Updated August 2024
In Canada, it’s up to each province to create its own franchise laws. Currently, six out of the ten provinces have legislation specific to franchising, including New Brunswick. The other provinces with franchising regulations are:
Similar to the franchise laws in other provinces the New Brunswick Franchises Act stipulates that franchisors provide a disclosure document to franchisees, allowing them to make a well-informed decision. New Brunswick’s franchise regulation also includes some unique features, namely a mediation process.
What is Included in the New Brunswick’s Franchises Act?
Ultimately, the goal of all franchising regulation is to ensure transparency, fairness, and protection for both franchisees and franchisors. To this end, the New Brunswick Act includes:
- Disclosure Requirements: Franchisors must provide comprehensive disclosure documents to prospective franchisees.
- Right to Rescind: Franchisees can cancel the agreement if proper disclosure is not made within specified timeframes.
- Duty of Fair Dealing: Both franchisors and franchisees must act in good faith and deal fairly.
- Right to Associate: Franchisees have the right to form or join franchisee associations without interference.
- Remedies for Breach: Franchisees can seek damages for violations of the Act, including lack of proper disclosure or unfair dealing.
- Liability of Franchisor’s Associates: Franchisees can hold franchisors’ associates (like officers or directors) accountable for losses due to misrepresentation or non-disclosure.
2 Unique Elements to New Brunswick’s Franchises Act
#1 – Disclosure Regulations
While the disclosure regulations in New Brunswick are similar to other provinces, there are a few noteworthy differences:
- Delivering the Document – New Brunswick specific permits delivery of the disclosure document by courier or electronic means, which is not the case in all provinces.
- Preparing the Document – Franchisors can use disclosure documents prepared for use in other jurisdictions as long as the document contains a New Brunswick supplement that ensures compliance with the province’s franchising law.
- Table of Contents – The disclosure document must include a table of contents for any manual or a statement specifying where the manual, if any, can be inspected in New Brunswick.
- Franchisor’s Policies – A description of the franchisor’s policies and practices regarding internet or distance sales must be provided in the disclosure document.
- Current Franchisees & Businesses – In addition to providing a list of current franchisees, the franchisor must also include a list of current businesses of the same type as the franchise being offered that the franchisor currently operates in New Brunswick.
- Confidentiality Agreement – The act states that a confidentiality agreement does not qualify as a “franchise agreement” when it comes to the timing of the 14-day disclosure period. This allows franchisors to enter into limited confidentiality agreements with potential franchisees during this two-week window.
#2 – The Mediation Process
The most unique feature of the New Brunswick Franchises Act is the party-initiated dispute resolution process. It goes as follows:
- In the case of a dispute, one party may notify the other party of the nature of the dispute and the desired outcome.
- When such a notice is delivered, the parties must attempt to resolve the dispute within 15 days of receiving a dispute notice.
- If the parties are unable to come to a resolution, a notice to mediate may be delivered.
- Upon receiving this notice, the parties must follow the rules of mediation in the mediation regulation.
- The party that received the mediation notice can decline mediation if they provide a notice declining mediation.
- The notice to decline mediation must clearly explain why the party believes that the dispute is not fit for mediation.
- Mediation must begin within 45 days of when the mediator is appointed, unless the mediator specifies another agreed upon date.
- The mediator schedules the dates, times and locations of the mediation sessions and any pre-mediation conference.
- Both parties must deliver a statement of facts and issues not fewer than 10 days before the first scheduled mediation session.
- The mediator must terminate the mediation after 10 total hours unless both parties agree to extend it, and the mediator believes the dispute is likely to be successful with additional time added to the proceedings.
- Both parties share the cost of mediation equally unless otherwise agreed to in writing.
There are various issues that might initiate a dispute resolution process. A few examples include: termination of the Franchise Agreement, non-disclosure issues, brand compliance and standards, territorial encroachment, operational support, and more.
Looking to Buy a New Brunswick Franchise?
If you’re interested in buying a franchise in New Brunswick or in any other province, FranNet can help. Our expert franchise consultants will help you find the right franchise opportunity and walk you through the process of buying the franchise from start to finish. Schedule your free consultation today!