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Ask the Experts: B.C.’s new franchise legislation

business hand pushing franchising button on a touch screen interfaceBy Jennifer Staines

Q: Which provisions in British Columbia’s new franchise legislation will differ notably from other provinces’ legislation?

Jennifer says:
British Columbia’s new Franchises Act and regulations are in many ways similar to the franchise laws of other provinces. Comparable to a number of provinces (but absent from Ontario), B.C.’s legislation contains a ‘substantial compliance’ provision, which means disclosure obligations will be met even if a disclosure document has a technical deficiency or error, so long as that deficiency does not affect the substance of the document and is substantially compliant with the legislation. Also different from Ontario, the B.C. legislation stipulates franchisors can accept a refundable deposit from prospective franchisees.

Specific disclosure obligations outlined in the regulations are largely similar—and in some cases identical—to those of other provinces. Ontario has requirements regarding earnings projections, but leaves the term undefined; B.C., like New Brunswick before it, has provided a definition that includes information “given by or on behalf of the franchisor, directly or indirectly, from which a specific level or range of actual or potential sales, costs, income, revenue or profits from franchises or businesses of the franchisor or of the franchisor’s affiliate of the same type as the franchise being offered can be easily ascertained.”

B.C. also follows a number of other provinces with a catch-all ‘basket clause’ for recurring or isolated fees or payments required of the franchisee, which is absent from Ontario’s legislation. Further, B.C. leaves out Ontario’s requirement to provide specific information on obligations under applicable municipal bylaws. Instead, as with New Brunswick’s regulations, disclosure documents must include a statement that in addition to listed information, the franchisee may be required to obtain other licences, registrations, etc.

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