Franchises and CASL: Are You Prepared?

Franchises and Canada’s Anti-Spam Laws: Are You Prepared?

As a current or potential Canadian franchisee, you need to be familiar with many Canadian business laws, and one set you should know in particular is Canada’s anti-spam legislation. The CASL's purpose to is promote Canadian economy efficiency by discouraging businesses from relying on electronic communication for commercial activities, but in truth, it can have more consequences for franchises because of the uniqueness of the business model.

CASL in a nutshell

At its core, CASL doesn't allow the sending of commercial electronic messages, such as emails and texts, without the express or implied consent of the receiver. Express consent means the receiver opted in or agreed to receive messages, but implied consent is murkier. An existing business relationship, such as the receiver's purchase of goods and services from the sending business within the last two years, is generally considered implied consent.

The penalties for CASL violations are steep. According to the Government of Canada's official website, an individual offender can face penalties of up to $1 million dollars, and that figure climbs to $10 million dollars for businesses.

What does this mean for franchises?

Franchises, like any businesses, are impact by CASL in terms of how they communicate with customers. This means keeping up-to-date contact lists in your marketing and sales areas and ensuring that unsolicited emails, texts and other electronic communications are not going out of your businesses at any time.

According to The Financial Post, just about the only section of CASL that recognizes the franchise business model is an allowance for messages between franchisors and franchisees and from franchisee to franchisee. One specific area of CASL concern for franchises is that most transactions take place between the customer and seller at the franchisee level and not between the franchisor and customer. If you drop your business card into a bowl for a free lunch drawing at a local franchise food chain, for example, you did give the franchisee implied consent under CASL but not the franchisor.

A franchisee can try to get consent on behalf of his or her franchisor, but generally speaking, if the main sender of a message is collecting consent on behalf of a third party - the franchisor in this case - that third party still needs express consent from the receiver. One way to address this issue is that any time a customer is giving consent to a franchisee, there should be a reference included that states he or she is also agreeing to receive communications from the franchisor.

Whether you're hunting for a franchise or are already a franchisee, it's absolutely necessary to keep CASL in your mind when it comes to your system, sales and customer communications. By being on top of the rules, you can avoid potentially devastating penalties for violation later.