In a surprising turn of events, the NDP opposition party in British Columbia presented a private member’s bill in the British Columbia Legislature on May 13, 2015 introducing franchise legislation to that province.  While it was expected that British Columbia would be the next province to have franchise specific legislation, the majority Liberal party had previously tasked the British Columbia Law Institute with a review of proposed legislation, and had conducted extensive consultations with interested parties.  There had been indications that the Liberal government would introduce their own bill later in the fall of 2015.

The bill was provided a first reading in the legislature, and as of the present date, it is unknown whether or not it will proceed to a second reading.  The NDP bill is unlikely to pass without support from the majority Liberal government, and again, it is unclear at this time whether the proposed Act will be amended to fit within the proposed form that would have been introduced by the Liberals.

Reviewing the bill itself, and based on its explanatory note, the bill is modeled on the Uniform Franchises Act that was prepared by the Uniform Law Conference of Canada.  From a practical standpoint, the proposed Act mirrors the provisions found within franchise legislation for the Province of Ontario, being the Arthur Wishart Act (Franchise Disclosure), 2000, with the exception of the following significant changes:

1. The proposed B.C. legislation will permit the franchisor to require the prospective franchisee to sign a deposit agreement and pay a fully refundable deposit prior to disclosure.
2. Unlike Ontario, the B.C. legislation will deem a disclosure document in compliance with the Act if it substantially complies despite any technical irregularity or error that does not affect the substance of the document.
3. Crown agencies will come within the scope of the proposed legislation and are required to provide a disclosure document under the Act.
4. Subject to certain conditions, an agreement executed by the parties prior to disclosure regarding confidentiality and/or designating a site for a prospective franchisee will not constitute a franchise agreement under the Act.Again, these types of provisions are common within deposit agreements usually signed between the parties at the onset of the grant of a franchise.
5. The proposed Act provides some relief to franchisors for claims of misrepresentation regarding financial or earning projections that were made on a demonstrably reasonable basis and which were accompanied by certain statements that the projections were based on assumptions about future economic, fiscal, and other conditions, and that actual results may vary significantly from those in the projection.
6. In response to the Midas case, a waiver or release by a franchisee or prospective franchisee pursuant to a settlement of an action, claim, or dispute is permissible under the proposed Act.

We will continue to monitor the status of franchise specific legislation in British Columbia and advise you of any developments as they may occur.

© Morrison Brown Sosnovitch LLP, 2015. All rights reserved.