Franchise Agreement Lawyer in Mississauga

The Arthur Wishart Act

Ontario franchising is governed by the Arthur Wishart Act (Franchise Disclosure), 2000. It imposes three obligations that shape every franchise relationship in the province.

• Disclosure. The franchisor must deliver a franchise disclosure document at least 14 days before the franchisee signs any agreement relating to the franchise or pays any consideration.
• Fair dealing. Every franchise agreement carries an implied duty of fair dealing in its performance and enforcement, including a duty to act in good faith and in accordance with reasonable commercial standards.
• Association. Franchisees have the right to associate with each other, and the franchisor cannot penalise them for it.

Section 11 makes any purported waiver of these rights void. A clause in the agreement saying otherwise is simply unenforceable.

Rescission: the remedy franchisors take seriously

Where disclosure is deficient, section 6 gives the franchisee a right of rescission.

If the disclosure document was delivered late or was materially deficient, the franchisee may rescind within 60 days of receiving it. If no disclosure document was ever delivered (or what was delivered was so deficient that it amounts to no disclosure at all), the franchisee may rescind within two years of entering the agreement.

The consequences are substantial. On rescission the franchisor must refund all money received, purchase back inventory, supplies, and equipment at the price paid, and compensate the franchisee for any remaining losses in establishing and operating the franchise. This is not a damages claim requiring proof of misconduct; it is a statutory unwinding, and it is why disclosure review matters far more than it appears to.

What we look at before you sign

• Whether the disclosure document is complete, current, and was delivered properly and on time
• The financial statements and any earnings projections, including the assumptions behind them
• Territory: whether it is exclusive, and what the franchisor may do within it, including online and through other channels
• Total investment against what the disclosure document actually commits to
• Ongoing royalties, advertising fund contributions, and technology fees
• Required purchases from the franchisor or designated suppliers, and any rebates the franchisor receives on them
• Term, renewal conditions, and what a renewal costs
• Transfer and resale restrictions, who you may sell to, and what the franchisor may charge to approve it
• Termination rights on both sides, and what happens to the business on termination
• Post-termination non-competition covenants and their practical effect on your livelihood
• Personal guarantees, which are almost always required and which survive the corporation
• Dispute resolution, including mandatory arbitration and choice of law provisions

Acting for franchisors

We also prepare disclosure documents and franchise agreements for franchisors expanding into or within Ontario. The compliance burden is real and the penalty for getting it wrong, a two-year rescission right sitting over every franchise sold, is the kind of contingent liability that stops a system being financed or sold.