Owing in part to the advocacy efforts by the Ontario Bar Association Franchise Law Section over the past years, there are a number of key developments regarding the Arthur Wishart Act (Franchise Disclosure), 2000 (AWA) and General Regulation (O. Reg. 581/00). The Franchise Law Section made submissions in 2015 and 2017 and recently met with staff at the Ministry of Government and Consumer Services as well as the Business Law Modernization and Burden Reduction Council to advocate for these changes.
Effective September 1, 2020, the unproclaimed legislative amendments in the AWA will be brought into force. Regulatory amendments to the General Regulation (O. Reg. 581/00) under the AWA will also come into force on this same date, including regulatory amendments needed to enable the legislative amendments noted above.
Bringing the remaining unproclaimed legislative amendments in the AWA into force will, among other things:
- Clarify when certain exemptions from disclosure requirements under the AWA apply;
- Specify that franchisor disclosure obligations are not triggered by certain ancillary agreements, with certain exceptions; and
- Require statements of material change provided by a franchisor to include information prescribed by regulation.
You can find these changes reflected in the AWA here: https://www.ontario.ca/laws/statute/00a03
The amendments to the General regulation will:
- Clarify the accounting standards that can be used for financial statements referred to in the regulation;
- Specify certain information to be included in a statement of material change provided to prospective franchisees;
- Specify the threshold for a deposit payment under an agreement for which a franchisor would be exempt from disclosure obligations in certain circumstances;
- Specify the thresholds for exemptions from disclosure requirements based on “total initial investment” and the manner for determining “total initial investment” for such exemptions; and
- Make housekeeping amendments to update phrases and terms used in the regulation to align with the legislative amendments.
You can find the updated regulation available here: https://www.ontario.ca/laws/regulation/000581.
The amending regulation can be found here: https://www.ontario.ca/laws/regulation/r20418.