Montreal is an attractive place to form a startup, if you can tolerate the snow. The rents are significantly lower than in any other major Canadian city. The universities, including "Harvard of the North" McGill, churn out thousands of highly skilled job applicants. There's universal health care. There are concentrated enclaves of young, creative minds, and the kind of nightlife that attracts them.

The city has become a beacon for the gaming industry, and a burgeoning startup scene has begun to flourish. Montreal lures tech companies not so much with its low rents and plentiful Molson Dry, but mainly because of a generous tax credit for multimedia companies offered by the Quebec government, which pays 30% of employees' salaries, sweetening the pot with an extra 7.5% if the company includes a French translation of their product in its initial release.

But despite the financial benefits, the laws that assert the primacy of the French language make it difficult for Montreal to assert its dominance as a startup superpower. And Montreal's tech hub, which provides a major boost to Quebec's otherwise troubled economy, suffers the most.

In recent years, Quebec's video game industry has pulled ahead of Vancouver to claim the lion's share of the gaming industry's profits and workforce. Major game developers such as Activision, EA Games and Ubisoft have all established headquarters in Montreal in the last two decades, along with an explosion of indie game studios more recently. In October 2013, Ubisoft announced that it would create 500 new positions in Montreal over the next seven years, to the tune of $363 million pumped into Quebec's economy.

"There are five places in the world where there's a significant concentration of multimedia and video games, and Montreal is in the top three with Japan and California," Pauline Marois, the current Premier of Quebec, said at a press conference in October. "That's no small thing, to compare to those giants."

Now, Montreal's startups are poised to follow in the well-heeled footsteps of the gaming industry.

"Montreal is the best city in the world to build an MVP (minimum viable product)," says Caithrin Rintoul, founder of the online farm-to-fork marketplace Provender, citing the tax breaks and general low overhead of setting up a business in the city. "In Montreal, I can essentially hire six engineers for the price of a single engineer in San Francisco."

A presentation by creative marketplace startup Ooomf for the FounderFuel accelerator program in Montreal. Image: Flickr, Eva Blue

But many entrepreneurs continue to view the province's controversial language laws as a source of frustration. The Charter of the French Language, also known as "Bill 101," came into law in Quebec in 1977. It establishes French as the official language of Quebec — unlike Canada's charter, which recognizes both English and French — with the purpose of making French the "normal and everyday language of work, instruction, communication, commerce and business."

The law appeared at an important moment in Quebec's history. In the 1960s, a federal inquiry into the state of bilingualism and biculturalism in Canada found that French-speaking Canadians were worse off financially, had less access to education and held fewer high-ranking jobs than English-speaking Canadians. The socioeconomic disparities were attributed in part to discrimination against non-English speakers.

These findings bolstered a growing Quebec nationalist movement, and legislators within the province drafted the Charter as a means of preserving a fragile French culture while boosting the socioeconomic rank of French Canadians.

Bill 101's provisions are fairly exacting. The law requires that signs featuring both French and English text must display the French lettering in larger type. Businesses must register with French names — although companies can often skirt this requirement by adding a French word to an otherwise English title. (In Quebec, for instance, Starbucks is officially known as Café Starbucks, and Apple avoids the name game entirely because the Apple Store logo is text-free.) Businesses with brick-and-mortar addresses in Quebec must have a bilingual website. Three years after it was forced to shut down its English-only website, clothing retailer Urban Outfitters still doesn't have a shopping page in Quebec, nor does its sister store, Anthropologie. Quebec-owned businesses must also license their software in French, when available. And since 2009, the sale of English-only video games is prohibited if a French version of the game exists.

Businesses of 50 employees or more are bound by these requirements, which means that most early-stage startups fall outside of the law's purview.

For the tech sector as a whole, this amounts to a few minor but accumulating inconveniences.

Jason Della Rocca, former executive director of the International Game Developers Association and co-founder of Montreal-based mobile game startup incubator Execution Labs, explains that these requirements, while mostly benign for large businesses, can present a challenge for indie studios and startups.

Major game developers like Activision and Ubisoft can easily accommodate the laws that require video games to be translated into French, Della Rocca says, since most of their titles are routinely translated into multiple languages.

"It impacts a smaller studio more," he says. "Translation becomes more cumbersome the smaller the team gets."

While the laws don't overtly affect most businesses, some entrepreneurs feel that the overall message of Bill 101 is unwelcoming to English-language businesses, making international investors hesitant to enter the Quebec market. Without investment capital, a startup's growth can be severely stunted.

"Bill 101 never really affected my business, but it sends a message to us," says Greg Isenberg, founder of the "video concierge" website 5by, which was recently acquired by StumbleUpon. Isenberg explains that at times companies must correspond with the government's business bureau in French, and the financial paperwork is complicated, even in English. "It doesn't feel good for a lot of the international entrepreneurs choosing to live in Montreal."

Alexander Hutchinson of Ubisoft Montreal gives a keynote address at the 2012 Game Developers Conference in Cologne, Germany. Image: Flickr, Official GDC

In most of Quebec, policies that favor the French language make sense. Quebec's Francophone population comprises 78.1% of the province's 8 million residents, according to Canada's 2011 census. English-speaking Quebecers, in contrast, make up a mere 7.7%. Compare that with the rest of Canada, where French-speakers comprise only 22% of the population, while 58% speak English as a primary language. The Quebec government argues that its laws are thus protecting French culture from discrimination and assimilation by Canada's English majority.

That logic is somewhat less applicable in Montreal, the province's most diverse and most cosmopolitan city. On the island of Montreal and in its surrounding metropolitan areas — which, with a population of 3.8 million, is by far Quebec's most populous city — Francophones represent 65% of the population while English-speakers make up 12.6%. (In Quebec City, the province's next largest metropolis, Francophones make up a whopping 95% of the population.)

Put simply, almost all of Quebec's English-speaking residents live in Montreal. Montreal is also the city most frequently visited by Americans and other international tourists and its businesses tend to have the most international traction.

But despite the interest in Montreal as a vacation destination, Quebec's language laws receive poor press abroad and do little to entice investors.

One particularly salient illustration of this is "Pastagate." Last summer, an established Italian supper club located in Montreal's tourist-friendly Plateau district was reprimanded for not translating the word "pasta" into French on their menu. A PR disaster, the incident received international coverage and resulted in the resignation of a government official.

In the aftermath, one critic called Quebec "the Cosmo Kramer of provinces; the zany antics are played out, and now we're just left with the unsettling racism."

"It's a branding issue, it really is," Rintoul says. "If we really want to nail the next five years as a startup ecosystem, it's got to be about attracting incredible talent and being able to leverage some of the charismatic advantages of building a business in Montreal. We need to capitalize upon this low-wage, low-rent, easy-to-build-an-MVP [factor] to build companies with enormous traction."

A protester holds a Quebec flag printed with the slogan, "Quebec Libre" ("Free Quebec") at a student rally protesting tuition hikes in Montreal. Image: Flickr, Gerry Lauzon

Overall, this political turmoil can send a troubling and lopsided message to outsiders.

"The politics potentially have a chilling effect," Della Rocca says. "If I'm from Europe or from the U.S. and I'm interested in investing in Quebec, and I hear rumors of referendums and Quebec splitting from Canada, there is some hesitation."

But, Della Rocca adds, that perception quickly shifts once investors and game developers actually visit the city.

"There are game conferences in Montreal, and the people who leave from the conference are really jazzed by the community. They don't say, 'I sat in the corner and nobody talked to me because I was English.'"

Montreal's entrepreneurs are generally confident that their city is the right place to build an early-stage startup, whether it operates in English or in French. According to them, investors with boots on the ground quickly come to view Montreal as a place where innovative ideas are prized in any language.

"If you're sitting somewhere else in the world and you have no sense of what's going on on the ground, it's easy to dismiss Montreal," Della Rocca says. "But there's so much talent and opportunity here already. It's not like we're sitting here with empty offices."

Quebec's scuffles over language supremacy are as much a part of the province's cultural identity as Celine Dion, Cirque Du Soleil and the Montreal Canadiens, and certainly the uniqueness of the province's French heritage is one of its more alluring traits. But these legal squabbles over bilingualism continue to hold Quebec back from becoming truly competitive in the tech world, all magnanimous tax breaks aside. These dust-ups may not play out quite so violently in the day-to-day operation of a startup — but all in all, the province needs a distinct re-branding before it can become the global powerhouse it's poised to be.

Update: Since its posting, this article has generated debate within Quebec's startup community. For more coverage, you can read today's article in La Presse and the open letter from members of Montreal's startup community.