Underneath the Golden Boy - Robson Hall Faculty of Law

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.