13Duration of franchise agreements

#### 13 Duration of franchise agreements (1) A corporation shall not enter, as franchisor, into a franchise agreement the term of which does not comply with the requirements of this section. (2) Subject to subsection (6), the term of: (a) a franchise agreement entered into otherwise than by way of renewal, where the franchisee has produced to the franchisor, before entering into the agreement, evidence reasonably sufficient to show that he is a person with prescribed experience; or (b) a franchise agreement entered into by way of renewal, other than an agreement referred to in subsection (4); shall be not less than 3 years. (3) The term of a franchise agreement, other than an agreement referred to in paragraph (2)(a) or an agreement entered into by way of renewal, shall be one year or less, or 3 years or more. (4) Subject to subsections (5) and (6), where: (a) a corporation enters, as franchisor, into a franchise agreement by way of renewal; and (b) the term of the original agreement amounts, or the terms of the original agreement and of any previous renewal amount in the aggregate, to a period of more than 6 years and less than 9 years; the term of the agreement so entered into shall be a period that is not less than the difference between the period referred to in paragraph (b) and 9 years. (5) In ascertaining the length of the term of an agreement for the purposes of paragraph (4)(b), so much of the term of the agreement as has occurred at a time when this Act did not apply to the agreement shall be disregarded. (6) Where: (a) a corporation proposes to enter, as franchisor, into a franchise agreement; (b) the marketing premises to which the proposed agreement relates are held by that corporation or a related corporation as lessee under a lease in respect of which the lessor is not a corporation related to the lessee; and (c) the term of the proposed agreement would, but for this subsection, be required by subsection (2), (3) or (4) to extend beyond the expiration of the term of the lease; the term of the proposed agreement shall be a period expiring immediately before the expiration of the term of the lease. (7) Where, by reason of the operation of subsection (6), the term of a franchise agreement entered into by a corporation is less than it would otherwise have been and: (a) the corporation or a related corporation becomes the owner of the reversion of the marketing premises, whether by merger or otherwise; or (b) after the expiration of the term of the lease referred to in subsection (6), the corporation or a related corporation continues to hold the marketing premises as lessee by holding over or otherwise; then, unless the franchisee serves on the corporation a notice in writing terminating the agreement, the agreement has effect, by force of this subsection, as if the corporation and the franchisee had agreed to the extension of the term of the franchise agreement for a period expiring: (c) where paragraph (a) applies—at the expiration of the period that, but for subsection (6), would have been the minimum term of the agreement provided by subsection (2) or (4), as the case may be; or (d) where paragraph (b) applies: (i) at the expiration of the period referred to in paragraph (c); or (ii) immediately before the expiration of the period during which the corporation or a related corporation holds the premises or, where there are 2 or more such periods, of the later or latest of those periods; whichever is the sooner. (8) Where: (a) a franchise agreement containing provisions of the kind referred to in paragraph (b) of the definition of franchise agreement in subsection 3(1) is extended by virtue of subsection (7); and (b) the rate of the rent payable by the franchisor in respect of the period of the extension under the lease of the marketing premises exceeds the rate of the rent that was payable by the franchisor or a related corporation under that lease or another lease of the marketing premises in respect of the corresponding period ending immediately before the commencement of the period of the extension; the rate of the amounts payable by the franchisee under the agreement in respect of the possession, occupation or use of the marketing premises may, to take account of the increased rate of that rent, be increased to such extent as is agreed upon between the franchisee and the franchisor or, failing agreement, as is determined by a court. (9) Where the term of an agreement is extended by virtue of subsection (7), any amount payable by the franchisee under the agreement (other than an amount to which subsection (8) applies or an amount payable in respect of motor fuel or other stock in trade) and calculated by reference to the full period of the term of the agreement before the extension shall be deemed to be increased by an amount that bears to the first‑mentioned amount the same proportion as the period of the extension bears to that full period. (10) Where a corporation purports to enter into a franchise agreement in contravention of a subsection of this section or this Act commences to apply in relation to an existing franchise agreement whose term contravenes a subsection of this section, the franchise agreement is not thereby invalidated, but the term of the agreement is: (a) in the case of a contravention of subsection (3): (i) if the marketing premises are held by that corporation or a related corporation as lessee under a lease in respect of which the lessor is not a corporation related to the lessee and the term of the lease will expire less than 3 years after the commencement of the agreement —a period expiring immediately before the expiration of the term of the lease; or (ii) if subparagraph (a)(i) does not apply—3 years; or (b) in any other case—the term, or the minimum term, as the case may be, provided by the subsection contravened. (11) For the purposes of this section, where a franchise agreement: (a) is one of 2 or more related franchise agreements; and (b) does not contain provisions of the kind referred to in paragraph (b) of the definition of franchise agreement in subsection 3(1); it shall be deemed to commence on the commencement of whichever of those agreements contains provisions of that kind. (12) In this section, person with prescribed experience, in relation to a particular time, means a person who, for a period amounting, or for periods amounting in the aggregate, to one year or more during the period of 6 years preceding that time, was a franchisee in relation to a franchise agreement or franchise agreements (whether or not this Act applied at any time to the agreement or agreements), where the agreement, or each of the agreements, as the case may be, was not terminated by reason of a ground of a kind referred to in any of paragraphs 16(2)(a) to (j) (inclusive) or by reason of any other breach of the agreement by the person.