Background

On Tuesday, April 12, 2016, the Ontario Ministry of Government and Consumer Services posted proposed regulatory amendments that would expand the acceptable methods of delivery of franchise disclosure documents (FDDs) and notices of rescission under the Arthur Wishart Act (Franchise Disclosure), 2000 (the AWA). If the amendments are approved, electronic delivery and courier would be acceptable delivery methods for franchisors delivering FDDs to franchisees, and for franchisees sending notices of rescission to the franchisor.

Currently, the only approved methods of delivery in Ontario are personal delivery and registered mail. The dearth of practical, modern methods of delivery has long been a sore point for franchisors in Ontario as, with the expanding scope of disclosure required by the courts, FDDs are typically several hundred pages long, sometimes even exceeding the weight limit for registered mail. Ontario also lags behind other provinces, as the franchise legislation in Manitoba, New Brunswick and Prince Edward Island already allow for delivery of FDDs both by electronic means and by prepaid courier, subject to specific requirements.

Responding to requests made in 2015 by the Ontario Bar Association and the Canadian Franchise Association, David Orizetti, the Minister of Government and Consumer Services, described the proposed regulations as part of the Ontario government’s commitment to reduce regulatory burdens and support Ontario business. View the full text of the posting and links to the proposed regulation language.

Proposed amendments

The proposed amendments would require that electronic delivery be in a form that allows the recipient to view, store, retrieve and print the FDD and do not permit the inclusion of links to external documents or content. Further, if an FDD is delivered electronically, and consists of multiple files, the FDD must contain an index listing for each file with the file name, and where the file name is not sufficiently described, a statement of the subject matter. Franchisees wishing to rescind their franchise agreements would also be able to issue their notices of rescission by electronic means and courier.

Interestingly, the draft amendments include the following provision that may make proving receipt of an FDD more difficult:

12(2) A disclosure document delivered in accordance with subsection (1) [electronic delivery] is not effective until the franchisor receives an electronic acknowledgment of receipt from the prospective franchisee. [emphasis added]

Manitoba, New Brunswick and Prince Edward Island require a written acknowledgment of receipt be received from the prospective franchisee. Those provinces do not prescribe that the receipt must be in electronic format only.

The Ministry is accepting comments on the proposed changes until May 2, 2016.