Underneath the Golden Boy - Robson Hall Faculty of Law
Underneath the Golden Boy - Robson Hall Faculty of Law Underneath the Golden Boy - Robson Hall Faculty of Law
406 Underneath the Golden Boy New Brunswick Act Alberta Act Means a change, in the business, operations, capital or control of the franchisor or franchisor's associate or in the franchise or the franchise system that would.... [emphasis added.] Means (i) a change in the business, operations, capital or control of the franchisor or its associate, or (ii) a change in the franchise system, that would... Note the addition of the term "or in the franchise" in the ULCC Act and the Atlantic legislation. This term is not included in the definition of a "material change" in either the Ontario Act or the Alberta Act. It is anticipated that the impact of this change will be significant. Note that the definition of a "franchise" begins with "a right to engage in a business... .” A narrow interpretation of the addition of the term "or in the franchise" to the definition of a material change would suggest that a franchisor must disclose any material change to the right to engage in a business. However, a more conservative and prudent interpretation of the addition would obligate a franchisor to disclose a material change to any element of what constitutes a "franchise". This interpretation casts the net extremely broadly, and a franchisor would have to consider all of the elements that are included in the definition of a franchise, such as a change to the business itself, the nature of the payment or continuing payments, the right to sell, offer for sale or distribute goods or services, etc. The breadth of what constitutes a "material change", combined with the number of factors which comprises a "franchise", means that the inclusion of "or in the franchise" to the definition of a material change significantly expands the scope of what must be disclosed between the time that the original disclosure document is delivered to the franchisee and the signing of any franchise agreement or payment of any consideration. Note that the Ontario Act is the only legislation that includes the possibility that the definition could be expanded by a prescribed change in the regulation. This currently results in no practical difference as no changes are prescribed in the Ontario Act. However, it may result in a divergence between the Ontario Act and other legislation if any such changes are prescribed in Ontario in the future.
Something Old, Something New 407 Ontario Act ULCC Act PEI Act New Brunswick Act Alberta Act Table 2 Material Fact Includes any information about the business, operations, capital or control of the franchisor or franchisor's associate, or about the franchise system, that would... Means any information, about the business, operations, capital or control of the franchisor or franchisor's associate or about the franchise or the franchise system, that would.... [emphasis added.] Means any information, about the business, operations, capital or control of the franchisor or franchisor's associate or about the franchise or the franchise system, that would.... [emphasis added.] Means any information, about the business, operations, capital or control of the franchisor or franchisor's associate or about the franchise or the franchise system, that would....[emphasis added.] Means any information about the business, operations, capital or control of the franchisor or its associate, or about the franchise system, that would... Note that the Ontario Act is the only legislation that starts the definition of a "material fact" with: "material fact includes... .” The ULCC Act, Alberta Act and the Atlantic Legislation limit a material fact to only those items covered by the definition. This means that while a franchisor in Ontario may over-disclose for fear of falling short of covering all possible material facts, franchisors in other provinces have some comfort that there is no possibility that a franchisee can argue that some information that was not specifically included within the four comers of the definition is still a material fact that should have been disclosed. In addition, the definition of "material fact" in the ULCC Act and the Atlantic Legislation includes information "about the franchise". As noted above
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Something Old, Something New 407<br />
Ontario Act<br />
ULCC Act<br />
PEI Act<br />
New<br />
Brunswick<br />
Act<br />
Alberta Act<br />
Table 2<br />
Material Fact<br />
Includes any information about <strong>the</strong> business, operations,<br />
capital or control <strong>of</strong> <strong>the</strong> franchisor or franchisor's associate, or<br />
about <strong>the</strong> franchise system, that would...<br />
Means any information, about <strong>the</strong> business, operations,<br />
capital or control <strong>of</strong> <strong>the</strong> franchisor or franchisor's associate or<br />
about <strong>the</strong> franchise or <strong>the</strong> franchise system, that would....<br />
[emphasis added.]<br />
Means any information, about <strong>the</strong> business, operations,<br />
capital or control <strong>of</strong> <strong>the</strong> franchisor or franchisor's<br />
associate or about <strong>the</strong> franchise or <strong>the</strong> franchise system,<br />
that would.... [emphasis added.]<br />
Means any information, about <strong>the</strong> business, operations,<br />
capital or control <strong>of</strong> <strong>the</strong> franchisor or franchisor's<br />
associate or about <strong>the</strong> franchise or <strong>the</strong> franchise system,<br />
that would....[emphasis added.]<br />
Means any information about <strong>the</strong> business, operations,<br />
capital or control <strong>of</strong> <strong>the</strong> franchisor or its associate, or<br />
about <strong>the</strong> franchise system, that would...<br />
Note that <strong>the</strong> Ontario Act is <strong>the</strong> only legislation that starts <strong>the</strong> definition <strong>of</strong><br />
a "material fact" with: "material fact includes... .” The ULCC Act, Alberta Act<br />
and <strong>the</strong> Atlantic Legislation limit a material fact to only those items covered by<br />
<strong>the</strong> definition. This means that while a franchisor in Ontario may over-disclose<br />
for fear <strong>of</strong> falling short <strong>of</strong> covering all possible material facts, franchisors in o<strong>the</strong>r<br />
provinces have some comfort that <strong>the</strong>re is no possibility that a franchisee can<br />
argue that some information that was not specifically included within <strong>the</strong> four<br />
comers <strong>of</strong> <strong>the</strong> definition is still a material fact that should have been disclosed.<br />
In addition, <strong>the</strong> definition <strong>of</strong> "material fact" in <strong>the</strong> ULCC Act and <strong>the</strong><br />
Atlantic Legislation includes information "about <strong>the</strong> franchise". As noted above
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