3 Reasons Why You Should Hire a Franchise Lawyer in Vaughan

Thinking of buying a franchise? Expanding your current franchise into Ontario? Here are a few reasons you should hire a franchise lawyer Vaughan ON.

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Are you considering buying a franchise or a current franchisor thinking of expanding into Canada? If so, you may want to consult a local legal professional who specializes in franchise law.

Here are three reasons why you should hire a local franchise lawyer in Vaughan, ON:

They know what to look for

Each province has specific franchise legislation. For example, large and established franchises in Ontario are exempt from providing financial statements. However, this is only if they meet the criteria detailed in Part III of O. Reg. 581/00.

Consequently, it’s important to familiarize yourself with the way these laws vary from province to province.

They can promote fair dealing

Most importantly, a franchise lawyer can also help each party to uphold the duty of fair dealing. This is outlined in Arthur Wishart Act (Franchise Disclosure), 2000 which encourages participants in a franchise agreement to engage in good faith. Similarly, having a strong counsel may be able to prevent future complications.

They can handle disputes

If complications do occur, franchise lawyers are uniquely capable of smoothing things over. Ben Hanuka, head of Law Works PC, launched the first franchise disclosure class action in Ontario. The case — Bekah v. Three for One Pizza (2003) — involved the franchisor structuring a transaction in a way that tried to sidestep disclosure requirements. Ultimately the court sided with the purchaser with help from the franchise lawyer.

In conclusion, hiring an experienced franchise lawyer can provide you with significant legal protection.

Before Buying a Franchise: Get a Disclosure Document

The disclosure document includes a list of current and former franchisees. You can learn about how a franchisor operates by talking to some of them before you invest. Some questions to ask include:

  • Were there unexpected costs or additional unexpected investments?
  • Do you have to purchase a minimum amount of merchandise/materials each year?
  • If there is a minimum sales quota, how difficult is it to achieve?
  • Are products/equipment supplied by the franchisor satisfactory and delivered on time?
  • Did you have adequate support when the business first opened?
  • Was the training adequate, and were employees included?
  • How are disagreements with the franchisor handled?
  • If you could change anything in your contract what would it be?
  • What do you like/dislike about the franchisor?
  • How long did it take you to start making money, and was it more or less than you expected?
  • Would you enter into an agreement with this franchisor again?

These questions are important to ask for any franchise agreement. If you need help with franchise law or before signing any contracts, you should contact Law Works the franchise dispute lawyers in Mississauga.

Your Franchise Agreement Checklist

Probably the best way to gauge how you will be treated once you join the franchise is to ask existing franchisees how they are being treated now.  Talk to as many franchisees as you can, so you are sure you are getting an accurate picture of things.  Ask them how long they owned their franchise, what they paid, what they think of the franchise system, and whether they are looking to sell (and if so, why).

Determine whether the franchisor is engaged in a lot of litigation.  While a certain amount of litigation is unavoidable, excessive litigation can be a warning sign. Canadian legal decisions can be accessed for free at canlii.org. Keep in mind that many disputes are settled by private arbitration or mediation, and these decisions are not available on-line.

When you find a franchise you think you want to buy, make sure you understand exactly what you are getting.  Remember, you are only buying what is stated in the franchise agreement and the lease, so check those documents carefully.

In the franchise agreement, some things to check are:

  • How long is the franchise grant?
  • Are you granted an exclusive territory?  If so, what is it?
  • Do you have renewal rights?  If so, how long, and how are they triggered?
  • Does the franchisor promise training?  Who pays the costs?

Some points to check in the lease are: rent amount, the duration of the lease, whether you can renew (and if so, when and for how long), how to trigger renewals, and how the rent will increase in future. These are important things to consider for any franchise purchase. If you need help with your franchising agreement contact Law Works your franchise dispute lawyer in Vaughan.

What Franchisees Need to Know About The Arthur Wishart Act

What Franchisees Need to Know About The Arthur Wishart Act Law Works

The idea of franchising is popular amongst those who dream of being in business, but simply don’t have the resources or experience to start out on their own. When franchising, they can rely on the experience of well established businesses as a way of learning all the how-to’s of running a successful business.  

Whether you’re an established franchisee or considering becoming a franchisor in Ontario, it’s important to familiarize yourself with Ontario’s franchise legislation. The Arthur Wishart Act (Franchise Disclosure) was first introduced in 2000 for the purpose of helping potential franchisors, as well as franchisees make more informed decisions when you chose to invest.  The legislation protects franchisees by providing the right to associate and share information with other franchisees, so you can share information about your business experiences before entering into or during your franchise agreement.

Furthermore, under new legislation the franchisor is required to provide a disclosure document at least 14 days before you sign an agreement or provide any payment. The disclosure documents should include details of the franchise’s background and the offer such as:

  • Business background
  • Litigation history
  • Bankruptcy
  • Financial statements
  • Costs (e.g. deposits or fees)
  • Copies of proposed franchise agreements
  • A description of any exclusive territory
  • Any restrictions
  • The franchisor’s policy on volume rebates
  • Conditions of termination, renewal or transfer of the agreement
  • A description of the franchisor´s mediation process, if one is used
  • Training and other assistance programs
  • Advertising funds
  • A list of their current and former franchisees

Before signing any offer or providing payment, you are highly encouraged to seek a franchise lawyer. To determine whether or not the franchise has provided a fair and honest representation of the proposed agreement in the disclosure document and to verify it is compliant with the Act as required. 

Get in touch with an experienced franchise lawyer at Law Works in Vaughan, we’ll be happy to answer all your questions and provide the guidance you need to make these important decisions.