Within Canada, there is no overarching federal legislation governing franchising or licensing; however, six out of the thirteen provinces and territories have enacted standalone franchise legislation. Under the six different pieces of provincial and territorial legislation, there are notable disclosure obligations. These obligations mandate that franchisors provide prospective franchisees with a disclosure document, or Franchise Disclosure Package (FDP), that contains financial statements, copies of the franchise agreement and other material information. Not complying with FDP requirements can result in a franchise bringing an action against the franchisor to cancel the contract or to obtain damages for misrepresentation and so it is vital that franchisors comply with applicable laws and regulations.
Licensing is similar but distinct from franchising. Generally, where a single license is granted in regards to a specific trademark, trade name, or logo, a franchisor-franchisee relationship does not arise and the disclosure requirements do not apply to the granted license.
At HazloLaw – Business Lawyers, we are well versed in navigating the complex law surrounding franchising throughout the provinces. Our lawyers regularly assist clients in creating or reviewing disclosure packages, franchise agreements, establishing franchise systems for new franchisors and all other aspects of franchising. We also regularly advise owners of intellectual property on the commercial and legal aspects of monetizing their IP.