Canadian franchise law encompasses the legal framework that governs the relationship between franchisors (companies that grant franchise rights) and franchisees (individuals or entities who operate a business using the franchisor’s brand and system). The laws and regulations pertaining to franchising vary across Canada as both federal and provincial/territorial legislation are involved. Here is an overview of Canadian franchise law:


1. Franchise Disclosure

In most provinces and territories, including Ontario, Alberta, and British Columbia, franchise legislation mandates franchisors to provide prospective franchisees with a disclosure document. This document contains essential information about the franchise opportunity, including the franchisor’s background, costs, obligations, and the rights and obligations of both parties. Franchisees must receive this disclosure document at least 14 days before signing any agreement or paying any fee.


2. Franchise Agreement

The franchise agreement is a legally binding contract that outlines the rights and obligations of the franchisor and franchisee. It covers various aspects, such as the use of trademarks, territory rights, operating standards, fees, royalties, and dispute resolution mechanisms. The agreement must comply with the relevant provincial/territorial laws.


3. Good Faith and Fair Dealing

Franchise legislation in certain provinces, such as Ontario, Alberta, and Manitoba, imposes a duty of fair dealing on both franchisors and franchisees. This duty requires parties to act in good faith and deal with each other fairly and honestly.


4. Cooling-Off Period

Some provinces, including Ontario, provide a cooling-off period that allows franchisees to reconsider their decision after signing the franchise agreement. During this period, which is typically 14 days, franchisees can cancel the agreement without any penalty.


5. Misrepresentation

Franchise legislation prohibits franchisors from making false or misleading statements or representations about the franchise opportunity. If a franchisor provides inaccurate information during the disclosure process, the franchisee may have legal remedies, including rescission or damages.


6. Termination and Non-Renewal

Franchise legislation often addresses the termination and non-renewal of franchise agreements. It sets out the rights and obligations of both parties in such situations, including the requirement for reasonable notice and the right to compensation for the franchisee if the agreement is terminated or not renewed.


7. Mediation and Dispute Resolution

Franchise legislation in various provinces, such as Ontario, provides a mechanism for mediation or alternative dispute resolution to resolve conflicts between franchisors and franchisees before resorting to litigation.


8. Competition Law

Franchise arrangements may also be subject to federal competition laws, which prohibit anti-competitive practices, such as price-fixing or market allocation.


It’s important to note that franchise laws can differ significantly between provinces and territories in Canada. Franchisors and franchisees should seek legal advice specific to their jurisdiction to understand the intricacies and requirements of the applicable franchise legislation.


This overview provides a general understanding of Canadian franchise law, but it is essential to consult with legal professionals who specialize in franchise law for comprehensive and up-to-date guidance.


For more information on how to franchise your business in Canada and how to buy a Franchise in Canada, contact Franchise Marketing Systems Canada: