With the coming into force of Alberta's Notaries and Commissioners Act (Alberta), effective April 30, 2015, the Guarantees Acknowledgement Act (Alberta) is amended in several ways important to franchisees and franchisors.
The amendments provide, inter alia, that any guarantee from an individual not
obtained in compliance with the following rules is unenforceable:
- 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; and
- 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
provided for such services, which was previously capped at $5.00.
These amendments are relevant to franchisors and franchisees
as franchise agreements often require the principal of a corporation, where the
franchisee is a corporation, to personally guarantee the corporate franchisee’s
obligations under the franchise agreement. Franchisors should update any
existing acknowledgement certificate they use in respect of guarantees from
individuals and make any corresponding amendments to their franchise disclosure
document.