Underneath the Golden Boy - Robson Hall Faculty of Law

322 Underneath the Golden Boy
C. Franchise Relationship Regulation
The relationship between a franchisor and his franchisees has often been likened
to a partnership or marriage. These analogies are valid because of the
interdependence of the parties, the division of responsibilities, the collective
effort for the common good, and the sharing of the fruits of that effort. But like a
partnership or marriage, a franchise relationship can turn sour and become a
bitter experience for all concerned. 88 Consequently, legislative provisions are
necessary to ensure the preservation of this delicate relationship.
Until the year 2000, when Ontario introduced the Arthur Wishart Act
(Franchise Disclosure), 2000, Alberta was the only Canadian jurisdiction to have
regulated the franchise relationship. However, because the population in Alberta
represents less than 10 percent of the total Canadian population, the franchise
relationship throughout Canada was governed primarily by common law. 89 Since
the year 2000, the introduction of franchise legislation in Ontario, PEI and
possibly New Brunswick has increased the statutory protection of the franchise
relationship.
D. Current Legislation, Bill 32, and the UFA
1. Alberta
Alberta first introduced franchise relationship provisions in 1995, when it
replaced the old Franchises Act. 90 The new Act adopted two relationship
provisions, addressing the duty of fair dealing and the franchisee’s right to
associate. Section 7 of the Act states that every franchise agreement imposes on
each party a duty of fair dealing in its performance and enforcement. Section
8(1) of the Act states that a franchisor or its associate must not prohibit or
restrict a franchisee from forming an organization of franchisees or from
associating with other franchisees in any organization of franchisees.
Furthermore, a franchisor or its associate must not directly or indirectly
penalize a franchisee for associating with others.
The common law continues to play an important role in presiding over
franchise relationships. In Thompson v. Cinnaroll Bakeries Ltd., 91 the defendant,
who held an exclusive franchise for Cinnabon bakeries in Western Canada,
88
Edward N. Levitt, “The Franchisor/Franchisee Relationship,” online: Gowlings Resource
Centre .
89
Allan D.J. Dick and Markus Cohen, “The Duty of Good Faith and Fair Dealing in Canada,”
(Fall 2004) Vol. 24, No. 2 Franchise Law Journal 89 at 89.
90
R.S.A. 1980, Ch. F-17 (repealed).
91
[2002] A.B.Q.B. 1112.