Franchises Act Coming Into Force on 1 February 2017
February 1, 2017
BY Greg Blue
The Franchises Act, an important piece of commercial legislation that is highly supportive of small business and entrepreneurship in the province, is in force as of 1 February 2017. Passage of the Franchises Act in 2015 followed quickly after the issuance of the BCLI Report on a Franchise Act for British Columbia, which recommended that BC enacts franchising legislation based on the Uniform Franchises Act, a prototype statute developed by the Uniform Law Conference of Canada (ULCC). The made-in-BC version of the uniform franchise legislation generally coincides with the BCLI recommendations.
The Franchises Act and accompanying regulations set requirements for pre-contractual disclosure in the sale of franchises and provide important protections to franchisees against non-disclosure or misrepresentation in the pre-contract stage. Recognizing the interdependence inherent in the franchise relationship, the Act imposes a statutory duty of fair dealing on franchisors and franchisees alike, requiring them to act in good faith and in accordance with reasonable commercial standards in performing and enforcing the franchise agreement.
In order to ensure that BC-based franchisees will not be blocked from asserting their rights and pursuing just claims for reasons of excessive cost and inconvenience, the Act overrides terms in a franchise agreement that would prevent the Act from applying, oust the jurisdiction of BC courts over a dispute arising under the agreement, or require disputes to be decided out of province.
BC is the sixth province to bring franchise legislation into effect. The others are Alberta, Ontario, Manitoba, New Brunswick, and PEI. As the six franchise statutes in force across the country are very similar, they set up a harmonious framework of ground rules for franchising on a national scale.
