Underneath the Golden Boy - Robson Hall Faculty of Law

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.