Underneath the Golden Boy - Robson Hall Faculty of Law

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.