Material fact (franchise disclosure)

A buyer meets this term in the statute’s demand that the disclosure document contain every material fact. The definitions in Ontario’s Arthur Wishart Act, British Columbia’s Franchises Act and Alberta’s Franchises Act cover information about the business, operations, capital or control of the franchisor or its associate, or about the franchise system.

How the Acts use it

Ontario’s s. 5(4)(a) says the disclosure document shall contain all material facts, including prescribed ones. British Columbia’s s. 5(5) says a disclosure document must include all material facts, in addition to the statements, documents and information otherwise required. Each of those sections lists cases it does not apply to (Ontario s. 5(7), British Columbia s. 5(8)). Ontario and Alberta also count as a misrepresentation an untrue statement of a material fact, or an omission to state one that is required to be stated or is needed so that a statement is not misleading.

What to ask

• Whether anything you were told about the franchisor’s business, capital or control is missing from the document
• Whether the certificate Ontario’s O. Reg. 581/00, s. 7, requires states that the document includes every material fact
• Whether a later change is covered by a material change statement

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