Franchise agreement

The Canadian Franchise Association says a franchisee’s system-specific responsibilities are outlined in the franchise agreement. In a resale, ask whether the buyer would sign the seller’s agreement or a new one. What should I check in the franchise agreement when buying a franchise business? lists the points.

How the statutes use it

Ontario’s Arthur Wishart Act defines it as any agreement that relates to a franchise between a franchisor or franchisor’s associate and a franchisee. Alberta’s Franchises Act extends the definition to a prospective franchisee. Under the Ontario regulation, the disclosure document must describe all restrictions or conditions in the agreement relating to termination or renewal, and to transfer of the franchise. British Columbia’s Act says a disclosure document must contain copies of all proposed franchise agreements, and other agreements relating to the franchise, to be signed by a prospective franchisee.

What to check

• The term, and what renewal requires, including any renewal fee
• The fees and contributions payable during the term
• Whether a transfer needs the franchisor’s approval, and on what conditions