Editor’s Note: This series of posts we’re calling “Around the World” come from a larger piece written by Shannon and published in the October 2014 edition of the International Bar Association’s International Franchising Newsletter. Updates were provided by speakers at the Annual IBA/IFA Joint Conference in Chicago in May 2014.
Dominic Mochrie, Osler, Hoskin & Harcourt LLP, was the first speaker and reported on the forthcoming franchise law in the Province of British Columbia (BC), recent court decisions, and the now-effective Canadian Anti-Spam Legislation (CASL). Dominic reported that on March 31, 2014, the British Columbia Law Institute released its Report on a Franchise Act for British Columbia. The BCLI recommended that BC enact a franchise law similar to legislation currently in effect in the provinces of Alberta, Manitoba, Ontario, New Brunswick, and Prince Edward Island. There is no federal franchise legislation in Canada. Draft legislation is expected soon.
There were two recent cases decided in Ontario addressing issues related to disclosure and waiver. With respect to disclosure, the Ontario Court of Appeal made another decision in the Springdale Pizza case (2014 ONSC 530). In March, the court held that some disclosure may be so deficient as to be deemed as no disclosure at all. This holding opens the window to rescission to two years (as for no disclosure) rather than 60 days (defective disclosure). The court further held that franchisees are not responsible for providing disclosure documents to purchasers and franchisors cannot rely on any documents provided by selling franchisees to satisfy the franchisor’s disclosure requirement. The court held that the resale exemption to franchisor’s disclosure requirement will be narrowly limited to circumstances where the franchisor is minimally involved and the transfer is not affected by or through the franchisor.
In the Cora Franchise Group case (2014 ONSC 600), the court held that a general release required by a franchisor in exchange for the franchisor’s consent to the franchisee’s assignment of its franchise agreement was void. The Arthur Wishart Act (AWA), Ontario’s franchise law, makes void any provision that purports to waive a franchisee’s rights arising under the AWA. The franchisor in Cora argued that the release was meant to waive only the franchisee’s non-AWA claims but the court disagreed, finding the ‘general release’ was too broad as drafted and therefore void as a violation of the anti-waiver provisions of the AWA. This decision is under appeal.
Lastly, Dominic gave an update on CASL, which went into effect on July 1, 2014. CASL requires senders of commercial electronic messages (CEM) to first receive permission from the recipients. CEM includes e-mail, text messages, and instant messages. The law also requires senders to clearly identify the sender, provide contact information for the sender, and allow for a simple unsubscribe mechanism so recipients can later opt-out if they so choose. The law does have extra-territorial application because CEM includes messages sent from or to a computer system accessed in Canada.