Proposal for a "Franchise Act" in British Columbia, Canada

Davis LLP Franchise & Distribution Bulletin


On February 5, 2013, the British Columbia (BC) Branch of the Canadian Bar Association issued an “Agenda for Justice” which includes the following recommendations for legislation to the Government of BC:

Enact a Franchise Act. In 2012, the British Columbia Law Institute began a project on a Franchise Act for BC. Franchisees are usually run by small business owners operating businesses under licenses by franchisors. Franchisees are found in many industries: food, retail and services. Small business owners in BC make up 98 percent of all businesses in BC and many of these businesses are franchisees. These small businesses often lack the resources to fight unscrupulous franchisors. Where there are disputes, BC franchisees often have to litigate in Ontario or even the United States since it is common for franchise agreements to require disputes to be resolved by the governing law of the franchisor, which is usually a foreign jurisdiction. Litigating outside of BC is often prohibitively expensive for BC franchisees. A Franchise Act for BC would fairly balance the interests of both parties and it would provide protection to small business franchisees.  

If BC enacts a Franchise Act, it will be the sixth of ten Canadian provinces to do so.

Presumably, a Franchise Act in BC would include a duty of good faith. In any event, the following statute proposed by the BC Branch would apply such a duty to all types of contracts:

Enact the Contract Fairness Act as recommended by the British Columbia Law Institute. The Act creates a duty of good faith in the performance of contracts. This Act addresses remedies for misrepresentation. Currently, the law is a complicated patchwork of confusing rules. The Act would make it easier for business to resolve disputes, reduce court cases, reduce court time and increase clarity in the law.

If you have any questions concerning this bulletin, please contact John Rogers, head of the Davis LLP Franchise & Distribution Practice Group, at jrogers@davis.ca.
 

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