FREDERICTON (CNB) – The provincial government is giving companies in New Brunswick advance notice of a new law on franchises that will take effect Feb. 1, 2011.

The intent is to give companies time to learn about the Franchises Act and to learn what steps they may need to take to adapt.

The law will protect persons buying franchises in New Brunswick, ensuring information is provided to them before they start and giving better avenues of recourse if they encounter problems.

“The Franchises Act was passed in 2007 to bring greater fairness into the legal relationship between franchisors and franchisees,” said Justice and Consumer Affairs Minister Bernard LeBlanc. “It contains five key elements: a duty of fair dealing; the franchisees' right to form an association; the franchisor's duty of disclosure; a mediation procedure; and protection from being forced to litigate outside New Brunswick.”

The Department of Justice and Consumer Affairs has been developing the regulations under the act since 2007, and it consulted with stakeholders earlier this year.

“We received some good comments, and we have taken them into account,” said LeBlanc. “I am pleased with the result.”

The most significant change under the act will occur when a franchise is granted or renewed. The company granting the franchise will be required to provide a disclosure document with prescribed information that will enable the purchaser to make an informed decision about whether to buy in.

“This involves extra work up front, but the benefit comes later,” said LeBlanc. “Good information up front should lead to fewer disagreements and misunderstandings down the line. There is also a mediation procedure under the act, so if disputes do emerge, people will have this extra avenue of trying to sort it out without having to go to court.”

Details of the act and regulations are on the department's home page.

LINK:

•    Department of Justice and Consumer Affairs: www.gnb.ca/justice


23-08-10