Manitoba has just released its draft regulation under the Franchises Act. Manitoba is the fifth province after Alberta, Ontario, New Brunswick and Prince Edward Island to pass a franchise disclosure and relationship statute.
The draft regulation setting out the information that a franchisor must disclose to a franchisee candidate is available at: http://www.gov.mb.ca/business/franchises/index.html
The Manitoba Government is consulting the public for feedback on the draft regulation. Any comments are to be delivered by December 15, 2011.
Unlike other provinces, the Manitoba statute does not require delivery of a disclosure document at one time as one document. Disclosure may be made in piecemeal fashion, but the obligation to disclose is not met until the date of delivery of the last document.
The proposed regulation also permits electronic delivery of a disclosure document whereas the Ontario legislation, for example, does not.
A disclosure document from another jurisdiction is permitted provided that the franchisor "includes such additional information with that document as is necessary to comply with the disclosure requirements of the Act and this regulation".
A notice of rescission must be delivered by prepaid courier. Unlike other provinces, delivery of a notice by fax is not prescribed.
Where earnings projections are not provided a statement to that effect is required. Where such projections are provided, either directly or indirectly, a statement must be provided specifying:
a. the assumptions and bases underlying the projection, its preparation and its presentation;
b. whether the projection is based on actual results of existing franchises or of existing businesses of the franchisor or the franchisor’s associates of the same type as the franchise being offered and, if so, the locations, areas, territories or markets of such franchises and businesses;
c. if the projection is based on a business operated by the franchisor or the franchisor’s associate, that the information may differ in respect of a franchise operated by a franchisee; and
d. where information that substantiates the projection is available for inspection.
Items (b) and (c) above, are not included in Ontario's Franchise Disclosure Regulation, O. Reg. 581/00, section 6.3 of which reads:
If an earnings projection for the franchise is provided, a statement specifying the reasonable basis for the projection, the assumptions underlying the projection and a location where information is available for inspection that substantiates the projection.
The Franchises Act provides that the franchisor may require payment of a refundable deposit. The draft Regulation provides for this to be in an amount up to 20% of the initial franchise fee, to a maximum of $100,000.
A copy of the Franchises Act, S.M. 2010, c. 13 is available at the following link:
This Act was passed in June, 2010 but has yet to be proclaimed in force. The proclamation date will be announced once the Regulation is finalized.