Franchise Law In Ontario

Ontario is one of three provinces that have legislation to regulate franchises. The act that governs franchises in Ontario is the Arthur Wishart Act (Franchise Disclosure), 2000 (the "Act"). Any franchise business located partly or wholly in Ontario must comply with the Act. Compliance is mandatory even if both the franchisor and franchisee reside outside of Ontario.

In Ontario, every franchisor is required to provide a prospective franchisee with a disclosure document. A disclosure document outlines and includes amongst other things, all material facts, financial statements and copies of all agreements relating to the franchise. Section 7 of the Act provides some limited exemptions from the requirement to deliver a disclosure document. A disclosure document can be delivered personally, by registered mail or by any other method prescribed by regulation made under the Act ("Regulation"). Electronic disclosure is not permitted in Ontario.

A disclosure document must be current and updated at the time of delivery to each prospective franchisee. This requirement places the onus on a franchisor to continuously update its disclosure document. Foreign franchisors must ensure that any existing foreign disclosure document contains all of the requirements prescribed by Regulation. The Act is not clear whether a franchisor can use a foreign disclosure document and include an addendum containing relevant local information or whether the foreign disclosure document must be revamped to comply with the Regulation.

Published: November 10th, 2008

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