Franchisors should welcome recent amendments to the Regulations under Ontario’s franchise-specific legislation permitting franchisors to deliver disclosure documents mandated by the Act electronically and by prepaid courier.
Prior to July 1, the Arthur Wishart Act (Franchise Disclosure), 2000 (the “Act”) provided that a disclosure document “may be delivered personally, by registered mail or by any other prescribed method”. Since most disclosure documents were large enough to exceed the weight requirements for delivery by registered mail, franchisors were often left with no choice but to deliver hard copies of the disclosure document personally.
Effective July 1, 2016, franchisors are permitted to deliver disclosure documents electronically if the following requirements are met:
- The disclosure document must be delivered in a form that enables the recipient to view, store, retrieve and print it.
- The disclosure document contains no links to external documents or content.
- The disclosure document contains an index for each separate electronic file of which the disclosure document consists, where each index sets out:
(i) the file name, and
(ii) if the file name is not sufficiently descriptive of the subject matter dealt with in the file, a statement of that subject matter, and
- the franchisor receives a written acknowledgment of receipt from the prospective franchisee.
The amendments provide no guidance on acceptable forms of written acknowledgment. For example, is a “read receipt” enough? Will email replies from the prospective franchisees that they have received the disclosure documents suffice? Unfortunately, further clarity may have to wait for guidance from our courts.
The Regulations were also amended to permit for delivery of disclosure documents by courier, provided that the franchisor pays the costs of such delivery. For franchisors who are skeptical about electronic delivery, this amendment should provide some a welcome alternative.
Finally, the recent amendments also provide that franchisees may deliver a notice of rescission by prepaid courier.
These amendments help modernize Ontario’s franchise laws and bring them in line with franchise legislation in other provinces that have franchise-specific laws in place. Franchisors and their management teams will now have a number of options for effective delivery of franchise documents.
Louis Vouloukos 905.452.6883 firstname.lastname@example.org