Underneath the Golden Boy - Robson Hall Faculty of Law

Response to Consultation Paper on Franchise Law 311
disclosure requirements. 52 For example, subsection 3(2) of the regulations under
the PEI Act states that a franchisor may use a document that is prepared and
used to comply with the disclosure requirements under the franchise law or
jurisdiction outside Prince Edward Island as its disclosure document to be given
to a prospective franchisee in PEI, if the franchisor includes supplementary
information with that document to bring it into compliance with the disclosure
requirements under the PEI Act. 53 The question facing Manitoba is whether a
wraparound provision should be included in its franchising legislation.
Prior to answering the question, it is helpful to consider the statutory
requirement of “clarity of disclosure.” Section 5(6) of the Arthur Wishart Act
(Franchise Disclosure) 2000, demands that all information in a disclosure
document must be accurately, clearly and concisely set out. Since one of the
purposes of the Act is to rectify a perceived information imbalance between the
franchisor and a prospective franchisee, any disclosure that is confusingly worded
or formatted frustrates that purpose. 54 The requirement of “clear and concise”
disclosure caters to parties unfamiliar with franchising. Mr. Trebilcock states:
Try to see the disclosure through the mind of a reader who has no experience in
franchising, and no familiarity with the business being franchised. […] So if you draft a
disclosure document, take the time to provide a clear, concise description of the required
contract provisions. 55
Since this is quite a sensible requirement, it is important to maintain
disclosure documents both clear and concise even with the addition of a “wrap.”
As stated earlier, Manitoba is a franchisee province. Thus, for the most part,
franchisors are coming into Manitoba to sell their product and services, and not
the other way around. It is imperative to take this into consideration when
thinking about adding a “wrap-around” provision to Manitoba’s franchise
legislation because of the origin of the foreign document that a franchisee would
be receiving. When one looks at the list of CFA members, it is clear that the vast
majority of franchisors coming into Canada hail from the United States. 56
52
Arthur J. Trebilcock, “Disclosure – The Advanced Course: Tricky Disclosure Issues and Some
Drafting Tips,” (Paper presented to the Ontario Bar Association’s 6th Annual Franchising
Conference: The Domino Effect, November 2006) [OBA Continuing Legal Education:
Toronto, 2006] at 12.
53
Edward N. Levitt, “Annual Legislative Update,” (Paper presented to the Ontario Bar
Association’s 6th Annual Franchising Conference: The Domino Effect, November 2006)
[OBA Continuing Legal Education: Toronto, 2006] at 45.
54
Edward N. Levitt, supra note 18.
55
Ibid.
56
Canadian Franchise Association, supra note 31.