Underneath the Golden Boy - Robson Hall Faculty of Law

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).