Manitoba will be the next Canadian province to enact franchise legislation

A new franchise disclosure act has been introduced in Manitoba, which if passed will make Manitoba the 5th Canadian Province to enact franchise disclosure legislation. Bill 15, The Franchises Act was introduced into the legislature in April 2010. The new Act is modeled after the Uniform Law Conference of Canada’s (ULCC) model franchise legislation and is similar to Ontario’s franchise disclosure law, the Arthur Wishart Act.

Some of the provisions of the Manitoba law include:

• A substantially complete disclosure document satisfies the disclosure document delivery requirements, even if there is a technical irregularity or mistake not affecting the substance of the document.
  
• The Manitoba law will not apply to contractual agreements for the purchase of a reasonable amount of goods or services at reasonable wholesale prices. This provides relief to distribution systems who would be subject to this legislation due solely to the payment element of the definition of a franchise.
  
• Franchisors will be able to use deposits, site selection and confidentiality agreements during the 14 day disclosure period. However, for confidentiality agreements, the franchisor will not be able to prohibit the prospective franchisee from disclosing information to a franchisee organization or to individual franchisees of the franchisor’s system.
  
• After its deletion from the ULCC model legislation, the sophisticated franchisee exemption that is contained in The Wishart Act is not included in the Manitoba law. This exemption only applies if the franchisee’s investment is more than $5,000,000 and therefore may not be a heavily used exemption.
  

If the Manitoba law is passed, Manitoba will join Ontario, Alberta, Prince Edward Island and New Brunswick as the Canadian provinces with franchise legislation.