Franchise Laws Coming to Manitoba

Following Alberta, Ontario, PEI and New Brunswick, Manitoba is on the verge of enacting franchise legislation which would require franchisors to provide prospective franchisees in that province with a franchise disclosure document.  The disclosure document is the compendium of information about a franchise system which franchisors must deliver to franchisees in order to assist them in making informed investment decisions, and, with its recent release of draft regulations, the Manitoba government just accelerated the legislative necessity of providing it to franchisees within that province. 

The Manitoba Franchises Act is not yet in force, but the release of draft regulations for public consultation is a strong indication of the form which this provincial law will take.

In many ways, the requirements under Manitoba franchise laws look very similar to those statutes already in place in other provinces, but certain notable exceptions warrant specific mention:

·        the Manitoba Act will allow for electronic delivery of disclosure documents

·        Unique to Manitoba is a provision that a disclosure document need not be delivered as one document at one time so long as specific delivery conditions are met. 

·        Franchisors will be permitted to accept fully refundable deposits of up to 20% of an initial franchise fee up to $100,000 and enter into confidentiality agreements with prospective franchisees without triggering the disclosure document delivery requirement

·        If the franchisor uses an operations manual, its table of contents must be disclosed

·        There are various requirements for statements to be made where the franchisor is not providing any information in relation to certain disclosure items, such as earnings projections

The Manitoba Regulations are available for public consultation until December 15, and a timeline for its formal enactment has yet to be set.