Canadian Franchises
Franchising involves a lot of legal documents; one of these documents is the complex Franchise Agreement. It is important for a prospective franchisee to understand what he or she will be signing. Franchising in Canada is governed by both federal and specific provincial laws. A good example would be the provinces of Ontario and Alberta, where franchisors are required by law to submit disclosure documents for the franchisee’s review, at least 14 days before any agreements are signed. Although these disclosure documents were meant to help the franchisee assess and review his potential investment, they are oftentimes written to put the franchisor and his business in a good light.Hiring a good Canadian Franchise Lawyer is one of the best ways to protect the interests of a potential franchisee.
One important consideration for the franchisee to take into account is ownership and control of the franchise trademark.Franchise law is closely related to trade marking, and most lawyers of franchise who have a business background are knowledgeable in trade marks, copyrights, and patents. Many are registered trademark agents as well.
Doing research to learn as much as he can about franchising will work to the first-time franchisee’s benefit. Working with franchise attorneys who can facilitate understanding of legal obligations, so that the franchisee knows exactly what he or she is getting into.This can keep the risk potential minimal. Before investing, it is best to be completely familiar with all the business aspects. The franchise lawyer can also assist with the franchisee’s understanding of the Franchise Agreement, as well as review and negotiate it on behalf of the latter.
Working with US-based franchisors is another important consideration for potential franchisees.When dealing with a US-based franchisor, the franchisee should make sure that the franchise agreement has been modified in accordance with Canadian laws, customs, and practices. Some franchise agreements may still contain U.S. legal concepts that are not applicable in Canada, or may omit necessary Canadian concepts. Canadian franchise lawyers can bring these matters to their client’s attention, and discuss them with the franchisors.
Other matters that franchisees need to consider and can consult a franchise lawyer about franchise fees and royalty rates; how advertising funds are going to be spent; control of the lease for the franchise location; rebate percentages from suppliers; extent of the franchisor’s discretion or right of approval; ease of reselling or renewing the franchise business; rights to buying the franchise business itself; and the effects of the Alberta Franchise Act and Franchise Act of Ontario on the franchise.