Under Section 2 of the Québec Charter of French Language (Charter), all firms doing business in Québec must communicate with Québec residents in French. In recent years, the generally accepted view of the meaning of this provision in the cross-border franchising context has been that it does not apply to extra-provincial or foreign-based franchisors with franchised stores (but no corporate stores or establishments) in Québec. Thus, only a franchisor’s Québec-based franchisees had to comply with the French language requirements flowing from the applicability of Section 2.
On the other hand, Sections 5 and 6 of Québec’s Legal Publicity Act (which sets forth registration requirements applicable to sole proprietorships, partnerships and legal persons) require the registration of foreign corporations that carry on an activity in Québec. Until recently, the generally accepted view in Québec of these provisions was that there was little or no downside for extra-provincial or foreign-based franchisors with franchised stores (but no corporate stores or establishments) in Québec to register under the Legal Publicity Act.
Analysis of “doing business in Québec”
A typical “doing business in Québec” analysis would independently determine the applicability of the Charter and the Legal Publicity Act on their own respective merit. In other words, carrying on an activity in Québec for the purposes of the Legal Publicity Act did not equate to doing business in Québec for the purpose of the Charter, and vice versa. In fact, there was a certain consensus in the legal field that not registering under the Legal Publicity Act carried certain risks for extra-provincial or foreign-based franchisors. Such risks included the possibility of fines being imposed as well as possible delays in the event that court proceedings had to be instituted in the province.
Office of the French Language
A recent development suggests that this approach may be questionable -- at least for the time being -- until further guidance is provide by the Office of the French Language (OFL). The OFL is the provincial authority established to oversee the use of French in commerce and business.
We were recently made aware that the legal staff at the OLF now considers that, where a foreign business is required register under the Legal Publicity Act, the OFL will generally take the view that Section 2 of the Charter should also apply to such business. In other words, it seems that, in the OFL’s view,carrying on an activity in Québec for the purposes of the Legal Publicity Act now equates to doing business in Québec for the purpose of the Charter.
While such an internal policy or opinion may be questionable, strictly speaking, it is not binding and does not have the force of law. However, it provides a useful indication of possible enforcement actions by the OFL in the future. Until this uncertainty is sorted out, extra-provincial or foreign-based franchisors may want to reconsider any prior decision or contemplated plans to register under the Legal Publicity Act, particularly given the possible repercussions concerning the applicability of the Charter to the franchisor’s operations in Québec.