Franchisor’s associate

The franchise Acts reach beyond the franchisor itself to certain connected persons. Knowing who is an associate tells a buyer whose conduct and whose lawsuits the disclosure should cover. See what a franchisor must disclose before you sign.

The definitions

Under s. 1 of Ontario’s Act, an associate directly or indirectly controls or is controlled by the franchisor, or is controlled by another person who also controls it. It must also be directly involved in the grant, by reviewing or approving it or by making representations for the franchisor, or exercise significant operational control over the franchisee while the franchisee has a continuing financial obligation to it. Alberta’s s. 1(2) uses its own wording. This entry covers Ontario, Alberta and British Columbia only; check the rules in the province where the business is.

Why it matters

Ontario’s s. 7(1)(d) and British Columbia’s s. 7(1)(c) list the franchisor’s associate among those a franchisee may sue for a misrepresentation in the disclosure document, subject to the defences in Ontario’s s. 7(4) and (5) and British Columbia’s s. 8. Alberta’s s. 9(1) lists the franchisor and every person who signed it. For signers, see personal liability for disclosure.