7-Eleven franchises in Canada, or franchising in general, are governed by the provincial laws on franchises, since there is no federal law on franchising in the country. Although these Franchises Acts differs from each other, especially in the jurisdiction that it covers, all of them are principally the same.
In regulating the offer and sale of franchises in Canada, these franchises acts govern the rights and obligations of the franchisee (the person/s or the entity who wishes to use the franchise) and the franchisor (the entity which grants or provides the franchise, which is 7-Eleven in this case).
As for franchises in Québec, it would be governed by the applicable provisions on contracts in the Civil Code of Québec. Similarly, for provinces or territories which did not enact a franchise law, franchises in these provinces or territories would be governed by common law principles and doctrines on contracts and obligations (although, these would also apply suppletory to the provinces which enacted a franchise act).
These provincial franchise laws are the following:
- Alberta’s Franchises Act
- British Columbia’s Franchises Act
- Manitoba’s Franchises Act
- New Brunswick’s Franchises Act
- Ontario’s Arthur Wishart Act (Franchise Disclosure)
- Prince Edward Island’s Franchises Act
What is a franchise disclosure document?
A Franchise Disclosure Document is one of the requirements under the provincial franchise acts before an offer and sale of a franchise may be perfected. Generally, this document is asked by a prospective franchisee from the franchisor, for the franchisee to be completely informed of pertinent matters which will guide them in deciding whether to move forward with the franchise agreement. However, in the provinces which enacted a Franchises Act, this Franchise Disclosure Document is mandatory on the part of the franchisor.
As such, in a 7-Eleven franchise in Canada, 7-Eleven is required to provide its prospective franchisees with a Franchise Disclosure Document, especially in the above-mentioned provinces, which are commonly called the “disclosure provinces” because of this requirement. As a franchisee of 7-Eleven, you may then request for a Franchise Disclosure Document from the company if you are planning to open one in any of these provinces since this is mandatory. Generally, 7‑Eleven will provide a prospective or interested franchisee with a Franchise Disclosure Document after you complete an application.
The Franchise Disclosure Document must also be given to you at least 14 days before the signing of the franchise agreement, and before any payment is given to the 7-Eleven for the perfection of your franchise agreement. However, when there is a prior agreement between you and 7-Eleven, regarding a deposit payment that is less than 20% of the franchise fee, which is less than C$100,000, and is fully refundable, the 14-day rule stated above would not apply.
What are the necessary contents of a franchise disclosure document?
According to these provincial franchise acts, a Franchise Disclosure Document must be complete in itself – that it provides all necessary information that you as a franchisee might need to consensually decide whether to proceed with the franchise agreement or not. Basically, it must be up to date, it must:
- be specific for every franchise offering;
- contain all “material facts”;
- be accompanied by a disclosure certification.
Franchise Offerings
For example, 7-Eleven have different “franchise offerings” that it may propose to a franchisee, such as a Single Store (traditional), Multi-Unit, Business Conversion, Micro Market, Veterans Franchising, among others.
In a Franchise Disclosure Document, all details regarding these offerings must be spelled out so that you, as a franchisee, may be able to fully decide on which is more appropriate for you or if you want to acquire a franchise itself.
Material Facts
Generally, under the franchise acts of these disclosure provinces, “material facts” that should be included in the Franchise Disclosure Document are:
- annual operating costs;
- projected annual earnings; and
- audited financial statement; and/or
- review engagement reports.
However, the presentation of these “material facts” and other specific facts may depend on the franchise act of your province, which may be consulted with a franchise lawyer so that you will know what to expect of the Franchise Disclosure Document from 7-Eleven. For those in Ontario, we recommend looking at the best Lexpert-ranked franchise lawyers in Ontario.
Disclosure Certification
Franchise Disclosure Documents must also bear with it a certification, which must be signed by at least two officers or directors of the franchisor. This certification is an attestation that all the contents of the Franchise Disclosure Document are true, and those officers or directors who signed the certification will be held liable should there be any inaccurate or misleading information in the disclosure.
Here, when asking for the Franchise Disclosure Document from 7-Eleven, and when operating under any of the disclosure provinces, you must also check that such Disclosure Document has its required accompanying certification that is duly signed.
How much is a 7-Eleven franchise?
A Canadian 7-Eleven franchise may approximately cost $50,000 to $750,000 for its one-time initial franchise fee, which the actual cost may depend on the franchise offering you will choose. This is in addition to the $29,000 initial downpayment for the store’s inventory, supplies, licenses, permits, and bonds. You, as the franchisee, would also have to provide the initial funds for the store’s cash register.
Keep in mind that in the disclosure provinces, these costs may only be paid 14 days after a Franchise Disclosure Document has been given to you by 7-Eleven. Remember that the laws in Quebec are different, consult with the best franchise lawyers in Quebec for the details.
Is it profitable to franchise and open a 7-Eleven?
Although a 7-Eleven franchise is likely to be profitable since it already has an existing customer base, offers a wide selection of products, and because of its 24/7 availability, their success would still specifically depend on other factors, such as your store’s location or area.
Comment down your questions below or consult with the best Canadian franchise lawyers to know more about franchising 7-Eleven in Canada.