Franchise & Distribution Law

Alberta Changes its Laws on Guarantees

Alberta LegislatureWhen Alberta’s Notaries and Commissioners Act (Alberta) became effective on April 30, 2015, the Guarantees Acknowledgement Act (Alberta) was amended in several ways that are important to franchisees and franchisors.

The amendments provide, inter alia, that any guarantee obtained from an individual that does not comply with both of the following rules is unenforceable.

  1. Each individual that provides a guarantee must appear before an active practicing lawyer and sign a certificate in a prescribed form in the presence of such lawyer acknowledging that such person has signed the guarantee. Signing in front of a student-at-law or notary public is no longer sufficient.
  2. The lawyer must be satisfied and certify that the individual guarantor is aware of, and understands, the contents of the guarantee.

The Notaries and Commissioners Act (Alberta) also removes the limitation on the fees to be changed for such services, which were previously capped at $5.00.

These amendments are relevant for franchisors and franchisees because principal(s) of a franchisee corporation are often required to personally guarantee the corporate franchisee’s obligations under the franchise agreement. Franchisors should update their existing Canadian/Alberta documentation to ensure that the acknowledgement certificate (used in respect of guarantees given by individuals) and franchise disclosure document reflect the new requirements.

View this article on Lexology.

.Andrae Marrocco’s Lexology contributor profile.

This article is published to inform clients and contacts of important developments in the field of franchise and distribution law. The content is informational only and does not constitute legal or professional advice. We encourage you to consult a Dickinson Wright attorney if you have specific questions or concerns relating to any of the topics covered here..

Standard