A franchisee reselling a unit in British Columbia or Manitoba usually owes no disclosure document, because section 5(8)(a) of BC’s Franchises Act and section 5(11)(a) of Manitoba’s The Franchises Act each exempt a grant by a franchisee on the same four conditions. Almost everything around that exemption differs — the size thresholds, the delivery rules, and the rescission notice.
Key takeaways
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Both Acts capture a share sale. BC’s section 1(1) provides that an interest in a franchise “includes the ownership of shares in the corporation that owns the franchise”, and Manitoba’s section 1(1) carries those words in a definition of its own. Selling the holding company is inside each Act, not outside it.
Because a reselling franchisee grants a franchise, each Act needed an express release for one. BC’s section 5(8)(a) exempts “the grant of a franchise by a franchisee” on four subclauses; Manitoba’s section 5(11)(a) carries the identical structure. Both are cumulative: fail one subclause and the whole of section 5 applies.
Three of the four match word for word. The grant must be “for the franchisee’s own account”; “in the case of a master franchise, the entire franchise is granted”; and “the grant of the franchise is not effected by or through the franchisor”. Only the first differs, and only in compression: Manitoba excludes “a director, officer or employee of either of them”.
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BC’s section 5(9) provides that “a grant is not effected by or through a franchisor merely because” either “the franchisor has a right, exercisable on reasonable grounds, to approve or disapprove the grant”, or “a fee must be paid to the franchisor in an amount set out in a franchise agreement or in an amount that does not exceed the reasonable actual costs incurred by the franchisor to process the grant”.
Manitoba’s section 5(16) is the same harbour with the same two limbs: an approval right “exercisable on reasonable grounds”, and a fee “in an amount set out in the franchise agreement” or one limited to the franchisor’s reasonable actual processing costs. Nothing else is listed in either province, so a franchisor that markets the location or takes a percentage of the price is outside it.
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This is the divergence most likely to catch a seller who knows the Ontario rule. BC’s section 5(8)(i) exempts a grant “if the prospective franchisee is investing an amount greater than a prescribed amount in the acquisition of the franchise”, and section 10 of the Franchises Regulation sets it: “the prescribed amount is $5 million”.
Manitoba does the reverse. Section 5(11)(g) exempts a grant where the buyer “is required to make a total annual investment to acquire and operate the franchise in an amount that does not exceed the prescribed amount”, and section 10 of its regulation sets that at “$5,000”. BC exempts large deals, Manitoba tiny ones; neither has the other’s.
Ontario has both ends, in clauses 5(7)(g) and (h), and sections 9(2) and 9(3) of O. Reg. 581/00 prescribe “$15,000” and “$3,000,000”. A $12,000 resale that is size-exempt in Ontario has no size exemption in BC, and a $6 million Manitoba deal has none where the same deal in BC would.
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The short-term exemption is the next sharpest gap. BC’s section 5(8)(g) stands alone: an agreement that “is valid, or would be valid, for one year or less” and “does not involve the payment of a non-refundable initial franchise fee, renewal fee or extension fee”. Manitoba’s section 5(11)(h) requires that and that “the franchisor or franchisor’s associate provides location assistance to the franchisee”.
The insolvency exemption differs by one office. BC’s section 5(8)(d) covers a grant “by an executor, administrator, sheriff, receiver, trustee, trustee in bankruptcy, liquidator or guardian”; Manitoba’s section 5(11)(d) lists the same offices without a liquidator.
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Clause (a) exempts a grant by a franchisee and says nothing about a grant by the franchisor. On the ordinary resale the buyer signs the franchisor’s current-form agreement rather than the seller’s paper, and that signature is a fresh grant carrying the franchisor’s own duty.
BC’s section 5(1) requires that “the prospective franchisee must have received the disclosure document at least 14 days before the earlier of” signing and paying consideration. Manitoba’s sections 5(1) and 5(2) split it: the document “must be received by the prospective franchisee at least 14 days before” the same events, “whichever is earlier”.
A deposit starts that clock unless it is small enough, and the caps differ. Section 11 of BC’s regulation sets it at “20% of the initial franchise fee” with no stated ceiling; Manitoba’s sets “20% of the initial franchise fee, to a maximum of $100,000”, matching Ontario’s section 7.1(1).
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BC’s section 5(3) is absolute: “A disclosure document must be delivered as one complete document and delivered at one time.” Agreements on Monday and financials on Thursday is not late disclosure in BC; on those words it is not delivery.
Manitoba contemplates the opposite. Its section 5(3) provides that if the document “is not delivered as one document, the requirement under subsection (2) is not met until the date of the delivery of the last document”, and section 4 of the regulation sets the rules that follow: the risk warnings “must be provided first”, and “the certificate of franchisor must be included with the last part”.
The channels differ too. BC’s section 5(2) allows delivery “personally, by email or by any other prescribed method”; Manitoba’s section 5(4) names “registered mail, fax or any other prescribed method”, and its regulation requires an electronic one to carry “no links to or from external documents or content”.
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The two windows match. BC’s section 6 allows rescission “without penalty or obligation, within 60 days after receiving a disclosure document” that was late or deficient, and “within 2 years after entering into the franchise agreement, if a franchisor never provided a disclosure document”. Manitoba’s section 6 runs the same two periods.
When the notice bites is where they separate. Manitoba fixes the dates in the Act itself: under section 6(4) a notice is effective “on the day it is delivered personally”, “on the fifth day after it was mailed”, “on the day it is sent by fax, if sent before 5:00 p.m.”, or “on the day after it was sent by fax, if sent at or after 5:00 p.m.”. Posting on day 59 of the 60 does not stop the clock.
BC deems only one method in the Act. Section 6(4) makes a notice effective “if delivered personally, on the day the notice is delivered”, and otherwise as the regulations determine. Section 9 adds one route, “prepaid courier or an equivalent that permits delivery by a prepaid method, with tracking and confirmation of receipt”. There is no postal deeming in BC at all.
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The consequences are near-identical. Within 60 days both Acts require the franchisor to refund money received, buy back inventory, supplies and equipment “at a price equal to the purchase price paid by the franchisee”, and compensate the franchisee for losses “incurred in acquiring, setting up and operating the franchise”. Neither asks whether the defect caused the loss.
BC adds two rules Manitoba does not have. Under section 11, “A franchisee is not required to elect between rescission under section 6 and the statutory rights of action for damages”, and a franchisee “is not entitled to be indemnified by way of damages in respect of a loss recovered through rescission of a franchise agreement”. Manitoba’s section 9 carries only the general non-derogation rule.
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Waivers are where a seller feels the difference at closing. Both Acts void a purported release of a right under the Act, but BC’s section 13(2) provides that this “does not apply to a waiver or release by a franchisee, or by a prospective franchisee, made in accordance with a settlement of an action, claim or dispute”. Manitoba’s section 11 has no equivalent.
The defendant list is the same in both; the broker definition is not. Manitoba’s covers a person who acts “on behalf of the franchisor”. BC’s covers a person “who grants, markets or otherwise offers to grant a franchise”, without that qualifier. Whether BC’s wider words reach a seller-side business broker is not settled here and is not asserted.
Check the Act reaches the deal at all. BC applies where an agreement was “entered into on or after the coming into force of this section” and the business is “wholly or partly in British Columbia”; Manitoba’s section 2(1) where it “is operated, or is to be operated, partly or wholly in Manitoba”, its consolidation recording that “S.M. 2010, c. 13 was proclaimed in force October 1, 2012”. BC’s regulation was “Deposited October 4, 2016 effective February 1, 2017”.
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Name the subclause you rely on, in writing, before the offer goes firm. Both burden provisions are unforgiving: BC’s section 14 puts the onus on “the person claiming the exemption or exclusion”, Manitoba’s section 12 on “the person claiming it”. A closing file silent on which exemption applied is an absence the claimant has to fill later.
Then check the franchisor’s position separately from your own: a failure there gives your buyer two years to unwind a business you were already paid for. Treadstone Law’s notes on BC and Manitoba franchise resales both make the same operational point — the exemption is read narrowly and confirmed at intake, never assumed — and its Vancouver and Winnipeg pages walk the consent and lease-assignment path beside it. None cites a section number, which is what this page is for. For Ontario and Alberta, read what you must disclose when selling a franchise.
Usually not, if four cumulative conditions are met: the grant is for the franchisee’s own account, the entire master franchise is granted where applicable, the grant is not effected by or through the franchisor, and (in Manitoba) no director, officer or employee of either party is involved. Miss any one condition and full disclosure applies.
Not on its own. Both provinces allow the franchisor a right to approve or disapprove the grant on reasonable grounds, plus a processing fee limited to its reasonable actual costs, without that involvement counting as the franchisor effecting the grant. Marketing the location or taking a percentage of the price would fall outside the safe harbour.
No — on an ordinary resale the buyer typically signs the franchisor’s current-form agreement, which is a fresh grant carrying the franchisor’s own disclosure duty, separate from the exempt franchisee-to-buyer transaction. The resale exemption covers a grant by the franchisee; it says nothing about a grant made directly by the franchisor.
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