REGINA — Saskatchewan’s The Franchise Disclosure Act comes into force on June 30.
"The new legislation is designed to promote transparency and fairness between franchisors and prospective franchisees by ensuring that individuals considering opening a franchise have access to comprehensive and accurate information before entering into an agreement," Justice Minister and Attorney General Tim McLeod, KC, said.
Under the act, franchisors must provide a franchise disclosure document to prospective franchisees at least 14 days before any franchise agreement is signed and any payment is made.
The disclosure document must include all information, such as material facts about the franchise system, financial statements, copies of franchise agreements and any other documents the franchisee is required to sign.
The legislation also introduces ongoing disclosure requirements, in addition to several important statutory rights for franchisees, including:
- A right for franchisees to cancel the agreement within specified timeframes if the disclosure requirements are not met;
- A right of action for damages in cases of misrepresentation in the disclosure document; and
- A duty for both franchisors and franchisees to act in good faith and according to reasonable commercial standards, with the right to pursue legal remedies in the event they do not.
Saskatchewan is the seventh Canadian province to enact franchise disclosure legislation, joining Alberta, Ontario, Prince Edward Island, New Brunswick, Manitoba and British Columbia in establishing a regulatory framework for franchise relationships.
According to Sask. Justice, this updated framework aligns with franchise legislation in the other provinces, aiming to provide uniformity across jurisdictions. It applies to franchise operations conducted wholly or partly within Saskatchewan and reinforces the importance of accurate and timely disclosure, fair business practices and accountability.
This new legislation represents a significant step forward in strengthening the province's regulatory environment and supporting informed decision making for prospective franchisees, says Sask. Justice.
