Franchising 2025

CANADA Trends and Developments Contributed by: Melissa Cattini and Ahmed Malik, MLT Aikins

Recent legal developments in the franchising space across Canada demonstrate that franchise law remains dynamic and ever-evolving. Notable expansion to the scope and nuance to interpretation of franchise dis - closure requirements and increased scrutiny of con - duct for franchisors and franchise systems is ushering in a phase of complexity in compliance practices. The current era of franchise law is defined by heightened regulation, scrutiny and a growing interplay between changing economic trends and continued technologi - cal advances across the country and the globe. This edition of Trends and Developments begins with legislative updates. Saskatchewan’s newly-enacted (but not yet in force) Franchise Disclosure Act (“the Saskatchewan Act”) and proposed Regulations aim to enhance cohesion across the regulated provinces of British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Prince Edward Island (collectively, the “Regulated Provinces”), while contemplating certain unique and nuanced procedural obligations of which franchisors should be aware. Next, we turn to Manitoba’s response to the recent Competition Act amendments – ie, the prohibition of certain restrictions and property controls within the commercial leasing context, in contrast with the fran - chise sector’s historical reliance on exclusivity cov - enants and franchisee expectations of territorial pro - tection. We then touch on British Columbia’s recently enacted Business Practices and Consumer Protection Amendment Act (BPCPPA), which introduces changes with implications at the franchise system and fran - chisee-to-consumer level. We go on to review two Ontario cases – Re: The Body Shop Canada Limited (CV-24-00723586-00CL, Endorsement dated December 14, 2024) (“TBS Canada”),and 2355305 Ontario Inc. v Savannah Wells Holdings Inc., 2025 ONCA 505 (“Jayasena”), provid - ing insight into how fact-specific contexts can qualify or exempt disclosure obligations and emphasising the importance of a considered approach to compliance in the applicable circumstances. Finally, we conclude with a brief discussion of parallel developments in economic volatility and the prolifera - tion and mandate of technology and AI and the poten -

tial implications for franchise systems in 2025. Such developments bring new challenges and opportunities for franchise systems looking to operate proactively and strategically. Saskatchewan’s Franchise Disclosure Act On 8 May 2024, the Saskatchewan Act received Royal Assent, with The Franchise Disclosure Regulations (the “Saskatchewan Regulations”) published on 16 April 2025 and expected to come into force in late 2025 or early 2026. The Saskatchewan Act will align Saskatchewan with other Regulated Provinces requir - ing mandatory franchise disclosure, but includes nota - ble distinctions and nuances that franchisors must understand when operating or planning to operate in the province. Saskatchewan’s proposed investment threshold, simi - lar to that of British Columbia, is set at CAD5 million, which exempts franchisors from the requirement to provide a disclosure document (Section 6 (8)(i) of the Saskatchewan Act) if the prospective franchisee is investing an amount greater than this threshold. This threshold is higher than Ontario’s CAD3 million thresh - old, limiting the ability of franchisors to rely on disclo - sure exemptions below that level when operating in Saskatchewan. The Saskatchewan Act and Saskatch - ewan Regulations also require explicit disclosure of proximity policies and how multiple outlets under the same brand are governed (Subsection 12–14 of the Saskatchewan Regulation). While most provinces require financial statements to be prepared with the generally accepted accounting principles (GAAP) of the jurisdiction in which the fran - chise is based, Saskatchewan mandates compliance with GAAP applicable to the franchisor’s jurisdiction (Section 7 (3) of the Saskatchewan Regulations). This subtle distinction could be easily overlooked, and franchisors may risk non‑compliance unless their financial statements are reviewed and prepared based on this requirement. The prescribed risk-warning language in Saskatch - ewan also diverges, omitting the term “expert” and requiring Saskatchewan’s statement to appear sep - arately from those of other Regulated Provinces in multi-jurisdictional disclosure documents.

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