Manitobans conducting business through franchise relationships would receive new protections under the proposed franchises act, Entrepreneurship, Training and Trade Minister Peter Bjornson said today after introducing the legislation.
The act aims to ensure the relationship between the franchisor and franchisee is fair and equitable and does not place the franchisee at a disadvantage, Bjornson said.
“This new legislation would brings Manitoba in line with other provinces that have developed similar laws and is consistent with Canada’s Agreement on Internal Trade, which was signed by all of the provinces, territories and the federal government,” said the minister.
“Buying a franchise is not simply buying a business; it is making an investment in a franchise system controlled by a franchisor. Franchise legislation is needed to ensure that the buyer has full knowledge of the franchise, the risks involved, and the financial strength and history of the franchisor,” said Lionel Weinberg, a partner in the Winnipeg law firm Meyers Weinberg LLP, which has represented both franchisees and franchisors for over 40 years.
The legislation proposes new protections that include:
· giving franchisees a right of action to recover losses caused by misrepresentation,
· requiring franchisors to disclose certain information such as financial statements and all material facts about a franchise to a franchisee before the franchisee enters into a franchise agreement,
· giving franchisees a right to associate with other franchisees and a right of action to recover damages if a franchisor imposes any penalties for associating, and
· requiring franchisors and franchisees with the duty to deal fairly in performing and enforcing the franchise agreement including a duty to act in good faith and in accordance with reasonable commercial standards.
Currently, Alberta, Ontario, New Brunswick and Prince Edward Island have franchise legislation.