Last month we discussed the release of the regulations that accompany British Columbia's new Franchises Act, S.B.C. 2015, c. 35 (the Act). The Act will come into force on February 1, 2017, after which franchisors that wish to renew, transfer or grant new franchises in that province will be required to comply.
An in-depth analysis of the new regulations provides insight into how the Act will impact franchise disclosure practices in British Columbia. As expected, the majority of the disclosure requirements imposed by the regulation are similar to requirements found in the regulations of the other five provincial franchise statutes. However, there are certain different requirements of which franchisors franchising in British Columbia must be cognizant.
The first category of changes relates to the contents of the franchise disclosure document. Franchisors will have to include new information not previously required by the other five statutes, including a specific form of certificate for the province. Also, additional information is required regarding existing collective advertising funds, such as the frequency of contributions to the fund. Further requirements imposed by the regulations mandate the inclusion of additional information on the dispute resolution processes, such as any restrictions surrounding venue.
Nevertheless, with some appropriate changes, a single Canada wide franchise disclosure document that will be compliant with the requirements of all six regulated provinces can be prepared and used.
In addition to new obligations in respect of the contents of the franchise disclosure document, franchisors must also be aware of the new requirements regarding delivery of disclosure documents. The regulations contain a new requirement that disclosure documents delivered by way of courier contain a method for tracking and confirmation of receipt of the delivery.
Statements of material change and notices of rescission both contain new delivery requirements which mirror the requirements for disclosure documents.
We encourage all of our clients to contact us to assist in updating their franchise disclosure documents in advance of the date the Act comes into force, namely February 1, 2017.
In particular, those franchisors who regularly plan to update their Canadian disclosure documents later in the calendar year should consider accelerating their update to make sure they have a fully compliant disclosure document in time.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
