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On October 3, Bill 154, Cutting Unnecessary Red Tape Act, 2017 was carried on division and referred to the Standing Committee on Justice Policy. The Bill, which includes proposed amendments to the Arthur Wishart Act, proposes helpful amendments for franchises operating in Ontario.
CFA has been actively engaged throughout the development of these proposed amendments, and Bill 154 closely reflects our recommendations submitted to the Ontario Business Law Advisory Council (BLAC) earlier this year. An overview of the proposed amendments are as follows:
- The Circumstances Under Which A Disclosure Document Is Required
- Proposes that a disclosure document does not have to be provided prior to the signing of a franchise agreement or any other agreement relating to the franchise if the agreement only contain terms that:
- (a) require any information or material that may be provided to a prospective franchisee be kept confidential,
- (b) prohibit the use of any information or material that may be provided to a prospective franchisee, or
- (c) designate a location, site or territory for a prospective franchisee.
- Additionally, a disclosure document does not have to be provided upon the payment of a fully refundable deposit if the deposit
- (a) does not exceed a yet-to-be prescribed amount,
- (b) is refundable without any deductions, and
- (c) is given under an agreement that in no way binds the prospective franchisee to enter into a franchise agreement.
- Service Marks
- Proposes that based on its lack of legal relevance in Canada, the use of the term "service mark" should be removed from the Arthur Wishart Act
- Statements of Material Change
- Proposes that the contents of statements of material change will contain the information that is prescribed (prescribed information not yet known).
- The Definition of "Franchise"
- Proposes changes that would recognize that the franchisor themselves may be a licensee, rather than an owner, of the intellectual property for the franchise. In addition, Bill 154 also proposes amendments that the right to exercise control, rather than the actual exercise of that control, may be sufficient for the purposes of characterizing a business as a franchise.
- Disclosure Exemptions For Officers and Directors
- Proposes the expansion of the disclosure exemption to include the grant of a franchise to a corporation that the former director or officer controls.
- Disclosure Exemptions for Fractional Franchise
- Proposesthat the calculation of anticipated sales has to be made in respect of the first year of operation.
- Disclosure Exemptions For De Minimis Investments and Large Investments
- Proposes that the amount spent by the franchisee that is required to qualify for the de minimis investment exemption is to be based on the total initial investment, as described in the disclosure document.
As an omnibus Bill which impacts dozens of unrelated Acts in the Province, it is expected that the Bill may not receive Royal Assent until late 2017/early 2018. CFA will remain engaged with the Ontario Government throughout this process, and will notify members as the Bill moves forward in the legislature.
If you have any questions about the reports or any other advocacy issue, please contact Ryan Eickmeier, Vice President, Government Relations & Public Policy, at [email protected] or phone 416-695-2896 ext. 297.
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