A Look at Provincial Legislation for Protecting Franchisees: Manitoba

Dec 19, 2017 | General

So far, we’ve looked at overviews of the franchising legislation of Alberta and British Columbia. These are two of the six provinces within Canada that have legislation specific to franchises. This month, we’ll explore Manitoba’s franchising law.

The other three provinces that have franchising laws are:

  • New Brunswick
  • Ontario
  • Prince Edward Island

Like all franchising laws in Canada, The Franchises Act in Manitoba is meant to level the playing field between franchisor and franchisee and promote cooperation and transparency between the two parties.

It focuses on pre -sale disclosure, so potential franchisees can make the most informed decision possible; the right to association for franchisees, so all owners within the franchise can exchange information freely; and a duty of fairness, so both parties deal with each other in the fairest way possible.  

Franchise Disclosure Document

Manitoba’s franchising law has officially been on the books since late 2012. While it is similar in scope to most of the other franchise laws in Canada, one of the unique features about it is that in Manitoba, a franchisor can provide the Franchise Disclosure Document (FDD) in pieces rather than all at once.

If a franchisor wishes to provide an FDD in pieces rather than all together, it has to adhere to certain rules:

  • Mandatory risk warnings must be supplied first.
  • Pieces of information must be provided together in groups if they all pertain to the same thing (for example, all the info about the franchisor or the list of current franchisees must be provided all at once).
  • A specifically worded statement must appear at the top of each segment of the FDD to inform the recipient that it is just one portion of the overall document.
  • The signed certificate of the franchisor has to accompany the last portion of the FDD that is delivered.

Like other Canadian franchising laws, in Manitoba there is a mandatory 14-day cooling off period, which only begins once the final document of the FDD has been delivered to the potential franchisee. Before those 14 days of the cooling off period are up, though, franchisors can accept a deposit of up to 20% of the initial franchising fee up to a maximum of $100,000. The deposit is fully refundable if the potential franchisee backs out before the end of the cooling off period. During that cooling off period, the franchisor and franchisee can also enter into confidentiality agreements and agreements about location selection.

Franchise Agreement

In Manitoba, the franchise agreement between the two parties is meant to outline how the relationship will work and who is responsible for what. This document has to address the following:

  • Advertising budgets and the territory to be covered by the franchisee.
  • How a franchisor’s protected trademarks can be used by the franchisee.
  • Lease agreements, particularly that a franchisee’s lease must be similar to the duration of the franchising agreement.
  • Instructions on doing business with the franchisor’s preferred suppliers and vendors.
  • Expected behavior that will be in line with the practices and policies of the franchise.  

Although it is quite similar to other franchising laws in Canada, there are a few differences in Manitoba’s law that both franchisors and franchisees should be aware of. Before entering into any type of agreement with each other, both parties should make themselves aware of the full text of The Franchises Act if they plan to open a franchise business in the province. For help finding a franchise in Manitoba or in any other province, sign up for a free FranNet franchise search and consultation today and let us help you find your perfect franchising match.