction in which the franchisor is based and that the requirements of clause (4) (a) or
(b), as the case may be, are satisfied.
v. New Brunswick
There are no draft regulations under the New Brunswick Act, but it is most
likely that, when issued, the regulation will require disclosure of financial
statements in substantially the same format as the other disclosure provinces.
9. Exemption from Providing Financial Statements
Ontario, Alberta and PEI's legislation provides certain exemptions from the
requirement to provide financial statements in a disclosure document.
i. Ontario
The exemption reads as follows:
Section 11:
(1) Pursuant to subsection 13 (2) of the Act, a franchisor that meets the following criteria
is exempt from the requirement to include the financial information described in clause 3
(1) (a) or (b) or subsection 3 (2) or (3) of this Regulation in a disclosure document,
subject to the conditions set out in subsection (3):
1. The net worth of the franchisor on a consolidated basis according to its most recent
financial statements that have been audited or for which a review engagement report has
been prepared,
i. is at least $5,000,000, or
ii have been audited or for which a review engagement report has been prepared is
at least $5,000,000.. is at least $1,000,000, if the franchisor is controlled by a
corporation whose net worth on a consolidated basis according to its most recent
financial statements that
2. The franchisor,
i. in the five years immediately preceding the date of the disclosure document, has
at least 25 franchisees engaging in business at all times in Canada

422 Underneath the Golden Boy
ii. in the five years immediately preceding the date of the disclosure document, has
fewer than 25 franchisees engaging in business at all times in Canada and has at
least 25 franchisees engaging in business at all times in a single jurisdiction other
than Canada,
iii. does not meet the requirements of subparagraph i or ii, but is controlled by a
corporation that meets the requirements of subparagraph i, or
iv. does not meet the requirements of subparagraph i or ii, but is controlled by a
corporation that meets the requirements of subparagraph ii.
3. The franchisor,
i. has engaged in the line of business associated with the franchise continuously for
not less than five years immediately preceding the date of the disclosure document,
or
ii. is controlled by a corporation that meets the requirements of subparagraph i.
4. In the five years immediately preceding the date of the disclosure document, the
franchisor, the franchisor's associates, and the directors, general partners and officers of
the franchisor,
i. in the case of a franchisor described in subparagraph 2 i or iii have not had any
judgment, order or award made in Canada against any of them relating to fraud,
unfair or deceptive practices, or a law regulating franchises, including the Act, or
ii. in the case of a franchisor described in subparagraph 2 ii or iv have not had any
judgment, order or award made in Canada or in the jurisdiction referred to in
subparagraph 2 ii against any of them relating to fraud, unfair or deceptive practices,
or a law regulating franchises, including the Act.
(2) Financial statements of a franchisor mentioned in paragraph I of subsection (1) shall,
(a) be prepared in accordance with generally accepted auditing standards that are at
least equivalent to those set out in the Canadian Institute of Chartered
Accountants Handbook, if the fmancial statements are audited; and
(b) be prepared in accordance with generally accepted accounting principles that
are at least equivalent to the review and reporting standards applicable to review
engagements set out in the Canadian Institute of Chartered Accountants
Handbook, if a review engagement report has been prepared for the financial
statements.
The exemption is based on a self-assessment process. If a franchisor decides
that it qualifies for the exemption, there is no requirement to notify or apply to
any government agency for an exemption order, as was the case when the
legislation was first introduced in Ontario. However, if challenged, the onus
would be on the franchisor to show that it qualified for the exemption.
One practical problem that occurs with respect to the self-assessment of the
exemption relates to the basis of the self-assessment. The evaluation of net
worth as provided for in the regulation is to be based on the franchisor's "most
recent financial statements." However, where the franchisor's financial
statements are consolidated into, and are part of, the controlling corporation's
financial statements, there may not be any financial statements for the franchisor
from which such assessment can be made. While the controlling corporation
could obtain a letter of advice or comfort from its auditors confirming that, in
the course of preparing the controlling corporation's financial statements, they
had access to and reviewed the records of the actual franchisor and that they are
of the opinion that had financial statements been prepared for the franchisor (on

Something Old, Something New 423
a review engagement or audited basis), the net worth of the actual franchisor
would have been not less than $1 000 000, there is still a risk of non-compliance
with the regulation as the standards set out in the regulation have not been
strictly met. Another option is to have statements prepared for the franchisor,
although the cost and time required to do so may be considerable.
Under the Ontario Act and regulations, as originally enacted, the financial
statements to be included in a disclosure document were required to meet the
Canadian Institute of Chartered Accountants Handbook standards. However,
amendments made on 1 July 2005 (and reflected in subparagraph (2) above)
introduced an equivalency standard, which allows financial statements prepared
in the franchisor's home jurisdiction to be used if they are equivalent to the
Canadian standards.
ii. Alberta
The Alberta regulation has a similar exemption for the requirement to include
financial statements in a disclosure document:
Section 1:
A franchisor is not required to include financial statements in a disclosure document
given to a prospective franchisee
(a) if the franchisor has a net worth on a consolidated basis according to its most
recent financial statements, which have been audited or for which a review
engagement report has been prepared,
(i) of not less than $5 000 000, or
(ii) of not less than $1 000 000 if the franchisor is controlled by a
corporation that meets the requirements of subclause (i), and
(b) if the franchisor
(i) has had at least 25 franchisees conducting business at all times in
Canada during the 5-year period immediately preceding the date of the
disclosure document,
(ii) has conducted business that is the subject of the franchise
continuously for not less than 5 years immediately preceding the date of
the disclosure document, or
(iii) is controlled by a corporation that meets the requirements of
subclause (i) or (ii).
The exemption in Alberta is also based on a self-assessment process, but
note two differences between the corresponding exemption in the Ontario Act:
(A) the absence of the requirement that the standard of audit or review for the
financial statements to be equivalent to the standards set out in the Canadian
Institute of Chartered Accountants Handbook, and (B) the franchisor must
meet the requirement to have twenty-five franchisees in Canada during the past
five years, or has operated in Canada for not less than five years (or in either case
is controlled by a corporation that meets these requirements). In Ontario, the
franchisor must meet both requirements.

424 Underneath the Golden Boy
iii. PEI
The exemption in the PEI Act is substantially similar to that found in the
Ontario Act, although the net worth requirements are lower:
Section 6:
A franchisor is exempt from the requirement in clause 5(4)(b) of the Act and section 5 of
these regulations to include financial statements in a disclosure document if:
(a) the franchisor has a net worth on a consolidated basis according to its most recent
financial statements, which have been audited or for which a review engagement report
has been prepared which
(i) is at least $2,000,000, or
(ii) is at least $1 000 000, if the franchisor is controlled by a corporation whose net
worth on a consolidated basis according to its most recent financial statements that
have been audited or for which a review engagement report has been prepared is at
least $2,000,000;
(b) the franchisor
(i) has at least 25 franchisees engaging in business at ail times in Canada in the five
years immediately preceding the date of the disclosure document;
(ii) has fewer than 25 franchisees engaging in business at all times in Canada and
has at least 25 franchisees engaging in business at ail times in a single jurisdiction
other than Canada in the five years immediately preceding the date of the disclosure
document;
(iii) does not meet the requirements of subclause (i) or (ii), but is controlled by a
corporation that meets the requirements of subclause (i); or
(iv) does not meet the requirements of subclause (i) or (ii) , but is controlled by a
corporation that meets the requirements of subclause (ii);
(c) the franchisor
(i) has engaged in the line of business associated with the franchise continuously for
not less than five years immediately preceding the date of the disclosure document;
or
(ii) is controlled by a corporation that meets the requirements of subclause (i); and
(d) the franchisor, the franchisor's associates and the directors, general partners and
officers of the franchisor in the five years immediately preceding the date of the disclosure
document;
(i) in the case of a franchisor described in subclause (b)(i) or (iii) have not had any
judgment, order or award made in Canada against any of them relating to fraud,
unfair or deceptive practices, or a law regulating franchises including the Act, or
(ii) in the case of a franchisor described in subclause (b)(ii) or (iv) have not had any
judgment, order or award in Canada or in the jurisdiction referred to in subclause
(b)(ii) made against any of them relating to fraud, unfair or deceptive practices, or a
law regulating franchises including the Act.
Accordingly, if a franchisee is exempt from providing financial statements in
Ontario, the franchisor will meet the exemption requirements in PEI. In addition
the PEI Act also gives the minister discretionary power to specifically exempt
franchisors from including financial statements if the franchisor doesn't satisfy
the criteria noted above.

Something Old, Something New 425
iv. ULCC
Neither the ULCC Act nor the regulations provide any exemption from the
requirement for a franchisor to include a copy of its most recent financial
statements in the disclosure document. This topic was vigorously debated during
the drafting of the act and the regulations, although the ULCC ultimately
decided against including an exemption, instead opting to require the franchisor
to provide to the franchisee copies of the financial statements regardless of the
extent of operations and financial position of the franchisor.
It is noteworthy that this example was not followed in the PEI Act, and it
remains to be seen whether the regulations ultimately issued under the New
Brunswick Act will include an exemption. However, given that Ontario, PEI and
Alberta include an exemption, it is possible that New Brunswick will follow suit,
rather than being seen to create a disincentive for franchisors looking to do
business in the province.
10. Confidentiality Agreements
Section 5(11) of the New Brunswick Act, Section 5(9) of the PEI Act and
Section 5(12) of the ULCC Act provide that neither a confidentiality agreement
(subject to certain restrictions) nor an agreement designating a location, site or
territory for a prospective franchisee are considered to be a "franchise
agreement" in the context the timing of providing a disclosure document.
Section 4(7) of the Alberta Act provides the same exceptions, though differently
worded. In other words, a franchisor may require that the franchisee execute
such agreements without being offside the fourteen-day waiting period
requirement.
This provision will bring some relief to franchisors who have largely been
unable to protect confidential information in the disclosure document when
providing the disclosure document to franchisees in Ontario, as without such an
exemption, a confidentiality agreement likely falls within the definition of a
franchise agreement. Provided that the confidentiality agreement complies with
the requirements of the New Brunswick Act or the PEI Act, as applicable,
franchisors will be able to require franchisees in those provinces to enter into
such agreements without risk of triggering any rescission rights.
11. Dispute Resolution
Section 8 of the New Brunswick Act and Section 8 of the ULCC Act include a
dispute resolution mechanism that can be utilized by any party to a franchise
agreement. Once any party provides notice to any other party of a dispute, the
parties must attempt to resolve the dispute within fifteen days (though query
whether the duty of fair dealing applies to such attempt).

426 Underneath the Golden Boy
If the parties do not resolve the dispute, any party may require the other
parties to attend mediation. The moving party may provide notice of mediation
within thirty days after delivery of the notice of dispute but not before the expiry
of the fifteen-day period for resolving the dispute as noted above. The procedure
for mediation is prescribed in the regulations made under the ULCC Act and
presumably will be described in similar regulations under the New Brunswick
Act.
There is no equivalent section in either the Ontario Act, the Alberta Act or
the PEI Act. Any mandatory dispute resolution would have to be included in the
franchise agreement.
12. Misrepresentations
Section 7(5) of the Ontario Act provides for certain exemptions from liability for
misrepresentation that are available to persons other than the franchisor. The
Atlantic Legislation includes an exemption for liability for a misrepresentation in
the disclosure document (for persons other than the franchisor) in situations
substantially similar to the exemptions listed in the Ontario Act. However, the
Atlantic Legislation includes an additional exemption for liability for a
misrepresentation if: (i) the representation was purportedly made on the
authority of a statement made by a public official (subject to certain conditions),
or (ii) the person conducted an investigation sufficient to establish that there
were reasonable grounds for him or her to believe that there was no
misrepresentation and that the person indeed believed there was no
misrepresentation. While category (i) may have limited practical application,
category (ii) will be useful to a person who is being sued for misrepresentation,
provided that such person can prove that he or she conducted a reasonable
investigation into the matter. What is reasonable will undoubtedly depend on
the nature of the misrepresentation and be decided on a case-by-case basis.
II. SUMMARY
In summary, the PEI Act and the New Brunswick Act are largely similar to, and
substantially follow the format of, the Ontario Act, which is conceptually similar
to the Alberta Act. In addition, other provinces and territories may choose to
adopt the ULCC Act as a basis for their franchise legislation to follow what
appears to be an emerging trend of adopting relatively uniform franchise-specific
legislation. This all bodes well for franchisors wanting to avoid having to deal
with franchise legislation that is unique to each province. However, despite the
apparent similarity, franchisors should be aware of the not-insignificant
differences that will affect how they deal with franchisees in each province.

Canadian Franchise Disclosure Laws:
Exemptions and Exclusions:
Analysis and Recommendations
JOHN SOTOS AND
ARTHUR J. TREBILCOCK
I. INTRODUCTION
T
o date in Canada, only Alberta, New Brunswick, Ontario and Prince
Edward Island have enacted franchise-specific laws. 1 Among other things,
these laws require a franchisor to give a prospective franchisee a disclosure
document that clearly and concisely states all "material facts", and that also
includes prescribed financial statements, contracts, other documents, ancillary
information and a certificate of disclosure. 2 Included in the many disclosure
requirements under these laws is prescribed, minimal disclosure concerning
rebates, commissions, payments or other benefits which the franchisor or its
associate may receive as a result of the purchase of goods or services by
franchisees. These laws provide certain exemptions from these disclosure
requirements, and exclude altogether from their ambit certain types of
commercial arrangements.
In this paper we briefly describe these statutory exemptions and exclusions
and the rebates disclosure, then express our concerns about them and our
recommendations for improvement.
1
Alberta: Franchises Act, R.S.A. 2000, c.F-23 ["Alberta Act"]; New Brunswick: Franchises Act,
S.N.B. 2007, c. F-23.5 ["New Brunswick Act"]; Ontario: Arthur Wishart Act (Franchise
Disclosure), 2000, S.O. 2000, c.3 ["Ontario Act"]; Prince Edward Island: Franchises Act,
S.P.E.I. 2005, c. 36 ["PEI Act"]. Proclamation of the disclosure sections of the New Brunswick
Act awaits finalization of the Act's disclosure regulation.
2
Alberta Act, s. 4; New Brunswick, Ontario and PEI Acts, s. 5.

428 Underneath the Golden Boy
II. THE STATUTORY EXEMPTIONS
A. Franchisee Transfers
The Alberta, New Brunswick, Ontario and PEI Acts each exempt from their
disclosure requirements the transfer of a franchise by a franchisee for his own
account, if the transfer is not effected by or through the franchisor. 3 The
language in the Ontario Act typifies this "franchisee transfer" exemption:
5(7) [The statutory disclosure obligation] does not apply to,
(a) the grant of a franchise by a franchisee if,
(i) the franchisee is not the franchisor, an associate of the franchisor or
a director, officer or employee of the franchisor or of the franchisor's
associate,
(ii) the grant of the franchise is for the franchisee's own account,
(iii) in the case of a master franchise, the entire franchise is granted, and
(iv) the grant of the franchise is not effected by or through the
franchisor."
Note that the franchisee's disposition of his interest in the franchise falls
squarely within the Ontario Act's definition of "grant", 4 and so for this type of
transaction the transferring franchisee falls within the statutory definition of
"franchisor". 5 Without the exemption, then, the franchisee would have to
provide the proposed transferee with a disclosure document!
Note also that the "real" franchisor is not "granting" anything, 6 and so does
not fall within the statutory definition of "franchisor". So even without the
exemption the "real" franchisor does not have to provide a disclosure document!
The franchisee transfer exemption originated in 1970 with California's
Franchise Investment Law. 7 The policy underlying the "franchisee transfer"
3
Alberta Act, ss. 5(1)(a) and5(2); New Brunswick Act, ss. 5(8) and 5(9); Ontario and PEI Acts,
ss. 5(7)(a) and 5(8).
4
Ontario Act, s. 1(1): "'grant', in respect of a franchise, includes the sale or disposition of...an
interest in the franchise." Similar definitions appear in the other three Acts (the Alberta Act
defines "sale" and its franchisee transfer exemption uses that word, rather than "grant").
5
Ontario Act, s. 1(1): "'franchisor' means one or more persons who grant...a franchise."
6
Unless, of course, it does something amounting to a "grant" of franchise. The simplest example
would be requiring the transferee to sign a new franchise agreement that imposes on him
obligations that are significantly different from those in the transferor's franchise agreement.
7
California Corporations Code, Cal. Stats. 1947, c. 1038 §31102 (2007) [“California
Corporations Code”]: "The offer or sale of a franchise by a franchisee for his own account or
the offer or sale of the entire area franchise owned by a subfranchisor for his own account, is
exempted from the provisions of Section 31100 if the sale is not effected by or through a
franchisor. A sale is not effected by or through a franchisor merely because a franchisor has a
right to approve or disapprove a different franchisee."

Canadian Franchise Disclosure Laws 429
exemption is that there is no utility in requiring the transferring franchisee to
disclose information that he does not know in the first place and can determine
only at great expense. 8
Sections 5(7)(a)(i) to (iii) of the Ontario Act exemption are simple "stop
loss" provisions, designed to prevent a franchisor from directly or indirectly
granting a franchise without providing a disclosure document. 9
Section 5(7)(a)(iv) of the Ontario Act permits a franchisor to 'interfere' to a
degree in the franchise transfer without 'tainting' the exemption. The interesting
issue is the level of interference that will result in the franchise transfer being
"effected by or through the franchisor." Section 5(8) of the Ontario Act purports
to answer this question:
• 5(8) For the purposes of subclause (7)(a)(iv), a grant is not effected by
or through a franchisor merely because,
• (a) the franchisor has a right, exercisable on reasonable grounds, to
approve or disapprove the grant; or
• (b) a fee must be paid to the franchisor in an amount set out in the
franchise agreement or in an amount that does not exceed the
reasonable actual costs incurred by the franchisor to process the grant.
The other three Acts have similar sections. 10
Because of the word "merely", sections 5(8)(a) and (b) evidently do not
exhaust the ways in which a franchisor may become involved in a franchisee
transfer without tainting the exemption. 11 But where does one draw the line To
date the only reported Canadian case on this issue is 1518628 Ontario Inc.,
Nancy van Dorp and Dean McCoy v. Tutor Time Learning Centers, LLC et. al. 12
In that case, plaintiff 1518628 acquired the shares of a corporate franchisee of
8
Most of the information that must be in the disclosure document would not be known by the
transferring franchisee, who would have to collect it from the "real" franchisor. The franchisee
would have to spend a lot of time and money independently verifying the accuracy and
completeness of this information, since he would be strictly liable if the buying franchisee
suffered a loss because of a misrepresentation in the disclosure document: Alberta Act, s. 9;
New Brunswick, Ontario and PEI Acts, s. 7.
9
For example, if subclause (iii) was not there a franchisor could grant a master franchise to its
affiliate (without disclosure, since the affiliate won't complain), and the affiliate could then
grant disclosure-free sub-franchises using the exemption. See the definitions of 'master
franchise', 'subfranchisor' and 'subfranchisee' in the four Acts.
10
Alberta Act, s. 5(2); New Brunswick Act, s. 5(10); PEI Act, s. 5(8).
11
For example, the grant will not be "effected by or through the franchisor" merely because the
franchisor provides material information to a prospective buyer, or refers prospective buyers to
the franchisee: Fox v. Ehrmantraut, 28 Cal.3d 127; 615 P.2d 1383.
12
[2006] O.J. 3011 (Sup.Ct.J.).

430 Underneath the Golden Boy
Tutor Time Learning Centers, LLC. As a condition of approving this share
transfer, Tutor Time required van Dorp (the sole director, officer and
shareholder of 1518628) and McCoy (her spouse and an employee of 1518628)
to indemnify Tutor Time against a breach of the franchisee's obligations.
Subsequently, the plaintiffs sought to rescind because Tutor Time did not
provide them with a disclosure document. Among other defences, Tutor Time
relied on section 5(7)(a) of the Ontario Act. Regarding this defence, Cumming
J. held that to require van Dorp's indemnity fell within section 5(8)(a), because
pursuant to the franchise agreement, anyone who held a 10% or greater interest
in a corporate transferee had to provide his indemnity. He also held that to
require McCoy's indemnity was not within 5(8)(a), because while Tutor Time
had the power to require McCoy's indemnity, and while it was reasonable to
require that indemnity, a "power" is not the same as a "right", and "right" in
5(8)(a) means a contractual right. 13 Thus the share transfer to 1518628 was
effected through Tutor Time without proper disclosure. 14
We have three concerns about the franchise transfer exemptions in the four
Acts (section references below are to the Ontario Act).
• The exemption should be redrafted so that if it does not apply, then it is the
franchisor who must provide the statutory disclosure document.15
• Section 5(7)(a)(i) covers an affiliate of the franchisor, because the
transferring affiliate obviously approves the grant, and thereby automatically
becomes the franchisor's associate. But it does not cover a director or officer
of a franchisor's affiliate, unless the affiliate is already a franchisor's
associate. Therefore a franchisor wishing to avoid disclosure could simply
incorporate a new affiliate, then grant a franchise (without disclosure) to a
director or officer of that affiliate, and that individual could then transfer his
franchise without disclosure using the 5(7)(a) exemption (unless, of course,
he was also a director or officer of the franchisor or a franchisor's associate).
• Section 5(8)(b) speaks of "an amount set out in the franchise agreement."
There is no principled reason for denying the transfer exemption if the
franchise agreement charges a transfer fee equal to an amount that cannot
be ascertained until a later date (e.g. "You must pay us a transfer fee equal
13
Ibid. at para. 44.
14
It is evident from the judgement that both the litigants and the Court assumed that if the
exemption didn't apply, then it was Tutor Time that had to provide the disclosure document.
We have seen above that the wording of the statute suggests otherwise.
15
The transferee will be acquiring either the franchisee's assets or its shares, and so can
adequately protect himself through suitable representations and warranties in the asset or share
purchase agreement.

Canadian Franchise Disclosure Laws 431
to 50% of whatever initial franchise fee we regularly charge for new XYZ
franchises at the time of your transfer").
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation include a "franchisee transfer" exemption similar
to that in the Ontario Act, suitably modified to deal with our concerns.
B. Grant to a Director or Officer
Each of the four Acts exempts from its disclosure requirements the grant of a
franchise to an individual for his own account, if he has been a director or officer
of the franchisor or the franchisor's associate for at least six months. 16 The
language in the PEI Act typifies this "director/officer" exemption:
5(7) [The statutory disclosure obligation] does not apply to,
…
(b) The grant of a franchise to a person who has been an officer or director of the
franchisor or the franchisor's associate for at least six months immediately before the
grant of the franchise, for that person's own account.
The director/officer exemption also appears to have its origin in California's
Franchise Investment Act. 17 The policy underlying the director/officer
exemption is that disclosure has little utility if the prospective franchisee is
already familiar with the franchisor, its management, the franchise system and
the attendant risks.
We have three concerns about the director/officer exemptions in the four
Acts:
• We suggest that six months is insufficient time for a director or officer to
gain appropriate familiarity with the franchise system and its risks. If
16
Alberta Act, s. 5(1)(c); New Brunswick Act, s. 5(8)(b); Ontario and PEI Acts, s. 5(7)(b).
17
California Corporations Code, supra note 7, at §31106: "There shall be exempted from the
[disclosure and registration requirements] any offer, sale or other transfer of a franchise or an
interest in a franchise, provided that the offer, sale or transfer meets the requirements in
subdivisions (a) and (b):
(a) Any of the following conditions apply:
...
(2) One or more of the owners of the prospective franchisee owning at least a 50%
interest in the prospective franchisee meet both of the following:
(a) The owner or owners are, or have been within 60 days prior to the
sale...an officer, director, managing agent, or an owner of at least a 25% interest in the
franchisor for at least 24 months.
(B) The owner or owners are not controlled by the franchisor...
(b) [File a notice with and pay a fee to the Commissioner of Corporations]."

432 Underneath the Golden Boy
Manitoba chooses to implement a director/officer exemption, then we
recommend that it follow California's two-year requirement.
• The Alberta and Ontario exemptions do not state when the six-month
period ends, so presumably the exemption in those two provinces is
available to someone who resigned as director or officer 25 years ago! The
New Brunswick and PEI Acts do better by requiring that the six-month
period end immediately before the franchise grant, but surely passage of a
30-, 60-, or even 90-day period should not significantly affect the familiarity
one has gained. If Manitoba chooses to implement a director/officer
exemption, then we recommend that the familiarity period (be it six months
or something else) end no more than 60 days before the grant of the
franchise.
• Why limit the exemption to directors and officers Surely it should also be
available (as in California and other states) if the franchise will be granted
to anyone else who has had at least two years direct management experience
with the franchisor or its associate.
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation include a "director, officer or manager"
exemption that responds to our concerns.
C. Grant of an Additional Franchise
Each of the four Acts exempts from its disclosure requirements the grant of an
additional franchise to the owner of an existing franchise that is substantially the
same as that to be granted. 18 The language in the New Brunswick Act typifies
this "additional franchise" exemption:
5(8) [The statutory disclosure obligation] does not apply to,
…
(c) the grant of an additional franchise to an existing franchisee if that additional
franchise is substantially the same as the existing franchise that the franchisee is operating
and if there has been no material change since the existing franchise agreement or most
recent renewal or extension of the existing franchise agreement was entered into.
The additional franchise exemption appears to have originated in 1976, in
Hawaii's Franchise Investment Law. 19 The policy underlying the additional
franchise exemption mirrors that underlying the director/officer exemption:
disclosure has little utility if the prospective franchisee is already familiar with
the franchisor, its management, the franchise system and the attendant risks.
18
Alberta Act, s. 5(1)(c); New Brunswick Act, s. 5(8)(c); Ontario and PEI Acts, s. 5(7)(c).
19
2 Hawaii Rev. Stat. tit. 26 §482E-4(a)(6) (2007) [“Hawaii Rev. Stat.”]: “[The disclosure
requirements shall not apply to] the offer or sale of an additional franchise to an existing
franchisee of the same franchisor."

Canadian Franchise Disclosure Laws 433
We have three concerns about the additional franchise exemptions
appearing in the four Acts:
• Some franchisors encourage poorly-performing franchisees to open
additional units in order to reduce their costs by taking advantage of the
synergies of operating multiple units. But these vulnerable franchisees are
exactly whom the franchise disclosure statutes are supposed to protect.
• Likely some material changes will have occurred in the period between the
grant of the original franchise and the grant of the additional franchise.
Because of this, a franchisor is unlikely to agree to grant the additional
franchise on the original franchise terms. But even if the franchisor did
agree to grant on the original terms, the franchisor would have to incur
significant costs to modify its then-current "plain vanilla" disclosure
document: to reflect (i) the location-specific information about the
additional franchise (of course it must expend these costs even if the
existing franchisee rejects the offer of the additional franchise), and (ii) the
pertinent information about the original franchise (because the additional
franchise must be substantially the same as the original franchise). It would
be cheaper for the franchisor to grant the additional franchise on current
terms.
• There is no minimum franchisee operating experience requirement.
For these reasons we recommend that if Manitoba decides to enact
franchise disclosure legislation, the legislation not include an additional
franchise exemption.
If Manitoba nevertheless decides to enact the exemption, then we suggest
that the government ensure that the existing franchisee has operated his existing
franchise for sufficient time to become reasonably familiar with its operation
within the franchise system. Therefore we recommend that the exemption be
available only to a franchisee who has operated the existing franchise
continuously for at least two years ending on a date no more than 60 days before
the grant of the additional franchise.
D. Grant by Trustee, Etc.
Each of the four Acts exempts from its disclosure requirements the grant of a
franchise on behalf of a franchisee who has become legally incapable of
managing his affairs due to physical, mental or financial circumstances. 20 The
language of the Ontario Act typifies this "trustee" exemption:
5(7) [The statutory disclosure obligation] does not apply to,
…
20
Alberta Act, s. 5(1)(f); New Brunswick Act, s. 5(8)(d); Ontario and PEI Acts, s. 5(7)(d).

434 Underneath the Golden Boy
(d) the grant of a franchise by an executor, administrator, sheriff, receiver, trustee,
trustee in bankruptcy or guardian on behalf of a person other than the franchisor or the
estate of the franchisor.
As was the case with a franchisee transfer transaction, the disposition by the
trustee of the franchisee's interest in the franchise falls squarely within the
statutory definition of "grant", 21 and thus in this transaction the trustee falls
within the statutory definition of "franchisor". 22 Therefore, without the
exemption, the trustee would have to provide a disclosure document. But what
information would the trustee's disclosure document contain If we construe
"franchisor" (as used in the disclosure content parts of the Act and its
Regulation) as referring to the trustee himself, then part of the required
information is completely irrelevant (e.g. the trustee's financial statement, his
criminal, litigation and insolvency history, etc.), part is immaterial (i.e. unlikely
to significantly affect a decision to acquire the franchise), and the rest is simply
unknown to the trustee (e.g. use of the advertising fund during the previous two
fiscal years), who would have to spend an enormous amount to collect and
verify it. 23 On the other hand, if we construe "franchisor" (as used in the
disclosure content parts of the Act and its Regulation) as referring to the "real"
franchisor, then almost all of the required information is unknown to the
trustee, who again would have to spend enormous amounts to collect and verify
it.
Again, similar to the franchisee transfer transaction, since the "real"
franchisor isn't "granting" anything, 24 the "real" franchisor does not fall within the
statutory definition of "franchisor" for the purposes of this transaction, and
therefore has no disclosure obligation even without the exemption.
The trustee exemption also has its origin in Hawaii's Franchise Investment
Law. 25 The policy underlying the exemption is similar to that for the franchisee
transfer exemption: there is no utility in requiring an executor, sheriff, trustee,
etc. to disclose information that is irrelevant, immaterial, or that the trustee does
not know in the first place and can determine only at enormous expense.
21
Ontario Act, s. 1(1): "'grant', in respect of a franchise, includes the sale or disposition of...an
interest in the franchise."
22
Ontario Act 1(1): "'franchisor' means one or more persons who grant...a franchise."
23
See supra note 8.
24
See supra note 7.
25
Hawaii Rev. Stat., supra note 19 §482E-4(a)(1): "[The disclosure requirements shall not apply
to] any transaction by an executor, administrator, sheriff, marshal, receiver, trustee in
bankruptcy, guardian or conservator."

Canadian Franchise Disclosure Laws 435
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation include a "trustee" exemption that has
requirements similar to those in section 5(7)(d) of the Ontario Act.
E. Grant of a Fractional Franchise
Each of the four Acts exempts from its disclosure requirements the grant of a
franchise to an established distributor to carry an additional, minor line that
comprises the goods or services of the franchisor. 26 For example, under the
Alberta Act:
1(1)(c) 'fractional franchise' means a franchise granted to a person to sell goods or
services within a business in which that person has an interest, the sales arising from
which, as anticipated by the parties at the time the franchise is entered into, do not
exceed, in relation to the total sales of the business, the percentage prescribed by the
regulations.
…
5(1) The following are exempt from [the statutory disclosure obligation]:
…
(h) the sale of a fractional franchise.
The "fractional franchise" exemption originated with the FTC Rule. 27 The
policy underlying the fractional franchise exemption is that disclosure has little
utility if there will only be a limited course of dealing between franchisor and
distributor such that the distributor will not be substantially dependent on the
franchisor for his business success.
We have three concerns about the fractional franchise exemptions
appearing in the four Acts:
• We believe that an inexperienced distributor may very well be
substantially dependent on the franchisor's line of goods or services for
his success during at least a reasonable start-up period (i.e. until the
distributor has gained sufficient experience of the sales, costs, profit and
risks attendant to distributing any line of goods and services). The
"fractional franchise" exemptions in the Acts do not require the
distributor to have had any previous distribution experience.
• The Alberta and Ontario Acts do not specify a measurement period for
determining sales for the 20% comparison test (presumably the period is
over the lifetime of the franchise). The New Brunswick and PEI Acts
26
Alberta Act, ss. 5(1)(h) and 1(1)(c); Alta.Reg. 240/95, s. 4 [“Alberta Regulation”]; New
Brunswick Act, s. 5(8)(e); Ontario Act, s. 5(7)(e); O.Reg. 581/00, s. 8 [“Ontario Regulation”];
PEI Act, s. 5(7)(e).
27
Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures, 16 C.F.R. Part 436, §436.2(a)(3)(i).

436 Underneath the Golden Boy
both specify as a measurement period the first year of operation of the
franchise.
• The New Brunswick and PEI Acts have 'hard coded' the 20% level of
the threshold test into the Act, making it very difficult to change that
number (both Alberta and Ontario have put the 20% number in their
disclosure Regulations).
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation include a fractional franchise exemption, but
that:
• The exemption not be available unless the distributor (or one of its
directors, officers or others having management authority, if the
distributor is an entity) has had at least two consecutive years
management experience (at any time) in a business that was
distributing goods and services competitive with or similar to those of
the franchisor, or was of a type that ordinarily would be expected to
offer such goods or services;
• The measurement period for determining sales for the threshold test be
the greater of the first year of operation of the franchise and the
reasonably foreseeable future; and
• The threshold level be coded into the disclosure regulation rather than
into the disclosure statute.
F. Renewal or Extension of a Franchise Agreement
The Alberta Act exempts from its disclosure requirements the renewal or
extension of a franchise agreement. 28 The New Brunswick, Ontario and PEI Acts
impose two conditions on the availability of this "renewal" exemption: 29
• There has been no interruption in the operation of the franchisee's
business, and
• There has been no material change since the franchise agreement or its
most recent renewal or extension was entered into.
The renewal exemption has its origin in California's Franchise Investment
Act. 30 The policy underlying the renewal exemption is that disclosure has little
28
Alberta Act, s. 5(1)(d).
29
New Brunswick Act, s. 5(8)(f); Ontario and PEI Acts, s. 5(7)(f).
30
California Corporations Code, supra note 7 at §31018(c): "[The terms 'offer', 'offer to sell', 'sale'
and 'sell'] do not include the renewal or extension of an existing franchise where there is no
interruption in the operation of the franchised business by the franchisee; provided, that a
material modification of an existing franchise, whether upon renewal or otherwise, is a 'sale'
within the meaning of [the statutory disclosure requirement]."

Canadian Franchise Disclosure Laws 437
utility if the business environment upon renewal is not likely to be substantially
different from that in which the franchisee has been conducting his business.
We have the following concerns about the two renewal exemption
conditions:
• Neither a starting date nor a duration for the business interruption is
specified. Surely a business interruption for a few weeks that occurred
some years ago for remodeling is quite irrelevant to availability of the
exemption.
• In any real life franchise system, a material change is likely to occur if
the term of the franchise extends for more than a couple of years.31
• In our view, the two existing renewal exemption conditions virtually
eliminate the availability of the renewal exemption.
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation include a renewal exemption that is available
only if:
• The franchisee's operation of his franchise business was not interrupted
for a period or periods exceeding a cumulative total of 60 days within
the 24 months immediately preceding the renewal or extension, and
• The franchisee's business environment immediately following the
renewal or extension is not substantially different from that in which
the franchisee has been conducting his franchise business.
G. Minimal Investment
Each of the four Acts exempts from its disclosure requirements the grant of a
franchise involving a total annual investment by the franchisee of less than $5
000. 32 The language of the Ontario Act typifies this "minimal investment"
exemption:
5(7) [The statutory disclosure obligation] does not apply to,
…
(g) the grant of a franchise if,
31
Especially if the franchisee operates wholly or partly in New Brunswick or Prince Edward
Island, because the franchise that is to be renewed or extended could have experienced a
material change during the term. See the definitions of "material change" in New Brunswick
Act, s. 1(1); PEI Act, s. 1(1)(k). The Alberta and Ontario Act definitions do not include
changes to the franchise.
32
Alberta Act, s. 5(1)(e) and Alberta Regulation, s. 6; Ontario Act, s. 5(7)(g)(i) and Ontario
Regulation, s. 9; PEI Act, s. 5(7)(e) and P.E.I. Reg. EC2006-231, s. 7; New Brunswick Act, s.
5(8)(g). New Brunswick has not completed drafting its disclosure Regulation, but we presume
that Regulation will also specify a $5,000 amount.

438 Underneath the Golden Boy
(i) the prospective franchisee is required to make a total annual investment to acquire
and operate the franchise in an amount that does not exceed a prescribed amount [the
amount is prescribed by Regulation as $5,000].
The minimal investment exemption has its origin in the FTC Rule. 33 The
policy underlying the minimal investment exemption is that the franchisee's
financial risk in acquiring and operating the franchise does not warrant the
expense in time and money of preparing a disclosure document.
Our concern about the minimal investment exemptions in the four Acts is
their use of the word "required", which to us suggests a contractual requirement;
in our view "require" should be replaced with "required, either by agreement or
by practical necessity."
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation include a minimal investment exemption similar
to that in the Ontario Act, but that responds to our concern.
H. Short-Term Franchise
The Ontario Act exempts from its disclosure requirements the grant of any type
of franchises having a term no longer than one year and not involving a nonrefundable
franchise fee. 34 The New Brunswick and PEI Acts exempt from their
disclosure requirements the grant of a "business opportunity" type of franchise
having a term no longer than one year and not involving a non-refundable
franchise fee. 35 The language of the PEI Act typifies the latter "short-term"
exemption:
5(7) [The statutory disclosure obligation] does not apply to,
(h) the grant of a franchise if the franchise agreement is not valid for longer than one
year and does not involve the payment of a non-refundable fee and if the franchisor or
franchisor's associate provides location assistance to the franchisee, including securing
retail outlets or accounts for the goods or services to be sold, offered for sale or distributed
or securing locations or sites for vending machines, display racks or other product sales
displays used by the franchisee.
The Ontario Act exemption simply omits the location assistance feature.
The Alberta Act has no short-term exemption.
33
Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures, supra note 27 at §436.2(a)(3)(iii) exempts the franchisor from disclosure:
"Where the total of [the payments made by the franchisee to the franchisor to acquire and
commence the franchise business] made during a period from any time before to within six
months after commencing operation of the franchisee's business is less than $500."
34
Ontario Act, s. 5(7)(g)(ii).
35
New Brunswick Act, s. 5(8)(i); PEI Act, s. 5(7)(i). A "business opportunity" franchise is the
type of franchise described by 1(1)(b)(ii) of the PEI Act, in which the franchisor, its associate
or a person designated by the franchisor provides location assistance to the franchisee.

Canadian Franchise Disclosure Laws 439
The policy underlying the business opportunity short-term exemption is that
the expense in time and money of preparing a disclosure document is not
warranted because the financial risk of the business opportunity franchisee is
minimal: he is committed for one year at most, paying no non-refundable fees,
and (presumably) he can sell for cash the equipment, goods, supplies, etc. that
he bought to operate the business, should his franchisor or supplier disappear.
The policy underlying Ontario's "short-term" exemption only has some of
these features, and in our view is on far shakier ground. Should Manitoba decide
to enact franchise disclosure legislation, then we recommend that the legislation
include a short-term exemption only for business opportunity-type franchises.
I. MLM Plans
Section 55 of the Competition Act defines a "multi-level marketing plan" as a
plan for the supply of goods or services whereby a participant in the plan receives
compensation for the supply of the goods or services to another participant in
the plan who, in turn, receives compensation for the supply of the same or
different goods or services to other participants in the plan. Since certain types of
MLM plans could also be "franchises", each of the New Brunswick, Ontario and
PEI Acts exempts an MLM plan from its disclosure requirements. 36 Alberta has
no MLM exemption.
The policy underlying this MLM exemption is that MLM plans are already
sufficiently regulated by the Competition Act.
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation exempt MLM plans from the disclosure
requirements.
J. Substantial Initial Investment
The Ontario Act exempts from its disclosure requirements the grant of a
franchise to a franchisee who invests more than $5 000 000 in one year to
acquire and operate the franchise. 37 The Alberta, New Brunswick and PEI Acts
have no such "substantial initial investment" exemption.
The substantial initial investment exemption appears to have originated in
1982 with an amendment to Michigan's Franchise Investment Law. 38 The policy
underlying the substantial initial investment exemption is that the expense in
36
New Brunswick Act, s. 5(8)(h); Ontario Act, s. 5(7)(g)(iii); PEI Act, s. 5(7)(h).
37
Ontario Act, s. 5(7)(h).
38
Franchise Investment Law, Mich. Comp. Laws. Ann. §445.1506(2)(b) (Supp. 1982-83). The
required initial investment threshold was $100 000.

440 Underneath the Golden Boy
time and money of preparing a disclosure document is not warranted where the
prospective franchisee is likely to demand and obtain the material information
he feels he needs in order to make an informed investment decision.
We have six concerns about substantial initial investment exemption in the
Ontario Act:
• The $5 000 000 threshold excludes almost all franchises except larger
new car dealerships a few hotel systems.
• Because the cost of real estate varies so markedly as a function of both
time and location, franchisors must recalculate each franchise offering
to ensure that the threshold amount is reached.
• The exemption does not exclude financing provided by the franchisor,
its affiliate or a selling franchisee.
• The exemption does not prevent a franchisor from requiring a number
of small investors to pool their money in order to attain the required $5
000 000 threshold.
• Since it is the size of the total investment that counts, the exemption
should be available for multiple grants made over a reasonably short
time to the same franchisee, provided that the total amount being
invested is at least $5 000 000.
• The exemption should be available only if the prospective franchisee
signs a separate acknowledgement that specifically refers to the
disclosure statute, its substantial initial investment exemption section,
and the required threshold amount, thus alerting the prospective
franchisee to both the statute and its exemption, so that he is likely to
read and understand them.
We recommend that if Manitoba decides to enact franchise disclosure
legislation, then the legislation not include a substantial initial investment
exemption. But if Manitoba nevertheless decides to include such an exemption,
then we recommend that the threshold amount be set at $2 000 000, excluding
the cost of real estate, and that the legislation address our five other concerns.
K. Ministerial Discretion
Each of the Alberta and New Brunswick Acts gives the Minister (in Alberta) or
Lieutenant-Governor in Council (in New Brunswick) discretion to exempt by
regulation any person or class of persons, any grant or class of grants of a
franchise, or any franchise or class of franchises, from any or all requirements of

Canadian Franchise Disclosure Laws 441
the Act or its regulations. 39 The Ontario and PEI Acts have no such "ministerial
discretion" exemption. 40
The policy underlying the ministerial discretion exemption for disclosure is
that the Crown has investigated appropriately and determined that, in the
circumstances, disclosure is not necessary to prevent misrepresentation (either
by misstatement or omission) of the nature, value and price of the franchise.
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation not include a ministerial discretion exemption
similar to that in the Ontario and PEI Acts.
L. Financial Disclosure
Each of the Ontario and PEI Acts gives the Lieutenant-Governor in Council the
power to make regulations exempting franchisors generally from the requirement
to include specified financial information in the disclosure document. 41 In
addition, the PEI Act gives the Minister, upon application by a specific
franchisor, the power to issue an order exempting that franchisor from having to
include its financial statement in the disclosure document, upon such terms and
conditions as the Minister may require. 42
The Ontario and PEI disclosure Regulations implement their Acts' "general
financial disclosure" exemptions: a franchisor need not include its financial
statement in the disclosure document if it meets and continues to meet certain
net worth and "good operating experience" requirements. 43
The policy underlying this "general financial disclosure" exemption is that
such "reliable" franchisors are unlikely to experience a disastrous financial
reverse before the prospective franchisee has established his franchise business.
Therefore these franchisors should not be unfairly disadvantaged in the market
by having to disclose their financial statements.
39
Alberta Act: 6; New Brunswick Act: 14(1)(j).
40
But see their financial statement exemption, described in the next section of this Paper.
41
Ontario Act, s. 13; PEI Act, s. 14(1)(g).
42
PEI Act, s. 8.
43
Ontario Regulation, s. 11; PEI Regulation, s. 6. The net worth requirement is either: (a)
having a net worth on a consolidated basis of at least $2 000 000 (PEI)/$5 000 000 (ON), or
(b) of at least $1 000 000, if controlled by a parent who meets the $2 000 000 (PEI)/$5 000
000(ON) requirement. The operating experience requirement is: (a) having either: (i) at least
25 franchisees operating at all times within a single jurisdiction during the five years preceding
the date of the disclosure document, or (ii) having a controlling parent meeting that
requirement, and (b) having (or such parent having) no Canadian judgement, order or award
made in Canada made against it in Canada within the previous five years relating to fraud,
unfair or deceptive acts or practices, or a law regulating franchises.

442 Underneath the Golden Boy
The same policy underlies PEI's "specific financial disclosure" exemption,
since the Minister, having investigated appropriately, has determined that the
franchisor will be sufficiently "reliable" if it complies with the terms and
conditions attached to the minister's order.
We have a concern with the net worth test in the general financial
exemptions appearing in the Ontario and PEI Acts. Exempting a franchisor
whose parent has the required $2 000 000 or $5 000 000 net worth, without
more, allows an unscrupulous foreign franchisor with sufficient net worth and
operating experience (based on its foreign operation) to totally eliminate its
financial risk of expanding to Canada, simply by incorporating a wholly-owned
"shell" subsidiary to act as the Canadian franchisor. Since the Canadian
franchisor's disclosure document need not include its financial statement, should
the disclosure document fail to reveal the franchisor's under-capitalization (a
material fact) and the Canadian implementation fail (as many do, the first time),
the franchisees may be "burned". One way to address this problem is to require
the foreign franchisor to unconditionally guarantee the Canadian franchisor's
obligations under the franchise agreement, and to make both franchisors liable
for a misrepresentation in the Canadian franchise disclosure document.
If Manitoba decides to enact franchise disclosure legislation that includes a
"general financial disclosure" exemption, then we recommend that the net worth
test of that exemption be available only if:
• The parent/affiliate unconditionally indemnifies the franchisee in
writing against the franchisor's failure to perform the franchisor's
obligations in the franchise agreement, and
• The certificate of disclosure (which we assume the legislation will
require be included in the franchisor's disclosure document) is also
signed by two of the indemnifying parent/affiliate's directors or officers,
so that they, too, become personally liable (together with the
franchisor's two directors and officers) under the statutory cause of
action remedy which we assume the legislation will provide.
III. THE STATUTORY EXCLUSIONS
A. Employment, Partnership and Co-operatives
Each of the New Brunswick, Ontario and PEI Acts states that it does not apply
to an employer-employee relationship, or to a partnership, or to membership in
certain defined co-operatives. 44 Without these exclusions many of these
44
New Brunswick Act, ss. 2(4)(a) to (c); Ontario Act, ss. 2(3)1. to 3. and Ontario Regulation, s.
1; PEI Act, ss. 2(3)(a) to (c).

Canadian Franchise Disclosure Laws 443
relationships could be franchises because of the "significant assistance/control"
element in the statutory definitions of "franchise". The Alberta Act has no such
exclusion (of course it has a different definition of "franchise").
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation include exclusions for employment, partnership
and co-operative types of business arrangement.
B. Single Trade-Mark License
Each of the New Brunswick, Ontario and PEI Acts states that it does not apply
to:
[A]n arrangement arising from an agreement between a licensor and a single licensee to
license a specific trade-mark, service mark, trade name, logo or advertising or other
commercial symbol were such license is the only one of its general nature and type to be
granted by the licensor in Canada with respect to that trade-mark, service mark, trade
name, logo or advertising or other commercial symbol. 45
The Alberta Act has no such "single license" exclusion.
The single license exemption originated with the FTC Rule. 46 The policy
underlying the exclusion is to ensure that the statute does not apply to three
important, recurring types of commercial arrangement:
• "One-on-one" licensing, in which a trade-mark is licensed to a
manufacturer who produces the trade-marked goods in accordance with
the licensor's specifications.
• "Collateral" licensing, in which a trade-mark that is well-known in one
context (e.g. designer clothing) is licensed for use in an entirely
different context (e.g. women's purses and luggage).
• Arrangements to settle trade-mark litigation, in which the plaintiff
licenses its trade-mark to the defendant.
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation include a single license exclusion.
C. Certification Marks
Each of the New Brunswick, Ontario and PEI Acts states that it does not apply
to:
[A]n arrangement arising form an agreement to use a trade-mark, service mark, trade
name, logo or advertising or other commercial symbol designating a person who offers on
45
New Brunswick Act, s. 2(4)(e); Ontario Act, s. 2(3)5; PEI Act, s. 2(3)(e). The exclusion in the
Ontario Act does not have the italicized words.
46
Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures, supra note 27 at §436.2(a)(4)(iv).

444 Underneath the Golden Boy
a general basis, for consideration, a service for the evaluation, testing or certification of
goods, commodities or services. 47
The policy underlying the "certification marks" exclusion is that although
the goods, etc, are certainly "substantially associated" with the certification mark,
that association has a different purpose than the trade-mark association referred
to in the statutory definitions of "franchise", since anyone whose goods, etc. meet
the licensor's standards and who pays the fee can use the certification mark.
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation include certification marks exclusion.
D. Leased Departments
A "leased department" is an arrangement in which an independent retailer sells
his own goods or services from space that he leases from a larger retailer within
or adjacent to the larger retailer's premises, and the independent retailer is not
required to purchase goods or services from the larger retailer or its affiliate. This
type of arrangement is typical in large department stores for the sale of tobacco,
shoes, watches and jewellery, cosmetics, sunglasses, etc.
A leased department may fall within the statutory definitions of "franchise",
depending on the details of the arrangement. The Ontario Act states that it does
not apply to leased departments, 48 whereas the Alberta Act merely exempts
leased departments from its disclosure requirements. 49 The New Brunswick and
PEI Acts do neither.
The leased department exclusion originated with the FTC Rule. 50 The policy
underlying the Alberta Act's exemption is that the expense in time and money
of preparing a disclosure document is not warranted where a smaller retailer is
merely leasing space in which to offer and sell his own merchandise acquired
from third parties, provided that the only payments made to the larger retailer or
its affiliate are for renting the space.
Ontario's choice to exclude leased departments altogether from the Ontario
Act's ambit means that the Act's fair dealing and right of association obligations
do not apply to a leased department arrangement, even if the arrangement
otherwise qualifies as a "franchise". We can see no principled reason for this.
47
In other words, the licensing of a certification mark. See New Brunswick Act, s. 2(4)(d);
Ontario Act, s. 2(3)4; PEI Act, s. 2(3)(d).
48
Ontario Act, s. 2(3)6.
49
Alberta Act, s. 5(1)(g).
50
Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures, supra note 27 at §436.2(a)(3)(ii).

Canadian Franchise Disclosure Laws 445
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation exempt leased departments from the disclosure
requirements. If Manitoba decides to adopt fair dealing, right of association or
other franchise relationship legislation, then we recommend that the legislation
not exclude leased departments that qualify as "franchises".
E. Oral Franchise
Each of the New Brunswick, Ontario and PEI Acts states that it does not apply
to an oral commercial arrangement that might otherwise be a "franchise", if there
is nothing in writing evidencing any material term of the arrangement. 51 The
policy underlying this "oral franchise" exclusion is simply to avoid problems of
proof.
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that the legislation include an oral franchise exclusion.
F. Bona Fide Wholesale Price
Each of the New Brunswick and PEI Acts states that it does not apply to an
arrangement arising from an agreement to purchase a reasonable amount of
goods or services at a reasonable wholesale price (goods) or a reasonable price
(services). 52 The Alberta Act accomplishes the same result by excluding such
purchases from its definition of "franchise fee". 53
The Ontario Act has neither exclusion, thereby including within its ambit
many commercial distribution arrangements that, in our view, ought not be so
regulated.
The policy underlying the "bona fide wholesale price" exclusion is that the
purchaser incurs no real risk in buying the goods or services, since ordinarily he
needs the services and can readily re-sell the goods.
Our concern with this exclusion is that it does not prevent a franchisor from
requiring franchisees to purchase unneeded services or excessive, obsolete or
otherwise unmarketable goods.
If Manitoba decides to enact franchise disclosure legislation, then we
recommend that legislation include a "bona fide wholesale price" exclusion, but
that the exclusion not be available if the franchisee is required (either by
agreement or practical necessity) to purchase goods or services in quantities
exceeding those which a reasonable person, operating a similar-size business in
51
New Brunswick Act, s. 2(4)(f); Ontario Act, s. 2(3)(7); PEI Act, s. 2(3)(f).
52
New Brunswick Act, s. 2(4)(g); PEI Act, s. 2(3)(g).
53
Alberta Act, s. 1(1)(f).

446 Underneath the Golden Boy
the same general market, normally would purchase in order to start up or
maintain the business.
G. Crown Arrangements
Each of the Ontario and PEI Acts states that it does not apply to a service
contract or other franchise-like arrangement with the Crown or a Crown agent.
Neither the Alberta Act nor the New Brunswick Act has this exclusion. 54
The policy underlying the "Crown arrangement" exclusion is, first, that the
expense in time and money of preparing and delivering a disclosure document to
the Crown is not warranted, since the Crown will always demand and obtain
whatever material information it needs before committing itself to the business
arrangement, and, second, that since the Crown can do no wrong, it will always
provide appropriate disclosure to the other party to the arrangement.
We have no comment or recommendation concerning the Crown
arrangements exclusion.
If Manitoba decides to enact franchise legislation, then we recommend that
the legislation not provide for this exclusion similar to the Alberta and New
Brunswick Acts.
54
The New Brunswick Act binds the Crown. See section 2(1).

Appendix A
Bills Passed in the 1 st Session of the 39 th Legislative Assembly
(6 June 2007 to 8 November 2007)
Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
1 An Act Hon. Mr.
Respecting the Doer
Administration (Premier)
of Oaths of
Office
*
1
2
3
4
5
6
One asterisk denotes a noteworthy bill. Two asterisks denote an especially noteworthy bill (controversial or a substantial policy initiative).
Housekeeping bill.
Potential constitutional issue.
S&EC denotes social and economic development; LA denotes legislative affairs; Just. denotes justice; CW denotes committee of the whole; PB denotes private bills; IA denotes
intergovernmental affairs; HR denotes human resources.
Report stage amendment.
RA denotes royal assent; P denotes proclamation; SD denotes specified date; ED denotes expiry date; WD denotes withdrawn.
Appendix A 447

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
2 The Interim
Appropriation
Act, 2007
3 The Healthy
Child
Manitoba Act
Hon. Mr.
Selinger
Hon. Ms.
Irvine-Ross
New
bill
New
bill
* Operating
expenditures
and capital
investments
Prevention &
early
intervention
strategy for
children’s
health
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
CW None None No No All party
support
S&EC
Five
organizations
and one
private
citizen
Significant
debate and
discussion
No No Some
discussion,
passed with
all party
support
Effect 6
RA
P
Substantive
areas
Finance
Family law
448 Underneath the Golden Boy
4 The Real
Property
Amendment
Act (Wind
Turbines)
Hon. Mr.
Rondeau
Amend Simplifies the
registration of
wind turbine
rights
Just. None Minor discussion
and
amendments
Yes No Some
concerns,
passed with
all party
support
RA
Trade and
commerce

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
5 The Public
Accounts
Committee
Meeting Dates
Act
(Legislative
Assembly Act
Amended)
Hon. Mr.
Chomiak
Amend * Regular
meeting times
for Standing
Committee
on Public
Accounts
Just. None Clauses passed
on division
No No WD
8 Nov
2007
Legislative
reform
6 The Adult
Literacy Act
Hon. Ms.
McGifford
New
bill
Establishes an
Adult
Literacy
Strategy and
program
funding
Just. Two groups Minor discussion No No Passed with
Liberal
support and
Tory
criticism
P
Education
Appendix A 449

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
7 The Insurance
Amendment
Act
8 The Public
Schools
Amendment
Act (Regional
Vocational
Schools)
Hon. Mr.
Selinger
Hon. Mr.
Bjornson
Amend Consistency
with other
jurisdictions,
industry
developments
and increased
consumer
protections
Amend Ensure the
continuation
of a regional
vocational
school
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
S&EC None Minor discussion
and
amendments
Amend RSA 5
Support or
opposition
in house
debates
Yes No Minor
debate and
criticism,
but passed
with all
party
support
Just. None None No No All party
support
Effect 6
RA/P
RA
Substantive
areas
Trade and
commerce
Education
450 Underneath the Golden Boy
9 The Securities
Amendment
Act
Hon. Mr.
Selinger
Amend Consistency
with other
jurisdictions
& enhances
investor
protection
S&EC None None No No Lengthy
unrelated
discussion,
but passed
with all
party
support
P
Securities
law

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
10 The Family
Maintenance
Amendment
and Interjurisdictional
Support Orders
Amendment
Act
Hon. Mr.
Chomiak
Amend Enforcement
of child
support
orders
S&EC None None Yes No All party
support
RA
Family law
11 The Children’s
Advocate’s
Enhanced
Mandate Act
(Various Acts
Amended)
Hon. Mr.
Mackintosh
Amend A review of
services
provided
upon the
death of a
child in care
S&EC
One private
citizen
Some discussion
and debate over
clauses
Yes No Liberal and
Tory
opposition,
passed on
division
P
Family law,
fatalities
legislation
Appendix A 451

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
12 The
Employment
Standards
Code
Amendment
Act (Leave for
Reservists)
13 The Organic
Agricultural
Products Act
Hon. Ms.
Allan
Hon. Ms.
Wowchuk
Amend Job
protection for
Reservists
New
bill
Labelling and
marketing of
organic
products
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
HR None None No No All party
support
S&EC
One private
citizen
Lengthy
discussion
No No Lengthy
debate,
passed with
some
opposition
Effect 6
RA
P
Substantive
areas
Employment
and
labour
Agriculture,
trade and
commerce
452 Underneath the Golden Boy
14 The
Government
Purchases
Amendment
Act
(Responsible
Manufacturing)
Hon. Mr.
Lemieux
Amend * Updates the
rules for
government
purchases
Just. None Minor discussion No No Some
discussion,
passed with
all party
support
P
Governance

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
15 The Biofuels
Amendment
Act
Hon. Mr.
Rondeau
Amend Expands the
definition of
biofuels and
requires
vendors to be
licensed
S&EC
Four groups
and two
private
citizens
Some discussion,
substantial
debate over
clauses
Yes No Lengthy
discussion,
passed with
all party
support
P
Trade and
commerce
16 The Statutory
Holidays Act
(Various Acts
Amended)
Hon. Ms.
Allan
Amend A new
statutory
holiday in
February
S&EC
One business
group and
one private
citizen
Significant
debate and
discussion over
clauses
Yes No Some
discussion,
passed with
all party
support
RA
Employment
and
labour law
17 The
Firefighters,
Peace Officers
and Workers
Memorial
Foundations
Act
Hon. Mr.
Lemieux
New
bill
Establishes
memorial
foundations
to honour
those who
have died in
the line of
duty
S&EC Two groups Substantial
discussions and
debate over
clauses
Yes No Some
discussion,
passed with
all party
support
P
Employment
and
labour law
Appendix A 453

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
18 The Forest Hon. Mr.
Health Struthers
Protection Act
19 The Fair
Registration
Practices in
Regulated
Professions Act
Hon. Ms.
Allan
New
bill
New
bill
Protection of
Manitoba’s
trees &
forests
Ensure that
registration
practices are
transparent,
objective,
impartial &
fair
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
S&EC None None No No Some minor
discussion,
passed with
all party
support
Just.
Fifteen
groups and
two private
citizens
Some discussion
and debate,
amendments
passed
Yes No Lengthy
debate,
passed with
all party
support
P
P
Effect 6
Substantive
areas
Conservation
Employment
and
labour law
454 Underneath the Golden Boy
20 The Planning
Amendment
Act (Deemed
Single
Operations)
Hon. Mr.
Ashton
Amend Two or more
livestock
operations
can be
treated as a
single
operation
Just.
Two
agricultural
groups
None No No Lengthy
debate,
passed with
all party
support
RA
Agriculture,
trade and
commerce

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
21 The Housing
and Renewal
Corporation
Amendment
Act (Fund for
Housing
Revitalization)
Hon. Mr.
Mackintosh
Amend Establishes a
fund for
improving
housing in
areas of need
S&EC
Two groups
and two
private
citizens
Intense
discussion and
debate
No No Tory and
Liberal
opposition,
passed on
division
RA
Social
welfare
22 The Medical
Amendment
Act
Hon. Ms.
Oswald
Amend Diagnostic &
treatment
facilities and
updating the
professional
discipline
process
S&EC
Two medical
groups
Minor discussion No No Debate and
criticism,
but passed
with all
party
support
RA
Health care
Appendix A 455

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
25 The Legislative
Assembly
Amendment
Act
26 The
Appropriation
Act, 2007
Hon. Mr.
Chomiak
Hon. Mr.
Selinger
Amend * Speaker of
the
Legislative
Assembly
continues in
office until
election
New
bill
* Operating
expenditures
and capital
investments
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
CW None No discussion No No RA Legislative
reform
CW None No discussion No No All party
support
RA
Finance
456 Underneath the Golden Boy
27 The Loan Act,
2007
Hon. Mr.
Selinger
New
bill
Increases the
government’s
borrowing
authority and
defines the
manner of
raising money
CW None No discussion No No All party
support
SD
Finance

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
28 The Budget
Implementation
and Tax
Statutes
Amendment
Act, 2007
Hon. Mr.
Selinger
Amend * Implements
measures of
the 2007
Manitoba
Budget
CW No discussion No No Criticism,
but all party
support
RA/
SD
Finance
200 The Health
Services
Amendment
and Health
Services
Insurance
Amendment
Act
Hon. Mr.
Gerrard
Amend Service
compliance
with the
Canada
Health Act
program
criteria
Not
proceeded
with
Health care
Appendix A 457

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
201 The Liquor
Control
Amendment
Act (Fetal
Alcohol
Spectrum
Disorder
Prevention)
202 The Apology
Act
Mr.
Lamoureux
Hon. Mr.
Gerrard
Amend Warnings
about alcohol
consumption
related birth
defects
New
bill
An apology is
not an
admission of
legal liability
Committee 4
Not
proceeded
with
Just.
Public
participation
at committee
stage
Two private
citizens
Committee
discussions &
clause by clause
No discussion or
debate, minor
amendment
Amend RSA 5
Support or
opposition
in house
debates
Yes No All party
support
Effect 6
SD
Substantive
areas
Health care,
trade and
commerce
Tort law
458 Underneath the Golden Boy
203 The
Phosphorus-
Free
Dishwashing
Detergent Act
Hon. Mr.
Gerrard
New
bill
Prohibit sales
of household
dish
detergents
containing
phosphorus
Not
proceeded
with
Conservation

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
204 The Personal
Health
Information
Amendment
Act
Hon. Mr.
Gerrard
Amend Patients to
have easy
access to
information
about their
health within
24 hours of
request
Not
proceeded
with
Health care,
privacy law
205 The Manitoba
Hydro
Amendment
Act
Hon. Mr.
Gerrard
Amend Procedural
changes to
appointments
to the board
of Manitoba
Hydro
Not
proceeded
with
Governance
Appendix A 459

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
206 The Personal
Information
Protection and
Identity Theft
Prevention Act
Mrs. Taillieu New
bill
207 The Elections
Amendment
and Elections
Finances
Amendment
Act
Mr.
Lamoureux
The
collection,
use, and
disclosure of
personal
information
by private
sector
organizations
Amend Public
information
about
electoral
investigations
Committee 4
Not
proceeded
with
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
Justice,
privacy law
Electoral
law
460 Underneath the Golden Boy
208 The Elections
Amendment
Act
Hon. Mr.
Gerrard
Amend Makes
vandalizing
elections
signs an
offence
Not
proceeded
with
Electoral
law

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
209 The Historic Mr.
Highway No. 1 Hawranik
Act
New
bill
Designate
Provincial
Trunk
Highway No.
44 as the
“Historic
Trans-
Canada
Highway”
Just. None No discussion or
debate, minor
amendments
Yes No All party
support
P
Culture,
heritage and
tourism
210 The Workplace Hon. Mr.
Safety and Gerrard
Health
Amendment
Act
(Harassment
in the
Workplace)
Amend Provides
workers with
the right to
an
harassmentfree
workplace
Not
proceeded
with
Employment
and
labour law
Appendix A 461

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
211 The Teachers’
Pensions
Amendment
Act
212 The Waste
Reduction and
Prevention
Amendment
Act
Mr. Schuler Amend Changes to
the Teachers’
Retirement
Allowances
Fund Board
Hon. Mr.
Gerrard
Amend Prohibits
retailers from
supplying
plastic
checkout
bags to
customers
Committee 4
Not
proceeded
with
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
Governance
Conservation
462 Underneath the Golden Boy
214 The Public
Schools
Amendment
Act (Property
Development)
Mr. Schuler Amend Prohibit
school boards
from
engaging in
residential or
commercial
property
development
Not
proceeded
with
Education,
property

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
215 The Mandatory Mr.
Testing for Goertzen
Pathogens Act
New
bill
Allows an
order
requiring a
bodily
substance for
testing and
analysis
Not
proceeded
with
Health care,
justice
216 The Municipal
Water System
Phosphorus
Control Act
Hon. Mr.
Gerrard
New
bill
Prohibit
phosphorusbased
substances to
control
leaching of
lead into
water pipes
Not
proceeded
with
Conservation
Appendix A 463

Bill Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
217 The Winter
Spreading of
Manure and
Biosolids
Prohibition Act
Hon. Mr.
Gerrard
New
bill
Prohibit
manure and
solid sewage
material
spreading on
land in winter
Committee 4
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5
Support or
opposition
in house
debates
Effect 6
Substantive
areas
Conservation
464 Underneath the Golden Boy

Appendix B
Bills Passed in the 2 nd Session of the 39 th Legislative Assembly
(20 November 2007 to 19 November 2008)
No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
1 An Act Hon. Mr.
Respecting the Doer
Administratio
n of Oaths of
Office
*
1
2
3
4
5
6
One asterisk denotes a noteworthy bill. Two asterisks denote an especially noteworthy bill (controversial or a substantial policy initiative).
Housekeeping bill.
Potential constitutional issue.
S&EC denotes social and economic development; LA denotes legislative affairs; Just. denotes justice; CW denotes committee of the whole; PB denotes private bills; IA denotes
intergovernmental affairs; HR denotes human resources; AG denotes agriculture.
Report stage amendment.
RA denotes royal assent; P denotes proclamation; SD denotes specified date; ED denotes expiry date.
Appendix B 465

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
2 The Public
Schools
Amendment
Act (Trans
Fats and
Nutrition)
3 The Highway
Traffic
Amendment
Act
Hon. Mr.
Bjornson
Hon. Mr.
Chomiak
Amend Food and
nutrition
policies for
schools
Amend Vehicle
forfeiture or
suspensions
for certain
convictions
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
S&EC None No discussion No No Generally
supported
Just. None None No No Lengthy
debate but
generally
accepted
Effect 6
P
RA
Substantive
areas
Health,
schools
Justice
466 Underneath the Golden Boy
4 The Provincial Hon. Mr.
Court Chomiak
Amendment
Act (Family
Mediators and
Evaluators)
Amend Referal to
mediation or
a family
evaluator’s
report
Just. None None No No Generally
accepted
RA
Family law

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
5 The Witness
Security Act
Hon. Mr.
Chomiak
New bill Witness
protection in
criminal
prosecutions
Just. None None No No Full party
support
P
Justice
6 The Securities
Amendment
Act
Hon. Mr.
Selinger
Amend Consistency
with other
jurisdictions
LA
Three private
citizens
Some
discussion
No No Generally
supported
RA/P
Securities
law
7 The Child and
Family
Services
Amendment
Act (Child
Pornography
Reporting)
Hon. Mr.
Mackintosh
Amend Reporting
child
pornography
Just.
Four groups
and one
private citizen
Some
discussion
Yes No Some
debate but
generally
supported
P
Justice,
child
protection
Appendix B 467

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
8 The
Phosphorus
Reduction Act
(Water
Protection Act
Amended)
Hon. Ms.
Melnick
9 The
Protection for
Persons in
Care
Amendment
Act
Hon. Ms.
Oswald
Amend Reducing
phosphorus
released from
cleaning
products
Amend Protects the
identity of a
person who
reports abuse
Committee 4
S&EC
Public
participation
at committee
stage
One group
and two
private
citizens
Committee
discussions &
clause by clause
Some
discussion
S&EC None Minor
discussion
Amend RSA 5 Support or
opposition
in house
debates
No No Some
debate but
generally
accepted
No No Generally
accepted
Effect 6
P
RA
Substantive
areas
Conservation,
water
stewardship
Justice,
identity
protection
468 Underneath the Golden Boy
10 The
Legislative
Library Act
Hon. Mr.
Robinson
New bill Provide a
library for use
by MLAs and
others
S&EC
One private
citizen
Minor
discussion
No No Generally
supported
RA
MLA and
public
privileges
11 The
Optometry
Amendment
Act
Hon. Ms.
Oswald
Amend Expand the
scope of
practice of
optometrists
S&EC None None No No Generally
accepted
P
Health care

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
12 The Securities
Transfer Act
Hon. Mr.
Selinger
New bill Rules for the
transfer of
investment
securities
based on
current
international
practices
S&EC None None Yes No Generally
accepted
RA
Securities
law
13 The Highway
Traffic
Amendment
Act (Damage
to
Infrastructure)
Hon. Mr.
Lemieux
Amend Create a new
offence for
damaging a
highway or
highway
structure
S&EC Four groups Some
discussion,
amendments
defeated
No No Some
debate,
generally
supported
RA
Road safety,
justice
Appendix B 469

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
14 The Criminal
Property
Forfeiture
Amendment
Act
15 The Climate
Change and
Emissions
Reductions
Act
Hon. Mr.
Chomiak
Hon. Mr.
Rondeau
Amend New system
for
distributing
the proceeds
of forfeited
property
New bill Targets for
emissions
reductions
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Just. None Minor debate
and
amendments
S&EC
Seven groups
and six
private
citizens
Significant
discussion and
debate at
committee
Amend RSA 5 Support or
opposition
in house
debates
Yes Yes Some
discussion,
generally
supported
Yes No Some
discussion,
generally
supported
Effect 6
P/SD
RA/P
Substantive
areas
Justice,
property law
Conservation
470 Underneath the Golden Boy
16 The Child
Care Safety
Charter
(Community
Child Care
Standards Act
Amended)
Hon. Mr.
Mackintosh
Amend A code of
conduct and
safety plan
for child care
centres
S&EC None No discussion No No Some
discussion,
all party
support
P
Child care

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
17 The
Environment
Amendment
Act
(Permanent
Ban on
Building or
Expanding
Hog Facilities)
Hon. Mr.
Struthers
Amend ** Prohibit the
construction
or expansion
of confined
livestock
areas
AG
Sixty-eight
groups, two
hundred, one
private
citizens
Intense
discussion, all
clauses passed
on division
No Yes Lengthy,
intense
debate,
passed on
division
RA
Environment,
agriculture
18 The Testing of Hon. Ms.
Bodily Fluids Oswald
and Disclosure
Act
New bill Allows
application
for an order
for bodily
substance for
testing and
analysis
S&EC Six groups Some
discussion
No No Some
discussion
but all party
support
P
Health care
Appendix B 471

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
19 The Liquor
Control
Amendment
Act
Hon. Mr.
Swan
20 The Gunshot
and Stab
Wounds
Mandatory
Reporting Act
Hon. Mr.
Chomiak
Amend Amendments
to The
Liquor
Control Act
New bill Requires
notification
to police
when a
person is
treated for a
gunshot or
stab wound
Committee 4
S&EC
Public
participation
at committee
stage
One private
citizen
Committee
discussions &
clause by clause
Some
discussion, no
amendments
Just. None Minor
discussion
Amend RSA 5 Support or
opposition
in house
debates
No No Some
concerns
raised, but
generally
supported
No No Some
discussion
but all party
support
Effect 6
P
P
Substantive
areas
Liquor
control
Health care,
justice
472 Underneath the Golden Boy
21 The Advisory
Council on
Workforce
Development
Act
Hon. Mr.
Swan
New bill Establishment
of an
advisory
council on
workforce
trends,
policies and
strategies
S&EC
Manitoba
Federation of
Labour
Some
discussion, no
amendments
No No Minor
discussion
but
generally
accepted
RA
Employment
and
labour

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
22 The Worker
Recruitment
and Protection
Act
Hon. Ms.
Allan
New bill Protections
for recruited
foreign
workers and
child
performers
S&EC
Three groups,
one private
citizen
No discussion No No Generally
supported
P
Employment
and
labour,
immigration
23 The
International
Labour
Cooperation
Agreements
Implementation
Act
Hon. Ms.
Allan
New bill Mechanism
for Manitoba
Government
to approve
international
labour
agreements
S&EC None No discussion No No Generally
supported
RA/P
Employment
and
labour,
trade and
commerce
Appendix B 473

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
24 The Public
Schools
Amendment
Act (Cyber-
Bullying and
Use of
Electronic
Devices)
25 The
Embalmers
and Funeral
Directors
Amendment
Act
Hon. Mr.
Bjornson
Hon. Mr.
Selinger
Amend Address
cyberbullying
and
the use of
personal
communication
devices in
schools
Amend Requires
greater
information
disclosure
and
development
of a code of
ethics
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
S&EC None None No No Minor
debate,
generally
supported
LA
Three groups
and five
private
citizens
Some
discussion at
committee
Yes No Generally
supported
Effect 6
RA
RA/P
Substantive
areas
Education,
child safety
Professional
regulation
474 Underneath the Golden Boy

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
26 The Legal
Profession
Amendment
Act
Hon. Mr.
Chomiak
Amend Enhances
protection of
the public
interest in
the delivery
of legal
services
Just.
One group,
two private
citizens
Some
discussion
No No Generally
accepted
RA
Professional
regulation,
justice
Appendix B 475

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
27 The
Shellmouth
Dam and
Other Water
Control
Works
Management
and
Compensation
Act (Water
Resources
Administration
Act
Amended)
Hon. Ms.
Melnick
Amend Establishes
compensation
program
for property
damage and
economic
loss caused
by operation
of the
Shellmouth
Dam
Committee 4
S&EC
Public
participation
at committee
stage
Two groups,
four private
citizens
Committee
discussions &
clause by clause
Lengthy
discussion,
amendments
defeated
Amend RSA 5 Support or
opposition
in house
debates
No No Some
debate,
generally
supported
Effect 6
P
Substantive
areas
Property,
natural
resources
476 Underneath the Golden Boy
28 The
Hon. Mr.
Strengthening Bjornson
Local Schools
Act (Public
Schools Act
Amended)
Amend Institutes a
moratorium
on school
closures
S&EC
Eight groups,
six private
citizens
Some
discussion and
debate
Yes No Strong
discussion,
passed on
division
RA/P
Education

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
29 The Business
Practices
Amendment
Act
(Disclosing
Motor Vehicle
Information)
Hon. Mr.
Selinger
Amend Requires
motor
vehicle
suppliers to
provide
vehicle
histories to
consumers
LA
One group,
two private
citizens
Some
discussion at
committee
No No Generally
supported
P
Motor
vehicles,
consumer
protection,
sale of
goods
30 The Crown
Lands
Amendment
Act
Hon. Mr.
Struthers
Amend Removes the
need for
Cabinet
approval of
the sale of
Crown lands
valued under
$25 000
S&EC None None No No Generally
supported
RA
Crown
lands
Appendix B 477

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
31 The Freedom Hon. Mr.
of Information Robinson
and Protection
of Privacy
Amendment
Act
Amend Appointment
of
Information
and Privacy
Adjudicator;
changes to
access to
information
and
protection of
privacy
Committee 4
S&EC
Public
participation
at committee
stage
Four groups
and ten
private
citizens
Committee
discussions &
clause by clause
Lengthy
discussion and
debate, some
clauses passed
on division, bill
reported on
division
Amend RSA 5 Support or
opposition
in house
debates
No Yes Some
debate,
passed on
division
Effect 6
P
Substantive
areas
Privacy,
access to
information
478 Underneath the Golden Boy
32 The Personal
Health
Information
Amendment
Act
Hon. Ms.
Oswald
Amend Criteria for
valid
consent;
appointment
of
Information
and Privacy
Adjudicator
S&EC
Four groups
and four
private
citizens
Some
discussion,
some
amendments
Yes Yes All party
support
P
Privacy,
health care

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
33 The Salvation
Army Grace
General
Hospital
Incorporation
Amendment
Act
Hon. Ms.
Oswald
Amend Reflect the
transfer of
operations to
the
Winnipeg
Regional
Health
Authority
S&EC None None No No Generally
supported
SD
Governance
health care
34 The Child and
Family
Services
Amendment
and Cild and
Family
Services
Authorities
Amendment
Act (Safety of
Children)
Hon. Mr.
Mackintosh
Amend Safety and
security are
paramount
considerations
in the
provision of
services to
children
S&EC
Two private
citizens
Some
discussion and
amendments
Yes No Unrelated
discussion,
generally
supported
RA
Child and
Family
Services
Appendix B 479

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
35 The Statutes
Correction
and Minor
Amendments
Act, 2008
Hon. Mr.
Chomiak
36 The Municipal Hon. Mr.
Assessment Ashton
Amendment
Act
Amend * Corrects
errors in
various Acts
and repeals
an obsolete
act
Amend Regulates the
years in
which
general
assessments
are to be
made
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Just. None No discussion No No Generally
supported
S&EC
Two groups
and one
private citizen
Some
discussion,
some
amendments
Yes No Minor
debate,
generally
supported
Effect 6
RA/
SD
SD
Substantive
areas
Municipal
law
480 Underneath the Golden Boy

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
37 The Lobbyists Hon. Mr.
Registration Chomiak
Act and
Amend-ments
to The
Elections Act,
The Elections
Finances Act,
The
Legislative
Assembly Act
and the
Legislative
Assembly
Management
Commission
Act
Amend ** * New
requirement
to register
lobbyists;
establishes
fixed date
elections;
and limits
political
communication
spending
Just.
Eleven
groups,
seventy-two
private
citizens
Intense
discussion and
debate, many
amendments,
some clauses
passed on
division, some
clauses
defeated
Yes Yes Lengthy,
intense
debate,
passed on
division
RA
Electoral
law, lobbist
regulation
Appendix B 481

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
38 The Balanced Hon. Mr.
Budget, Fiscal Selinger
Management
and Taxpayer
Accountability
Act
39 The Court of
Appeal
Amendment
Act
Hon. Mr.
Chomiak
New bill Establishes
new
requirements
for fiscal
accountability
and
balanced
budgets
Amend Increase the
number of
judges and
makes the
language
genderneutral
Committee 4
LA
Just.
Public
participation
at committee
stage
Eleven
groups and
thirty -nine
private
citizens
One private
citizen
Committee
discussions &
clause by clause
Lengthy
disucssion
Amend RSA 5 Support or
opposition
in house
debates
Yes No Intense
debate,
passed on
division
No discussion No No Generally
supported
Effect 6
SD
RA
Substantive
areas
Finance
Justice
482 Underneath the Golden Boy

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
40 The Drivers
and Vehicles
Amendment
Highway
Traffic
Amendment
and Manitoba
Public
Insurance
Corporation
Amendment
Act
Hon. Mr.
Chomiak
Amend Introduces
an enhanced
driver’s
license
Just.
One private
citizen
No discussion No No Generally
supported
P
Drivers’
licensing
42 The
Hon. Mr.
Appropriation Selinger
Act, 2008
New bill * Operating
expenditures
and capital
investments
CW None None No No Generally
accepted
RA
Finance
Appendix B 483

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
43 The Loan Act, Hon. Mr.
2008 Selinger
44 The Budget
Implementation
and Tax
Statutes
Amendment
Act, 2008
Hon. Mr.
Selinger
New bill Increases the
government’s
borrowing
authority
Admen Amends tax
and financial
legislation
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
CW None None No No Generally
accepted
CW None None No No Some
debate,
passed on
division
Effect 6
SD
RA/
SD/P
Substantive
areas
Finance
Taxation,
budget,
finance
484 Underneath the Golden Boy
45 The Teachers’
Pensions
Amendment
Act
Hon. Mr.
Bjornson
Amend ** Modifies the
rate of return
on the
pension
adjustment
account
S&EC
Eleven
groups and
two hundred,
seventy
private
citizens
Intense
discussion
No No Amdendments
defeated on
division, bill
passed on
division
RA/
SD
Teachers’
pensions

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
46 The
Community
Revitalization
Tax Increment
Financing Act
Hon. Mr.
Ashton
New bill Designate
properties as
community
revitalizing
properties
subject to
levy in lieu of
taxes
Not
proceeded
with
Property tax
47 The
CentrePort
Canada Act
Hon. Mr.
Lemieux
New Bill Establishes
long-term
development
and
operation of
inland port
S&EC None Some
discussion,
sinle, minor
amendment
Yes No All party
support
RA
Trade and
commerce,
transportation
Appendix B 485

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
48 The Animal
Care
Amendment
Act
Hon. Ms.
Wowchuk
Amend Report abuse
or neglect of
animals;
regulations
for animal
transport;
licensing of
animal
breeders, pet
stores, and
shelters
Committee 4
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
Animal
protection
486 Underneath the Golden Boy
200 The Waste Hon. Mr.
Reduction and Gerrard
Prevention
Amendment
Act
Amend Prohibits
retailers from
providing
plastic
checkout
bags to
customers
Not
proceeded
with
Environment,
trade
and
commerce

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
201 The
Phosphorus-
Free
Dishwashing
Detergent Act
Hon. Mr.
Gerrard
New bill Prohibits the
sale of
household
dishwashing
detergent
containing
phosphorus
Not
proceeded
with
Conservation
202 The Health
Services
Amendment
and Health
Services
Insurance
Amendment
Act
Hon. Mr.
Gerrard
New bill Services
provided
must comply
with criteria
set out in the
Canada
Health Act
Not
proceeded
with
Health care
Appendix B 487

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
203 The Liquor
Control
Amendment
Act (Fetal
Alcohol
Spectrum
Disorder
Prevention)
204 The Milk
Prices Review
Amendment
Act
Mr.
Lamoureux
Mr.
Lamoureux
New bill Warnings
about birth
defects
caused by
alcohol
consumption
during
pregnancy
New bill Establishes
Manitoba
Milk Prices
Review
Commission
Committee 4
Not
proceeded
with
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
Liquor
control,
health care
Agriculture
488 Underneath the Golden Boy
205 The Elections
Amendment
and Elections
Finances
Amenement
Act
Mr.
Lamoureux
Amend Making
information
about
electoral
investigation
s available to
the public
Not
proceeded
with
Electoral
law

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
206 The Elections
Amendment
Act
Hon. Mr.
Gerrard
Amend Makes it an
offence to
vandalize
election signs
Not
proceeded
with
Electoral
law
207 The Manitoba
Hydro
Amendment
Act
Hon. Mr.
Gerrard
Amend Amend
appointment
process to
the board of
Manitoba
Hydro
Not
proceeded
with
Crown
governance
208 The Crown
Appointment
Review Act
(Various Acts
Amended)
Hon. Mr.
Gerrard
Amend Amends
appointment
process to
some Crown
Corporations
Not
proceeded
with
Crown
governance
Appendix B 489

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
209 The Personal
Health
Information
Amendment
Act
210 The Winter
Spreading of
Manure and
Biosolids
Prohibition
Act
Hon. Mr.
Gerrard
Hon. Mr.
Gerrard
Amend Access to
health
information
within 24
hours of
patient
request
New bill Prohibits
winter
spreading of
manure and
solid material
from sewage
Committee 4
Not
proceeded
with
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
Health care,
access to
information
Agriculture
and conservation
490 Underneath the Golden Boy
211 The
Environment
Amendment
Act (Methamphetamine)
Mr.
Lamoureux
Amend Offence for
release of
pollutant
from
methamphetamine
production
Not
proceeded
with
Environment,
justice

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
212 The Teachers’
Pensions
Amendment
Act
Mr. Schuler Amend Changes to
Teachers’
Retirement
Allowances
Fund Board
Not
proceeded
with
Teachers’
pensions
214 The Labour
Relations
Amendment
Act
(Information
in Employee’s
Language)
Mrs. Taillieu Amend Requires
unions to
provide
information
in a language
understood
by the
employee
Not
proceeded
with
Employment
and
labour
Appendix B 491

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
215 The Public
Schools
Amendment
Act (Property
Development)
216 The Personal
Information
Protection and
Identity Theft
Prevention
Act
Mr. Schuler Amend School
boards are
not
authorized to
engage in
residential or
commercial
property
development
Mrs. Tallieu New bill Governs
collection,
use, and
disclosure of
personal
information
by private
sector
organizations
Committee 4
Not
proceeded
with
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
School
boards
Privacy
492 Underneath the Golden Boy

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
217 The Ukrainian
Famine and
Genocide
Holodomor
Memorial Day
Act
Mr. Derkach New bill Proclaims the
forth
Saturday of
November as
“Ukrainian
Famine and
Genocide
Memorial
Day”
S&EC None Minimal
discussion
Yes No Full support
by all
parties
RA
Official
observances
218 The Public
Schools
Finance Board
Amendment
Act
Mr. Schuler Amend Resource
allocations
among
school
divisions
Not
proceeded
with
Finance,
education
220 The Right to Hon. Mr.
Timely Access Gerrard
to Quality
Health Care
Act
New bill Access to
health care
and medical
information
Not
proceeded
with
Health care,
access to
information
Appendix B 493

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
221 The Liquor
Control
Amendment
Act (Liquor
Vendor Siting)
222 The Business
Practices
Amendment
Act
(Disclosure of
U.S. Lemon
Vehicles)
Mrs. Taillieu New bill Guidelines to
determine
distance
between
rural liquor
vendors
Mr.
Faurschou
Amend Disclosure of
used vehicle
history
Committee 4
Not
proceeded
with
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
Liquor
control
Motor
vehicles,
consumer
protection,
sale of
goods
494 Underneath the Golden Boy

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
223 The Non-
Smokers
Health
Protection
Amendment
Act
(Protecting
Children From
Second-Hand
Smoke in
Motor
Vehicles)
Mr.
Lamoureux
Amend Prohibits
smoking in
motor
vehicles in
the presence
of children
Not
proceeded
with
Health care,
child
protection
224 The Highway
Traffic
Amendment
Act (Booster
Seats)
Hon. Mr.
Gerrard
Amend Requires
booster seats
for children
under 8 years
while riding
in a vehicle
Not
proceeded
with
Motor
vehicles,
child
protection
Appendix B 495

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
225 The Highway
Traffic
Amendment
Act (Bicycle
Helmets)
226 The Social
Inclusion and
Anti-Poverty
Act
Mr.
Lamoureux
Hon. Mr.
Gerrard
Amend Requires
persons
riding on a
highway or
bicycle path
to wear a
helmet
New bill Provincial
strategy to
combat
poverty and
social
exclusion
Committee 4
Not
proceeded
with
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
Traffic,
bicycle
safety
Poverty
496 Underneath the Golden Boy
227 The Fetal
Alcohol
Spectrum
Disorder
Reporting Act
Hon. Mr.
Gerrard
New bill Reporting
protocols for
doctors
diagnosing
FASD
Not
proceeded
with
Health care

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
228 The
Greenhouse
Gas Emissions
Reporting Act
Hon. Mr.
Gerrard
New bill Requires
government
reports on
Manitoba’s
greenhouse
gas emissions
Not
proceeded
with
Environment
229 The Manitoba Mr.
Public Hawranik
Insurance
Corporation
Amendment
Act
(Elimination
of Benefits for
Auto Thieves)
Amend Denies MPIC
injury
benefits to a
person
convicted of
stealing the
vehicle
involved in
the
accdident
Not
proceeded
with
Motor
vehicle
accident
compensation,
justice
Appendix B 497

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
230 The
Regulatory
Accountability
and
Transparency
Act
Mrs. Taillieu New bill Formal
process for
procedural
transparency
231 The Municipal
Amendment
Act
Mr. Pedersen Amend Prevents
municipal
land
expropriation
for economic
development
purposes
Committee 4
Not
proceeded
with
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
Regulatory
procedures
Municipal
law,
economic
development
498 Underneath the Golden Boy
232 The Public
Schools
Amendment
Act (Anaphylaxis
Policies)
Ms. Selby Amend Requires
school boards
to develop an
anaphylaxis
policy
Private Bills None None No No Generally
supported
P
Health care,
education

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
233 The Jordan’s
Principle
Implementation
Act
Hon. Mr.
Gerrard
New bill Right of
children to
timely access
to services,
regardless of
jurisdictional
disputes
Not
proceeded
with
Child
safety,
social
welfare
234 The Ending
Government
Spending on
Partisan
Advertising
Act
Mrs.
Driedger
New bill Standards for
government
advertising
and annual
report by
Auditor
General
Not
proceeded
with
Government
spending
Appendix B 499

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
235 The Public
Interest
Disclosure
(Whistleblowe
r Protection)
Amendment
Act
Mr.
Faurschou
236 The Domestic Mrs.
Violence Driedger
Death Review
Committee
Act
Amend Protects
whistleblowers
from
civil
proceedings
New bill Establishes
the Domestic
Violence
Death
Review
Committee
Committee 4
Not
proceeded
with
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
Tort law,
justice
Justice,
social
welfare
500 Underneath the Golden Boy
237 The Pet
Cemeteries
and
Crematoriums
Act
Mr.
Faurschou
New Bill Establishes
obligations
and
operating
procedures
Not
proceeded
with
Animal
care,
consumer
protection

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
Committee 4
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Effect 6
Substantive
areas
240 The Justice for
Victims of
Child
Pornography
Act
Mr.
Goertzen
New Bill Award for
damages
against
person
convicted of
child
pornography
offences
Not
proceeded
with
Justice,
child
protection
241 The
Grandparent’s
Day Act
Ms. Braun New bill Proclaims
first Sunday
in September
after Labour
Day as
Grandparents’
Day
Not
proceeded
with
Official
observances
Appendix B 501

No. Title Sponsor Type Noted 1 H.B. 2 Const. 3 Origin:
who/what is
behind the
bill
242 The Electoral
Divisions Act
(Population
Variances for
Southern
Rural Constituencies
300 The Royal
Lake of the
Woods Yacht
Club
Incorporation
Amendment
Act
Mr. Derkach Amend Allows
southern
rural
constituencie
s a
population
variance
Mrs.
Stefanson
Amend Amends the
object of the
club and
repeals stock
provisions
Committee 4
Not
proceeded
with
Public
participation
at committee
stage
Committee
discussions &
clause by clause
Amend RSA 5 Support or
opposition
in house
debates
Private Bills None None No No All party
support
Effect 6
RA
Substantive
areas
Electoral
law
Governance
502 Underneath the Golden Boy