Today, the Government of British Columbia introduced a Franchises Act for the Province of British Columbia. It is expected that the legislation will be approved by the Government of British Columbia in the fall of 2015 with the Franchises Act in force towards the end of 2016 or early in 2017.
The legislation is based upon the model franchise act recommended by the Uniform Law Conference (ULC) and the 2013 report of the British Columbia Law Institute (BCLI) which recommended franchise legislation for British Columbia.
The B.C. Ministry of Justice formed an Advisory Group in May 2015 to review the BCLI recommendations and to review the ULC model franchise act. Peter Snell, co-leader of Gowlings’ franchise and distribution law practice group, was a member of the Advisory Group and was instrumental in advocating for changes to the legislation that would assist in solving some of the practical challenges under the franchise legislation in other Canadian provinces. These provisions include:
- wrap-around disclosure documents are permissible if supplemented with additional information required to comply with the British Columbia legislation and regulations
- franchisors can accept a fully refundable deposit from a prospective franchisee prior to the franchisor providing disclosure so long as the deposit does not exceed an amount prescribed by regulation, is refundable without deductions and does not obligate the franchisee to enter into any franchise agreement
- the prohibition against a waiver or release of rights under the legislation does not apply to a post-dispute settlement agreement
- classic distribution arrangements will be exempt from disclosure
- franchise disclosure documents must meet a "substantial compliance" standard
- transactions involving franchisees making significant investment (anticipated to be $3 million) will be exempt from franchise disclosure
The regulations to the Franchises Act will be drafted based upon the ULC model franchise regulations and the BCLI report. The Ministry of Justice Advisory Group will be reviewing the draft regulations prior to their public release.
With the enactment of the Franchises Act, British Columbia will become the 6th province in Canada to regulate franchising, following the Provinces of Ontario, Alberta, Prince Edward Island, New Brunswick and Manitoba.