Underneath the Golden Boy - Robson Hall Faculty of Law

326 Underneath the Golden Boy
With regard to the duty of fair dealing, Manitoba ought to adopt the widest
provisions. Since these extend the duty from a pre-contractual obligation to
apply to the exercise of a right under the agreement, franchisees will be
protected throughout their entire relationship with the franchisor. Conversely,
franchisors will be protected from franchisees since the duty is reciprocal. It is
necessary to note that the common law assumes that parties to a contract are
equal and capable of looking out for their respective interests. Since this is not
the reality in a franchise relationship, due in part to the power imbalance
between a franchisor and franchisee, legislation is needed to compensate for this
shortcoming. 104 Thus, the duty of good faith and fair dealing must be included in
Manitoba’s franchise legislation.
A right of action should also be granted to ensure that parties abide by the
requirements or risk facing legal action. Lastly, the expansion of the duty of fair
dealing to include reasonable commercial standards ought to be adopted as well.
As stated earlier, including reasonable commercial standards in the definition of
fair dealing provides the concept of fair dealing with the contextual clarification
it requires and is consistent with the standard of good faith already applied in the
Canadian common law. 105
Manitoba’s franchise legislation should also grant franchisees the right to
associate, emulating the Ontario and PEI Act as well as the New Brunswick Bill.
Since associations may be beneficial to both franchisors and franchisees, a
franchisee’s right to associate or join an organization should be protected. As
Edward N. Levitt stated:
The association can assist in dispute resolutions between the franchisor and franchisees,
provide a useful feedback mechanism for all sorts of issues affecting the system, assist the
franchisor in dealing with franchisees who operate poorly or contrary to the interest of
everyone in the system, raise the level of commitment of all franchisees and assist in the
introduction of new products and services into the system. 106
F. Additional Franchise Relationship Issues
Current franchise relationship legislation in Canada only addresses a small
portion of relationship issues. Although extending the duty of fair dealing to
include the performance of the contract may provide more protection to
franchise parties, several areas remain where no protection is issued. These
include contract termination, renewal of contract, transfers and sale of a
franchise by a franchisee.
104
Daniel F. So, supra note 69 at 212.
105
Edward N. Levitt and Deborah E. Palter, supra note 92.
106
Edward N. Levitt, “Franchisee Associations,” online: Gowlings Resource Centre,
.