O. Reg. 418/20: GENERAL
filed July 16, 2020 under Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3
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made under the
Arthur Wishart Act (Franchise Disclosure), 2000
Made: July 16, 2020
Filed: July 16, 2020
Published on e-Laws: July 17, 2020
Printed in The Ontario Gazette: August 1, 2020
Amending O. Reg. 581/00
(GENERAL)
1. Clauses 3 (1) (a) and (b) of Ontario Regulation 581/00 are revoked and the following substituted:
(a) an audited financial statement for the most recently completed fiscal year of the franchisor’s operations, prepared in accordance with generally accepted auditing standards as set out,
(i) in the CPA Canada Handbook — Assurance,
(ii) by the Auditing Standards Board of the American Institute of Certified Public Accountants or the Public Company Accounting Oversight Board of the United States, as applicable, or
(iii) by the International Auditing and Assurance Standards Board;
(b) a financial statement for the most recently completed fiscal year of the franchisor’s operations, prepared in accordance with generally accepted accounting principles that meet the review and reporting standards applicable to review engagements as set out,
(i) in the CPA Canada Handbook — Accounting,
(ii) by the Financial Accounting Standards Board of the United States, or
(iii) by the International Accounting Standards Board; or
2. (1) Paragraph 9 of section 6 of the Regulation is amended by striking out “service mark”.
(2) Subparagraph 14 ii of section 6 of the Regulation is revoked and the following substituted:
ii. any other distributor using the trade-mark, trade name or logo or advertising or other commercial symbol that is owned by or licensed to the franchisor or the franchisor’s associate,
(3) Subparagraphs 14 iii and iv of section 6 of the Regulation are amended by striking out “service mark” wherever that expression appears.
3. The Regulation is amended by adding the following section:
7.1 (1) For the purposes of subclauses 5 (1) (b) (i) and 5 (5) (b) (i) of the Act, the prescribed amount is 20 per cent of the franchise fee, to a maximum of $100,000.
(2) A statement of material change shall include a certificate certifying that it,
(a) contains no untrue information, representations or statements, whether of a material change or otherwise; and
(b) includes every material change.
(3) A certificate referred to in subsection (2) shall be signed and dated by,
(a) in the case of a franchisor that is not incorporated, the franchisor;
(b) in the case of a franchisor that is incorporated and has only one director or officer, by that person; or
(c) in the case of a franchisor that is incorporated and has more than one officer or director, by at least two persons who are officers or directors.
4. Sections 9 and 10 of the Regulation are revoked and the following substituted:
9. (1) For the purposes of subclause 5 (7) (g) (i) and clause 5 (7) (h) of the Act, a total initial investment is determined by all of the franchisee’s costs associated with the establishment of the franchise, including,
(a) the amount of any deposits or franchise fees;
(b) an estimate of the costs for inventory, leasehold improvements, equipment, leases, rentals and all other tangible and intangible property necessary to establish the franchise; and
(c) any other costs or estimates of costs associated with the establishment of the franchise not listed in clause (a) or (b), including any payment to the franchisor, whether direct or indirect, required by the franchise agreement.
(2) For the purposes of subclause 5 (7) (g) (i) of the Act, the prescribed amount is $15,000.
(3) For the purposes of clause 5 (7) (h) of the Act, the prescribed amount is $3,000,000.
5. Clauses 11 (2) (a) and (b) of the Regulation are revoked and the following substituted:
(a) if the financial statements are audited, be prepared in accordance with generally accepted auditing standards as set out,
(i) in the CPA Canada Handbook — Assurance,
(ii) by the Auditing Standards Board of the American Institute of Certified Public Accountants or the Public Company Accounting Oversight Board of the United States, as applicable, or
(iii) by the International Auditing and Assurance Standards Board; and
(b) if a review engagement report has been prepared for the financial statements, be prepared in accordance with generally accepted accounting principles that meet the review and reporting standards applicable to review engagements as set out,
(i) in the CPA Canada Handbook — Accounting,
(ii) by the Financial Accounting Standards Board of the United States, or
(iii) by the International Accounting Standards Board.
Commencement
6. (1) Subject to subsection (2), this Regulation comes into force on the later of the day that subsection 4 (1) of Schedule 9 to the Cutting Unnecessary Red Tape Act, 2017 comes into force and the day this Regulation is filed.
(2) Section 4 comes into force on the later of the day that subsection 4 (2) of Schedule 9 to the Cutting Unnecessary Red Tape Act, 2017 comes into force and the day this Regulation is filed.