Anonymised, illustrative composite. In one file (see the gift-card file), an Ontario retailer's loyalty-points breakage assumption held up, because no province was found lacking a gift-card no-expiry rule — every one of the ten has some version of it. What differs by province is loyalty points, and Quebec regulates those by name.
At a glance
A specialty retailer with stores in both Ontario and Quebec was sold by asset purchase. Its closing balance sheet carried a single, consolidated loyalty-points liability of $540,000, split roughly by store count between the two provinces — about $340,000 Ontario, $200,000 Quebec — presented net of a 15% breakage credit applied uniformly across the whole program.
The buyer's diligence team had, on a separate Ontario-only file, already confirmed that a retailer's loyalty-points breakage assumption is defensible there: Ontario's gift-card no-expiry rule, in O. Reg. 17/05, turns on a definition requiring the consumer to have paid directly for the voucher, and a loyalty point earned as a percentage of an ordinary purchase does not meet that definition. Applying that finding to this file's whole $540,000 liability, uniformly, was the mistake.
The Ontario finding is provincial, not national, and it does not even generalise across all ten provinces the way it was first assumed to. A survey of every province's consumer-protection regime found none lacking some version of the standard prepaid gift-card no-expiry rule — the premise that some province simply has no such rule does not hold. What actually differs province to province is not gift cards; it is whether loyalty points sit inside or outside that regime, and Quebec draws that line in the opposite place from Ontario.
Quebec's Consumer Protection Act regulates prepaid cards and loyalty programs as two separate, adjacent divisions of the same Act, added by different amendments seven years apart. The prepaid-card division, added in 2009, defines a “prepaid card” at s.187.1 as “a certificate, card or other medium of exchange that is paid in advance” — a payment-based gate structurally similar to Ontario's, and one that a free loyalty point would fail for the same reason. But Quebec did not stop there. A second division, added in 2017, defines and separately regulates loyalty programs, and it is that division — not the prepaid-card rule — that reaches the loyalty points in this file.
Total loyalty liability: $540,000, split $340,000 Ontario and $200,000 Quebec by store count. The seller's uniform 15% breakage credit, $81,000 in total, held up in full against the Ontario share ($51,000 of the $81,000) but not against the Quebec share ($30,000 of the $81,000). The buyer assumed the Quebec share's full $200,000 gross figure, a $30,000 increase in assumed liabilities isolated to the Quebec stores alone — the Ontario breakage assumption was untouched.
Quebec's Consumer Protection Act keeps the two regimes explicitly apart before it regulates either of them. The Act states plainly that “a contract for the sale of a prepaid card does not constitute a contract relating to a loyalty program” — the two divisions do not overlap, and a program surviving the prepaid-card definition's payment gate is not thereby cleared of the loyalty-program rule.
That second rule is unambiguous. Section 187.8 provides: “Subject to any applicable regulations, any stipulation providing that the exchange units received by the consumer under a loyalty program may expire on a set date or by the lapse of time is prohibited.” “Exchange unit” is defined at s.187.6 as “any form of benefit granted to a consumer that has an exchange value within the meaning of a loyalty program” — language broad enough to reach an ordinary points-per-dollar loyalty program without needing the points themselves to have been purchased for cash. Unlike the prepaid-card definition, s.187.8's prohibition is not gated on payment at all.
This is the opposite of the Ontario finding, not a variation on it. In Ontario, loyalty points escape the no-expiry rule because the applicable definition requires a direct payment the points never received. In Quebec, loyalty points are caught by a rule that was written specifically for them and does not ask whether anything was paid — it asks only whether the consumer received exchange units under a loyalty program. The same balance-sheet methodology, applied to the same kind of program, is correct in one province and wrong in the other because two different statutory tests are actually in play, not because one province is stricter across the board.
The purchase price adjustment schedule was revised to carry the Quebec share of the loyalty liability at its full $200,000 face value, with the 15% breakage credit reversed for that portion only. The Ontario share's breakage credit was left untouched, consistent with the earlier, Ontario-specific finding that no statute reaches loyalty points there.
Accepting the seller's uniform breakage figure would have left the buyer carrying a $30,000 understated liability specific to the Quebec stores, on a program that cannot legally shed the difference through the mere passage of time — the same structural risk the original gift-card file identified for Ontario's gift cards, arriving instead through Quebec's loyalty-program rule for a liability the Ontario analysis had cleared.
The tell was applying a single-province finding as if it answered a multi-province question, and doing so in the direction that assumed the more permissive answer was universal. The correction is not “check whether the province lacks a gift-card rule” — none of the ten does. It is “check whether the specific instrument in front of you (a prepaid card, or a loyalty program) is regulated by name in the province where it was issued,” because Quebec regulates one of those two instruments more broadly than Ontario does, not both.
A 30-minute call is enough to tell you whether AI pays for itself here.
Canadian small-business transaction data is not published anywhere, so most valuations in this country quote an American benchmark. The Deavo–Treadstone Acquisition Index is a daily record of Canadian listings built to replace that: asking-price distributions by province and city are published now, and days on market, departure rates and asking-to-sale spreads follow as the series lengthens. Leave an email and we will tell you as each measure lands.
No pitch, no listings. One email when the first report lands.
