Canada, the United States' northern neighbor, borders 11 American states, is one of the world's most technologically advanced countries and offers a market of 30 million people with relatively high disposable incomes. English is the preferred language in nine Canadian provinces.
Canada is a federal state in which a federal government regulates some matters and the respective ten provincial governments and three territorial governments regulate other matters. Consequently federal, provincial and territorial statutes as well as court decisions apply to multilevel marketing plans, their operators and their participants, operating within Canada. (To see a political map of Canada showing all provinces and territories CLICK HERE. See a photograph from space showing all of Canada during summer CLICK HERE.)
Due to its distinctive social and political history Canada's regulatory approach to multilevel marketing differs from that of other countries in several ways:
First, Canadian federal statutory and judicial definitions of multilevel marketing plans and schemes of pyramid selling may differ from foreign meanings;
Second, one of Canada's federal regulators issues Advisory Opinions for multilevel marketing plans. However, as some procedural changes are usually required of multilevel marketing plans operating outside of Canada to cause them to receive a positive, rather than a negative, Advisory Opinion, it is preferable to make the required changes prior to submission for the Advisory Opinion. These Advisory Opinions relate to Canada's Competition Act but do not relate to the requirements of the Criminal Code of Canada which have been applied to some multilevel marketing plans;
Third, the direct selling industry is more regulated in Canada with most provinces and territories requiring licensing and bonding for companies and some requiring licensing for individual distributors;
Fourth, corporate registration (including government filing fees and retaining and appointing local persons to handle the registration and serve as local agents for service) will be required in each Canadian jurisdiction in which your activities meet the local definitions of carrying on business and in which your, or your distributors', activities meet the local definitions of direct selling;
Fifth, Canadian direct selling and consumer protection legislation can permit lengthy return periods, sometimes enforceable via mandatory credit card charge backs, if paper and online ordering contracts and other procedures are not correctly prepared and executed.
There are also other regulatory requirements affecting: business ventures initiated by non-Canadians; specific contract content requirements for direct selling, executory, Internet and other contracts; statutory cancellation periods; Canadian food and drug definitions and required manufacturing practices and licensing, labeling and packaging requirements, tax collection, reporting and remittance, electronic commerce processes; telemarketing; referral selling; negative option offers, trade marks; use of testimonials; language use; deemed cultural activities such as entertainment and publication sales and more. This list tends to lengthen rather than shorten with each sitting of a government. Incomplete harmonization of Canadian legislation results in different regulatory requirements in the respective jurisdictions.
If you are selling your products or services to Canadians and paying commissions to Canadians via a multilevel commission structure, then you will likely be operating a multilevel marketing plan or scheme of pyramid selling under Canadian legal definitions. The difference is significant as the former is legal while the latter is illegal.
Companies operating with Canadian plan participants are often brought to the attention of Canadian regulators by the company's competitors, inquiries by Canadians recruited for plan participation, unsuccessful participants or the regulators' own surveys of the marketplace.
Appropriate Canadian legal counsel licensed to practice in Canada can make the Canadian legal compliance process as expeditious, convenient and affordable as possible for each distinctive multilevel marketing plan and direct sales business.