Fair dealing duty (franchise)
The franchise duty of fair dealing is a duty that provincial franchise statutes, including Ontario’s and British Columbia’s, impose on each party to a franchise agreement. In Ontario it applies to performing and enforcing the agreement and includes acting in good faith and in accordance with reasonable commercial standards, and a breach carries a right of action for damages.
In both Acts the duty applies to the franchisor and the franchisee alike, and the statute, not the parties’ drafting, puts it into every franchise agreement. A buyer who becomes a party to a franchise agreement covered by either Act owes the duty and can rely on it.
What the statutes say
Section 3 of Ontario’s Arthur Wishart Act and s. 3 of British Columbia’s Franchises Act both impose the duty on each party, give a right of action for damages for breach, and say the duty includes acting in good faith and in accordance with reasonable commercial standards. British Columbia’s version adds that it applies in exercising a right under the agreement. The Canadian Franchise Association notes that several provinces have such duties.
Contracting around it
Under s. 11 of the Ontario Act, a purported waiver or release by a franchisee of a right given by the Act is void. Ask a lawyer how that applies to any release in the transfer paperwork. See the Arthur Wishart Act and, for resales, how the Act applies to a franchise resale.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Government of OntarioGovernmentArthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3
- 02Government of British ColumbiaGovernmentFranchises Act, S.B.C. 2015, c. 35
- 03Canadian Franchise AssociationIndustryFranchise Disclosure Legislation across Canada
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.