Directors’ personal liability for franchise disclosure

The Acts do not single out directors by title. They name signers, and the regulations say who signs. For the franchisee suing after a misleading disclosure, that can put named individuals alongside the company. See how the Arthur Wishart Act applies to a resale.

Who can be sued

Ontario’s s. 7(1) gives a right of action for damages against the franchisor, its agent, broker and associate, and every person who signed the disclosure document or statement of material change. O. Reg. 581/00, s. 7(2), has an incorporated franchisor with more than one officer or director sign through at least two of them. Alberta’s s. 9(1) and British Columbia’s s. 7(1) also name every signer. Persons found liable, or who accept liability, are jointly and severally liable (Ontario s. 8(3), Alberta s. 12, British Columbia s. 10(3)).

Defences

In Ontario, s. 7(4) relieves a person who proves the franchisee acquired the franchise knowing of the misrepresentation, and s. 7(5) gives a person other than the franchisor further defences, such as the document being given without that person’s knowledge or consent followed by prompt written notice. Alberta’s s. 10 and British Columbia’s s. 8 set out their own defences. The certificate of the franchisor is where the signatures sit.