Franchising

The thing about franchising is not knowing whether you're a franchisor or franchisee. Ontario's Arthur Wishart Act on franchise disclosure places weighty requirements on businesses that qualify as franchises. The meaning of franchise is broad, and business growth generally occurs organically and without contemplation of how new locations and ownership structures may engage legislative requirements. The biggest piece for businesses during expansion is determining if they fit within the the Arthur Wishart Act. If a business determines that it is a franchisee or franchisor, intentionally or not, a set of rules about disclosure and agreements apply. Further, franchise standards in Ontario are about to change with new legislation being developed.

A significant number of franchisors and franchisees aren't aware that their relationships are captured under franchise disclosure rules. It is not always evident when business growth and ownership becomes something else entirely.

A significant number of franchisors and franchisees aren't aware that their relationships are captured under franchise disclosure rules. It is not always evident when business growth and ownership becomes something else entirely.

For franchisees, a thorough review a franchise agreement and disclosure document will determine whether these documents are compliant with applicable legislative as well as Canadian Franchise Association standards. These documents generally give room for clients to discuss or negotiate terms with a franchisor, to ensure that a true meeting of minds and have language recorded that reflects such understanding and agreement.

For franchisors, it is critical to determine how to solicit potential investors, compliantly sell the investment opportunity, protect the client from liabilities as a franchisor, and organize disclosure documents and franchise agreements.

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