Company-owned outlet (corporate store)

The Canadian Franchise Association describes a proven system as one that has worked out the major kinks in its corporate locations or with previous franchisees. For a buyer, the question is how those outlets sit beside franchised ones. Territory protection is covered in franchise territory and encroachment.

What the disclosure rules ask

In Alberta, Schedule 1 of the regulation asks for the addresses of franchisor outlets operating in Alberta under the same trade name, for the franchisor’s policy on how close a franchisor outlet may be to an existing franchisee outlet, and for closures of both kinds of outlet, including franchises the franchisor has reacquired. Under its item on earnings claims, if information is given about a franchisor outlet, the franchisor must state that it may differ for a franchise outlet. Ontario’s O. Reg. 581/00, s. 6, asks for the proximity policy between an existing franchise and a franchise owned or operated by the franchisor that sells similar goods under a different trademark. This entry covers Alberta and Ontario only; check the rules in the province where the business is.

What to check or ask

• Where the franchisor’s own outlets are compared with the site being bought
• What the agreement says about opening one nearby
• Whether results for company outlets are given and how they were prepared