Canada, with its bustling economy and close proximity to the United States, is naturally the first destination for franchise companies in the U.S. and overseas that are looking to expand internationally. Franchise in its simplest terms is a license from the owner of a trademark or Trade Name permitting another to sell a product or service under that name or mark. There are approximately 1,300 franchise brands and over 75,000 franchise units operating throughout Canada, crossing almost 50 different sectors of the economy, including retail, hospitality, automotive, and health care.
If you are a franchisor operating to planning to operate in Canada, you need to stay current on the provincial legislation and news to prevent risks to your business. Franchising is not regulated at the federal level in Canada; rather each province is responsible for its regulation of franchising. Six provinces so far have enacted franchise legislation; they include British Columbia, Ontario, Manitoba, Prince Edward Island, New Brunswick, and Alberta.
The key aspects in franchising law include the below-listed areas;
- Franchise disclosure legislation – This means requiring that franchisors provide pre-sale franchise disclosure to potential franchisees through a Franchise Disclosure Document (FDD) that complies with the provincial franchise law;
- The duty of fair dealing – Imposing on all parties the duty to act in good faith
- Providing the franchisees the right of association;
- Quebec – The province of Quebec has no franchise-specific legislation rather both the Civil Code of Quebec and the Charter if the French Language applies to franchising.
The rights of franchisees and the obligations imposed on franchisors under the franchise legislation in these six provinces are very similar, with the general aim of regulating the marketplace and protecting both prospective franchisees and those parties already in franchise relationships.
Don’t put your business at risk – contact Topmarké Attorneys today to get more information about legal assistant services around:
- Ongoing Disclosure obligations – with assistance from professionals that regularly operate within franchising laws in Canada, franchisors can be mindful of ongoing obligations to FDD recipients and ensure an effective way to expand your business in Canada.
- Updating your FDD – at least annually, if not more often, franchisors should perform a thorough review of the generic FDD to ensure that its contents are accurate and up to date.
- Failure to comply with any of these obligations gives rise to significant remedies for franchisees. Furthermore, a franchisee cannot contract out of the rights granted to it or grant a waiver of the obligations imposed on franchisors under the legislation.
- The franchise legislation is also deemedFranchise Law – Topmarké Attorneys unenforceable if any provision in a franchise agreement restricts the application of the laws of the province or restricts the jurisdiction or venue to a forum outside of the province for claims enforceable under that province’s franchise legislation.
To learn more or get legal assistance on franchise-related matters in Canada contact us – firstname.lastname@example.org