British Columbia Considers Franchise Legislation

The British Columbia Law Institute has issued the Consultation Paper on a Franchise Act for British Columbia. It appears likely that BC may soon be the sixth province in Canada (after AB, MB, ON, PEI and NB) to adopt franchise-specific legislation. The consultation paper, available here, is intended to foster discussion amongst stake-holders in the franchise industry in British Columbia, and contains several recommendations of the BCLI on the type and nature of franchise legislation that BC ought to adopt.

Some of the key recommendations found in the consultation paper are:

1. Disclosure documents should be valid if they are in substantial compliance with the legislation and regulations, and minor defects should not lead to a rescission right by franchisees (as opposed to the regime of “technical” defects giving rise to substantial rescission remedies)
2. Fully refundable deposits prior to disclosure should be permissible (as opposed to the current situation in most legislated provinces)
3. If a franchisor intends to reserve the right to sell goods and services directly and in competition with its franchisees, this should be declared in the disclosure document;
4. Delivery of a disclosure document by electronic means such as e-mail, or delivery of a disclosure document in machine-readable form (such as a DVD disk), should be expressly permitted;
5. The legislation should contain statutory language that forces all litigation concerning the franchise (including arbitrations), whether statutory or otherwise, to take place in British Columbia in order to prevent the potential splitting of cases (this will affect most franchise agreements which seek to host litigation or arbitration in a location convenient for the franchisor).

Many of our valued clients call British Columbia home, and many more actively sell or maintain and support franchises in British Columbia. We are happy to provide practical advice to you about how the consultation paper may affect your business and we are also uniquely placed to provide feedback to the BCLI in respect of future legislation as Dan So, head of our franchise group (and additionally called to the bar in British Columbia) has been appointed to a special subcommittee of the Canadian Franchise Association’s Legal & Legislative Committee to provide additional input to the BCLI as the legislative process continues.

Please contact us if you have any questions on the consultation paper or if you would like to know how to make submissions to the BCLI on behalf of your organization. Finally, we would be happy to assist in developing a submission to the BCLI on behalf of your company.