Franchise law changes positive, but still more clarity needed, says lawyer – Law Times

Long-awaited amendments to the Arthur Wishart Act came into force on September 1, 2020. Law Times journalist Aidan Macnab discussed the changes to Ontario’s franchise law during an in-depth interview with Andraya Frith, Chair of Osler’s National Franchise and Distribution Practice Group. 

“What I would say about these amendments is that they have been a long time coming,” says Andraya, alluding to the uncertainty franchisors were experiencing with the legislation and the way it has been interpreted by the courts. “And at the same time, there is quite a bit more work to do, in order to truly modernize the Ontario franchise legislation.”

In particular, franchisors have been unclear about the extent and content of their franchise disclosure obligations. Their lawyers, explains Andraya, are always anxious that there’s something missing – even when the disclosure they provide is exhaustive.

“We do our best. But after the fact, the franchisee and their lawyer may argue that a particular piece of information was critical to their investment decision,” she continues. “And a court may ultimately agree with that. But that doesn’t provide the well-intentioned franchisor with the guidance that they need up front to make sure that they’re giving out that information.

“What I would say would be a really welcomed development in the legislation, is if the legislature could provide more clarity and certainty around the obligation to disclose ‘all other materials facts.’ … What are the categories of information? And what are the specific pieces of information that the franchisor must include in the disclosure document so that the franchisee can make an informed investment decision?”

In addition, Andraya says, franchise lawyers would like to see more certainty on the use of the rescission remedy as well as the obligation for franchisors to provide a customized disclosure document to each franchisee candidate.

To learn more, read Aidan Macnab’s full article, “Franchise law changes positive, but still more clarity needed, says lawyer,” in the September 23, 2020 issue of Law Times.