Franchisee list (disclosure item)

A franchise buyer meets this term when the disclosure document arrives and the question is whom to phone. Ontario’s O. Reg. 581/00 requires every disclosure document to carry a statement that a prospective franchisee is strongly encouraged to contact any current or previous franchisees before entering into the franchise agreement.

What each regulation lists

Ontario’s s. 6 requires a list of the locations of the franchises in Ontario of the type offered, with the business address, telephone number and franchisee’s name, and adds the nearest franchises outside Ontario if there are fewer than a stated number. It also requires the name, last known address and telephone number of each Ontario franchisee who operated a franchise of the type offered that was terminated, cancelled, not renewed, reacquired or who otherwise left the system in the preceding fiscal year.

Alberta’s Schedule 1, items 14 and 15, asks for the names, mailing addresses and phone numbers of existing franchisees operating an outlet in Alberta under the same trade name, and the name, last known address and telephone number of every former franchisee in the franchisor’s total operating territory whose franchise under that trade name ended or who otherwise left the system in the previous fiscal year.

What to ask

• Whether you can speak to former franchisees as well as current ones
• Why each departed franchisee left the system
• Whether the list covers the type of franchise you are buying

This entry covers Ontario and Alberta only; check the rules where you are. See what a franchisor must disclose and litigation disclosure.