Franchisee

The franchisee is the party that runs the business under the franchisor’s brand. In a resale the seller is the current franchisee and the buyer becomes the next one. What does a franchisee own and have the right to sell? sets out what that includes.

What a franchisee is expected to do

The Canadian Franchise Association says a franchisee should follow the franchisor’s standards, methods and procedures, and pay a fee to the franchisor for the right to use its trademarks and business system. It adds that system-specific responsibilities are outlined in the franchise agreement. Ontario’s Act gives the franchisee the right to rescind in listed circumstances, and its disclosure rules are directed at a person who is a prospective franchisee. New Brunswick’s Franchises Act opens its definition with the same words, a person to whom a franchise is granted.

In a resale

A grant by a franchisee can fall outside the disclosure requirement of section 5 of the Ontario Act if the conditions in section 5(7)(a) are met, including that the franchisee is not the franchisor, its associate, or a director, officer or employee of either, and that the grant is not effected by or through the franchisor. Ask which rules apply to the buyer.