B.C. has new legislation in force as of February 1, 2017: the Franchises Act SBC 2015, c. 35 and Franchises Regulation (BC Reg 238/2016) (the “Act”). If you are a Franchisor or Franchisee carrying on business in B.C., this new legislation will impact you.
Franchise legislation is akin to consumer protection legislation. To a great extent, the Act follows the legislation in force in those jurisdictions of Canada that have adopted franchise legislation, specifically, Alberta, Manitoba, Ontario, New Brunswick and PEI.
For new Franchisors, and for Franchisors only carrying on business in B.C., it will be important for the Franchisor to understand the disclosure requirements and the exemptions of the Act and to note the following:
- Failure to provide a Disclosure Document permits the Franchisee to rescind the franchise agreement within 2 years after it enters into the franchise agreement;
- If disclosure is not properly made in the Disclosure Statement the Franchisee might be able to rescind the franchise agreement and the officers or directors who signed the Disclosure Document maybe liable for damages;
- The impact of rescission is significant as the Franchisor is required to return all funds received from the Franchisee and repurchase inventory, supplies and equipment at the price paid by the franchisee.
If you are a Franchisor carrying on business in B.C., you should consider getting legal advice regarding the implications of the new legislation.