After completing its third reading on April 16, 2024, Saskatchewan’s Franchise Disclosure Act (The “Franchise Disclosure Act”) received royal assent on May 8, 2024. The Franchise Disclosure Act will now come into force by an Order of the Lieutenant Governor in Council at a currently unknown date.
For additional details on The Franchise Disclosure Act, and its progression through the Saskatchewan legislature, please see the following blogs:
- Saskatchewan’s Franchise Disclosure Act receives its third reading
- Review of the Franchise Disclosure Act by the Committee
- Second reading by the Government of Saskatchewan
- How the Franchise Disclosure Act measures up to franchise disclosure legislation in other provinces
- What are the requirements of the Franchise Disclosure Act and how it impacts franchisors
For discussion of key requirements of franchise disclosure legislation across Canada and considerations when building your franchise system, please see the following blogs:
- Is a franchising model right for your business?
- Which franchise model is best for you?
- The duty of good faith and fair dealing
- When a director or officer of a franchise may be liable
- What are material facts and changes? Why does disclosure matter in franchise law?
- Lease riders – maintaining control over leased franchise locations
- 2023 case highlights
What happens next
There is uncertainty as to when The Franchise Disclosure Act will come into force and, as noted in our earlier blog, Regulations have yet to be published. The Regulations are key to clarifying franchisor disclosure obligations and are expected to set out particulars including, for example, permissible methods for franchisors to deliver disclosure documents to franchisees.
Without Regulations to accompany The Franchise Disclosure Act, as drafted, only personal delivery of disclosure documents is expressly authorized. Other disclosure requirements (form and substance) are left unclear. As a result, it is most likely that the Government of Saskatchewan will publish Regulations prior to the legislation coming into force. Such an approach is consistent with that taken across other provincial legislatures when enacting franchise disclosure legislation.
Similarly, the Saskatchewan legislature has previously indicated an intention to closely follow franchise disclosure legislation across Canada, recognizing the need for consistency for franchisors doing business across Canada. This is reflective of how The Franchise Disclosure Act closely mirrors British Columbia’s franchise disclosure legislation, being the most recent iteration of franchise disclosure legislation. As a result, it is likely that the Regulations will closely resemble and draw language from franchise disclosure regulations in jurisdictions across Canada, including British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Prince Edward Island.
What franchisors can do to prepare
Leading up to The Franchise Disclosure Act coming into force, we recommend that local and national franchisors:
- Review their existing franchise agreements and form of franchise agreement to ensure that the agreements meet the requirements of The Franchise Disclosure Act
- Prepare a disclosure document or refine those documents previously supplied on an “information only” basis to comply with the requirements of The Franchise Disclosure Act
- Ensure that their current policies and practices align with The Franchise Disclosure Act and do not restrict the right of franchisees to associate with one another
- Engage legal counsel to ensure compliance with the legislation and a smooth transition as soon as it comes into force
Our Franchise Practice Group will continue to monitor the developments in relation to The Franchise Disclosure Act and associated Regulations. It is strongly recommended to consult with experienced franchise counsel to understand how The Franchise Disclosure Act will impact emerging as well as existing and operating franchise businesses (by that or any other name) in Saskatchewan, and what that may mean in terms of practical next steps to ensure compliance with the legislation.
MLT Aikins has extensive experience advising franchisors including with respect to structuring and strategy for implementation of systemwide disclosure updates and franchise agreement changes, developing and updating forms of franchise agreements, disclosure documents, and managing enforcement and dispute resolution processes in Western Canada. Contact one of our franchise lawyers to learn more.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.