Franchise Disclosure Act, 1999 Tsubouchi, Hon. David H. Minister of Consumer and Commercial Relations — Bill 20 (36th Parliament, 3rd Session)

Bill 20, 36-3

Ontario — Bills

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Bill 20, Franchise Disclosure Act, 1999

Tsubouchi, Hon. David H. Minister of Consumer and Commercial Relations

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[36] Bill 20 Original (PDF)

Bill 20

Bill 201999

An Act to require fair dealing between parties to franchise

agreements, to ensure that franchisees have the right to associate and to

impose disclosure obligations on franchisors

Her Majesty, by and with the advice and consent of the Legislative

Assembly of the Province of Ontario, enacts as follows:

Definitions

(1) In this Act, "

disclosure document" means the disclosure document required by

section 5;

("document d'information") "

franchise" means a right to engage in a business for which the franchisee

is required to make a payment or continuing payments, or a commitment to make

such payment or payments, to the franchisor, or the franchisor's associate,

as a condition of acquiring the franchise or commencing operations and,

(a)in which,

(i)the franchisor grants the franchisee the right to sell, offer for sale

or distribute goods or services that are substantially associated with the

franchisor's, or the franchisor's associate's, trade-mark, service mark,

trade name, logo or advertising or other commercial symbol, and

(ii)the franchisor or the franchisor's associate exercises significant

control over, or offers significant assistance in, the franchisee's method of

operation, including building design and furnishings, locations, business

organization, marketing techniques or training, or

(b)in which,

(i)the franchisor, or the franchisor's associate, grants the franchisee

the representational or distribution rights, whether or not a trade-mark,

service mark, trade name, logo or advertising or other commercial symbol is

involved, to sell, offer for sale or distribute goods or services supplied by

the franchisor or a supplier designated by the franchisor, and

(ii)the franchisor, or the franchisor's associate, or a third person

designated by the franchisor, provides location assistance, including

securing retail outlets or accounts for the goods or services to be sold,

offered for sale or distributed or securing locations or sites for vending

machines, display racks or other product sales displays used by the

franchisee; ("franchise") "

franchise agreement" means any agreement that relates to a franchise

between,

(a)a franchisor or franchisor's associate, and

(b)a franchisee; ("contrat de franchisage") "

franchisee" means a person to whom a franchise is granted and

includes,

(a)a subfranchisor with regard to that subfranchisor's relationship with a

franchisor, and

(b)a subfranchisee with regard to that subfranchisee's relationship with a

subfranchisor; ("franchis") "

franchise system" includes,

(a)the marketing, marketing plan or business plan of the franchise,

(b)the use of or association with a trade-mark, service mark, trade name,

logo or advertising or other commercial symbol,

(c)the obligations of the franchisor and franchisee with regard to the

operation of the business operated by the franchisee under the franchise

agreement, and

(d)the goodwill associated with the franchise; ("systme de franchise")

franchisor" means one or more persons who grant or offer to grant a

franchise and includes a subfranchisor with regard to that subfranchisor's

relationship with a subfranchisee; ("franchiseur") "

franchisor's associate" means a person,

(a)who, directly or indirectly,

(i)controls or is controlled by the franchisor, or

(ii)is controlled by another person who also controls, directly or

indirectly, the franchisor, and

(b)who,

(i)is directly involved in the grant of the franchise, or

(ii)exercises significant operational control over the franchisee and to

whom the franchisee has a continuing financial obligation in respect of the

franchise; ("personne qui a un lien") "

grant", in respect of a franchise, includes the sale or disposition of the

franchise or of an interest in the franchise, and for such purposes, an

interest in the franchise includes the ownership of shares in the corporation

that owns the franchise; ("concession") "

master franchise" means a franchise which is a right granted by a

franchisor to a subfranchisor to grant or offer to grant franchises for the

subfranchisor's own account; ("franchise matresse") "

material change" means a change in the business, operations, capital or

control of the franchisor or franchisor's associate, a change in the

franchise system or a prescribed change, that would reasonably be expected to

have a significant adverse effect on the value or price of the franchise to

be granted or on the decision to acquire the franchise and includes a

decision to implement such a change made by the board of directors of the

franchisor or franchisor's associate or by senior management of the

franchisor or franchisor's associate who believe that confirmation of the

decision by the board of directors is probable; ("changement important")

material fact" includes any information about the business, operations,

capital or control of the franchisor or franchisor's associate, or about the

franchise system, that would reasonably be expected to have a significant

effect on the value or price of the franchise to be granted or the decision

to acquire the franchise; ("fait important") "

minister" means the minister responsible for the administration of this

Act; ("ministre") "

misrepresentation" includes,

(a)an untrue statement of a material fact, or

(b)an omission to state a material fact that is required to be stated or

that is necessary to make a statement not misleading in the light of the

circumstances in which it was made; ("prsentation inexacte des faits") "

prescribed" means prescribed by regulations made under this Act;

("prescrit") "

prospective franchisee" means a person who has indicated, directly or

indirectly, to a franchisor or franchisor's associate an interest in entering

into a franchise agreement, and a person whom a franchisor or franchisor's

associate, directly or indirectly, invites to enter into a franchise

agreement; ("franchis ventuel") "

subfranchise" means a franchise granted by a subfranchisor to a

subfranchisee. ("sous-franchise")

Masterfranchise, subfranchise

(2) A franchise includes a master franchise and a subfranchise.

Deemed control

(3) A franchisee, franchisor or franchisor's associate which is a

corporation shall be deemed to be controlled by another person or persons

if,

(a)voting securities of the franchisee or franchisor or franchisor's

associate carrying more than 50 per cent of the votes for the election of

directors are held, otherwise than by way of security only, by or for the

benefit of the other person or persons; and

(b)the votes carried by such securities are entitled, if exercised, to

elect a majority of the board of directors of the franchisee or franchisor or

franchisor's associate.

Application

(1) This Act applies with respect to a franchise

agreement entered into on or after the coming into force of this section,

with respect to a renewal or extension of such a franchise agreement and with

respect to a business operated under such an agreement, renewal or extension

if the business operated by the franchisee under the franchise agreement or

its renewal or extension is to be operated partly or wholly in Ontario.

Same

(2) Sections 3 and 4, clause 5 (6) (

d) and sections 8, 10 and 11 apply

with respect to a franchise agreement entered into before the coming into

force of this section, and with respect to a business operated under such

agreement, if the business operated by the franchisee under the franchise

agreement is operated or is to be operated partly or wholly in Ontario.

Non-application

(3) This Act does not apply to the following continuing commercial

relationships or arrangements:

1.Employer-employee relationship.

2.Partnership.

3.Membership in a co-operative association, as prescribed.

4.An arrangement arising from an agreement to use a trade-mark, service

mark, trade name, logo or advertising or other commercial symbol designating

a person who offers on a general basis, for consideration, a service for the

evaluation, testing or certification of goods, commodities or services.

5.An arrangement arising from an agreement between a licensor and a single

licensee to license a specific trade-mark, service mark, trade name, logo or

advertising or other commercial symbol where such licence is the only one of

its general nature and type to be granted by the licensor with respect to

that trade-mark, service mark, trade name, logo or advertising or other

commercial symbol.

6.An arrangement arising out of a lease, licence or similar agreement

whereby the franchisee leases space in the premises of another retailer and

is not required or advised to buy the goods or services it sells from the

retailer or an affiliate of the retailer.

7.A relationship or arrangement arising out of an oral agreement where

there is no writing which evidences any material term or aspect of the

relationship or arrangement.

8.A service contract or franchise-like arrangement with the Crown or an

agent of the Crown.

Fair dealing

3. Every franchise agreement imposes on each party a duty

of fair dealing in its performance and enforcement.

Right to associate

(1) A franchisee may associate with other franchisees

and may form or join an organization of franchisees.

Franchisor may not prohibit association

(2) A franchisor and a franchisor's associate shall not interfere with,

prohibit or restrict, by contract or otherwise, a franchisee from forming or

joining an organization of franchisees or from associating with other

franchisees.

Same

(3) A franchisor and franchisor's associate shall not directly or

indirectly penalize, attempt to penalize or threaten to penalize a franchisee

for exercising any right under this section.

Provisions void

(4) Any provision in a franchise agreement or other agreement relating to

a franchise which purports to interfere with, prohibit or restrict a

franchisee from exercising any right under this

section is void.

Right of action

(5) If a franchisor or franchisor's associate contravenes this section,

the franchisee has a right of action for damages against the franchisor or

franchisor's associate, as the case may be.

Franchisor's obligation to disclose

(1) A franchisor shall provide a prospective

franchisee with a disclosure document and the prospective franchisee shall

receive the disclosure document not less than 14 days before the earlier

of,

(a)the signing by the prospective franchisee of the franchise agreement or

any other agreement relating to the franchise; and

(b)the payment of any consideration by or on behalf of the prospective

franchisee to the franchisor or franchisor's associate relating to the

franchise.

Same

(2) A disclosure document must be one document, delivered as required

under subsection (1) as one document at one time.

Contents of disclosure document

(3) The disclosure document shall contain,

(a)all material facts, including material facts as prescribed;

(b)financial statements as prescribed;

(c)copies of all proposed franchise agreements and other agreements

relating to the franchise to be signed by the prospective franchisee; and

(d)other information and copies of documents as prescribed.

Material change

(4) The franchisor shall provide the prospective franchisee with a written

statement of any material change, and the franchisee must receive such

statement, as soon as practicable after the change has occurred and before

the earlier of,

(a)the signing by the prospective franchisee of the franchise agreement or

any other agreement relating to the franchise; and

(b)the payment of any conside

Document details

Collection	Ontario — Bills
Citation	Bill 20, 36-3
Type	bill
Volume / chapter	p36 s3 bill 20 html
Language	en
Format	html
Source	PROVINCIAL
Identifier	5f76d9c92b7ba67a9d7dbf4d99a5ab2d2156a16d

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