Bill 101 — Fourth Session, 16Th Legislature, 20 Elizabeth Ii the Legislative Assembly of Allbertlt Bill 101 the Franchises Act the Attorney General (Legislature 16, Session 4)

L16 S4 4938

Alberta — Bills

1971 Bill 101 Fourth Session, 16th Legislature, 20 Elizabeth II THE LEGISLATIVE ASSEMBLY OF AllBERTlt BILL 101 The Franchises Act THE ATTORNEY GENERAL First Reading . . . . . . . . . . . . . ................. . Second Reading ............................ . Third Reading ............................. . Printed by L. S. Wall, Queen's Printer, Edmonton

BILL 101 1971 THE FRANCHISES ACT (Assented to ,1971) HER MAJESTY, by and with the advice and consent of the Legislative Assembly Qf Alberta, enacts as follows: 1.

(1) In this Act, 1. "area franc:his'e" means atny contDact, agreement or ar,rangemient he,tween a fr,anchisorand a subfran c:hislOr wher,eby the subfranchislOr f'Or donlSideration giv'e'n or agreed to be given in whole or in part for that purpose, is granted the right to trade in the franchise; 2.

"a'ssoci!ate", where used iUO indic1ate a relationship with 'any person, indudes (Ii) any company 'Of which ,that person beoofi,cially 'Owns, directly or inddre{~Jtly, equity shtares carrying more than 10 per cenlt IOf the voting rights 'attached 'tD all equity shares of th'e com pany for the time being outs:tJanrdiing, lOr (ii) any assDciaJtedcDrpDraJtion wlithlin the mooning 'Of the Income ~ax Act (Oamada), or (iii) any affHiated comp1any, OT (iv) amy trust or estate in which that person has a beneficial inrbe1resJt or as to whlich that person Is'erves 'as trusltee or in a similar capacity, lOr (

v) any relative or spouse of that person or any Tel~tive 'Of that spouse who, in any such case, has the same home aiS that person, lOr (vi) any partner, fellow member Qf a synddcate lOr j'Oint trustee; 3. "Commission" means the Alberta Securities Com missJon; 4. "company" mea~ a~y incorporated corponrution, in corporated assoclabon Dr other indoTporated Ol' ganiZlatiQn; 5. "Director" m'eans the person designruted by the Minister as the DirectoT of Franchises,· ,

Explanatory Notes This Bill introduces a system to regulate trading in franchises by compelling full disclosure of all relevant facts to a prospective franchisee by a franchisor. The prospective franchisee will then be in a proper position to make a business decision. In this aspect it is similar in many of its provisions to The Securities Act. It also provides a measure of protection in the area of pyramid sales operations or multi-level distributorships by not only requir ing full disclosure but also requiring the operations to meet certain prescribed standards in their relations with persons who become involved in the operations. I.

Interpretation.

2 6. "franchi'se" means a contract, agreement 'OQ'" arrange ment, either expreslsed 'Or impUed, whether 'Oral or written, between two 'Or more pers!On's by which a franchjsse is required to pay directJy 'Or indirectly a franchiisle fee in cOnJsliiderlation for any 'Of the fol lowing: (

i) the right to engage in the busine'sls of offering, 'seilling lOr dilstI'1iburting the gOlods manufactured, proces1s.ed lOr dis,tributed or the serVliees orga nized and dire'Cited by the franchisor, lOr (rii) the r,ightto engage in the businesis of 'Offering, seHring or diistiribuUrng" lany goods or serviceH under a mark'erting plan 0'1' system prescribed lOr ~ontroned by the franchisor, or (idi) the rip-ht to engage in la business whd,ch is as soeialted with the franehiislor's trademark, ser vice mark, trade name, logotype, advertising 'Or amy business symbol de'signating the fran cbJisor lOr its as:socilake, or (iv) the right vo en~age in a business in which the franchis'ee is reHant on the franchisor fnr the conbinued supply 'Of goods or services, or (v) ,the right to recrui,t additional franchisees or subfranclhislOrs; but excluding eonrtra1cts" agreements or arrange ments between manufae,turers 'Or wherle vhe frtan chisor is the Grown, la Crown .agency or a municipal corporation; 7.

"franchisee" me,ans a pers!on to wh'Om a fl'lanchise is granted; 8. "franchise fee" meians any conslideration exchanged lor agreed to be exchanged for the gflanting of the franchise agreement and without limiting the gene rality of the foregoing, (i) ,the consideration miay include, (

A) any fee or charge that a franchisee or subfranc:hislor ils requ'ired to payor ag,rees to pay, or (

B) any payment for goods or services, or (

c) any service which the foonc-hi-s'ee or sub francbJi810r is required to perform or agrees to perform, or (

D) any loan, guarantee or other commercial consideration exigible from the fran chisee or subfranchisor at the d/ilscretiion of the fraThchigor or subfronchisor for the right to engage in business uncler a fran chis·e agreement, but

(iii) the following are not franchise fees: (

A) the purchase of or agreement to purchase goods at the current wholesale market rate; (

B) the purchase of or the agreen1ent to pur ,chase serviee,s at rthe cur:r~ent market rate; (

c) the payment of a reasonable serv,ice charge to. the isr~mer of 'a credit card by an establishn1ent accepting or honouring rtJhe credit ~a:~d; 9. afrianchisor" meallis a perlson who grants, a frarn chi'se; 10. "Minister" means the A,ttorney General; 11. "officer" means the chairman or lany vi'C'e .. chaJi'rman 'Of the board 'Of director1s, the pr'es:ident, vi0e-presi dent, secretary, a!slsisrtanrt sreeretary, trea8urer, 3!slsis taut treasurer or general mlanager of a company, or any other person design!arbed an officer of a com pany by by-law or simlilar authority; 12.

"person" means any indhnidual, partnership, unin corporated association, ulliinClorp'OraiJed organization, syndicate, trustee, executor, administrato~ or other Ie gaIT repres1e'ntatiVle, corpol'lartJion or clOmpany; 13. "pyramid sia'les franchise" means any scheme, ar rangement, device or other me,ans whereby a par tJieipant pays a franchisle flee and (

i) ils required 101" receiv'es the right to recruit one or more other pe'l'IsO'll'S as particlipan:ts wh'O are subjelcrt to a similar requirem'ent 'Or whio 'Obtain a simBal' right, and (ii) has the right to receive money, credits, dis 'Counts, goods Dr any other l"i'ght Dr thing of value where the amount there'Of is dependent upon the number of pamicipants; 14. "register" means reglister in accordance with this Act; 15. "regis,tranrt" means la person registe'red or required to be registered under this Act; 16. "Registrar" 'means the Regisltr'ar of the Oommlission; 17. "subfranchislor" mea'ns a person to. whom 'an area franchise is granted; 18. "trade" or "trading" includes (

i) any purchase or sale or dispos'ition 'Of Dr olbher dealin~ in O'r any sloliciiJation in respect of a franchIse for valuable consideration whether the terms of the payment are by inslbalment or ot~erwise, 'Or any attempt to do any of the fore gOIng, 3

(,ii) any act, 'advertt1sement, conduct or negotiation dire-ctly or indirectly in ful'ltJhe~ance of any of the foregoing.

(2) A company shaH be deemled to be an aff.iliate of anort;herr company if one of them i's the subslidi~ry of the other or if both are subsidiaries of the same company or if each of them i,s controlled by the same person.

(3) A comp3JTIy sh'all be deemed to be collitrolled by an other pel1SIOTI or perrsons if (

a) equity shar'es of the company carrying more than 50 per cent of the votes for the election of direc rbors are held, o1Jherwise than by way of security only, by or for the benefit of that other person or persons, and (

b) the votelS ,carried by thosle slhares aresuffieient, if exerdsed, toelelct ,a mrajority of the boa'rd of direcrbors of the company.

(4) A company shall be deemed to bea subslidiary of another company if (

a) Hi,s contI'loHed by (

i) that other, or (

H) that other and one 'Or mOI'le companies each of which is cornrbroUed by that oither, QT (iii) two or m10re 'Companies each of which is con trOlUed by that other, or (

b) it is a subsidiary of a company that is that other's 'subsidi'ary.

(5) Acomparny shaH be deemed to be another's holding company or parent company if that other is its subsidi airy. 4

PART 1 REGULATION OF FRANCHISE TRADING Exemptions 2. Any trade in a franehi,se other than a pyram.Ld sales f'~anchise is 'exempt from the provislioll!s 'Of slection 5 (

a) where the franchisor has a net wor,vh on a con s'Olida!ued basis,ac~cordilng to ius mOist recent audited financiral srtarbememk, (i) 'Of TIot less than $5,000,000, or (ii) 'Of not less than $1,000,000 if the franchisor is at least 80 per cent 'Owned by a corpora1tion which meets the requ[lrements 'Of subclause (1), and (

b) wheTe the franchi'sor (

i) has had at le,ast 25 fralll0hisle€s c10nducting business at all times during the five-year period imm:edi'ately pre,ceding the trade, or (ii) has eonduclted bus1iness which i,s the subject of the franchise continuously f'Or not less than five years :immediate1ly pre'ceding the trade, or (iii) is at least 80 per cellllt 'Owned by a corporart;i~n which meets the requiremlents of subdausle (1) or (ii). 3.

(1) The Director may, where in his opinion the action is not prejudicial to ,uhe public intelrest, 'Order, sub jreet to such vermis and conditions as he m'ay impose, that any trade in a franchise is exempt from the provisions of

section 5.

(2) In conlsidering the effect on the publirc intereslt in subsection (1) the Dire(~tor shall have reward to the finan cial respons~bility of the f,ranchisor, its businesls experi ence, its ability to provide the gOOtds and services it ad vel'ltilses 'and its ge~elral success in the franchise field.

(3) A novice of ea,ch 'Order made under subsection (1) and a

summary 'Of the f'acrbs relating rtJhereruo sihaU be pub llished by the Direetor in The Alberta Gazette 'as soon as pra,cticable after .the olrder is made. 4.

(1) Where 'a trade in a franchise is exemplt under seoti'On 2 or has been granted an exemption by the Direc tor under

section 3, the franchirs'Or shall nevertheless, at least four days (exclusive of Statu~days SiUnd~ys or holi- days) prior to ' (

a) the execution by the propective francJhisee of any binding franchise or any other agreement, or 5

2. Statutory exemptions. 3. Certain franchisors may be exempted from registration by the Director. 4. Contents of statement of material facts for exempt trade. 5

(

b) the receipt of any consideration, supply the following information to each prospective fran ehisee by me1ans of a statem'enJt 'Of material facts: 6 1. the name 'Of the franchis'Or, ,the name under which the franchisor d'S doing or intends to do ibusiness, and the name of any aSlsodate that will eng:age in busine:sls t,ranS'actioa1s with the frandhisee; 2. the franchi,sor's principal busineslS addres's rand the name and addr8lsls of his agent for servi0e in Al berta; 3. the busliness form 'Of the f~anchi:slor, whether cor porarte, partnership or otherwise; 4. the business experience of the franchisor, in01uding the length of time the f~anchislOr (i) 'has 'Conducted a business of the type to he operarted by the franchisee, (ii) has gran:ted franchisle's for such busliness, Hll1d (iii) has granted franchilses in other lines of busi ness; 5. a eopy 'Of the typical franchise 'Contract orr agree ment proposed for use or in use in Alberta; 6. a statement of the franchise fee charged, the pro posed application 'Of the proceeds 'Of such fee by the franchis'Or, and the formula by which the amount of the fee is deltrermined if !the ~ee is not the same in all cases, together with aTiiotation 00flleerning the existence 'Of any ,Clonltinuing royalties; 7. a statement delscrlibing any piaym1ents or fees other than franchise fees that the franchisee or sub franchisor is required 10 pay to the fmnc!hisor, in cluding royalties and paymernts or fees which the fr1anchisor ool1e'Cl17s in whole or in pari on behalf of a third party or parities, iJoge1Jher wirt;h the names of such third party or parties; 8. a statem'enrt indicating wheth'e'r the cash inves'bment requiJ:'led for the fr:ancrhisle 'Ciover:SI payment £or fix tures and equipmenrt; 9. a statement of the cond~rt:iollis undeT which the fran chise agreement m1ay be iJermi'Illated or renewal re fused, or repufClha'sed at the optioa1 of the fram chisor; 10. :a ,gtatem'oortas to whether the fDanchi>s!eeiJS alble to sell Ithe franchise and if so, what00nditions, if any, a:1:tbach to the sale; 11. a ~ta'tement as to whether, by the terms Qf the fI'lan c:hlse a.greement or by other de'\ni!ce O\r pralCitice, the franchIsee or subfranc:hisor is requliTied ibo purch 'a;8e

f~om the franchisor or his designate, servkes, sup plies, products, fixtures or other g'lOiods relating to the establishn1ent or operation of the franchise busines1s together with a des0ripriJilOin the,reof; 12. 2. st2.tement as to whether th2 services, supplies, pro ducts, fixtw_'es, or other goods relating to the establishn1ent or operation of the franchise business 'a'fe ,availlable frlOrn so'Ure8S OIthe'r than rbhe fran {~hisor ; 13. a statem'e~)Jt aiS. to whether, byiJhe terms 'Of the fran .chise agreement or other devi.ce 00[" pI'lacti.ce rbhe fran chis?0 is limited in the goods or services which may be offered by him t'O hi,s 'Customer'S; 14. a sit'a:veme'lltas to whe;ther the fI'lancihi'slOT has, whether by conrtraet, lagreem'ent, arrangement or IOtherwri!se, agreed with 'amy third pa;rty or parties that the products 'Or 'services of slUch third party or parties, will be made available to the f.ran0his!ee or subfranchisior on a di,s,c.ount or bonus basis; 15. a statement of the terms and conditions of any fi nancing HrT,ang~me1Its "'illhen offered directly or in directly by the franchd'slOr or 'his associ}ate; 16. a statement of any prust or present pl'la:c.tice of or any intent of the franchi,sor to sell, la1ssign lOr dis 'count toa thi'rd party any 'note, contra!crt lOr other obligatilO~ of the fDamchisee or subfDanehii'sor in whole oQr in part; 17. if any statement of estimated or proj1ereted fra'l1- ehisee earnings is used, the data upon which it is bas!ed; 18. a ,statement als tlO whether franchis!ees or suhfr1am ehisors receive any exelusive rig'hrts-Oil' terrlitory and if so, the extent thereof; 19. 'a statement indi0ating whether the franchisee is required to participate in 'a franchisolr sponsored promotion 'Or pubUC'ity campaign; 20. a :statement as to whether the benefit of lamy p'aitent or liability insurance protection of the franchisor is extended to the franchisree; 2]. a statement as to wheth8r any procedure has been [lciopted by the fra.TIchisor for the settlement of dis putes between the franchisor and franchisee; 22. a sbateme'll!t as to whether the franchli'slOr provides continuing aISsistan0e in any form to the franchisee and if ISO, the nature, extent and ,COlst thereof; 23. a list of orther franchises operating in Alberta where such is available and if no such franc.hises exist, a list of the franchiilseres operating in the next closest jurisdiction. 7

(2) No franchiisor to Whom tS:ection 2 or 3 'applies shan trade in the franchise until he has fHed with the Commis ,sion a copy of the is,tlatement of mate'rial flaets. Registration 5.

(1) On or aflter Fiebruary 1st, 1972, no person shall trade in a franchiilse in Alberta either 'On hi,s own 'account or on behalf of any otiheir person until there have been filed with the Commission both 'an 'applicart:,ion fOT regitStration in the prescribed form and 'a prospe:etus in respeet to the offer of such franehi,seaind until a receipt flor the prlOlspee tus has been obta:ined from the Registrar.

(2) The 'applicant for ,regilstra:tion of a fra:llichilse shall provide the iniorm,altion requested in the applilCiation form and any additional inform'ation reque:sted by the Director 'and shall pay the fee prescribed by rthe r1egulatlilo[l's. (3) A trade in a franchise ils deemed to have occurred in Alberta whe,re (

a) an offe,r to tSell or a siale is mlaJde in Alberta, or (

b) an 'Offer to buy i,s accepted in Alberta, or (

c) Ithe fr'anchisee ,is domidl'ed Dr ordinarrily resident rin Alberta, or (

d) the franchilse will be operated in Alberta, or (

e) Ian offe'r tio sell is made from Alberta, or (

f) an off'er to sell or am offer to buy is a(~C'eptled by communicating the :acceptiance to a person in Al berta eirbher directly or through an agent in Al berta. H. Wherre a m,ate:f'iia!l adverse ehange occuns 'after the dart:e 'Of ,the applieatian for 're,gis.tration 'Of a franchli'se and before the iSlsuance of a receipt for a prolsprectru:s that makes contrary or misleading any statemlent 'Of 3" m,akerri'al fa'ct contained j,n the application for regi,straition, an amend ment to the 'app.Jieai:Jion for registrlation shall be filed with the Commission as 'SOlon as practicable, and in any evenlt within 10 days frO'm rthe date the change occurs. 7.

(1) The p~os'Pectus shall prov1de full, plain and true dilsdosure of aH material fa.cts relating to the franClhise proposed to be offered.

(2) A prospectus shall CJomply as tlO form and content with the requirem'elnts of this Act and the regul'aiJions. (3) ~he Dire,ctor may require any additiona.l informa tion which he considerr.s neceS:8'ary to be included in the pros peCJtus. 8

5. Registration. 6. Material changes to be contained in amendment to applica tion. 7. Contents of prospectus. 8

(4) The ,applicant shall fHe with :a prosp1ecrtus such docu ments, fiinancial statemenbs,~eports and materilal, in a form s!atisfla!ctlory to the Dilreetor, and pay suC'h fees as are pr'es,C'ribed by the regulations. 8. An application for registration, prospectus, registra tion renewal s'uaibemlenrt,and any 'am'endm'ents thereifJo, shaD ,contain a certificate 'in the following :Dorm, ,signed (Ia) by the SOllie pif'oprietor, partners, unit holders, trus tee, or, (

b) in the case 'Of a oompany, by the chief executive ofHcer and the ,chief fiinandal offiee'r 'and on behalf of the board of directors by 'any two direc,tors of the company, authorized to ISlign, and (0) by lainy othe'r person who hrus a ,substa'll'tial interest in the franchilsor: The foregoing Iconstjltutes fuB, plla-in and true dis dosure of 'aliI 'materi'al f!alets re}ating to rt'he fran chise offered by this prospedJUs 'as requried by

Part 1 of The Franchilses A'ct 'Of A,lbertaand the regulations thereunder. 9. If the Director finds that ,the applieant fo~ regisltra tion h~s failed to den10nstrate that adequate financial arrangeme1nts have been m'ade to fulfHl the franchiisor's obligations to pr'Ovide improvements, equipment, inve1ntory, training o'r other items included jn the offe,ring, the Direc tor may by order require (

a) uhe 'eslcrow OT impounding of franchise fees· amJd other funds paid by fra'nCJhisees 'Or subfranchisors, or (

b) at the option of the franchisor, the furnishing of a surety bond in :such form and such amount 'as mlay be required by the Director, until no later than the time of opening by the franchisee of the franchise business if the Director finds that such a requir'emell't i,g neeessiary and appropriarbe to protect pros pective franc'hisees or 8ubfranCJhislOrs. 10.

(1) The Dire.ctor may in his dis,cT'etion direct the Registrar to issue a receipt for any prospectus fii'led under th'is Part unless it appears Ito the Director that (

a) the prospeetus or 'amy document requi'red to be fEed therewith (

i) fails to comply in 'any substantial respect with any 'Of the requirements of this Part or rtJhe regulations, or (ii) .contains any statement, promilSieestim,ate or forecast that 'is milsleading, fallse' or deceprtive, or 9

8. Certificate of full disclosure. 9. Director may require security for performance of franchisor's o bliga tions. 10. Receipt for prospectus. 9

(iii) oonceals or IQmits to strute any material facts neeesisary -in order to make ~tlny statement con tained therei1n not misleading in the li:;;ht c the circum,stanoos ,in which it wals made, or (

b) any person identified in the application has a criminal record or i!s, subje1ct to an orde'r or has a civil judgment entered agaliinst him and the involve ment 'Of that perlson in the Stale lOr mlanagement of the franchilse is n'Ot in the public interest, or (

c) the finallleia~ positi'On of the f~alllchilso~ ils such thaJt the granting of the rli'ght to distribute fl"anehis1es is not in the pubHc interest, or (

d) the busineSls expelrienc1e of the 'applli,cant is sruch ,that the granting of the r1ight to di,,s,tribute fr1an chiSlets is not in the publiic interest, o~ (

e) the ability of the fr1anchisor to provide the goods and servioes outlined i'n the prospectus is such that the granting of the right to tradre in f~alliclVises is nlOt in the public intelrest.

(2) EveTY deteTm,ination by the Director under subsec tion (1) shall be IDlade in writing within 30 d1ays iOf the re ceipt of the application for registration, the prospectus and any amending document and the person who filed the prospectus shall h-ave a prior opportunity to be heard.

(3) The Lieutenant Governor in Oounclil may make such regulations as he considers necess'ary or appropriate in the pUblic inteTest pe1rtaining to the matters ~eferred to in subsection (1), clauses (cL (

d) and (

e) and, without lirnft ing the gen.'erality of the foregoing, peI'lbaining to require ments a.s to the paid-up capitaJI and surplus, liquidity of as s,e:ts , rati'O of debts to pra!id-up tClap:ital ,and iSu~plus,audit procedures, the furnishing of interim finanC'i'al statements, and tlle qualifi'0ationrs, and obligations of the fTalll'0hisor. 11. No 'reeeipt shall1ilsslUe for a prospectus re1aiJing to a proposled trade in a pyr1amid slaJles franchise uurless the Director is slatisfied 'LO (

a) that the majority of the income of the persons in- (b) (c) (

d) volved will de~'ive from the siale 'Of goods or ser Vlices to the puhli,c, that franchisees who obtain goodJs pursuant to the franchise arrangement m!ay receive a refund of the ClOst p~j,0e 'Of unsold inventory upon termination of the franch iSle , tJha,t there is ,a suitable limitaN:on on the number of franchi,sees to be located in any area in relation to the popUlation within the area, and that all other requirements of this Act 'and the regul'a1i:Jions have been complied with.

II. Pyramid sales franchises. 10

1.2. The Director may, and when so directed by the OommiiS1sion shaH, (

a) require any applieant or registrant to delive'r a bond to the Commission within a specified time, or (

b) requi're la regi-stramt who had previoUisly delivered a bond to deHve'r a new bond to the Commis,sion, and the bond 'Or new bond shall be in the form pres.cribed in the regulations and shall be :approved by the Director as to amount 'amd 'Otherwis'e. 1.3. Wher'e an application f'Or regilstr'ation is refus'e.d the applicant may re--apply upon 'Other 'Or additional m'at~ial or upon the same mat,erial when there has been a signifi cantchiange in circumstances. :14.

(1) Where ilt appears to -the Commission, afrte'r the registration ofa prospectus under this Part and the issu ance 'Ofa receipt therefor, (

a) that lany of 1:lhecircumstances slet out in

section 10 'exi'st, OT (

b) that there ha.s been a faHure to comply with 'any provisions of this A,ct or the regulations 'Or any rule or order of the Gommis!slion, 'Or (

c) that the tr'ade would ,constitute de0eit or fraud of the purchasers, the Commi,ssion m1ay 'Order 1)h'at all tr'aiding in the franchise shall ceasle.

(2) No .order shall be made under 'suhselction (1) with out a bearing unlesls in the .opinion 'Of the Commislsion the length of time required for a hearing 00uld he prejudicial to the public interest, in which event a tempor1ary order may be ma.de which shall expire 15 days f'l~om the date of the m'aldng thereof.

(3) A noti,ce of every order made unde~r this

section shaH be served upon the person to whose frall1!chise the prm:;pectus rf~lates and upon every salesman of the fran ehise, and forthwith upon the receipt of the notioe (

a) no further tmdes shall be made in the fmuehise named in the order by any peTls'On, and (

b) any re,cei pt issiU1ed by the Hegistrar for the pros pectus is revoked. ~5.

(1) A franchisor shall advise in writing, by an application to amernd the registration and prospectus 'Of 'any mate'rialehange in the inf'Ormation contained in the appli cation or prospectus as originally submitted, amended or renewed and the application shall be filed with the Regis trar as soon as praeticable and in any event within 10 days from the date the change occurs. 11

12. Director may require posting of a bond. 13. Applicant may re-apply. 14. Order to cease trading. 15. Material changes to be the subject of amendment applica tions. 11

(2) The Director shan determine whether 'any changes as submitted pursuant to subsection (1) are to be aecepted, but in no ease shall a 'refuslal be m,ade wilthoutan oppor tunity to be heard.

(3) An 'amendment approved by the Di'rectJor becomes effective 'On 'any date whieh the Directo'r determines, having due regtard to the public inten~sta:nd the protecrtion of franehi,s'ees. 16. The registration of a fran0hi:se offering expires one year from the date of registration, unless the Di rect 0:' ), order specifies a different period. 17. The registTa'ti'On of a fran~hise offe,ring m'ay be renewed for additilOnal periods of one year ea:ch by sub mitting to the Director a regi1stration renewal statement in the prelSeribed form no later t'han 30 business days pdo~ to the expiration of the registration un}<esls such period is waived by the 'Order of the Director. 18.

(1) No person shall 'act as a ,s,alesman 'On behalf of a f:r~anc:hisor whose franchise is registered undtelr this Act unless (

a) he is listed on the franchisor'sapplicaiion for regis tration of a prospectus, and (

b) he is registered under this Act. (2) 'The termination of the employm,elnt 'Of 'a sialesman with a person Whose fr,alu0hise is registered shall operate as 'a witJhdra wal of the registration of the salesman untH notice in writing has been receiv,ed by the Reg~srtrar from another person whose fra'll'c1hise is registered under this Act of the empllOyment 'Of the salesman by that other per som and the employm,ent has been approVied by the Director. 19. Subject to se,ct,ions 18 and 22, the regisimation of a sialesman expires one year from the date 'Of Tegistraition. 20.

The registration of a sialesman may he renewed flOT additional periods of one year each by submitting to the Director a registration renew'al statement in the pres,cribed form no la te,r t!h~n 30 busine:s,s days prior to the expiration 'Of the registration unlesls such period is waived by the order 'Of the Director. 21.

(1) The Director shall grant regi,stration 'Or re newal of registration to a prospective slalesma;n where in the opinion 'Of the DireciJolr the applicant is suitable fo~ registration and the proposed registration is not 'Objection able. 12

16. Expiry of registration. 17. Renewal of registration 18. Registration of salesmen. 19. Expiry of registration. 20. Expiry of registration. 21. Bond may be required. 12

(2) The Direetor Ishall not refuse to grant or refus1e to renew registr'ation as a salesman withouJt giving the appli 'Cant an opportunity to be heard.

(3) The Direetor m'ay in his dis,cretio~ restrict a regis tration of a s,al'etSm'an by imposi'ng terms and conditions thefieon.

(4) T'he Directo'r m'ay, and when so dire,cted by the Commission shall, (

a) require any appUcant for registration as a slales man 'or any person who has bee'll regi.s.tefled as a salelsm'an to delive'r a bond to the Commission within a specified time, 'Or (

b) requir'e a salesman who had previouslly delivered a blOnd to deliver a new bond to the CommissilQn, wrudthe bond or new bond shall be in the form preseribed in the regulations and shall be 'appfioved by the Diflector a'S to amount 'and otherwise. 22.

The Direetor, after giving the regisre,red sla,J.elsman an OPPofitunity to be heard, shall suspend or cancel any slalesman registratiIQn where in his opinion .such action is in the public interes!t, but, where the granting of an oppor tunity to be heard would be prejudicial to the public inte rest, he may suspend any registrat.io~ of a salesman with out giving the sialesman an opportunity to be he 3!rd , in which case he shall forthwH:Jh notify ;fjhe slal'e!sman of the suspen:sio~ and 'Of a hearing and review to he held before the Conlmission wi.thin 15 days .of the date of the suspen sio~, which hearing and review shall be deemed to he a hearing and review under

section 48. 23. Where an applioatiou for registr'ation as a slalesman is refused the applieant may re-apply upon other or addi tional ma,terial .or upon the sam'e material when there has been a signifieant change in circums;tances. 24. An application for registration as a sa:lesman shall be made in writing upon a form pres1crihed by the regula tions and provided by the Commislsion and shal,l be accom panied by such fee as may be prescribed by the regulation.s. 25.

The Director may requir'e any further inform1ation or material to be submitted by any appli'Clant for registra tio~ ,~s a. s,alesman :vith~n a specifie~ time and may require venfloatlOn by aff'ldavIt or otherwlse of 'any infcrmation or mate~ial then or :I?'revi~usly submitted or m!ay require the lapphcan~ for regIstrruhon as a s,a:lesman OT the regis tered fr~:r:ohlsor Dr any partner, ) oint trustee, joint unit holder, JOInt personal representatIve Dr d~re'CtIOT or offker of the latter to submit to an examination under oath by a person designated by the Director. 13

22. Suspension or cancellation of registration. 23. Further application where registration refused. 24. Application for registration. 25. Director may require additional information. 13

2H. Without limiting rbhe general~ty of

section 21, sub

section ( 1 ), the Direetor may~efus,e regisibr,ation tQ 3.Jny prospective salesma;n where 'he is satisfied, on the basis 'Of statements on the application 'and frQm any other soure'es of iniorTnatioln, that the lapplicanrt (

a) has not been a resident 'Of Oanada for at l'east 'One year p~iolr to the date the 'application is m:aide, or (

b) i,s n'Ot a resident of Alberta 'at the da~e the applica tion is m'ade, or (

c) dOles not intend to mlakehis pelrm'ament home in Al berta after the applkamon is gr'anted. 27. Where an application fQr registration or renewal of ,regisli:ration of a franchise offering OIr of a Slal'es:rnan is refus,ed or !Cancelled or where 'a receipt fiolr a prospectus ri,s not 'Obtained, the Director m1ay -refund the flee or such part thereof as he considers fair and reasonable. 28. On and 'after February 1st, 1972 no f,rancihislOr shall conclude a trade in any franClhise without providing to the purchaser a statement of mateTi'al f1a.cts, p['lospectus Q1r am'ended prospectus in accordance with

section 34. General 29.

(1) Except rus m'ay be permitted by the regulations in the case of a prospectus, no person shall hold himself out as being a registrant hv having printed in a circular, pamphlet, adverti,semenit, l,etter, telegram OIr 'Other sta tioneryanything indi'()ating that he is a regi!stmnt.

(2) No peirson whlo is not a registrant shall either di rectly or indirectly hOild himself out as being a regisltrnnlt. 30. No person shalll make any repres,entation, written or oral, t hgt the Commission has in any way passed upon the financial standing, f'iimesls .or c'Onduct 'Of any registrant, upon rbhe quality 'Of amy rrancihise, or upon the results to be expected by a franchisee operating under the terms 'Of the franClhise. 31.

EVlery franchi,slOr and iSubfranchislOT offering £ran chises for sale shaJll at ,all timles keep !and maintbain a com plete set of books, records and iac()ounts of their respective slates in Alberta art: 1ftH~ir principal pllace 'Of business within Alberta shown on the prospectus or srtatement of material facts, as thecas1e m1ay be. 14

26. Refusal of registration. 27. Refund of fees. 28. Prohibition. 29. Representations as to registration. 30.Representations of Commission's approval prohibited. 3 I. Records. 14

PART 2 ENFORCEMENT Offences and Penalties 32.

(1) Every perrsom who (

a) makes a statement in any mated'al, evidence or in formation submitted 'Or given under this Aelt or the regul'ations, to the Oommisls'iom, i'ts rep rles'enrbative , the Dii'reciJo'r or 'the Registrar or to any pe'l'ison 'appoi;nted to make 'am invelsrtigalt~lQn OT 'audit under this Act, that, at the time 'and in rUhe light of the ci>rcumstances under which 'it is m'ade, is false or misleadling with re,spect to any mlarted~al flact or that 'Omits to s1:Jate any m'atelrial iaet, 1Jhe omi'ssion of which makes the st!aiJement fa;lse or misleading, or (

b) mrakes a statement in any application, repoTrt, pros- pectus, return, financial statement or other doClU m'ent, required to be fiiled or furnis:hed under this Aet or the regul,ationls that,M the time 'and in the light 'Of 1Jhe ciireums,taneels under whi'Cih ~t is made, i18 false or misleading with respect to any materliral fact 'Or that omits to sitate any m1aterial fiact, the omission iOf which makes the statement false or misleading, or (

c) contr;avenes this Act or the regulations, or (

d) fails to observe orr ciOmply with 'any orde'r, ruling, direction 'Or other requirements made under this Act or the regulratioThS is guilty of an offence and liable on

summary conviction to (e) ,a fine 'Of not mOIre than $2,000 'Orr to impriisonment for a term of nlot more than one year, or to both, or (

f) in the case of a 00mpany, a fine of not mOTe than $25,000.

(2) No perlson 'is guilty of an offence under subsection (1), dause (

a) or (

b) if he establishes that he did not know that the statement was, fraIse or misleading and in the exer cise of reasonable diligence could not have known that the sluatement was false or misleading. (3) ,\Vhere a company is found guilty of an offence under ,srubs·ecrbion (1) every direCltor or officer of the company who authorized, permitted or ,wcquiesl0ed in such offence is 'als'O guii'lty of an 'Offence and is liable on

summary convk tion to a fine of not more than $2,000 or to imprisonment for a term of not more than one year, 'Or to bortlh. 33. No procoodings under

section 32 shaH be commenced miOre than 'One year ·af'telr the fams upon whh~h the prro ceedings 'are basled first oame to. "tfue knowledge 'Of the Com mis'sion. 15

32. Offences and penalties. 33. Limitation. 15

Civil Remedies and Liabilities 34.

(1) A person not acting as age!nt 'Of the pUf!cha;s'(~r who receives an o~der for a franchise ibo Which slection 4, 5 or 17 is applicable shall, unlesls he has previou:sly done SIO, send by prepaid mail or deliver to the purclha;se~ the statement of material fa;C:Ds, prospectus or amended pros pectus, whichever is the last required to he fned with the Gom'mis:sion, (

a) before entering into an agreement of pU'r~has€ and sa}e resullting from the order, or (

b) not late'r than midnight 0'n the f'Ourth day, exclu ,sive of Saturdays, Sundays and holidays, after en tering into the agreement.

(2) An agreement of purcha:sleand slale o,r a s.ale referred to in subsection (1) is not binding upon the purchaser if the person f~om whom tlhe purchaser purchased the f'ran chise receives written or teleg-raphic notice evidencing the intention 'Of the purchaser not to be bound by the agree ment 'Of purchase and sale or the sale not later than mid nig:ht on the fourth day, exclusive of Saturdays, Sundays and holidays,after receipt by the purichaser 'Of tlhe state ment 'Of material facts, pr0'spectus 0'1" amended prospectus, whi~hever :j,S the last required to' be filed with the Com,mis s'ion.

(3) Subs'ection (2) does nlQitapply if the purchaseT is a registrant or if the purchas1er seNs or otherwise tr'ansfers beneficial ownership 'Of the f,ranchi,s1e referred to in sub section (2), otherwise than to s'e,cure indebtednesls, before the expir,ation 'Of the time referred tD in suhsecltion (2).

(4) FDr the PUTpos,e 'Of this seoti'On, wh8'l~e 'a statement of material f'acts, prospelctus 0,1" 'amended proS'pectus is sent by prepaid mail, the staltement 'Of materilal facts, pros pelctus Dr amended p~ospeetus shall be deemed c0'nclusively to be received in the ordinalry clOur,se of mlairl by the person orcDmpany to whom it was addT€ssed.

(5) The receipt 'Of a statement of m~:beri'al f'acts, pTOS pectus Dr amelnded prospeetus by a person who is 'aciJing as agent IOf Dr Who thereafteT CDmmences to act as agent of the purchaser with respect to the pu~~ha;se Qf a ff'anchise referred tD in 'Subsection (1) shall, for the purpose Qf this sectiDn, be reeeiprt by the purchas1eras of the date IOn whiclh the agent received such statement Qf mlater.i'al fa;cts, pros pectus Dr amended prospectus.

(6) The rec'eipt 'Of the notice referred vo in subsecrtion (2) by a persQn wh'O acted as agent 'Of the vendor with re spect to the sale 'Of a franchise referred tD in subsectiDn (1) shall. for the purpose 'Of this sectiDn, be receipt by the vendDT as of I1;he date 'On whi,ch the agent rec'ed:~ed such notice. 16

34. Withdrawal from trade agreement. This and the subsequent

section are the same procedures as are used in The Securities Act, sections 64 and 65 respectively. 16

(7) For the purpose 'Of this se1c1tion, a persom shall not be considered to be 'acting as agent of the pUT(~haser unI:eslS the person or company is aet!ing solely 'as the agent of the pur~has,elr with re1spect tlO the pu~chase and slale im question 'and has not received ,and has nlO 'agreement to receive compensatilQn from or on behalf of the v'endor with re speet to the purchase and sale.

(8) The 'Onus of proving thak the time for giving notice under subsection (2) hals expired ils upon :the person from whom the purchaser agreed to purchase the franchise.

(9) Every snatem,ent of m'anerlial facts or prospectus shall .contain a statement of the riglhts given to a pur chaser by this seetinn. ,35.

(1) A person that ,is party to a C!ontra'ct as pur chaser resulting from the IOffer 'Of a f'ranchis,e to which sec ti'On 4, 5 or 15 j,s rapplioable has la right to rescind the con tract while still the owner of the franchise if the statement of material facts or the prospectus and any amended prospectus then filed vvith the Commission in compliance with

section 15 rand received by the purclhaS'e,r, 'als lof the date of recffipt contains an untrue s,tatement of a material fiact or omits to state am'aterial fraet neeessa'ry in orde'r to m'ake any state ment eIQntwi'ned the,rein not misleading in the light of the eircrumstances in whieh it wa,s made.

(2) No laction shaH be eommenrced under this s.ection after the exprir,a tion of 2 yearis from (

a) the receipt 'Of the statement of matelri'al f'acts, pro spectus lOr amended prospectus by the purchaser, or (

b) the date 'Of the contra.ct ref.er1red to in subsection (1), w hirchever is the later. (3) Subsection (1) does not apply to an untrue Sltate ment of a material faclt 'Or an omission to state a material fact (

a) if ,the untruth 'of sudh sitatement or the fact of such omission w'a.s unknown 'bo the person whose fr'anchilses are being 'Offered by the s:tatement of m'aterial fraert:s or prosperctus and, in the exercise 'of reasonable diligence, 'Could not have been known to such person, 'Or (

b) if suclh statement or 'Omlission is disclosed in an amended prospectus filed in compliance with sec tion 15 and the amended rrrospectus was reooived by the purchaser, or (

c) if the purchaser knew of the untruth 'Of the state ment or knew of the omi'ss.ion at the time he pur chased the franchisle. 17

35. Rescission of trade agreement. 17

(4) For ,the pUl"piQSle of this section, whelre a statem,ent of mlaterial f'acts, p~ospectus or amlended prospectus is s'ent by prepaid mail, it shall be deemed CIOnclusively to be re ceived lin th'e ordinary ,COU1}se 'Of m'aill by the peirson to whom it was addflelssed. (5) 'Dhe rec'eipit iQf a strutelnent 'Of matell'ial f'aCits, PIl'O spectus 'or amended priQspectus by la person who is acting as agent of or who therleafter 'Commences to aet as agent of the purc'hasler with resp'el(~rt; to the pUlrc'hase of a francihis'e referred to in subsection (1) shall, for the purpose of this section, be receipt by the purchaser as of the date on which the agent rec~ived such statement of matell'i,al facts, pro speCitus; or 'am ended prospectus. ( 6 ) For the purpose of this 'seertion, a peTtson s~J.laJB not bec'Ornslidered to be a.cting arS ag1ent 'Of the purdhaslell' unless the person is aCiting solely 'arS the 'agent 'Of tJhe pur~haser withresperct to the purchras,e ,and Slale in question and lbJas nOit flerceived and has no ag1reemlent Ito receive C1ompens1ation from 'Or on behalf 'Of the vendor with relspelct to the purchase and sale.

(7) The cause of action conferred by this

section is in addition to and without derogation from any other right the purchaser may have at law.

(8) Everry statement of martedal f:acts or pTOSiplectus shall contain a statement of the ~ight of rescirssion provided by this section. 36. ( 1 ) Where a f'l~anC'hise has heen registered undell' this Aret, 'a subfranchisor m'ay, in lieu of providing its own prospectus, provide to a prospective francihi,s,ee a copy of tJhe franch!islorr's pflos;pectus, and such prospedtus shan be deemed to be PfiOISpecltus of the lSubfrancibJislOr except as ilt may be varied in writing by Ithe slUbfll'lanchisOir.

(2) Where a franchise is exempt or has been e~empted from regisltration under this Aet, 'a subf,r:anchilsor \Sihl'a~l pro vide to a prospective foonrchrrlsee 'a copy of the frranchisor's statement 'Of material facts 'and \Such statement shall bind the subfranchisor ,except 'ras i,t m:ay be varied in writing by the subfrandhisor.

(3) The franchisor sihwll provide each subfl'lanchisor with sufficient Icopies of the prospectus 'Or !statement of mater[,al facts to ,enable hi'm to eomply with Itlhis 8'ection. 37.

(1) Whelre a T'eceipt f'Or a prospectus has be,eln iSlsued by the Registrar, notwitlhstanding !that such reoeipt is thereaft8lr revoked, every pur,chase,r of the franchis:e to w1hich the prospedms reJratels shaH be deemd to have relied upon the st,a:tem'elnts m1ade in the pl'lospeCltus whether the 18

36. Subfranchisors. 37. Personal liability for material false statements in the pros pectus. 18

pUDchraser has reeeJived the prospectus lOr not, and if a material f,alse state'ment is contained in the prospedms everry person vviho, at the ti,me IOf :the i'Sisue of a receipt for the pr'OlSpecltus, irS a di'rector of a company is,suing the franchises 'Or a person who sligned the certifirCiate required by sectlion 8 is liable tQ pay ,CQm pensrai1ion to aU persons who have pUfr(~ihased the franchi's'e for 'any 1'Oss 'Or damage such persons have sustained as a result 'Of such purchase unless H i8 proVied (

a) that rthe p['ospectus was HIed with the Commission without his knowledge 'Or consent, and that, on bec'Oming aware IOf itls filing with the C'Ommis,sion, he forthwith gave Teasonable public noti(~e that i,t was so filed, lOr (

b) that, after the issue 'Of a receipt for the prrospectus and before the purchase 'Of the franchise by such purlchaser, on bec'Oming aware 'Of any falSie state ment therein, he wilthdrew 'hi,s consent thereto and gave realsonable publk notice 'Of such withdr'awal and of the r'eason theref'Or, 'Or (

c) that, wirth T'€:spect tQ every false statement, he ha;d reaslOnlable grounds to beillieve and did believe that the sltatemernt wars true, or (

d) that he had no reas'Onable grounds to believe that an expert who made ra sltJatemenrt in 'a prospectus or whose report or valuation was produced or fairly summarized there,in was nQt competent to make such sltaltemernt, valuatrilOn 'Or report, 'Or (

e) Ithart, with respect to every :Da,l,se stateme:t;t pur pOTting to be a statement m'ade by an IOffiellal per son 'Or eonta'ined in what purports to' be a copy of or extract fr'Om a public 'Official document, it was a correct rand fair repres'entatl}on of the sltarte'Inent 'Or 'Copy ,of 'Or ,extra,ct from the docum'ent.

(2) The liability under subse,ction (1) of ra person as a director 'Or aiS ra signato1ry 'Of ,the 'certifi0ate is jQint rand several wirth all 'olbherr such persons rand wiltih the eompany. 38.

(1) Except with the c'Onsent 'Of the Minister, no a'ction whatever and no proceedings by way 'Of injunction, mandamus, prohibitIon nr other extraordinary remedy lies or shall be i'nstituted 'ag;ainst any perSlOn, whether in his public capacilty, in respeclt of any act OT Gmirsisi'On in c:on necti'on with the administration lOr the carrying Gut of the prQvisions 'Of this Act lOr the regulatiQns where such per SDn is a membeT IOf the OommissiG.Jl" a representative :of the Commisslion 0'r the Direcrbor 'Or Regisltrar, or where su~h person or CQmpany was proceredi'll'g under the written 'Or oral direction or eonsent 'Of anyQne 'Of them 'Or under an 'Order Qf the MinisteT made under rbh'is A'ct. 19

38. Certain persons and actions protected. 19

(2) No. person has lamy Irightls 'Or remedies and no pro ceedings lie or shall be brought against any person in respect of any act lOr omiss'i'On of ,that person done or omitted in 00mpli'ance Dr intended 'compli'ance with 20 (

a) any requirem'ent, order or dril'1ecm'On under this Act 'Of (

i) the Oommiss'ion Dr any member :tlhereof, or (ii) the Director, 'Or (iii) ,the Registrar, or (iv) any person apPOli'nted by order .of the Minislter, or (

v) the M'i'lllilS-uer, or (vi) any representative 'Of the Minister, the Com mission, the Di'rector or Registrar or of any person appoinrt:ed by the Miruister, or (

b) this Act a:nd the regu}atJions.

PART 3 INVESTIGATION AND ACTION BY THE COMMISSION 39.

(1) The Commission or any person to whom as its representative it may in writing delegate such ·authority may at any time m·akean examination of the financial affairs of a registrant 'Or of any person whose franchilses have been rbhe subject 'Of a filing witlh the Oommission, and prepare a balance ·sheet as of the date IQf suchexmnina tion and such other state,mentsand r1eportsas may be re quired by the Commislslion.

(2) The Comm1ilssion or any person m!aking an exami nati'On under this secti'On is entitled to free aC!cess to all books of account, securi1ties, cash, documents, bank accounts, vouchers, correspondence and records of every des1cription of the person whose finanda:l affairs are being examined, and no person shall withhold, destroy, oonceal or refuse to give any information or thi,ng realsonably re quired for the purpose of the examlinati'On.

(3) The Commission may charge slUch fees as may be p·resc:ribed by the regulations ~or ~my eXlamination made under this section. 40.

(1) The Commission may appoint one or more ex perts to as,s'ilst the Gommis:sion in any m!anner Which it may cons,ider expedient.

(2) The Commislslion m'ay submit 'any agreement, pros peC'bus, fiDlMl!ci'al statement, report '0[" orbher docum'eUit to one or more experts appointed undelr subsection (1) for 'examinati'On, and the Oommiss1ion ha;s the like power to summon and enforce the attendance of witnesses before the expert and eompel them to produce documents, records and things als is vested in the Commission in conducting an investigation and

section 41, suhsections (3) and (4) apply with all necessary modifications.

(3) An expert appointed under subsection (1) shall be paid such amounrts for s'ervices 'and expenses as the Lieutenant Governor in Council may determine. 41.

(1) Where upon a statement made under oath it appears 'Probable 'bothe Commislsion that 'any person has (

a) contravened any 'Of the provisions of this Act or the regul,ations, 'Or (

b) committed an offence under the Grim 1il1'al Code in connection with a trade in franClhises, the Gommi's,sion may by order appoint any person to make such investigation as lit deems expedient for the due ·ad ministration of this Act, and in the order sihall determine and prescribe the scope 'Of the investigatiion. 21

39. Financial affairs of registrant may be examined. 40. Board may use experts. 41. Investigations by order of the Commission. 21

(2) The Gommis,s'ilOn 'may, 'On its own motion by order, apPlOint one or more persoill'sto make sUClh iinves!tligtation als it ,cons,icier,s expedient for the due ladministr1ation IOf this Act or into any mattea:' relalting to tr'aiding dn fr~lmehi:se,s, and in the order shall determine land preseribe the scope of rbhe rrnvesrtigation.

(3) For the purpos1es of any investigaEon ordered under this section, the person appointed to make Ibhe in ves1tigation may investigate, j:nqui,re linto land examine (

a) the affairs of the person in respect of which the investigat1i'On <lIS being m'ade and any books, papelrs, documents, correspondence, communications, ne glQlti'ations, tr,ansaetions, inVlestigations, loans, bor rowings and playments to, by, on belhwlf IQf lOr in rel'at'i'On to or eonnecrtJed wiibh ,such peirson 'and any pr'Operty, aSlsets or things 'Owned, a,cquired Q1r u'lien ated in whole 'Or in part by such person 'Or by any person a:cting on behalf IQf or as agent fO'r such person, and (

b) the assets 'at lany time held, the liabHilties, debts, undertakings and ohl1igartiollis lart lany time existing, the financ'ial or otlber 'Cionditions lat any time pre vailing in 'Or in ,~e}atilQln to 'Or in eonnectJ:on with any stIch person and the relationship that may at any time exist 0'1' have exislted bertwe'en suclh per sonalll'dany other person by reaiSon of ~a sale or an agreement of pUir'chase land slale, C'ommissCons promi'sed, secured or pa1id, interests held or acquired, the l'Oaning or borrlOwing of money or other proper1ty, inte,rlocking directorates, common control, undue influence or oontrol or any other relationship. ( 4) The person making an linvestig'arbion runde'r this

section has tlhe Blame power to Isrummon and enforce the attendance of witnesses and compel them to give evideno8 IOn oath lOr OItheTwis,e, land to produce dlOcuments, r,eclO~ds and things, as lis vested in the Supreme Count flOr the tn'al of dvH 'actions, and the failure or refusal 'Of a peDson to attend, to la,nswer questions or to pDoduce sruch documents, records and things a,s are in his custody or possesls!i'Onm,akes the pe'rson liab}e to be eommiitted f'Or 'ClOlliDempt by a judge 'Of the Supreme Oourtas if in br,eaeh Qf ,an order 'Of judg ment of the Supreme Court, provided that no provision of The Alberta Evidence Act exempts any bank or any office,r or employee thereof frlOm the operati'On Qf this s,eCltion.

(5) A pers'On giving evidence at an investigation under this

section mlay be represented by counsel.

(6) VVhere an investigation is ol'ldered under th[s section, the person appointed to make the invesrtigat'iQn mlay seize and take posses'sion of lany docume1nts, records, 'selcnrities or other property 'Of the person whose affairs are be~ng in vestigated. 22

(7) Where any documents, records, S!e,curities or other property are seized under subsection (6), such documents, recIQ,pds, securities or 'other p'Poperty wiN be m1ade available for inspection and copying by the person from whom seized at a mutually convenient time and place.

(8) W'herean 'investiga1tion is 'orde,red under thisseci.ion the Commission mlay 'appoint an aec!Ountant or other expert toexamjne documents, records, prIQperlties and matters of the person whose aff'airsare being investigated.

(9) Every person appointed under subsection (1), (2) or (8) shall report the result of his investigation or ex amina ton to the Commlission.

(10) The provisi'Ons IQf any rules of 00Urt Oil' IQf law re lating to the se'rvke of subpoenas to wiitnesses and to the payment 'Of conduct money or witness fe,elS dio nOit apply with respect to investigations under tih'is

section O'r

section 43.

(11) An order under suhsectilOm. (1) 'Or (2) may provide for the appointment of two or more persons to make the investigatilOn. 42.

(1) Whe're upon the report IQf an investigation made under

section 32 tit appe1arls to the Oommiission thalt any person may have (

a) eontr1avenedany of tthe provisions IQf this Act 0[' the regulatilQns, or (

b) committed an offence under the Criminal Code in connection with a trans l3Jctiiou relating to fran chises the Comn1ission shall send a fuN and oompletJe report of the investiga1tio1n, induding the report made to it, any transcripts of evide,nce and any mat'el'lial in the pos8ession of the Commission relating thereto, to the Minister. 43.

Notwithstanding StectJion 41, the Minister may by order 'appoint 'One lOr more persons to make such investiga tion as he considers expedlie1llit f'Or the due administration of this Act or into 'any matter relaJting to tr'a;diing in frml chises, in which case the person or pelrsons 18'0 appointed, flOr the purposes of the investigation, have the same author ity, powers, rights and privileges as a person appointed under sectilOn 41. 44.

No person, without the 'Consent of the Commission, sihalll disdose, except to hi,s 'Counsel, any information or evidence 'Obtained 0'1' the nam'e 'Of any wiltness examined or sought to be -examined under secti0'n 41 or 43. 23

42. Commission to report offences and contraventions to the Minister. 43. Minister may order a further investigation. 44. Evidence not to be disclosed. 23

45. Where 'an inves1tiga'tion has been made under

section 41, the Comn1ission may, and, where an ~nvestigatlion has been made under

section 43, the person m,aking the investiga tion shalrl, ['eporlt the resu:l:t rthe,relQf, in0luding the e~idence, findings, comments ,and re00mmendations, t'O the MinilSter, and the Mi'nlist.e'r m'ay cause 1:1he report to be published in whole 'Or in

part iinany manner whil(~!h he conside'lis prlOper. 46.

(1) The Commission may, (

a) where it is about tlO order 'an investigation under

section 41 or during lOr afrter ,an investigation und'er slelCuilOn 41 or 43, lOr (

b) where it i,s about rbo mlake 'Or 'ha,s made a direction, decision, order or ruling suspending or cancelling the regislt'liatlion 'Of a.ny person lOr 'aff'ecting the ~ighrt; of 'any person to trade in franchises, or (

c) w~here criminal} proceediings 'Or proceedings in re spect 'Of a eontrlavention 'Of this Act or the regu}a tionsare about 1:10 be or have been iinlstiturted against any pe~son, that in Ijjhe IOpini'On 'Of the Gommis:Sliron are connected wHJh 'Or !arise 'Out of '3;ny fr'anchise or trade therein or out of any business conducted by such perlSon, in writing 'Or by t'e,l'egram dir'eci 'any person havi,ng on de postinor under control 'Or for safekeeping any funds or se curitiesof rbhe perslOn referred to in daU'sle (a), (

b) lOr (

c) to hold such funds or securiities 'Or direct the person re ferred to in dause (a), (

b) or (

c) to refr1a;in Tvom with drawing ,any such :Dunds 'Or selcuri:ties f'rom any .other person having any of them 'On depos:it, under ,control or for safe keeping or ,to hold all funds or ,s!ecuriiJies of dients or others in his possession or controll in Itrust for ,any interim reeeiver, custodian, trusltee, reee:iver lOr 'liquidator apporinted under the Bankruptcy A0t (OalllaJdIa.), The Judkature Act, The Companies Act 'Or the Winding--up AClt (Canada), or until the Commission in writing Tevokes tlhe direction or consents to ,release 'any particular fund 'or se0urity from the dkeetion, 'and lin the cas'e 'Of a bank, ,rolan .or trust company the direction 'applies 'only to rtlhe 'Offices, br,anches or 'agencies named in the direotion.

(2) Any pelison in re0eript 'Of a direlction given under subsection (1), 'if in doubt as to the applicati'on of t)1e direction to 'any funds lOr fr'anClhiise 'Or in tJhe ca,se IOf 'a cl:alm being made the,reto by any person not nam'ed in the direc ti'On, may apply to a judge 'Of the Supreme Court who may direct the dispositilOn 'Of such funds or franchise and may make such 'Orde'r as to COSIUS as seems just.

(3) In any of the circumstances n1entioned in subsection (1), dause (a), (

b) lOr (,e), the Commission may in writing or by telegram n'Otify any registrar 'Of land titles that proceedings are being or are about to be ta~en that may 24

45. Minister may publish findings. 46. Order to preserve funds. 24

affect land belonging to the pe,rs'On referred to in the notice, and the notice slhall be registered or reClorded agaiinst the lands mentioned therein and ha,s 1Jhe Sla'm,e eff'ectas the registraltion or recording of ,a 'certifieate 'Of lis penden8 or acaurt:lion, but tlhe Gommi'Slsi'On may in writing revoke or modify the notice. 47.

(1) The Gommissrion m'ay, (

a) vvhere it i,s about to order an invesltigation under se,ction 41, lOr during or af1Jer an irnv€stigaiJiDn under

section 41 or 43, or (

b) where it is 'about rbo m1ake 'Or halS made a direction, deeitSiorn, order or !I"ulling suspending or canceHing the registratilOn 'Of any person or laffecting the rright of any person Ito trade in fTla'nchises, 'Or (

c) where cr,i'millial proceedings or proC'eed~ng'ls in respect 'Of a cont'raventlion 'Of this Act or tlhe regulations are about to be Dr have heen instituted against any person that in the opinrllOn 'Of the Oom'mlis,sion are connected wilth or ar!ise 'Out of 'any franchise Dr any trade therein, Dr out 'Of 'any business 'clOnducted by such perlson, apply iJo a judge 'Of the Sup'rerme Court fOT the appointment 'Of 'a rec'eiver 'Or a receiver and manager 'Ora tTu'Stee of the property of suelh pe'rson.

(2) Upon an applioation m'ade under subsection (1), the judge m'ay, where he i,s satisfied that the appointment 'Of a receiver or a re'ceiver and mlanager 'Or a trustee of the property of any person is in the best interests 'Of the credit ors of such perSlo'n or of pe'rsons whose property IjlS lim the possession or under the control of such person, appoint a receiver 'Or a receiver rand m'alllage,r 'OT :a trustee 'Of the properrty ,of s'Ucih person.

(3) Upon an ex parte applieation made by the Oommis!sion under this section, the judge may m!ake an orde'r under subsection (2) appointing a receiver ora receiver 'and man ager or a trustee fora perliod not exceeding eight days.

(4) A receiveT or 'a l'Ie'ceiv,e,r rarnd maTiiageT or a trustee of tlhe property of any person appointed under 1Jhis se:CJ1:ion shall be the receivelr or the receiver ,and manager or the trustee 'Of :a11 the property belonging to rtlhe pe'r,son or held by the person on beha,lf 'Of 'Or lin trust for any other person, and the re'C!eiverr or the receiver and manager or the trustee slha11 have '3utJhority, if S'O directed by the judge, to wind-Up O'r manage the business and 'affairs 'Of the person and all powers necess!ary or inC'idenrbal thereto. ( 5) An order made under this

section may be enforced in the 'Sianle manner als any order 'Or judgment of the Supreme Oourt and may be Viaried ordll'Slcharged upon anappliea:tion made by nOltice.

(6) The rules Gf pracN'ce of ,the Supreme C'Ourt apply to an applicati'On made under this section. 25

47. Applications for receivers, managers or trustees. 25

PART 4 APPEALS 48.

(1) Any person prri'marily iafflected by a dire'Cltion, ded.slion, ordm~ or ruling of tlhe Dih~ector m1ay, by notioe in wrdting sent by registered m'ail to rthe R'egistr'ar within 30 days ,after tlhe m,ailing IOf rthe Inotice of the dir'€'ctiion, dedslion, order 'Or rula.ng, request and he entitl1ed to 'a hea'ring and review 1jJ1ier,elOf by the C'Ommission.

(2) Upon a he'arilJlg and review, the Commd!slsion m'ay by order 'COlnfiirm the idi'fl8lclti'On, decision, orde'T or fluling undeT review or make such other direction, decision, order or fulling as t!he Gommislsion deems proper. 49.

(1) Any person prima,rily aff'Bcted by a dd'rection, de cis:ion, order 'or ruling of the Commission, may appeal to Ibhe AppeLlia:te DiVlisiOin IOf the Supreme Oourt of Alberta.

(2) Every appea.l slhalll be by noti<ce IOf mlOtion sent by re~ilstered mail to tlhe RegilstDar wi,thin 30 days 'after the mailing of the noUce IOf the order, 'and the pradJi,oe and procedure upon and ,in rel,ation to the appe1al shaH be the same as upon an appeal frlOm a judgm'ent 'Of a judge of the Supreme Court in an action.

(3) The Regist,r'a!r shall <certify tOlthe Clerk 'Of the Supreme Oourt (

a) the direction, deeision, order or Tuldng if:lhat has been fieviiewed by the Commission, (

b) the oflder IOf tlhe Commis,si'On, together with any 'stiatemellit of r'eaSlOns therefor, (

c) rthe record of the r'eview, and (

d) aliI written 'Submi'slslions to the CommlissilOn or other mate,da,l that lis releVlant to the ,appeaL ( 4) T'he Oommi,ssi'On may appear and he rep['esiented by counsel appointed by the Mini~,slter fOT that purpose upon the he'aring of any appeal under rt!his sect:ion.

(5) Where an appeal is takien under this s'ection, the Appellate Divislion m'ay by its o~der direct the Oommislsiion to 'm'ake 8uch direction, decision, order 'Or ruling o.r to dIQ suclh other alct 'als the Commission is authlQlriiz'ed and em powefled to do under this A'clt or the regulations anJd as the Court deems pr'Ope~, having 'regard to the materlia;} a.nd subm,ilslslions bef'Ofie it and to this A,ct and the regulations, and the Commilssi'O'll sha.M mlake such diir'elction, decis,ion, order o'r ruling or do sUdh alct aecordingly.

(6) Notwithst~anding an order 'Of the AppeUaJte Divis,iIQn, the Commi's,sion has power to ma~eany further dd'rection, decision, order or ruling upon new material or where there is a mate,rialClhange in tlhe circumstances, and every such dkectd'On, decisdon, oflder or ruling is 'Subject to this section. 26

48. Appeals to the Commission from the Director. 49. Appeals to the Appellate Division from the Commission. 26

PART 5 ADMI N ISTRA liON 50. For tlhe purposes of a hearing requi'red 'Or permitted under this Act to be :held before the Commislsdon or the Direeto'r, the following rules apply: 1.

In add1ition tlO a:ny other person tlO whom norbiee is required to be miven, noi::i1ce in wrilting of the time, place and purpose of the hearing shall be given to any person that, in the opinion of the Com miissiorn 'Or the Director, is primla;r'ily affeeted by the hearing, and any such notice is sufficient if sent to the per,slOn by prepaid ma,il at tlhe laslt ad dress of the pers10nappearing on :the reoord of the CommislS'ion 'Or, if not so appearing, to such address as is directed by the CommissilOn or the DirectlOr. 2.

For tihe purposes IOf the hearing a1ny of the persons eonvening the -hearing or before whom the hearing ,is held has the slam'e power to summon 'and enfor:ce the attendance of witnelsses and compel them tlO give evidence on oath or otherwise, and to produce docum'ents, records and tlhings, as i,s vested in the Supreme Court of Alberta for the trial of Clivil actions, and the failure 'Or refusa,l of a person tlO a'ti'end to answer questi'Ons olr tlO produce such documents, reclOrdrsand things as ar'e in his cust10dy or possless:ion m,akes the person li'able to be com mitted for 'ClOntempt by a judge of the Supreme Court of Albert:a a,s 'if in breach of an order 'Or judg ment of that Court. 3.

At the hearing, the person pres1iding shalllreceive all evidence slubmiltted by a:ny peirson tlO whom notke ha,s bee1n given 'Or by any other person sub mi tting 'evidence that is relevant to the hearing, but tlhe person presliding is not bound by the legal Of techlllkal rules of evidence. 4. At the hearing or hearing and review by tihe Com mislsion, all .oral evidence received shall be taken down in writing and together with such document ary evidence and things as are reeelived in evidence by the Ccmmrislsii'on shall form the record. 5.

Wflere the direction, decision, order 'Or ruling made after a hea:ring adversely affeclt'S the right ofa pers'on to trade in franchises, the person pre,siding at the hear'ing shall, at the request 'Of the pers'on, issue written reasons for the direction, decision, order or rulling. 6. N'otiee of every d'iTection, decision, arde'r or ruling, together with a eopy of the writt,en reasons there for, if an~.T, shaH be given upon the issuanoo thereof 27

50. Rules relating to hearings. 27

t'O every person to whonl norbi1ce of the hearing was given and tlOa,ny peliSlOn who ,in the opini1on of the perslOn whlO preslided at the hea1ring, is prlimarily affected thereby, alnd any sUClh notice is suffielie'nt if sent to siUcih person by prepadd mail at the }ast addres,s of sluch person 'appearing OIn the re~ords of the Gon1'mislslion 'Or, if not so appearing, rbo suC'h address as is directed by the Commission or the Di~ector. 7. A personattrtenJding or :submlitting evidence at a hearing pursuant to daus€ 1 may be represented by counsel. 51. A statement als to (

a) the registration or nlOn-registration of any per,SlOll, or (

b) t:he filliing or non-filing IOf any document 'Or ma terial required Oil' pe'rrn:itted tOo be filed with the Gonlmission, Dr (

c) any OIbher mla1tter pertaining tlO such registration, non-reg1istr'Rbi'On, filing or non-filing or tlO any such perSlOn, docum'ent Of material, purporting to be certified by the Commiss,ion or a member there'Of 'Or by the Director or the Registriar i8, without pro 'Of of the offiice 0.1' signature 'Of the person certifying, receivable in evidence, SIO far as relevant, flOr all purposes in any 'action, prlOceeding or prosecution. 52.

(1) Where a magistrate or justice of another prov ince issued a warr;ant for the arrest of any person on a charge of contravening any provi,sion 'Of 'a statute of such province siimilar to this Aot, any provincial judge or just[lce of Alberta within whose j uri'sdietion that perslOn ,is or is suspected t,Q be may, upon satisfactory p'roof 'Of the hand writing IOf the provinc1ial judge 'Or justio€ who issued the warrant, make 'an endrors€lmel1lt1:lhef'eon in the form pre ser~hed bv the regul1ations and a warrant SIO endlOrs'ed i'S 'Sufficient authority to the person bringi'ng the warramt and to lall 'perslons to whom it \VIalS 'OrigiIlJally directed and to all constables within the territorial jurisdiction of the p,rlOvincial judge or jus1biee so endorsing the warrant to execute it within 1:lhat jurisdktion and to take tjhe person arrest,ed thereunder eirbher out of or 'anywhere lin Alberta and toO re-,arrest that peirson anywhere in Alhert:a.

(2) Any constable of Alberta or of any other province of Canada who is pa:sls'ing through Alberta 'having in his custody a pers'On arrest'ed in another province under a war rant endrorsled in pursuan0e of subsection (1) is entitled to hold, rbake and re~arrest the accused anywhere in Alherta under that w:arrant without proof 'Of the warrant or the endorsement thef'(:~of. 28

a I. Certified statements receivable in evidence. a'2. Execution of warrants from another province. 28

(1) Whrerre it appears to the Com'mislsion that any person balS falHed to Icomply with or i:s vio}ating any pr'Ovi slion of t~h'is Alct or the regulations, nlOtwithstand~ng the imposition of any penalty in respect of such non-compliance or viollation and in addit!ion to any ouherr rights it may have, the Co'm:misS'lon m'ay apply tlo the Supreme Court 'Of Alb~rta by way 'Of ,originating notice of motion fOT an orde'r direct ing that per:son to comply wi,th the prov'islion .or fo.r 'an 'Order restraining that perls:on from vioJatJi'ng the provision, and upon suchappliC'ation the C:ourt may m'ake the 'Order or any other order that it thinks fit. ( 2 ) T'h(e or'igina:t'i'ng notice slhall he sle'rved ,at leaslt two dear days before the day named in the notice f'Or heal":ing the applic:ation.

(3) An appeal lies to the AppeHate Divislion 'Of the Court from an 'ordermade under subsection (1). 54.

(1) Any bond mentioned in se'Ci;ion 12 or secti'On 21 is f'Orfeited andtJhe amount thereof becomes due and owing, by the person bound thereby, as 'a debt to Her Majesty in rig1ht of Alberta (

a) when rany pers:on 'Or any officer 'Or partner of a company in respect of whose oond'Uct tile blOnd is conditioned 'has bee'll (,onvicrted of (

i) an ,off€ll'ce under th'i.s A'ct 'Or ,tJhe regulations, Dr (iii) an off.ence involving fTtaud or theft 'Or con spiracy to commit an offence involving fraud or theft under the Criminal C'Ode, or (iii) an 'Offence in rconnection wi1fh ,a transaction relating to securi:tli'eis under the Criminal Oode, (

b) when judgment basled on a finding of fraud has been given 'aga.insltany registered pers'On or any officer 'Or partner 'Of a registered 'CIompany, in res pect of whose 'Conduct the bond is rCionditioned, or (

c) when proceedings by or in respect of 'any registered person or any officer Dr partner of a register~d 'CIompany, in respeot of whose conduct the bond IS conditioned, have been taken under the Bankruptcy Act (Canada) or by way of vV1indling up and a re ceiving order under the Bankrupt,cy Arct (Gan!ada) or a winding-up ordelr has been made, and such conviction, judgment or order has become final by reason of lapse of time or of having been confirmed by the hjghest court to which a.n appeal may be taken.

(2) A bond may be .cancelled by any person bound thereunder by giving to the Registrar at lea.st tJhree monbhs' notice in writing of intention to cancel and, subject to sub- 29

53. Orders compelling compliance with the Act. 54. Forfeiture of bond. 29

section (3) it shall be deemed to be cancelled on the date sltated in the notice, which daite shall be not less than three months after receipt of the notice by the Regisltrar.

(3) For the purposes of every act and omissrion occur ring during the period of registration 'Or the period prior to cancellation under subsection (2), every bond continues iin floree and the eoi}lllater lalslec'Urity, if any, sihall rema'in on deposit for a period of two years after the lapse 'Or cancel lation of the registration to which it rellarbes, or the cancel lation of the bond, whichever 'Occurs firslt.

(4) Where a bond secured by the deposit of coUateral security with the Provincial Treasurer is forfeited under subsection (1) the Lieutenant Governolr in Council may dirle~t the Pr'Ovincial Treasurer to sell the collateTal security at the current market price.

(5) Where Her Majesty becomes a 'creditor of any per son in respect of a debt to the CrDwn arisiing from the provisions 'Of subse,~tion (1), the Oommis'slion may take such proceeding'ls as it deems fit under the Bankruptcy Act (Canada), The Judicature Act, The Compami'es Alct O'r the \Vinding-up Act (Canada) f'Or the appointment 'Of an in terim receiver, custodian, trustee, receiver Dr }liquidator.

(6) The Lieutenant Governor in Council may direct the Provincial TreasureT (

a) to ass,ignany bond forfeited under subS'e'ction (1) and tr1ansfer the cDllateral security, lif any, or (

b) to pay 'Over any moneys rec'Overed under such bond, or (

c) to pay over any moneys realized from the sale of the .collateral security under subs'ection (4), to any person, or to the 'Clerk 'Of the Supre'me Court of Al berta in trust for su~h persons as m'ay becDme judgment creditors 'Of the person bonded Dr to any trustee, custodian, interim receiver, receiver 'Or liquidator 'Of such person. 30

(7) Where (a) 'a bond has been fDrfeited under subsecti'On (1) by realSDn of a conviction Dr judgment under subsec ti'On (1), daus!e (

a) or (b), and (

b) the Gommisisi'On has not (

i) within two years 'Of the convictiDn Dr judg ment having becDm,e final, or (ii) within two years of the registered person in respect of whDm the bond was furnished, hav ing 'Ceased to carryon business as sruch, whichever OCtCurs first, received notice in writing 'Of any 'Claim against the proceeds of the bond or of such portiDn thereof as remaiins in the posses sion 'Of the Provincial Treasurer,

the Lieutenant Governor in Council may dir'ect the Provin cial Treasurer to pay such proceeds 'Or portion thereof to that person or to any person who upon forfeiture 'Of the bond mlade any payments thereunder, after first deducting the amount of any expenses that have been 'incurred in connection with any investigation 'Or other n1atte:r relating to that person. 31

PART 6 MISCELLANEOUS 55.

The Lieutenant Governor in Gouncil may make regulations 1. prescribing the form and content of prospectuses to be filed with the Commission by persons in aCicordance with the Act, 2. prescribing requirements respecting applications for registration and renewal of registration, 3. regurating the trading in francihis,es and records relating thereto, 4. governing the furnishing of information to the public or to the Commission by a registrant in con nection with franchises or trades therein, 5. governing the keeping 'of accounts and records, the preparation and filing of financial statements of franchise iSlSuers and the audit requirements with rerspect thereto, 6. prescribing the fees payable to the Commission, including fees for filing, fees upon applications for registration, fees in respect of audits made by the Commission and other fees inconneCition with the administration of this Act and the regulations, 7. pres r0ribing the documents, reports, statements, agreements and other information and the form, content and other parti-cular1s relating thereto that are required to be filed, furnished or delivered under this Act and the reguLations, 8. prescribing the practice and procedure of investi gations under sections 41 and 43, 9. prescribing the forms for use under this Act and the regulations, 10. prohibiting or 'Otherwise regulrating the distI'ibu tion of writb~n 'Or printed material by a person in respect of a franchdse wherbhe-r lin the ,course of trad ing or otherwise, and 11. respecting any matter necessary O'r advisable to carry out effectively the intent 'and purpose of this Act. 56.

This Act ,comes into fo'rce 'On a date to be fixed by proclamation. 32

55. Regulations. 32 Title: 1971 (16th, 4th) Bill 101, The Franchises Act

Document details

Collection	Alberta — Bills
Citation	L16 S4 4938
Type	bill
Volume / chapter	L16 S4 4938
Language	en
Format	json
Source	PROVINCIAL
Identifier	cea6a814e4a0f71df1729a336e86d0b155e291b7

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