CFA Responds to Ontario Government's
Proposed
Electronic Disclosure Amendment
In April, the Ontario government
responded to CFA's request
to amend the Regulations of the Arthur Wishart Act to allow for electronic disclosure and delivery by courier.
A
draft amendment was posted online for public comment and feedback. CFA has identified the following draft regulation as potentially problematic and costly for franchisors:
12 (2) A disclosure document delivered in accordance with subsection (1) is not effective until the franchisor receives an electronic acknowledgement of receipt from the prospective franchisee (emphasis added)
In our feedback to the Ontario Minister of Government and Consumer Affairs, CFA argues that the acknowledgement of receipt should be allowable in more than just electronic format, for example, as a printed and signed hard copy (
click here to read the full submission).
If non-compliance with this regulation would render the disclosure document "not effective," it could mean that a franchisor who delivers a perfectly compliant disclosure document electronically could still be subject to a 2-year rescission remedy. This is a significant concern and the potential consequences would be frustrating, litigious and costly.
CFA supports uniformity in franchise disclosure legislation. Our submission highlights that other provinces are not as restrictive with regards to acknowledgement of receipt. New Brunswick, for example, does not
require acknowledgement of receipt while PEI and Manitoba simply require "written acknowledgement." CFA has asked the Minister to model the regulation on these other provinces.
CFA is very pleased with the movement of the government on this issue. We are optimistic that the Regulation will be modified in form before it proceeds towards a committee process and will keep members apprised of further developments.
