Franchising in Quebec
Franchising in Quebec
Language
The Charter of the French Language contains a provision which states that contracts pre-determined by one party or contracts that contain printed standard clauses (e.g., franchise agreements), together with related documents, must be drafted in the French language.
Every person whose name is in a language other than French must disclose the French version of the name used in Quebec in carrying on its activities. In other words, anyone carrying on business in Quebec within the meaning of the Act must have a French name.
The Charter of the French Language also deals with issues relating to advertising, computer software, consumer rights, employment matters and commercial signage. With respect to commercial signage, public signs and posters and commercial advertising must be in French (however, English is permitted together with French provided that the French version of same is markedly predominant).
External Clauses
The province’s Civil Code of Quebec sets forth a series of rules, which protect against franchise agreements drafted in an incomprehensible or unreadable manner, agreements that contain abusive clauses and agreements that incorporate by reference documents that are not part of the actual contract signed between the franchisor and the franchisee (External clauses)
External clauses are clauses, which refer to and incorporate provisions not expressly included in the contract itself or in its schedules. The provisions of the typical franchise agreement relating to an operations manual are a good example of external clauses. The purpose of the Quebec legislature is to prevent a franchisee being bound by the provisions of a document, which it has not read or understood prior to signing it. Therefore, it is crucial for the franchisor to comply with this disclosure obligation by providing a copy of the operations manual at the time of execution of the franchise agreement. However, if the operations manual is particularly lengthy, it may be difficult to convince a court that the franchisee had the opportunity to read the entire manual at the time of execution of the franchise agreement. A less attractive alternative would be for the franchisor to provide a copy of the operations manual to the franchisee prior to the execution of the franchise agreement, subject to the franchisee’s execution of a Confidentiality/Non-Disclosure agreement in respect of its contents. The operations manual is the source of other difficulties, in that it is not a static document but is rather intended to evolve throughout the term of the franchise agreement. It could be argued in law that any amendment to the operations manual constitutes an amendment to the original franchise agreement; this would require the franchisor to comply again with the disclosure obligation each time an amendment is made to the operations manual. The difficulty arising from this interpretation is that, by is very nature, both parties must agree to an amendment at the time it is made. It is difficult to predict whether Quebec courts will take the same position as to minor amendments to operational standards, as they will with respect to amendments, which are major in nature, either by reason of the nature of the franchise business or the expenditure required from the franchisee to comply with such amendments. It should be noted that the courts are not given the power to rewrite external clauses; they can only be entirely upheld or declared null. The consequence is severe, as the nullity of external clauses relating to an operations manual would mean that the provisions of the manual no longer bind the franchisee.
Norman P. Friend
President
Franchise 101 Incorporated.
