Underneath the Golden Boy - Robson Hall Faculty of Law

Response to Consultation Paper on Franchise Law 347
This concludes the list of issues for consultation suggested by the Manitoba
Law Reform Commission in the Consultation Paper on Franchise Legislation.
I. Additional Suggestions
1. Exclusions on Oral Representations During the Franchise Sale Process
In order to prevent a franchisor abusing a franchisee by making oral
representations that will not be enforced, Manitoba should follow the UFA,
PEI’s Act and New Brunswick’s Bill and incorporate an exclusion for oral
arrangements. Section 2(3) of the UFA, the Arthur Wishart Act (Franchise
Disclosure), 2000, PEI’s Franchises Act, and section 2(4) of New Brunswick’s
Bill 32 states:
This Act does not apply to […] a relationship or arrangement arising out of an oral
agreement where there is no writing that evidences any material term or aspect of the
relationship or arrangement.
This will in turn deter franchisees from entering into oral arrangements with
franchisors and require that all promises be made in writing. Furthermore, since
Manitoba has repealed its Statute of Frauds 178 dictating that a written agreement
will override any alleged oral contract, 179 it is necessary to say so through
franchise legislation.
In conclusion, Manitoba ought to include Ontario’s exclusion on oral
representations made during the sale process to encourage potential franchisees
to require franchisors to reduce all agreements to writing.
2. Cooling-Off Period
All Canadian franchise legislation allows for a 14-day period between the
issuance of disclosure documents and the signing by the prospective franchisee of
any agreement relating to the franchise or the payment of any consideration
relating to the franchise. In addition to adopting such a provision, Manitoba
should consider incorporating a cooling-off period.
Although the two-week period grants franchisees with ample time to
acquaint themselves with all disclosure documents, a cooling-off period would
allow them a final interlude during which to assess the purchase. Considering
that, for the most part, franchise agreements last as long as ten years and may be
difficult to transfer, a potential franchisee will be investing a significant amount
of time and money. Thus, once the agreement is signed, a seven-day period
178
An Act to Repeal The Statute of Frauds, C.C.S.M. c. F158, Enacted as: R.S.M. 1987, c. F158.
179
Frank Zaid, “Franchising and The Law,” online: Online Publications,
.