Underneath the Golden Boy - Robson Hall Faculty of Law

Response to Consultation Paper on Franchise Law 325
4. New Brunswick
The Provincial Legislature of New Brunswick proposed Bill 32, entitled
Franchises Act, at a first reading on 23 February 2007. If passed, the bill will
impose on franchisors and franchisees a duty of good faith and fair dealing. The
legislation will also protect the right of franchisees to associate. 101 Although New
Brunswick altered the order, it followed PEI’s fair dealing provision, extending
the performance and enforcement of the franchise agreement to include the
exercises of a right under the agreement. Once again, Ontario’s association
provisions were adopted verbatim.
5. ULCC
The Uniform Franchises Act contains the same fair dealing provision as PEI.
The expansion of the section from its Ontario counterpart means that the duty
of fair dealing will not only apply during the performance and enforcement of the
agreement but also in the exercise of a right under it. The ULCC argues that the
addition of the words “in the exercise of a right” is necessary because the duty of
fair dealing incorporating the duty of good faith and commercial reasonableness
standards in the Ontario Act does not extend to express contractual provisions
granting the franchisor discretionary authority over rights to be exercised during
the term of the contract that may be carried out without regard to fair dealing. 102
When drafting its model act, the ULCC chose to follow Ontario’s association
provisions rather than Alberta’s. The reason for this decision is that the Alberta
Act has been drafted in the negative, that is, that a franchisor or its associate
may not prohibit or restrict a franchise from forming an organization while the
Ontario Act has been drafted in the affirmative, where a “franchisee may
associate with other franchisees.” 103
E. Recommendation for Manitoba
The question at hand is what relationship provisions Manitoba ought to adopt.
The options range from Alberta’s narrower provisions to PEI, New Brunswick
and the ULCC’s wider provisions; Ontario stands in the middle of the spectrum.
All relationship provisions pertain to the duty of good faith and the right of
franchisees to associate.
101
Richard Leblanc, “New Brunswick Reintroduces Franchise Legislation,” FranNews (Spring
2007), online: Miller Thomson LLP, Publications, Newsletters
at 1.
102
Uniform Law Conference of Canada, supra note 71 at 9.
103
Ibid.