Underneath the Golden Boy - Robson Hall Faculty of Law

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.