Can I buy multiple franchise units from one franchisee?

One seller does not mean one approval. A franchisee who owns several units may hold a separate franchise agreement for each, so check each one for the franchisor’s approval rights. Before you agree on a package price, work out what you are actually acquiring and what the franchisor must sign off on. That means reading each agreement, not the seller’s summary of them.

One agreement or several

Ask for every franchise agreement, renewal and amendment for each unit. Each may have its own term, territory and transfer clause. If the clauses differ, your package may need different timelines and conditions, and one franchisor refusal can leave you with part of the deal. Build that possibility into your purchase agreement, including how price adjusts if a unit cannot be transferred.

Asset purchase or share purchase

The Arthur Wishart Act defines a grant as including the sale or disposition of the franchise or of an interest in it, and an interest includes ownership of shares in the corporation that owns the franchise. A share purchase therefore does not avoid the question. Whether the franchise agreement also treats a change of control as a transfer needing consent is a separate point to read in the agreement.

Disclosure and approval for each unit

Ontario’s disclosure section does not apply to a grant by a franchisee if the franchisee is not the franchisor, its associate or one of their directors, officers or employees, the grant is for the franchisee’s own account, an entire master franchise is granted where one is involved, and the grant is not effected by or through the franchisor. A franchisor’s right, exercisable on reasonable grounds, to approve or disapprove the grant does not by itself make the grant one effected through it. In any proceeding under the Act, the burden of proving an exemption is on the person claiming it. Other provinces, including Saskatchewan, have their own statutes.

Compare your plan with our page on buying more than one franchise location, which focuses on qualification and financing.