Franchise Agreements in Ontario: The Arthur Wishart Act Explained

Ontario's Franchise Legislation: The Arthur Wishart Act

Ontario is one of the few provinces in Canada with comprehensive franchise legislation. The Arthur Wishart Act (Franchise Disclosure), 2000 regulates the relationship between franchisors and franchisees in Ontario, providing significant protections for prospective and existing franchisees.

Disclosure Obligations

Before a prospective franchisee signs any franchise agreement or pays any money, the franchisor must provide a comprehensive disclosure document containing:

• Detailed information about the franchisor's business history and financial condition
• Litigation history involving the franchisor and its principals
• A copy of the franchise agreement and all other agreements the franchisee will be required to sign
• Audited financial statements
• A list of all current and former franchisees
• All material facts that would reasonably be expected to affect the decision to enter the franchise agreement

The disclosure document must be provided at least 14 days before the earlier of signing any agreement or paying any consideration to the franchisor.

The Right of Rescission

If a franchisor fails to provide a disclosure document, or if the disclosure document contains deficiencies, the franchisee has the right to rescind (cancel) the franchise agreement without penalty: within 60 days of receiving a materially deficient disclosure document, or within 2 years if no disclosure document was provided at all. Rescission entitles the franchisee to a full refund of all amounts paid.

Duty of Fair Dealing

The Arthur Wishart Act imposes a duty of fair dealing on both parties — they must perform their obligations under the franchise agreement in good faith and in accordance with reasonable commercial standards.

Why You Need a Lawyer Before Signing

Franchise agreements are complex, long-term commitments involving substantial investment. Always have an experienced franchise lawyer review the disclosure document and franchise agreement before signing.