Underneath the Golden Boy - Robson Hall Faculty of Law

310 Underneath the Golden Boy
to disclose the result and not terms of settled litigation. Doing so will not only
allow the franchisee to determine if the franchisor is reasonable and will settle,
rather than being litigious, but also clearly portray the franchise’s legal history.
Manitoba’s legislation should also include a provision whereby the
franchisor must disclose franchise support resource and methods. This will not
only allow a franchisee to choose a franchise that provides them with the desired
support but will also benefit the franchisor that has such a system in that they
will be preferred by several franchisees. This provision will be beneficial to both
parties.
Manitoba would not be the first jurisdiction to adopt such a provision. For
instance, Australia’s Trade Practices Act 1974 requires that a franchisor provide
its potential franchisees with a summary of the conditions of the franchise
agreement that deal with obligations of the franchisor, including an obligation to
provide training both before and after the franchised business starts. 50
Furthermore, Article 142 Bis of Mexico’s Law to Develop and Protect Industrial
Property requires that a franchisor disclose to the franchisee all the necessary
training required by the franchisee’s employees, including the manner in which
the franchisor will provide technical assistance. 51
Last, repeated sales of the same franchised outlet should be added to the
disclosure requirements. A franchisee needs to know if the same franchise
location has been sold repeatedly. This will in turn prevent a franchisor from
constantly re-selling the same location, knowing that it will shut down soon,
while blaming the franchisee for the store’s failure and keeping the franchisee’s
deposit and other fees. In other words, this will alert a franchisee to either not
get involved with a franchisor offering a location that has closed several times in
a short period of time or adjust the price to reflect the poor location.
3. Wrap-Around Disclosure Document
Regulations under the PEI and Alberta Acts contain “wrap-around” provisions.
These permit a franchisor to use as its disclosure document a foreign document
that has been authorized by the franchise laws of another jurisdiction, if
supplementary information is included which discloses any additional
information needed to make the foreign document comply with domestic
50
Australia, Trade Practices (Industry Codes – Franchising) Regulations 1998, SR 1998 No. 162
[Franchising Regulations] online: FCA – Franchising Code of Conduct
at s. 15.1(a).
51
Camara de Diputados del H. Congreso de La Union (Centro de Documentacion, Informacion y
Analisis), Ley de la Propiedad Industrial, online:
.