EXPLANATORY NOTE
The Bill regulates franchises as follows:
1. A duty of fair dealing is imposed on each party to a franchise agreement.
2. Franchisees are given the right to associate with other franchisees and to form or join an organization of franchisees. Any attempt by a franchisor to interfere with, prohibit or restrict this right is void. Franchisors are prohibited from imposing penalties on franchisees for exercising this right. Franchisees are given a right of action for damages against franchisors and their associates who contravene this prohibition.
3. Franchisors are required to provide franchisees with one disclosure document not less than 14 days before a prospective franchisee signs an agreement or pays any money in respect of the franchise. The disclosure document must contain all material facts, financial statements, copies of agreements to be signed by the prospective franchisee and other information and documents as prescribed by regulation. Franchisors are also required to provide franchisees with a statement of material change, if there has been a material change, before any agreement is signed or money paid by the franchisee. A franchisor may be exempted by regulation from the requirement to include financial statements in the disclosure document.
4. A franchisee is entitled to rescind the franchise agreement within 60 days if the franchisor provided the disclosure document or statement of material change late or if the disclosure document did not meet the requirements of the Act. A franchisee is entitled to rescind the franchise agreement within two years if the franchisor never provided the required disclosure document.
5. A franchisee is entitled to damages for loss if the disclosure document or statement of material change contained a misrepresentation or if the franchisor failed to comply in any way with the requirements respecting the disclosure document or statement of material change.
6. The Act generally applies to franchise agreements entered into on or after the Act comes into force. The obligation to deal fairly and the right to associate also apply to franchise agreements entered into before the Act comes into force.