New franchise rules in B.C. aims to inform prospective franchisees

Victoria – The new Franchises Act and regulations, which come into force on Feb. 1, 2017, will help ensure that a prospective entrepreneur who wants to open a franchise in British Columbia has the information and support needed to make an informed decision about whether to invest in the franchised business.

The new legislation will provide important legal protections for British Columbia-based franchisees who operate a franchise, the B.C. government said in a news release. This includes regulating the sale of franchises, requiring that contracts include pre-sale disclosure requirements, and providing more legal rights and protections to help parties resolve disputes. The legislation will provide certainty for franchised businesses, a move the Province hopes will encourage franchising efforts in B.C., generating investment and employment opportunities as well as providing direct and indirect economic benefits to the communities in which they operate.

The act will also increase transparency for new franchisees, requiring franchisors to disclose all information that will significantly affect the franchisee’s decision to purchase the franchise, including background information on legal, financial and bankruptcy history.

The Franchises Act and regulations were developed to meet the specific needs of franchisees and franchisors in British Columbia, while aligning B.C.’s laws with the five other provinces with franchise regulations (Alberta, Manitoba, Ontario, New Brunswick and Prince Edward Island) to reduce red tape and bring consistency for franchisors across Canada, the release said.

To help with the transition to the new franchise legislation, the Province has created resource materials to help educate franchisees and franchisors. These materials will be available in four languages: Chinese (simplified and traditional), Punjabi and Korean:

• a checklist with a high-level overview of steps required to enter into a franchise agreement
• a “questions to ask” sheet prompting franchisees to seek specific information during discussions with franchisors
• an easy-to-read summary of the key points of the new Franchises Act