Additional franchise exemption (existing franchisee)

A multi-unit buyer meets this exemption when the franchisor offers another unit in the system. Ontario’s Arthur Wishart Act, s. 5(7)(c), exempts the grant of an additional franchise to an existing franchisee if it is substantially the same as the existing franchise the franchisee is operating and there has been no material change since the existing agreement, or its latest renewal or extension, was entered into. Buying more than one location covers the wider picture.

Differences in the text

British Columbia’s Franchises Act, s. 5(8)(c), has both of Ontario’s conditions. Alberta’s Franchises Act, s. 5(1)(c), exempts the sale of an additional franchise that is substantially the same as the existing franchise, and that paragraph has no no-material-change condition. This entry covers Ontario, British Columbia and Alberta only; check the rules where the business is.

What to ask

• Whether the new unit is substantially the same as the one already operated, and who decides that
• Whether anything has changed in the franchisor or the system since the existing agreement or its latest renewal
• Whether the unit is instead being bought from another franchisee, which Ontario’s s. 5(7)(a) covers in a separate exemption with its own conditions, as the disclosure exemptions entry sets out