In our ongoing series exploring the various franchising laws in Canada, we’ve thus far looked at the franchising legislation of Alberta, British Columbia, Manitoba and Ontario. These are four of the six provinces within Canada that have legislation specific to franchises. This month, we’ll check out an overview of New Brunswick’s franchising law.
The other province that has franchising legislation in Canada is Prince Edward Island, which we will look at next month.
New Brunswick’s Franchises Act is similar to Ontario’s Arthur Wishart Act, but it does have some crucial differences from the Ontario legislation and that of other provinces, namely the mediation regulation that the province has included in its franchising law.
Disclosure
The disclosure regulation in New Brunswick’s act requires disclosure similar to other provinces that have franchising regulations. However, there are some noteworthy differences in the maritime province.
For example:
- Delivery of the disclosure document by courier or electronic means is specifically permitted, which is not always the case in Canada.
- Disclosure documents prepared for use in other jurisdictions can be used in New Brunswick as long as the document contains a New Brunswick supplement that brings it into compliance with the province’s franchising law.
- 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.
- A description of the franchisor’s policies and practices regarding internet or distance sales must be provided in the disclosure document.
- 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.
These are the main differences that New Brunswick requires, but there are other, more minor ones. Franchisors must ensure they comply with all the unique requirements of the New Brunswick disclosure requirements or they’ll risk a claim for rescission or misrepresentation.
New Brunswick’s Franchise 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.
Mediation
Perhaps the most unique feature of this eastern province’s franchising act is the party-initiated dispute resolution process.
The act says that 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 regulation does permit the party that received the notice of mediation to decline mediation if they provide a notice declining mediation. The notice to decline mediation must spell out why the party that issued it believes the dispute is not fit for mediation. This opens up the possibility for franchisors and other parties to be held accountable in fair dealing actions if their reasons for wanting to forego mediation are found to be especially dubious.
Mediation must begin within 45 days of when the mediator is appointed, unless the mediator themselves specifies another date with both parties’ agreement. The mediator schedules the dates, times and locations of the mediation sessions, plus any pre-mediation conference and conducts the mediation sessions in the manner they deem appropriate.
For their part, the parties must deliver a statement of facts and issues not fewer than 10 days before the first scheduled mediation session. The mediator is required to 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. The parties share the cost of mediation equally unless otherwise agreed to in writing.
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