Right to cancel a franchise agreement (Alberta)

A franchisee in Alberta meets this right when the disclosure document arrives late or not at all. Section 4 of the Franchises Act requires the document to be received at least 14 days before the earlier of signing any agreement relating to the franchise or paying any consideration for it, subject to subsections 4(6) and (7), which set aside a fully refundable deposit and an agreement dealing only with such a deposit, confidentiality or the designation of a location or territory. Section 5 lists exemptions from section 4, and section 6 lets the Minister make further exemptions by regulation, so check whether one applies. The cancellation answer sets this right beside others.

How cancellation works

Under section 13, the franchisee gives a notice of cancellation to the franchisor or its associate. It must be given no later than 60 days after receiving the disclosure document or no later than 2 years after the franchisee is granted the franchise, whichever occurs first. Under section 14, the notice cancels the franchise agreements (or, for an offer to purchase, withdraws the offer), and the franchisor or its associate must, within 30 days after receiving it, compensate the franchisee for any net losses incurred in acquiring, setting up and operating the franchised business.

Points to confirm

• The date the disclosure document was actually received, and whether it was on time
• Whether an exemption in section 5 applies to the franchisor or the sale
• That any waiver or release by the franchisee of a right under the Act is void under section 18
• How and to whom the notice must be given

Alberta’s Franchises Regulation also requires the disclosure document to quote sections 13 and 14. This entry covers Alberta only; check the rules where you are. See receipt of disclosure.