Prince Edward Island is the most recent province to require pre-sale disclosure in the sale of franchises. Until recently, only the Provinces of Alberta and Ontario had franchise legislation, requiring, among other things, that a franchisor provide a prospective franchisee with a disclosure document prior to entering into a franchise agreement.
Although the PEI legislation came into force on July 1, 2006, those provisions relating to the delivery of a disclosure document will not come into force until on January 1, 2007. At that time franchisors granting a franchise in PEI will be required to provide a prospective franchisee with a disclosure document prior to the franchisee signing any agreement related to the franchise or paying any money to the franchisor.
The Province of New Brunswick may follow PEI’s lead on the east coast. The consultation period on Bill 6, the Franchises Act (New Brunswick) was recently closed and a final draft of the proposed legislation is expected to be introducted during the fall session of the New Brunswick legislature.