ARCHIVED: Small Business and Red Tape Reduction

New rules increase transparency and protections for franchisees

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ARCHIVED: Small Business and Red Tape Reduction Note: This News Release has been archived - the Ministry no longer exists

New rules increase transparency and protections for franchisees

Media Contacts
Government Communications and Public Engagement
Ministry of Small Business and Red Tape Reduction
and Responsible for the Liquor Distribution Branch
778 678-1572
Media Contacts
Government Communications and Public Engagement
Ministry of Small Business and Red Tape Reduction
and Responsible for the Liquor Distribution Branch
778 678-1572

Backgrounders

Franchise Act and regulations

Key benefits for British Columbia’s business community:

  • The act governs franchised businesses in B.C., providing important legal protections for B.C.-based franchise operators and simplifying investing in B.C.
  • The act will harmonize B.C.’s process with other jurisdictions and reduce costs associated with disclosure documents.
  • This franchise legislation is consistent with the approach taken in other provinces across Canada, including Alberta, Manitoba, Ontario, New Brunswick and Prince Edward Island.
  • Uniform legislation provides a higher degree of certainty to both franchisors and franchisees and standardizes practices already followed by most large reputable franchisors.

Benefits for franchisees:

  • The act ensures franchisees will receive all the information they need to decide whether to invest in a business before signing franchise agreements.
  • They will also have remedies if information is not disclosed, or if they are misled about potential profits or other information about the franchise.
  • Furthermore, the act:
    • regulates the sale of franchises
    • requires that contracts include pre-sale disclosure requirements
    • provides legal rights and protections to help parties to resolve disputes

Benefits for franchisors:

  • The legislation provides franchisors with uniformity in their disclosure requirements – which means they will know exactly what they need to share with their potential franchisees because it follows the uniform model of legislation.
  • By creating legislation that is similar, we help minimize the work required to understand the way business is done in B.C. which in turn will make it easier to do business across the country and vice versa.

Disclosure documents – what to expect:

  • Standardizing the franchise legislation across Canada can help minimize the regulatory burden that can happen when a business moves into the province – so franchisors will already be accustomed to complying with similar rules elsewhere in the country.
  • Details of what is required in the disclosure documents will be set out in the regulation. The disclosure documents will include information about the franchisor, such as:
    • business background
    • litigation history
    • bankruptcy or insolvency information
    • financial statements
       
  • It will also include information about the franchise offer, such as:
    • costs (e.g., deposits or fees)
    • copies of proposed franchise agreements
    • a description of any exclusive territory
    • restrictions (e.g., obligations to purchase from certain suppliers)
    • the franchisor's policy on volume rebates
    • conditions of termination, contract renewal and transfer of franchise
    • a description of the franchisor´s mediation process, if one is used
    • training and other assistance programs
    • advertising funds (whether the franchisee is required to contribute to an advertising fund)
    • a list of their current and former franchisees

Who was consulted:

  • Groups consulted included an advisory group of franchise lawyers, the BC Law Institute, the Canadian Franchise Association, the BC Chamber of Commerce, Canadian Federation of Independent Businesses, BC Hotel Association, New Car Dealers Association, Retail Council of Canada, Retail Council of BC, Coalition of BC Businesses, Chartered Professional Accountants of BC, B.C. Small Business Roundtable and various franchisees and franchisors throughout British Columbia.

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