Manitoba Introduces Franchise Legislation

Manitoba is set to be the next province with franchise regulation as Bill 15, The Franchises Act, was recently introduced in the Manitoba legislature. The Manitoba Act is modeled after the Uniform Law Conference of Canada’s Uniform Franchises Act (which was co-chaired by John Sotos of our firm), and closely resembles the statutes already in place in Ontario, Prince Edward Island, and New Brunswick.

Similar to other provinces that have enacted franchise legislation, the Manitoba Act provides for strict disclosure obligations along with a right of rescission for non-compliance with the disclosure obligations; a statutory duty of fair dealing and a statutory right to associate; and a right to sue for misrepresentation without the common law requirement to prove reliance.

However, unlike the Arthur Wishart Act in Ontario, the Manitoba Act also provides, among other things, that the disclosure document may be delivered in tranches over a period of time; that confidentiality and location agreements do not constitute franchise agreements if their sole purpose is to retain confidential information or assign a territory; and includes a provision for substantial compliance in disclosure requirements as opposed to strict compliance.

The Manitoba Act, while years in the making, marks a trend towards increased franchise regulation in Canada. Given the growth of franchise regulation in Canada, franchisors are well advised to keep current of all developments and to ensure that their disclosure documents meet all requirements.