BC – The new Franchises Act and regulations that have recently taken effect ensure prospective business owners in British Columbia will have more information available to help them decide whether to open a franchised business.
The act increases transparency for new franchisees by requiring franchisors to disclose important information about the company’s legal, financial and bankruptcy history. The act also provides new legal protections for BC-based franchisees including:
- Requiring that contracts include pre-sale information disclosure requirements;
- Providing legal rights and protections to help parties to resolve disputes;
- Requiring disputes be heard in BC;
- Providing franchisees with the ability to sue for damages in court in cases where the franchise agreement is not honoured or the franchisee does not receive the required disclosure information; and
- Allowing franchisees to cancel the franchise agreement and request their money back if the disclosure document was not provided to them as required.
The act outlines remedies in the event a potential franchisee is misled about potential profits through the disclosure documents by providing a time frame which a franchisee may rescind a franchise agreement, without penalty or obligation.
The legislation provides certainty for businesses which will help new franchises open in BC, generating investment and employment opportunities and providing direct and indirect economic benefits to communities.
The Province has created resource materials to help franchisees understand the new legislation and made the following materials available in Chinese (simplified and traditional), Punjabi and Korean:
- A checklist with a high-level overview of steps required to enter into a franchise agreement;
- A ‘questions to ask’ sheet prompting franchisees to seek specific information during discussions with franchisors; and
- An easy-to-read summary of the key points of the new Franchises Act.
The Franchises Act and regulation were developed with input from key stakeholders throughout the province to ensure it meets the specific needs of franchisees and franchisors in British Columbia, while harmonizing BC’s laws with the five other provinces with franchise regulations (Alberta, Manitoba, Ontario, New Brunswick and Prince Edward Island) to reduce red tape and costs associated with disclosure documents and bring consistency for franchisors across Canada.
