Each spring, franchisors across the country turn their attention towards updating their Canadian franchise disclosure documents (FDD) and related franchise agreements.
It is always imperative for franchisors to review and revise their FDD to ensure it is updated for a variety of necessary items, such as the inclusion of up-to-date, compliant financial statements. However, this year's annual update is of increased importance.
As you may have seen from past newsletters, there are two important legislative changes currently impacting the Canadian franchise landscape: 1) new French language laws in Quebec, and 2) revisions to Canada's federal Competition Act.
While franchisors with a calendar year fiscal year-end (i.e., December 31, 2022) typically have 180 days from the end of December (unless financial statements are available earlier) as the hard and fast deadline for FDD updates, there is added urgency this year given that the new French language laws come into force on June 1, 2023, and the Competition Act changes, which can give rise to criminal liability, come into force on June 23, 2023.
If an FDD and/or FA is not yet updated or otherwise ready to be utilized, a small amount of effort by counsel and the franchisor can provide the franchisor with an up-to-date and legally compliant FDD and FA that can greatly minimize the franchisor's risk of a claim for non-compliance.
Remember that the provinces with a franchise law are Alberta, British Columbia, Manitoba, New Brunswick, Ontario, and Prince Edward Island, but the Competition Act changes apply in all provinces and territories in Canada, regardless of whether or not such location has a franchise statute.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
