The Saskatchewan government has highlighted that tougher safeguards for prospective franchisees and changes seeking to improve transparency and fairness between franchisors and potential franchisees have come into force as of June 30 via Bill 149, the Franchise Disclosure Act.
According to the provincial government’s news release, Saskatchewan is the seventh Canadian jurisdiction to establish franchise disclosure legislation and update the regulatory framework governing franchise operations conducted wholly or partly within the province.
Saskatchewan thus follows the lead of Alberta, Ontario, Prince Edward Island, New Brunswick, Manitoba, and British Columbia.
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The Saskatchewan government explained that its adjusted regulatory framework for franchise relationships, which aligns with the other provinces’ franchise laws, seeks to promote uniformity across different jurisdictions.
“The new legislation is designed to promote transparency and fairness between franchisors and prospective franchisees by ensuring that individuals considering opening a franchise have access to comprehensive and accurate information before entering into an agreement,” said Tim McLeod, Saskatchewan’s justice minister and attorney general, in the province’s news release.
New requirements under the law
According to the provincial government’s news release, the new legislation requires franchisors to give a franchise disclosure document to prospective franchisees at least 14 days prior to the signing of any franchise agreement and the making of any payment.
Under the new law, the franchise disclosure document should contain all the relevant information, including:
- all material facts regarding the franchise system
- the prescribed financial statements
- copies of all proposed franchise agreements
- any other documents the prospective franchisee should sign
- the required statements seeking to help the prospective franchisee make informed investment decisions
- all other prescribed information and documents
The new legislation now includes continuing disclosure requirements. The new law also introduces the following statutory rights for franchisees, among others:
- a franchisee’s right to cancel the agreement within specific timeframes if the disclosure requirements were unmet
- a right of action for damages in the event of misrepresentation in the disclosure document
- franchisors’ and franchisees’ duties to act in good faith and in accordance with reasonable commercial standards, plus the right to seek legal remedies if they failed to do so
The new law requires the franchisor to inform the prospective franchisee of any material changes through a written statement.