Sale of the franchisor (change of franchisor ownership)
A sale of the franchisor is a change in who owns or controls the franchisor. Ontario’s, Alberta’s and British Columbia’s franchise Acts include a change in the control of the franchisor or its associate in their material change definitions, but only a change reasonably expected to have a significant adverse effect on the franchise’s value or price or on the decision to acquire it.
A buyer meets this term when the company behind a brand is itself bought or restructured, during or after a franchise resale. The Acts do not treat every change of ownership alike: what counts is whether the change meets the definition of a material change. See what a franchisor must disclose before you sign.
What the Acts say
Under s. 5(5) of Ontario’s Arthur Wishart Act, the franchisor provides a written statement of any material change, and the prospective franchisee must receive it as soon as practicable after the change and before the earlier of signing an agreement relating to the franchise or paying consideration, subject to the exceptions in s. 5. Alberta’s s. 4(4) and (5) and British Columbia’s s. 5(6) set comparable duties, subject to the exceptions in Alberta’s ss. 4 and 5 and British Columbia’s s. 5. Each duty is owed to a prospective franchisee. Control also shapes the definition of a franchisor’s associate, so a new controller can change who counts as one.
What to ask
- Whether a statement of material change has been issued since the disclosure document
- Who now controls the franchisor and its associates
- Whether the franchise agreement says anything about the franchisor transferring or changing control
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Government of OntarioGovernmentArthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3
- 02Government of AlbertaGovernmentFranchises Act, R.S.A. 2000, c. F-23
- 03Government of British ColumbiaGovernmentFranchises Act, S.B.C. 2015, c. 35
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.